Exhibit 10.5

 

EXECUTION VERSION

 

SINGLE TENANT

OFFICE LEASE AGREEMENT

 

OPUS WEST, LP

Landlord

 

and

 

HORIZON HEALTH CORPORATION

Tenant

 

Effective Date: May 6, 2005

 

Single Tenant Office Lease Agreement

Horizon Health Corporation

 

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TABLE OF CONTENTS

 

Article 1 LEASE OF PREMISES AND LEASE TERM

   3

1.1 Premises

   3

1.2 Term Delivery Commencement Extension

   3

1.2.1 Commencement and Expiration of Term

   3

1.2.2 Tender of Possession

   3

1.2.3 Commencement Date Memorandum

   3

1.2.4 Early Occupancy

   3

1.2.5 Extension Option

   4

1.2.6 Selection of Fair Market Basic Rent

   4

1.3 Effect of Occupancy

   5

Article 2 RENTAL AND OTHER PAYMENTS

   5

2.1 Basic Rent

   5

2.2 Additional Rent

   5

2.3 Delinquent Rental Payments

   6

2.4 Independent Obligations

   6

Article 3 PROPERTY TAXES AND OPERATING EXPENSES

   6

3.1 Utilities

   6

3.2 Payment of Property Expenses

   6

3.3 Estimation of Property Expenses

   6

3.4 Payment of Estimated Property Expenses

   6

3.5 Re-Estimation of Property Expenses

   7

3.6 Confirmation of Property Expenses

   7

3.7 Tenant’s Inspection and Audit Rights

   7

3.8 Personal Property Taxes

   7

 

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3.9 Landlord’s Right to Contest Property Taxes

   8

3.10 Waiver

   8

Article 4 USE

   8

4.1 Permitted Use

   8

4.2 Acceptance of Premises

   8

4.3 Increased Insurance

   9

4.4 Laws/Building Rules

   9

4.5 Signs

   9

Article 5 HAZARDOUS MATERIALS

   10

5.1 Compliance with Hazardous Materials Laws

   10

5.2 Notice of Actions

   10

5.3 Disclosure and Warning Obligations

   10

5.4 Indemnification

   10

Article 6 SERVICES

   11

6.1 Landlord’s Obligations

   11

6.2 Tenant’s Obligations

   11

6.3 Other Provisions Relating to Services

   11

6.4 Tenant Devices

   11

Article 7 MAINTENANCE AND REPAIR

   12

7 1 Landlord’s Obligations

   12

7.2 Tenant’s Obligations

   12

7.3 Alterations Required by Laws

   12

Article 8 CHANGES AND ALTERATIONS

   13

8.1 Landlord Approval

   13

8.2 Tenant’s Responsibility for Cost and Insurance

   13

 

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8.3 Construction Obligations and Ownership

   14

8.4 Liens

   14

8.5 Indemnification

   14

Article 9 RIGHTS RESERVED BY LANDLORD

   14

9.1 Landlord’s Entry

   14

9.2 Control of Property

   15

9.3 Lock Box Agent/Rent Collection Agent

   15

Article 10 INSURANCE

   15

10.1 Tenant’s Insurance Obligations

   15

10.1.1 Liability Insurance

   16

10.1.2 Property Insurance

   16

10.1.3 Other Insurance

   16

10.1.4 Miscellaneous Insurance Provisions

   16

10.1.5 Tenant’s Waiver and Release of Claims and Subrogation

   16

10.1.6 No Limitation

   17

10.2 Landlord’s Insurance Obligations

   17

10.2.1 Property Insurance

   17

10.2.2 Liability Insurance

   17

10.2.3 Landlord’s Waiver and Release of Claims and Subrogation

   17

10.3 Tenant’s Indemnification of Landlord

   18

10.4 Tenant’s Waiver

   18

10.5 Tenant’s Failure to Injure

   18

Article 11 DAMAGE OR DESTRUCTION

   18

11.1 Tenantable Within 180 Days

   18

11.2 Not Tenantable Within 180 Days

   19

 

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11.3 Insufficient Proceeds

   19

11.4 Landlord’s Repair Obligations

   19

11.5 Rent Apportionment Upon Termination

   19

11.6 Exclusive Casualty Remedy

   20

Article 12 EMINENT DOMAIN

   20

12.1 Termination of Lease

   20

12.2 Landlord’s Repair Obligations

   20

12.3 Tenant’s Participation

   20

12.4 Exclusive Taking Remedy

   20

Article 13 TRANSFERS

   21

13.1 Restriction on Transfers

   21

13.1.1 General Prohibition

   21

13.1.2 Transfers to Affiliates

   21

13.1.3 Tenant’s Right to Mortgage

   21

13.2 Costs

   22

Article 14 DEFAULTS; REMEDIES

   22

14.1 Events of Default

   22

14.1.1 Failure to Pay Rent

   22

14.1.2 Failure to Perform

   22

14.1.3 Misrepresentation

   22

14.1.4 Other Defaults

   23

14.1.5 Notice Requirements

   23

14.2 Remedies

   23

14.2.1 Termination of Tenant’s Possession; Re-entry and Reletting Right. 23

   23

 

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14.2.2 Termination of Lease

   24

14.2.3 [Intentionally deleted]

   24

14.2.4 Self Help

   24

14.2.5 Other Remedies

   24

14.3 Costs

   24

14.4 Waiver and Release by Tenant

   25

14.5 Landlord’s Default

   25

14.6 No Waiver

   25

Article 15 CREDITORS: ESTOPPEL CERTIFICATES

   25

15.1 Subordination

   25

15.2 Attornment

   26

15.3 Mortgagee Protection Clause

   26

15.4 Estoppel Certificates

   26

15.4.1 Contents

   26

15.4.2 Failure to Delivery

   27

Article 16 TERMINATION OF LEASE

   27

16.1 Surrender of Premises

   27

16.2 Holding Over

   27

Article 17 ADDITIONAL PROVISIONS

   28

17.1 Initial Improvements

   28

17.1.1 Building Improvements

   28

17.1.2 Tenant Improvements

   28

17.2 Parking

   28

Article 18 MISCELLANEOUS PROVISIONS

   28

18.1 Notices

   28

 

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18.2 Transfer of Landlord’s Interest

   28

18.3 Successors

   29

18.4 Captions and Interpretation

   29

18.5 Relationship of Parties

   29

18.6 Entire Agreement; Amendment

   29

18.7 Severability

   29

18.8 Landlord’s Limited Liability

   29

18.9 Survival

   29

18.10 Attorneys Fees

   30

18.11 Brokers

   30

18.12 Governing Law

   30

18.13 Time is of the Essence

   30

18.14 Joint and Several Liability

   30

18.15 Tenant’s Waiver

   30

18.16 Tenant’s Organization Documents; Authority

   30

18.17 Provisions are Covenants and Conditions

   31

18.18 Force Majeure

   31

18.19 Management

   31

18.20 Quiet Enjoyment

   31

18.21 No Recording

   31

18.22 Nondisclosure of Lease Terms

   31

18.23 Construction of Lease and Terms

   32

 

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EXHIBITS:

 

Exhibit “A”

  Definitions

Exhibit “B”

  Legal Description of the Land

Exhibit “B-1”

  Site Plan

Exhibit “C”

  Work Letter

Exhibit “C-2”

  List of Design Documents

Exhibit “D”

  Commencement Date Memorandum

Exhibit “E”

  Building Rules

 

SCHEDULES

 

Schedule “C-2”

  Outline Specifications for Base Building

 

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OFFICE LEASE AGREEMENT

 

This Office Lease Agreement is made and entered into as of the Effective Date by
and between OPUS WEST LP, a Delaware limited partnership, as Landlord, and
HORIZON HEALTH CORPORATION, a Delaware corporation, as Tenant.

 

DEFINITIONS

 

Capitalized terms used in this Lease have the meanings ascribed to them on the
attached EXHIBIT A.

 

BASIC TERMS

 

The following Basic Terms are applied under and governed by the particular
section(s) in this Lease pertaining to the following information:

 

1.      

  Premises:    All of the rentable square feet contained in the Building
currently contemplated to be 80,000 rentable square feet.

2.      

  Lease Term:    Ten (10) Lease Years (120 months) (See Section 1.2)     Renewal
Options:    Two periods of five-years each (See Section 1.2.5)

3.      

  Delivery Date:    April 1, 2006 (See Section 1.2)

4.      

  Basic Rent:         

Months

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Annual Basic Rent per rentable square
foot of the Premises (RSF)

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Monthly Installments

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1 through 12

   $14.50    $72,500.00               [based on 60,000 RSF]    

13 through 24

   $14.50    $84,583.00               [based on 70,000 RSF]    

25 through 60

   $14.50    $96,666.67               [based on 80,000 RSF]    

61 through 120

   $15.95    $106,333.33               [based on 80,000 RSF]     Renewal Term:
   Market rent determined in accordance with Section 1.2.5

5.      

  Security Deposit:    None required

 

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6.

  Rentable Area of the Building    80,000 square feet of rentable area

7.

  Estimated Operating Expenses for first year of operation (but not including
electricity):    $7.00 RSF

8.

  Improvement Allowance:    $3,208,000

90.

  Rent Payment Address:   

Opus West Management Corporation

2555 East Camelback Road, #840

Phoenix, Arizona 85016

Attn: Accounts Receivable – Horizon Health

Telephone: (602) 912-8880

Facsimile: (602) 912-8881

10.

  Address of Landlord for Notices:   

Opus West Corporation

15455 Dallas Parkway, Suite 450

Dallas, Texas 75001

Attn: Real Estate Director

Telephone: (972) 448-0615

Facsimile: (972) 669-2216

 

Opus West Corporation

2555 East Camelback Road, #800

Phoenix, Arizona 85016

Attn: Legal Department

Telephone: (602) 912-8880

Facsimile: (602) 912-8881

11.

  Address of Tenant for Notices:   

Horizon Health Corporation

1500 Waters Ridge Drive

Lewisville, Texas 75057

Attn: Chief Financial Officer

Telephone: (972) 420-8222

Facsimile: (972) 219-1710

 

Horizon Health Corporation

1500 Waters Ridge Drive

Lewisville, Texas 75057

Attn: General Counsel

Telephone: (972) 420-8220

Facsimile: (972) 222-4367 ‘

12.

  Initial Property Manager:    FACServices, Inc.

13.

  Broker(s):   

Paul Whitman

The Staubach Company-Southwest, Inc.

(See Section 18.11)

 

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ARTICLE 1

LEASE OF PREMISES AND LEASE TERM

 

1.1 Premises. Subject to the satisfaction of Landlord’s Condition (as defined in
Section 1.4 below), in consideration of the mutual covenants this Lease
describes and other good and valuable consideration, Landlord leases the
Premises to Tenant and Tenant leases the Premises from Landlord, upon and
subject to the terms, covenants and conditions set forth in this Lease. The
rentable area of the Premises is the rentable area specified in the Basic Terms.
Upon completion of construction of the Building, BOKA Powell Architects will
determine the rentable area of the Premises substantially in accordance with
BOMA Standards. If BOKA Powell Architects determines, in accordance with BOMA
Standards, that the rentable area of the Premises differs from the rentable area
specified in the Basic Terms, Landlord and Tenant will amend this Lease
accordingly.

 

1.2 Term, Delivery Commencement Extension.

 

1.2.1 Commencement and Expiration of Term. The Term of this Lease is the period
stated in the Basic Terms. The Term commences on the Commencement Date and
expires on the last day of the last calendar month of the Term.

 

1.2.2 Tender of Possession. Landlord will use commercially reasonable efforts to
tender possession of the Premises to Tenant on or before the Delivery Date,
subject to the terms of the Work Letter attached hereto as Exhibit C (the “Work
Letter”).

 

1.2.3 Commencement Date Memorandum. Within a reasonable time after the
Commencement Date, Landlord will deliver to Tenant the Commencement Date
Memorandum with all blanks relating to dates completed with dates Landlord
derives in accordance with this Lease. Tenant, within 10 days after receipt from
Landlord, will execute and deliver to Landlord the Commencement Date Memorandum.
Tenant’s failure to execute and deliver to Landlord the Commencement Date
Memorandum does not affect any obligation of Tenant under this Lease. If Tenant
does not timely execute and deliver to Landlord the Commencement Date
Memorandum, Landlord and any prospective purchaser or encumbrancer may
conclusively rely on the information contained in the unexecuted Commencement
Date Memorandum Landlord delivered to Tenant.

 

1.2.4 Early Occupancy. Tenant will not occupy the Premises before Substantial
Completion without Landlord’s prior written consent, which consent Landlord may
grant, withhold or condition in its good faith business judgment. If Landlord
consents, Tenant, during the early occupancy period, may only install Tenant’s
furniture, fixtures and equipment in the Premises and must comply with and
observe all terms and conditions of this Lease (other than Tenant’s obligation
to pay Basic Rent), including those provisions applicable thereto in Section 4
of the Work Letter.

 

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1.2.5 Extension Option. Provided that no Event of Default exists at the time of
exercise, Tenant may extend the term of this Lease for up to two (2) consecutive
periods of five (5) years each. Tenant must exercise each such right of
extension within thirty (30) days after receiving written notice of Landlord
setting forth the Fair Market Basic Rent (as defined below) for the applicable
extension. Landlord will reasonably determine such Fair Market Basic Rent and,
subject to Section 1.2.6 below, deliver Landlord’s determination to Tenant at
least nine (9) months prior to the expiration of the then-current term. “Fair
Market Basic Rent” means the fair market base rental rate for the Premises for
the applicable extension period in relation to comparable (in quality, location
and size) space located in the Building and/or the Lewisville, Texas submarket,
with due consideration given to the following factors regarding the Premises and
Tenant, on the one hand, and the comparable space(s) and tenant(s), on the other
hand: (a) the financial condition of the tenant; (b) the location, quality and
age of the building(s); (c) the extent and quality of leasehold improvements
(existing or to be provided) in the premises; (d) rent abatements, if any; (e)
the location of the premises within the building; (f) the length of the term;
(g) the nature and extent of services provided by the landlord; (h) expense
stops, if any; (i) any other concessions given; and (j) other pertinent factors.
The Basic Rent for the extension term shall be equal to 95% of the Fair Market
Basic Rent. In no event will the Basic Rent for an extension of the Lease term
be less than the Basic Rent (exclusive of temporary abatements) payable by
Tenant for the Lease Year immediately prior to commencement of the applicable
extension period. If Tenant elects to exercise its right of extension, all of
the terms of this Lease shall apply except that the Basic Rent shall be adjusted
as provided in this Section 1.2. These extension rights may not be assigned or
transferred in any manner except in connection with an approved or otherwise
permitted assignment of this Lease under Article 13.

 

1.2.6 Selection of Fair Market Basic Rent. If Tenant disputes Landlord’s
determination of Fair Market Basic Rent for an extension of the Term, Tenant
will deliver notice of such dispute, together with Tenant’s proposed Fair Market
Basic Rent, to Landlord within thirty (30) days of Tenant’s receipt of
Landlord’s determination. The parties will then attempt in good faith to agree
upon the Fair Market Basic Rent. If the parties fail to agree within 15 days,
then either party shall be entitled to give notice to the other electing to have
the Fair Market Basic Rent selected by an appraiser as provided in this section.
Upon delivery and receipt of such notice, the parties will within seven days
thereafter mutually appoint an appraiser who will select (in the manner set
forth below) the Fair Market Basic Rent (the “Deciding Appraiser”). The Deciding
Appraiser must have at least five years of full-time commercial appraisal
experience with projects comparable to the Property and be a member of the
American Institute of Real Estate Appraisers or a similar appraisal association.
The Deciding Appraiser may not have any material financial or business interest
in common with either of the parties. If Landlord and Tenant are not able to
agree upon a Deciding Appraiser within such seven days, each party will within
five days thereafter separately select an appraiser meeting the criteria set
forth above, which two appraisers will, within seven days of their selection,
mutually appoint a third appraiser meeting the criteria set forth above (and who
also does not have any material financial or business interest in common with
either of the two selecting appraisers) to be the Deciding Appraiser. Within
seven days of the appointment (by either method) of the Deciding Appraiser,
Landlord and Tenant will submit to the Deciding Appraiser their respective
determinations of Fair Market Basic Rent and any related information. Within 21
days of such appointment of the Deciding Appraiser, the Deciding Appraiser will
review each party’s submittal (and such other information as the Deciding
Appraiser deems necessary) and will select, in total and without modification,
the submittal presented by either Landlord or Tenant as the Fair Market Basic
Rent; provided, however, that in no event will Fair

 

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Market Basic Rent for an extension of the Term be less than the Basic Rent
(exclusive of temporary abatements) payable by Tenant immediately prior to
commencement of the applicable extension period. Subject to the previous
sentence, if the Deciding Appraiser timely receives one party’s submittal, but
not both, the Deciding Appraiser must designate the submitted proposal as the
Fair Market Basic Rent for the applicable extension of the Term. Any
determination of Fair Market Basic Rent made by the Deciding Appraiser in
violation of the provisions of this section shall be beyond the scope of
authority of the Deciding Appraiser and shall be null and void. If the
determination of Fair Market Basic Rent is made by a Deciding Appraiser,
Landlord and Tenant will each pay, directly to the Deciding Appraiser, one-half
( 1/2) of all fees, costs and expenses of the Deciding Appraiser. Landlord and
Tenant will each separately pay all costs, fees and expenses of their respective
additional appraiser (if any) used to determine the Deciding Appraiser.

 

1.3 Effect of Occupancy. Subject to the Warranty Terms, Tenant’s occupancy of
the Premises conclusively establishes that Landlord completed the Improvements
as required by this Lease in a manner satisfactory to Tenant. Tenant’s failure
to strictly comply with the Warranty Terms with respect to any item included as
part of the Improvements constitutes Tenant’s waiver and release of any and all
rights, benefits, claims or warranties available to Tenant under this Lease, at
law or in equity in connection with each such item.

 

ARTICLE 2

RENTAL AND OTHER PAYMENTS

 

2.1 Basic Rent. Tenant will pay Basic Rent in monthly installments to Landlord,
in advance, without offset or deduction, commencing on the Rent Commencement
Date and continuing on the first day of each and every calendar month after the
Rent Commencement Date during the Term. Tenant will make all Basic Rent payments
to Landlord at the address specified in the Basic Terms or at such other place
or in such other manner as Landlord may from time to time designate in writing.
Tenant will make all Basic Rent payments without Landlord’s previous demand,
invoice or notice for payment. Landlord and Tenant will prorate, on a per diem
basis, Basic Rent for any partial month within the Term.

 

2.2 Additional Rent. Article 3 of this Lease requires Tenant to pay certain
Additional Rent pursuant to estimates Landlord delivers to Tenant. Tenant will
make all payments of estimated Additional Rent in accordance with Sections 3.3
and 3.4 without deduction or offset and without Landlord’s previous demand,
invoice or notice for payment. Tenant will pay all other Additional Rent
described in this Lease that is not estimated under Sections 3.3 and 3.4 within
10 days after receiving Landlord’s invoice for such Additional Rent. Tenant will
make all Additional Rent payments to the same location and, except as described
in the previous sentence, in the same manner as Tenant’s Basic Rent payments.

 

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2.3 Delinquent Rental Payments. If Tenant does not pay any installment of Basic
Rent or any Additional Rent within three Business Days after the date the
payment is due, Tenant will pay Landlord an additional amount equal to the
greater of (a) interest on the delinquent payment calculated at the Maximum Rate
from the date when the payment is due through the date the payment is made, or
(b) a late payment charge equal to 5% of the amount of the delinquent payment.
Landlord’s right to such compensation for the delinquency is in addition to all
of Landlord’s rights and remedies under this Lease, at law or in equity.

 

2.4 Independent Obligations. Notwithstanding any contrary term or provision of
this Lease, Tenant’s covenant and obligation to pay Rent is independent from any
of Landlord’s covenants, obligations, warranties or representations in this
Lease. Tenant will pay Rent without any right of offset or deduction.

 

ARTICLE 3

PROPERTY TAXES AND OPERATING EXPENSES

 

3.1 Utilities. Tenant shall pay the cost of all separately metered utilities
used by the Premises directly to the applicable utility companies furnishing
such utilities.

 

3.2 Payment of Property Expenses. Tenant will pay, as Additional Rent and in the
manner this Article 3 describes, Property Expenses due and payable during any
calendar year of the Term. Landlord will prorate Property Expenses due and
payable during the calendar year in which the Lease commences or terminates as
of the Commencement Date or termination date, as applicable, on a per diem basis
based on the number of days of the Term within such calendar year.

 

3.3 Estimation of Property Expenses. Landlord will deliver to Tenant a written
estimate of the following for each calendar year of the Term: (a) Property
Taxes, (b) Operating Expenses and (d) the annual and monthly Additional Rent
attributable to Property Expenses.

 

3.4 Payment of Estimated Property Expenses. Tenant will pay the amount Landlord
estimates as Property Expenses under Section 3.2 for each calendar year of the
Term in equal monthly installments, in advance, on the first day of each month
during such calendar year. If Landlord has not delivered the estimates to Tenant
by the first day of January of the applicable calendar year, Tenant will
continue paying Property Expenses based on Landlord’s estimates for the previous
calendar year. When Tenant receives Landlord’s estimates for the current
calendar year, Tenant will pay the estimated amount (less amounts Tenant paid to
Landlord in accordance with the immediately preceding sentence) in equal monthly
installments over the balance of such calendar year, with the number of
installments being equal to the number of full calendar months remaining in such
calendar year.

 

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3.5 Re-Estimation of Property Expenses. Landlord may re-estimate Property
Expenses from time to time during the Term. In such event, Landlord will
re-estimate the monthly Additional Rent attributable to Property Expenses to an
amount sufficient for Tenant to pay the re-estimated monthly amount over the
balance of the calendar year. Landlord will notify Tenant of the re-estimate and
Tenant will pay the re-estimated amount in the manner provided in the last
sentence of Section 3.3.

 

3.6 Confirmation of Property Expenses. After the end of each calendar year
within the Term, Landlord will determine the actual amount of Property Expenses
for the expired calendar year and deliver to Tenant a written statement of such
amounts. If Tenant paid less than the actual amount of Property Expenses
specified in the statement, Tenant will pay the difference to Landlord as
Additional Rent in the manner Section 2.2 describes. If Tenant paid more than
the actual amount of Property Expenses specified in the statement, Landlord, at
Landlord’s option, will either (a) refund the excess amount to Tenant, or (b)
credit the excess amount against Tenant’s next due monthly installment or
installments of estimated Additional Rent. If Landlord is delayed in delivering
such statement to Tenant, such delay does not constitute Landlord’s waiver of
Landlord’s rights under this section.

 

3.7 Tenant’s Inspection and Audit Rights. If Tenant is not in default in the
performance of any of its obligations under this Lease, Tenant disputes
Landlord’s determination of the actual amount of Property Expenses for any
calendar year and Tenant delivers to Landlord written notice of the dispute
within 30 days after Landlord’s delivery of the statement of such amount under
Section 3.5, then Tenant (but not any subtenant or assignee), at its sole cost
and expense, upon prior written notice and during regular business hours at a
time and place reasonably acceptable to Landlord (which may be the location
where Landlord maintains the applicable records), may audit Landlord’s records
relating to the disputed amounts; provided, however, if the audit is to be
performed by a third party, such third party (i) shall be a certified public
accountant reasonably acceptable to Landlord and (ii) shall not be compensated
by Tenant on a contingency fee basis, and (iii) shall have agreed with Landlord
in writing to keep the results of such audit confidential. Tenant’s objection to
Landlord’s determination of Property Expenses is deemed withdrawn unless Tenant
completes and delivers the audit to Landlord within 60 days after the date
Tenant delivers its dispute notice to Landlord under this section. If the audit
shows that the amount Landlord charged Tenant for Property Expenses was greater
than the amount this Article 3 obligates Tenant to pay, then, unless Landlord
reasonably contests the audit, Landlord will refund the excess amount to Tenant,
together with interest on the excess amount at the Maximum Rate (computed from
the date Tenant delivers its dispute notice to Landlord) within 10 days after
Landlord receives a copy of the audit report. If the audit shows that the amount
Landlord charged Tenant for Property Expenses was less than the amount this
Article 3 obligates Tenant to pay, Tenant will pay to Landlord, as Additional
Rent, the difference between the amount Tenant paid and the amount determined in
the audit. Pending resolution of any audit under this section, Tenant will
continue to pay to Landlord the estimated amounts of Property Expenses in
accordance with Sections 3.3 and 3.4. Tenant must keep all information it
obtains in any audit strictly confidential and may only use such information for
the limited purpose this section describes and for Tenant’s own account.

 

3.8 Personal Property Taxes. Tenant, prior to delinquency, will pay all taxes
charged against Tenant’s trade fixtures and other personal property. Tenant will
use all reasonable efforts to have such trade fixtures and other

 

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personal property taxed separately from the Property. If any of Tenant’s trade
fixtures and other personal property are taxed with the Property, Tenant will
pay the taxes attributable to Tenant’s trade fixtures and other personal
property to Landlord as Additional Rent.

 

3.9 Landlord’s Right to Contest Property Taxes. Landlord is not obligated to but
may contest the amount or validity, in whole or in part, of any Property Taxes.
Landlord’s contest will be at Landlord’s sole cost and expense, except that if
Property Taxes are reduced (or if a proposed increase is avoided or reduced)
because of Landlord’s contest, Landlord may include in its computation of
Property Taxes the costs and expenses Landlord incurred in connection with the
contest, including, but not limited to, reasonable attorneys fees, up to the
amount of any Property Tax reduction Landlord realized from the contest or any
Property Tax increase avoided or reduced in connection with the contest, as the
case may be. Tenant may not contest Property Taxes but may request that Landlord
contest Property Taxes on the condition that Tenant pay all Landlord’s
out-of-pocket costs and expenses incurred in connection therewith. Landlord will
not be obligated to contest Property Taxes following Tenant’s request at any
time there is less than two full years remaining on the Term.

 

3.10 Waiver. Landlord and Tenant are knowledgeable and experienced in commercial
transactions and agree that the provisions of this Lease for determining
charges, amounts and rent payable by Tenant (including without limitation,
payments under this Article 3) are commercially reasonable and valid even though
such methods may not state a precise mathematical formula for determining such
charges. ACCORDINGLY, TENANT VOLUNTARILY AND KNOWINGLY WAIVES ALL RIGHTS AND
BENEFITS OF TENANT UNDER SECTION 93.004 OF THE TEXAS PROPERTY CODE, AS AMENDED
FROM TIME TO TIME.

 

ARTICLE 4

USE

 

4.1 Permitted Use. Tenant will not vacate the Premises prior to the expiration
of the Term without Landlord’s prior written consent, which consent Landlord may
grant or withhold in its sole and absolute discretion. Tenant will not use the
Premises for any purpose other than general office purposes. Tenant will not use
the Property or knowingly permit the Premises to be used in violation of any
Laws or in any manner that would (a) violate any certificate of occupancy
affecting the Property; (b) make void or voidable any insurance now or after the
Effective Date in force with respect to the Property; (c) cause injury or damage
to the Property; (d) cause substantial diminution in the value or usefulness of
all or any part of the Property (reasonable wear and tear excepted); or (e)
constitute a public or private nuisance or waste. Tenant will obtain and
maintain, at Tenant’s sole cost and expense, all permits and approvals required
under the Laws for Tenant’s use of the Premises.

 

4.2 Acceptance of Premises. Except for the Warranty Terms, Tenant acknowledges
that neither Landlord nor any agent, contractor or employee of Landlord has made
any representation or warranty of any kind with respect to the Building or the
Property, specifically including, but not limited to, any

 

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representation or warranty of suitability or fitness of the Building or the
Property for any particular purpose. Subject to the Warranty Terms, Tenant
accepts the Building and the Property in an “AS IS - WHERE IS” condition.

 

4.3 Increased Insurance. Tenant will not do on the Property or permit to be done
on the Premises anything that will (a) increase the premium of any insurance
policy Landlord carries covering the Premises or the Property; (b) cause a
cancellation of or be in conflict with any such insurance policy; (c) result in
any insurance company’s refusal to issue or continue any such insurance in
amounts satisfactory to Landlord; or (d) subject Landlord to any liability or
responsibility for injury to any person or property by reason of Tenant’s
operations in the Premises or use of the Property. Tenant, at Tenant’s sole cost
and expense, will comply with all rules, orders, regulations and requirements of
insurers and of the American Insurance Association or any other organization
performing a similar function. Tenant will reimburse Landlord, as Additional
Rent, for any additional premium charges for such policy or policies resulting
from Tenant’s failure to comply with the provisions of this section.

 

4.4 Laws/Building Rules. This Lease is subject and subordinate to all Laws. A
copy of the current Building Rules is attached to this Lease as EXHIBIT E.
Landlord may amend the Building Rules from time to time in Landlord’s sole and
absolute discretion.

 

4.5 Signs. Tenant may erect signs on the exterior of the Building or on the
landscaped area adjacent thereto, provided that such sign or signs (a) do not
cause any structural damage or other damage to the Building; (b) do not violate
applicable governmental laws, ordinances, rules or regulations; (c) do not
violate any existing covenants, conditions or restrictions affecting the Demised
Premises; and (d) are compatible with the architecture of the Building and the
landscaped area adjacent thereto. Tenant may not install any exterior sign until
it has obtained all necessary governmental and quasi-governmental approvals
therefor, all third party approvals, and Landlord’s reasonable approval as to
the size, location, design and all other aspects thereof. When Tenant requests
Landlord’s approval of any such sign, Tenant will concurrently submit to
Landlord the proposed fabrication drawings thereof. Landlord’s consent to such
sign shall be granted or withheld within five (5) business days following
Tenant’s written request therefor accompanied by the documentation required
above. If Landlord has failed to respond within said five business-day period,
Tenant may give Landlord a second notice of Landlord’s failure to respond, and
if Landlord does not grant or reasonably withhold its approval of such sign
within ten (10) days after receipt of such second notice, Landlord’s approval
shall be deemed granted. Tenant must remove such signage prior to the expiration
or earlier termination of this Lease, and must repair and restore any damage to
the Demised Premises caused by such installation and/or removal.

 

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ARTICLE 5

HAZARDOUS MATERIALS

 

5.1 Compliance with Hazardous Materials Laws. Tenant will not cause any
Hazardous Material to be brought upon, kept or used on the Property in a manner
or for a purpose prohibited by or that could result in liability under any
Hazardous Materials Law. Tenant, at its sole cost and expense, will comply with
all Hazardous Materials Laws and prudent industry practice relating to the
presence, treatment, storage, transportation, disposal, release or management of
Hazardous Materials in, on, under or about the Property required for Tenant’s
use of the Premises and will notify Landlord of any and all Hazardous Materials
Tenant brings upon, keeps or uses on the Property (other than small quantities
of office cleaning or other office supplies as are customarily used by a tenant
in the ordinary course in a general office facility). On or before the
expiration or earlier termination of this Lease, Tenant, at its sole cost and
expense, will completely remove from the Property (regardless whether any
Hazardous Materials Law requires removal), in compliance with all Hazardous
Materials Laws, all Hazardous Materials Tenant causes to be present in, on,
under or about the Property. Tenant will not take any remedial action in
response to the presence of any Hazardous Materials in on, under or about the
Property, nor enter into any settlement agreement, consent decree or other
compromise with respect to any Claims relating to or in any way connected with
Hazardous Materials in, on, under or about the Property, without first notifying
Landlord of Tenant’s intention to do so and affording Landlord reasonable
opportunity to investigate, appear, intervene and otherwise assert and protect
Landlord’s interest in the Property.

 

5.2 Notice of Actions. Tenant will notify Landlord of any of the following
actions affecting Landlord, Tenant or the Property that result from or in any
way relate to Tenant’s use of the Property immediately after receiving notice of
the same: (a) any enforcement, clean-up, removal or other governmental or
regulatory action instituted, completed or threatened under any Hazardous
Materials Law; (b) any Claim made or threatened by any person relating to
damage, contribution, liability, cost recovery, compensation, loss or injury
resulting from or claimed to result from any Hazardous Material; and (c) any
reports made by any person, including Tenant, to any environmental agency
relating to any Hazardous Material, including any complaints, notices, warnings
or asserted violations. Tenant will also deliver to Landlord, as promptly as
possible and in any event within five Business Days after Tenant first receives
or sends the same, copies of all Claims, reports, complaints, notices, warnings
or asserted violations relating in any way to the Premises or Tenant’s use of
the Premises. Upon Landlord’s written request, Tenant will promptly deliver to
Landlord documentation acceptable to Landlord reflecting the legal and proper
disposal of all Hazardous Materials removed or to be removed from the Premises.
All such documentation will list Tenant or its agent as a responsible party and
will not attribute responsibility for any such Hazardous Materials to Landlord
or Property Manager.

 

5.3 Disclosure and Warning Obligations. Tenant acknowledges and agrees that all
reporting and warning obligations required under Hazardous Materials Laws
resulting from or in any way relating to Tenant’s use of the Premises or
Property are Tenant’s sole responsibility, regardless whether the Hazardous
Materials Laws permit or require Landlord to report or warn.

 

5.4 Indemnification. Tenant will release, indemnify, defend (with counsel
reasonably acceptable to Landlord), protect and hold harmless the Landlord
Parties from and against any and all Claims whatsoever arising or resulting, in
whole or in part, directly or indirectly, from the presence, treatment, storage,

 

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transportation, disposal, release or management of Hazardous Materials in, on,
under, upon or from the Property (including water tables and atmosphere)
resulting from or in any way related to Tenant’s use of the Premises or
Property. Tenant’s obligations under this section include, without limitation
and whether foreseeable or unforeseeable, (a) the costs of any required or
necessary repair, clean-up, detoxification or decontamination of the Property;
(b) the costs of implementing any closure, remediation or other required action
in connection therewith as stated above; (c) the value of any loss of use and
any diminution in value of the Property; and (d) consultants fees, experts fees
and response costs. The obligations of Tenant under this section survive the
expiration or earlier termination of this Lease.

 

ARTICLE 6

SERVICES

 

6.1 Landlord’s Obligations. Landlord will provide electrical energy to the
Premises for lighting and for operating office machines for general office use.
Electrical energy will be sufficient for Tenant to operate personal computers
and other equipment of similar low electrical consumption, but will not be
sufficient for lighting in excess of six (6) watts per square foot installed or
for electrical convenience outlets in excess of six (6) watts per square foot
installed. Tenant will not use any equipment requiring electrical energy in
excess of the above standards without receiving Landlord’s prior written
consent, which consent Landlord will not unreasonably withhold but may condition
on Tenant paying all costs of installing the equipment and facilities necessary
to furnish such excess energy. Tenant will be responsible for replacing all
lighting bulbs, tubes, ballasts and starters within the Premises at Tenant’s
sole cost and expense.

 

6.2 Tenant’s Obligations. Tenant is solely responsible for paying directly to
the applicable utility companies, prior to delinquency, all costs of electricity
and all other separately metered or separately charged utilities, if any, to the
Premises or to Tenant. Such electricity and other separately metered or charged
amounts are not Operating Expenses. Except as provided in Sections 6.1, 17.1 and
the Work Letter, Tenant will also obtain and pay for all other utilities and
services Tenant requires with respect to the Premises (including, but not
limited to, hook-up and connection charges).

 

6.3 Other Provisions Relating to Services. No interruption in, or temporary
stoppage of, any of the services this Article 6 describes is to be deemed an
eviction or disturbance of Tenant’s use and possession of the Premises, nor does
any interruption or stoppage relieve Tenant from any obligation this Lease
describes, render Landlord liable for damages or entitle Tenant to any Rent
abatement. Landlord is not required to provide any heat, air conditioning,
electricity or other service in excess of that permitted by voluntary or
involuntary governmental guidelines or other Laws. Landlord reserves the right,
from time to time, to make reasonable and non-discriminatory modifications to
the above standards for utilities and services.

 

6.4 Tenant Devices. 0Tenant will not, without Landlord’s prior written consent,
use any apparatus or device in or about the Premises that causes substantial
noise, odor or vibration. Tenant will not connect any apparatus or device to
electrical current or water except through the electrical and water outlets
Landlord installs in the Premises.

 

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ARTICLE 7

MAINTENANCE AND REPAIR

 

7.1 Landlord’s Obligations. Except as otherwise provided in this Lease, Landlord
will repair and maintain the following in good order, condition and repair: (a)
the foundations, exterior walls and roof of the Building; (b) the electrical,
mechanical, plumbing, heating and air conditioning systems, facilities and
components located in the Building; and (c) all driveways, pathways, roadways,
sidewalks, curbs, parking areas, loading areas, landscaped areas, entrances and
passageways. Landlord’s repair and maintenance costs under this Section 7.1 are
Operating Expenses. Neither Basic Rent nor Additional Rent will be reduced, nor
will Landlord be liable, for loss or injury to or interference with Tenant’s
property, profits or business arising from or in connection with Landlord’s
performance of its obligations under this section.

 

7.2 Tenant’s Obligations. Except as otherwise specifically provided in this
Lease, Landlord is not required to furnish any services or facilities, or to
make any repairs or Alterations, in, about or to the Premises or the Property.
Except as specifically described in Section 7.1, Tenant assumes the full and
sole responsibility for the condition, operation, repair, replacement,
maintenance and management of the Premises. Except as specifically described in
Section 7.1, Tenant, at Tenant’s sole cost and expense, will keep and maintain
the Premises (including, but not limited to, all non-structural interior
portions, systems and equipment; interior surfaces of exterior walls; interior
moldings, partitions and ceilings; and interior electrical, lighting and
plumbing fixtures) in good order, condition and repair, reasonable wear and tear
and damage from insured casualties excepted. Tenant will keep the Premises in a
neat and sanitary condition and will not commit any nuisance or waste in, on or
about the Premises or the Property. If Tenant damages or injures any part of the
Property other than the Premises, Landlord will repair the damage and Tenant
will pay Landlord for all uninsured costs and expenses of Landlord in connection
with the repair as Additional Rent. Tenant is solely responsible for and, to the
fullest extent allowable under the Laws, will release, indemnify, protect and
defend Landlord against (with counsel reasonably acceptable to Landlord) and
hold Landlord harmless from, the cost of repairing, and any Claims resulting
from, any penetrations or perforations of the roof or exterior walls of the
Building Tenant causes; provided, however, the foregoing indemnity shall not
extend to penetrations or perforations made during the construction of the
Tenant Improvements pursuant to the Work Letter. Tenant will maintain the
Premises in a first-class and fully operative condition. Tenant’s repairs will
be at least equal in quality and workmanship to the original work and Tenant
will make the repairs in accordance with all Laws.

 

7.3 Alterations Required by Laws. If any governmental authority requires any
Alteration to the Building or the Premises as a result of Tenant’s particular
use of the Premises or as a result of any Alteration to the Premises made by or
on behalf of Tenant, or if Tenant’s particular use of the Premises subjects
Landlord or the Property to any obligation under any Laws, Tenant will pay the
cost of all such Alterations or the cost of compliance, as the case may be;
provided, however, the foregoing requirement is not intended and will not be
construed to apply to any Alterations or cost of compliance that is attributable
solely to the use of the Premises for general office uses. If any Alterations
required

 

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to be performed by Tenant pursuant to this Section 7.3 are Structural
Alterations, Landlord will make the Structural Alterations; provided, however,
that Landlord may require Tenant to deposit with Landlord an amount sufficient
to pay the cost of the Structural Alterations (including, without limitation,
reasonable overhead and administrative costs). If the Alterations to be
performed by Tenant pursuant to this Section 7.3 are not Structural Alterations,
Tenant will make the Alterations at Tenant’s sole cost and expense in accordance
with Article 8. The term “Alterations” when used in this Section 7.3 does not
mean or refer to the Tenant Improvements to be constructed by Landlord pursuant
to the Work Letter.

 

ARTICLE 8

CHANGES AND ALTERATIONS

 

8.1 Landlord Approval. Tenant will not make any Structural Alterations to the
Building without Landlord’s consent, which consent may given or withheld in
Landlord’s sole and absolute discretion. Tenant will not make any other
Alterations costing in excess of $25,000 without Landlord’s prior written
consent, which consent Landlord will not unreasonably withhold or delay;
provided, however, that Landlord may impose conditions in its reasonable
discretion. Along with any request for Landlord’s consent, Tenant will deliver
to Landlord plans and specifications for the Alterations and names and addresses
of all prospective contractors for the Alterations. If Landlord approves the
proposed Alterations, Tenant, before commencing the Alterations or delivering
(or accepting delivery of) any materials to be used in connection with the
Alterations, will deliver to Landlord for Landlord’s reasonable approval copies
of all contracts, proof of insurance required by Section 8.2, copies of any
contractor safety programs, copies of all necessary permits and licenses and
such other information relating to the Alterations as Landlord reasonably
requests. Tenant will not commence the Alterations before Landlord, in
Landlord’s reasonable discretion, approves the foregoing deliveries. Tenant will
construct all approved Alterations or cause all approved Alterations to be
constructed (a) promptly by a contractor Landlord approves in writing in
Landlord’s good faith business judgment, (b) in a good and workmanlike manner,
(c) in compliance with all Laws, (d) in accordance with all orders, rules and
regulations of the Board of Fire Underwriters having jurisdiction over the
Premises and any other body exercising similar functions, and (e) in full
compliance with all of Landlord’s rules and regulations applicable to third
party contractors, subcontractors and suppliers performing work at the Property.

 

8.2 Tenant’s Responsibility for Cost and Insurance. Tenant will pay the cost and
expense of all Alterations, including, without limitation, a reasonable charge
for Landlord’s review, inspection and engineering time, and for any painting,
restoring or repairing of the Building the Alterations occasion. Prior to
commencing the Alterations, Tenant will deliver the following to Landlord in
form and amount reasonably satisfactory to Landlord: (a) builder’s all risk
insurance in an amount at least equal to the replacement value of the Building
(excluding the Land, foundation, grading costs and excavation costs), (b)
evidence that Tenant and each of Tenant’s contractors have in force liability
insurance insuring against construction related risks, in at least the form,
amounts and coverages required of Tenant under Article 10 and (c) copies of all
applicable contracts and of all necessary permits and licenses. The insurance
policies described in clauses (a) and (b) of this section must name Landlord and
Landlord’s lender (if any) and Property Manager as additional insureds.

 

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8.3 Construction Obligations and Ownership. Landlord may inspect construction of
the Alterations. Immediately after completing the Alterations, Tenant will
furnish Landlord with contractor affidavits, full and final lien waivers and
receipted bills covering all labor and materials expended and used in connection
with the Alterations. Tenant will remove any Alterations Tenant constructs in
violation of this Article 8 within 10 days after Landlord’s written request and
in any event prior to the expiration or earlier termination of this Lease. All
Alterations Tenant makes or installs (including all telephone, computer and
other wiring and cabling located within the walls of and outside the Premises,
but excluding Tenant’s movable trade fixtures, furniture and equipment) become
the property of Landlord upon installation and, unless Landlord requires Tenant
to remove the Alterations, Tenant will surrender the Alterations to Landlord
upon the expiration or earlier termination of this Lease at no cost to Landlord.
Landlord will advise Tenant within ten (10) days of any written request from
Tenant (which request may be made prior to or after the construction or
installation) as to whether Landlord will require the removal of any particular
Alterations as aforesaid.

 

8.4 Liens. Tenant will keep the Property free from any mechanics’,
materialmens’, designers’ or other liens arising out of any work performed,
materials furnished or obligations incurred by or for Tenant or any person or
entity claiming by, through or under Tenant. Tenant will notify Landlord in
writing 30 days prior to commencing any Alterations in order to provide Landlord
the opportunity to record and post notices of non-responsibility or such other
protective notices available to Landlord under the Laws. If any such liens are
filed and Tenant, within 15 days after such filing, does not release the same of
record or provide Landlord with a bond or other surety satisfactory to Landlord
protecting Landlord and the Property against such liens, Landlord may, without
waiving its rights and remedies based upon such breach by Tenant and without
releasing Tenant from any obligation under this Lease, cause such liens to be
released by any means Landlord deems proper, including, but not limited to,
paying the claim giving rise to the lien or posting security to cause the
discharge of the lien. In such event, Tenant will reimburse Landlord, as
Additional Rent, for all amounts Landlord pays (including, without limitation,
reasonable attorneys fees and costs).

 

8.5 Indemnification. To the fullest extent allowable under the Laws, Tenant will
release, indemnify, protect, defend (with counsel reasonably acceptable to
Landlord) and hold harmless the Landlord Parties and the Property from and
against any Claims in any manner relating to or arising out of any Alterations
or any other work performed, materials furnished or obligations incurred by or
for Tenant or any person or entity claiming by, through or under Tenant.

 

ARTICLE 9

RIGHTS RESERVED BY LANDLORD

 

9.1 Landlord’s Entry. Landlord and its authorized representatives may at all
reasonable times and upon reasonable notice to Tenant enter the Premises to: (a)
inspect the Premises; (b) show the Premises to prospective purchasers,
mortgagees and tenants; (c) post notices of non-responsibility or other
protective notices available under the Laws; or (d) exercise and perform
Landlord’s rights and obligations under this Lease. Landlord, in the event of
any emergency, may enter the Premises without notice to Tenant. Landlord’s entry
into the Premises is not to be construed as a forcible or unlawful entry into,
or detainer of, the Premises or as an eviction of Tenant from all or any

 

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part of the Premises. Tenant will also permit Landlord (or its designees) to
erect, install, use, maintain, replace and repair pipes, cables, conduits,
plumbing and vents, and telephone, electric and other wires or other items, in,
to and through the Premises if Landlord determines that such activities are
necessary or appropriate for properly operating and maintaining the Building.

 

9.2 Control of Property. Landlord reserves all rights respecting the Property
not specifically granted to Tenant under this Lease, including, without
limitation, the right to: (a) change the name of the Building; (b) designate and
approve all types of signs, window coverings, internal lighting and other
aspects of the Premises and its contents that may be visible from the exterior
of the Premises; (c) prohibit Tenant from installing vending or dispensing
machines of any kind in or about the Premises other than those Tenant installs
in the Premises solely for use by Tenant’s employees; (d) close the Building
after Business Hours, except that Tenant and its employees and invitees may
access the Premises after Business Hours in accordance with such rules and
regulations as Landlord may prescribe from time to time for security purposes;
(e) install, operate and maintain security systems that monitor, by closed
circuit television or otherwise, all persons entering or leaving the Building;
and (f) retain and receive master keys or pass keys to the Premises and all
doors in the Premises. Notwithstanding the foregoing, or the provision of any
security-related services by Landlord, Landlord is not responsible for the
security of persons or property on the Property and Landlord is not and will not
be liable in any way whatsoever for any breach of security not solely and
directly caused by the willful misconduct of Landlord, its agents or employees.

 

9.3 Lock Box Agent/Rent Collection Agent. Landlord, from time to time, may
designate a lock box collection agent or other person to collect Rent. In such
event, Tenant’s payment of Rent to the lock box collection agent or other person
is deemed to have been made (a) as of the date the lock box collection agent or
other person receives Tenant’s payment (if the payment is not dishonored for any
reason); or (b) if Tenant’s payment is dishonored for any reason, the date
Landlord or Landlord’s agent collects the payment. Neither Tenant’s payment of
any amount of Rent to the lock box collection agent or other person nor
Landlord’s or Landlord’s agent’s collection of such amount if the payment is
dishonored constitutes Landlord’s waiver of any default by Tenant in the
performance of Tenant’s obligations under this Lease or Landlord’s waiver of any
of Landlord’s rights or remedies under this Lease. If Tenant pays any amount to
the lock box collection agent or other person other than the actual amount due
Landlord, then Landlord’s or Landlord’s agent’s receipt or collection of such
amount does not constitute an accord and satisfaction, Landlord is not
prejudiced in collecting the proper amount due Landlord and Landlord may retain
the proceeds of any such payment, whether restrictively endorsed or otherwise,
and apply the same toward amounts due and payable by Tenant under this Lease.

 

ARTICLE 10

INSURANCE

 

10.1 Tenant’s Insurance Obligations. Tenant, at all times during the Term and
during any early occupancy period, at Tenant’s sole cost and expense, will
maintain the insurance this Section 10.1 describes.

 

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10.1.1 Liability Insurance. Commercial general liability insurance (providing
coverage at least as broad as the current ISO form) with respect to the Premises
and Tenant’s activities in the Premises and upon and about the Property, on an
occurrence basis, with minimum limits of $1,000,000 each occurrence and
$3,000,000 general aggregate. Such insurance must include specific coverage
provisions or endorsements (a) for broad form contractual liability insurance
insuring Tenant’s obligations under this Lease; (b) naming Landlord and Property
Manager as additional insureds by an Additional Insured - Managers or Lessors of
Premises endorsement (or equivalent coverage or endorsement); (c) waiving the
insurers subrogation rights against all Landlord Parties; (d) providing Landlord
with at least 30 days prior notice of modification, cancellation, non-renewal or
expiration; and (e) expressly stating that Tenant’s insurance will be provided
on a primary and non-contributory basis. If Tenant provides such liability
insurance under a blanket policy, the insurance must be made specifically
applicable to the Premises and this Lease on a per location basis.

 

10.1.2 Property Insurance. At Tenant’s option, property insurance providing
coverage at least as broad as the current ISO Special Form (all-risks) policy in
an amount not less than the full insurable replacement cost of all of Tenant’s
trade fixtures and other personal property within the Premises and including
business income insurance covering at least nine months loss of income from
Tenant’s business in the Premises. If Tenant provides such property insurance
under a blanket policy, the insurance must include agreed amount, no coinsurance
provisions.

 

10.1.3 Other Insurance. Such other insurance as may be required by any Laws from
time to time or may reasonably be required by Landlord from time to time. If
insurance obligations generally required of tenants in similar space in similar
office buildings in the area in which the Premises is located increase or
otherwise change, Landlord may likewise increase or otherwise change Tenant’s
insurance obligations under this Lease.

 

10.1.4 Miscellaneous Insurance Provisions. All of Tenant’s insurance will be
written by companies rated at least Best A-VII and otherwise reasonably
satisfactory to Landlord. Tenant will deliver a certified copy of each policy,
or other evidence of insurance satisfactory to Landlord, (a) on or before the
Commencement Date (and prior to any earlier occupancy by Tenant), (b) not later
than 30 days prior to the expiration of any current policy or certificate, and
(c) at such other times as Landlord may reasonably request. If Landlord allows
Tenant to provide evidence of insurance by certificate, Tenant will deliver an
ACORD Form 27 certificate and will attach or cause to be attached to the
certificate copies of the endorsements this Section 10.1 requires (including
specifically, but without limitation, the additional insured endorsement).
Tenant’s insurance must permit releases of liability and provide for waiver of
subrogation as provided in Section 10.1.5.

 

10.1.5 Tenant’s Waiver and Release of Claims and Subrogation. To the extent not
prohibited by the Laws, Tenant, on behalf of Tenant and its insurers, waives,
releases and discharges the Landlord Parties from all Claims arising out of
personal injury or damage to or destruction of the Premises, Property or
Tenant’s trade fixtures, other personal property or business, and any loss of
use or business interruption, occasioned by any fire or other casualty or
occurrence whatsoever (whether similar or dissimilar), regardless whether any
such Claim results from the negligence or fault of any Landlord Party or
otherwise, and Tenant

 

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will look only to Tenant’s insurance coverage (regardless whether Tenant
maintains any such coverage) in the event of any such Claim. Tenant’s trade
fixtures, other personal property and all other property in Tenant’s care,
custody or control, is located at the Property at Tenant’s sole risk. Landlord
is not liable for any damage to such property or for any theft, misappropriation
or loss of such property. Tenant is solely responsible for providing such
insurance as may be required to protect Tenant, its employees and invitees
against any injury, loss, or damage to persons or property occurring in the
Premises or at the Property, including, without limitation, any loss of business
or profits from any casualty or other occurrence at the Property.

 

10.1.6 No Limitation. Landlord’s establishment of minimum insurance requirements
is not a representation by Landlord that such limits are sufficient and does not
limit Tenant’s liability under this Lease in any manner.

 

10.2 Landlord’s Insurance Obligations. Landlord will (except for the optional
coverages and endorsements Section 10.2.1 describes) at all times during the
Term maintain the insurance this Section 10.2 describes. All premiums and other
costs and expenses Landlord incurs in connection with maintaining such insurance
are Operating Expenses.

 

10.2.1 Property Insurance. Property insurance on the Building in an amount not
less than the full insurable replacement cost of the Building insuring against
loss or damage by fire and such other risks as are covered by the current ISO
Special Form policy. Landlord, at its option, may obtain such additional
coverages or endorsements as Landlord deems appropriate or necessary, including,
without limitation, insurance covering foundation, grading, excavation and
debris removal costs; business income and rents insurance; earthquake insurance;
flood insurance; and other coverages. Landlord may maintain such insurance in
whole or in part under blanket policies. Such insurance will not cover or be
applicable to any property of Tenant within the Premises or otherwise located at
the Property.

 

10.2.2 Liability Insurance. Commercial general liability insurance against
claims for bodily injury, personal injury, and property damage occurring at the
Property in such amounts as Landlord deems necessary or appropriate. Such
liability insurance will protect only Landlord and, at Landlord’s option,
Landlord’s lender and some or all of the Landlord Parties, and does not replace
or supplement the liability insurance this Lease obligates Tenant to carry.

 

10.2.3 Landlord’s Waiver and Release of Claims and Subrogation. To the extent
not expressly prohibited by the Laws, Landlord, on behalf of Landlord and its
insurers, waives, releases and discharges Tenant from all claims or demands
whatsoever arising out of damage to or destruction of the Property, or loss of
use of the Property, occasioned by fire or other casualty, regardless whether
any such claim or demand results from the negligence or fault of Tenant, or
otherwise, and Landlord will look only to Landlord’s insurance coverage
(regardless whether Landlord maintains any such coverage) in the event of any
such claim. Notwithstanding the foregoing, Tenant will continue paying Rent
without any right of abatement, to the extent Landlord does not receive rent
interruption insurance proceeds, if Tenant’s negligence or fault causes or
contributes to any damage to the Premises or the Property. Landlord’s policy or
policies of property insurance will permit releases of liability and will
provide for waiver of subrogation as provided in this section.

 

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10.3 Tenant’s Indemnification of Landlord. In addition to Tenant’s other
indemnification obligations in this Lease but subject to Landlord’s agreements
in Section 10.2, Tenant, to the fullest extent allowable under the Laws, will
release, indemnify, protect, defend (with counsel reasonably acceptable to
Landlord) and hold harmless the Landlord Parties from and against all Claims
arising from (a) any breach or default by Tenant in the performance of any of
Tenant’s covenants or agreements in this Lease, (b) any act, omission,
negligence or misconduct of Tenant, (c) any accident, injury, occurrence or
damage in, about or to the Premises, and (d) to the extent caused in whole or in
part by Tenant, any accident, injury, occurrence or damage in, about or to the
Property.

 

10.4 Tenant’s Waiver. In addition to the other waivers of Tenant described in
this Lease and to the extent not expressly prohibited by the Laws, Landlord and
the other Landlord Parties are not liable for, and Tenant waives, any and all
Claims against Landlord and the other Landlord Parties for any damage to
Tenant’s trade fixtures, other personal property or business, and any loss of
use or business interruption, resulting directly or indirectly from (a) any
existing or future condition, defect, matter or thing in the Premises or on the
Property, (b) any equipment or appurtenance becoming out of repair, (c) any
occurrence, act or omission of any Landlord Party or any other person. This
section applies especially, but not exclusively, to damage caused by the
flooding of basements or other subsurface areas and by refrigerators, sprinkling
devices, air conditioning apparatus, water, snow, frost, steam, excessive heat
or cold, falling plaster, broken glass, sewage, gas, odors, noise or the
bursting or leaking of pipes or plumbing fixtures. The waiver this section
describes applies regardless whether any such damage results from an act of God
or an act or omission of any other person.

 

10.5 Tenant’s Failure to Insure. Notwithstanding any contrary language in this
Lease and any notice and cure rights this Lease provides Tenant, if Tenant fails
to provide Landlord with evidence of insurance as required under Section 10.1.4,
Landlord may assume that Tenant is not maintaining the insurance Section 10.1
requires Tenant to maintain and Landlord may, but is not obligated to, without
further demand upon Tenant or notice to Tenant and without giving Tenant any
cure right or waiving or releasing Tenant from any obligation contained in this
Lease, obtain such insurance for Landlord’s benefit. In such event, Tenant will
pay to Landlord, as Additional Rent, all costs and expenses Landlord incurs
obtaining such insurance. Landlord’s exercise of its rights under this section
does not relieve Tenant from any default under this Lease.

 

ARTICLE 11

DAMAGE OR DESTRUCTION

 

11.1 Tenantable Within 180 Days. Except as provided in Section 11.3, if fire or
other casualty renders the whole or any material part of the Premises
untenantable and Landlord determines (in Landlord’s reasonable discretion) that
it can make the Premises tenantable within 180 days after the date of the
casualty, then Landlord will notify Tenant that Landlord will repair and restore
the Building and the Premises to as near their condition prior to the casualty
as is reasonably possible within the 180 day period (subject to delays caused by
Tenant Delays or Force Majeure). Landlord will provide the notice within 30 days
after the date of the casualty. In such case, this Lease remains in full force
and effect, but, except as provided in Section 10.2.3, Basic Rent and

 

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Property Expenses for the period during which the Premises are untenantable
abate pro rata (based upon the rentable area of the untenantable portion of the
Premises as compared with the rentable area of the entire Premises).

 

11.2 Not Tenantable Within 180 Days. If fire or other casualty renders the whole
or any material part of the Premises untenantable and Landlord determines (in
Landlord’s reasonable discretion) that it cannot make the Premises tenantable
within 180 days after the date of the casualty, then Landlord will so notify
Tenant within 30 days after the date of the casualty and may, in such notice,
terminate this Lease effective on the date of Landlord’s notice. If Landlord
does not terminate this Lease as provided in this section, Tenant may terminate
this Lease by notifying Landlord within 30 days after the date of Landlord’s
notice, which termination will be effective 30 days after the date of Tenant’s
notice.

 

11.3 Insufficient Proceeds. Notwithstanding any contrary language in this
Article 11, if this Article 11 obligates Landlord to repair damage to the
Premises or building caused by fire or other casualty and Landlord does not
receive sufficient insurance proceeds (excluding any deficiency caused by the
amount of any policy deductible) to repair all of the damage, or if Landlord’s
lender does not allow Landlord to use sufficient proceeds to repair all of the
damage, then Landlord, at Landlord’s option, by notifying Tenant within 30 days
after the casualty, may terminate this Lease effective on the date of Landlord’s
notice.

 

11.4 Landlord’s Repair Obligations. If this Lease is not terminated under
Sections 11.2 through 11.4 following a fire or other casualty, then Landlord
will repair and restore the Premises and the Building to as near their condition
prior to the fire or other casualty as is reasonably possible with all
commercially reasonable diligence and speed (subject to delays caused by Tenant
Delay or Force Majeure) and, except as provided in Section 10.2.3, Basic Rent
and Property Expenses for the period during which the Premises are untenantable
will abate pro rata (based upon the rentable area of the untenantable portion of
the Premises as compared with the rentable area of the entire Premises). In no
event is Landlord obligated to repair or restore any Alterations or Tenant
Improvements that are not covered by Landlord’s insurance, any special equipment
or improvements installed by Tenant, any personal property, or any other
property of Tenant.

 

11.5 Rent Apportionment Upon Termination. If either Landlord or Tenant
terminates this Lease under this Article 11, Landlord will apportion Basic Rent
and Property Expenses on a per diem basis and Tenant will pay the Basic Rent and
Property Expenses to (a) the date of the fire or other casualty if the event
renders the Premises completely untenantable or (b) if the event does not render
the Premises completely untenantable, the effective date of such termination
(provided that if a portion of the Premises is rendered untenantable, but the
remaining portion is tenantable, then, except as provided in Section 10.2.3,
Tenant’s obligation to pay Basic Rent and Property Expenses abates pro rata
[based upon the rentable area of the untenantable portion of the Premises
divided by the rentable area of the entire Premises] from the date of the
casualty and Tenant will pay the unabated portion of the Rent to the date of
such termination).

 

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11.6 Exclusive Casualty Remedy. The provisions of this Article 11 are Tenant’s
sole and exclusive rights and remedies in the event of a casualty. To the extent
permitted by the Laws, Tenant waives the benefits of any Law that provides
Tenant any abatement or termination rights (by virtue of a casualty) not
specifically described in this Article 11.

 

ARTICLE 12

EMINENT DOMAIN

 

12.1 Termination of Lease. If a Condemning Authority desires to effect a Taking
of all or any material part of the Property, Landlord will notify Tenant and
Landlord and Tenant will reasonably determine whether the Taking will render the
Premises unsuitable for Tenant’s intended purposes. If Landlord and Tenant
conclude that the Taking will render the Premises unsuitable for Tenant’s
intended purposes, Landlord and Tenant will document such determination and this
Lease will terminate as of the date the Condemning Authority takes possession of
the portion of the Property taken. Tenant will pay Rent to the date of
termination. If a Condemning Authority takes all or any material part of the
Building or if a Taking reduces the value of the Property by 50% or more (as
reasonably determined by Landlord), then Landlord, at Landlord’s option, by
notifying Tenant prior to the date the Condemning Authority takes possession of
the portion of the Property taken, may terminate this Lease effective on the
date the Condemning Authority takes possession of the portion of the Property
taken.

 

12.2 Landlord’s Repair Obligations. If this Lease does not terminate with
respect to the entire Premises under Section 12.1 and the Taking includes a
portion of the Premises, this Lease automatically terminates as to the portion
of the Premises taken as of the date the Condemning Authority takes possession
of the portion taken and Landlord will, at its sole cost and expense, restore
the remaining portion of the Premises to a complete architectural unit with all
commercially reasonable diligence and speed and will reduce the Basic Rent for
the period after the date the Condemning Authority takes possession of the
portion of the Premises taken to a sum equal to the product of the Basic Rent
provided for in this Lease multiplied by a fraction, the numerator of which is
the rentable area of the Premises after the Taking and after Landlord restores
the Premises to a complete architectural unit, and the denominator of which is
the rentable area of the Premises prior to the Taking. Tenant’s obligation to
pay Basic Rent will abate on a proportionate basis with respect to that portion
of the Premises remaining after the Taking that Tenant is unable to use during
Landlord’s restoration for the period of time that Tenant is unable to use such
portion of the Premises.

 

12.3 Tenant’s Participation. Landlord is entitled to receive and keep all
damages, awards or payments resulting from or paid on account of a Taking.
Accordingly, Tenant waives and assigns to Landlord any interest of Tenant in any
such damages, awards or payments. Tenant may prove in any condemnation
proceedings and may receive any separate award for damages to or condemnation of
Tenant’s movable trade fixtures and equipment and for moving expenses; provided
however, that Tenant has no right to receive any award for its interest in this
Lease or for loss of leasehold.

 

12.4 Exclusive Taking Remedy. The provisions of this Article 12 are Tenant’s
sole and exclusive rights and remedies in the event of a Taking. To the extent
permitted by the Laws, Tenant waives the benefits of any Law

 

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that provides Tenant any abatement or termination rights or any right to receive
any payment or award (by virtue of a Taking) not specifically described in this
Article 12.

 

ARTICLE 13

TRANSFERS

 

13.1 Restriction on Transfers.

 

13.1.1 General Prohibition. Except as set forth in Sections 13.1.2 and 13.1.3,
Tenant will not cause or suffer a Transfer without obtaining Landlord’s prior
written consent. Landlord may grant or withhold consent in Landlord’s sole and
absolute discretion. Landlord may also, at Landlord’s option by notifying
Tenant, recapture any portion of the Premises that would be affected by such
Transfer. Tenant’s request for consent to a Transfer must describe in detail the
parties, terms and portion of the Premises affected. Landlord will notify Tenant
of Landlord’s election to consent, withhold consent and/or recapture within 30
days after receiving Tenant’s written request for consent to the Transfer. If
Landlord consents to the Transfer, Landlord may impose on Tenant or the
transferee such conditions as Landlord, in its sole discretion, deems
appropriate. Tenant will, in connection with requesting Landlord’s consent,
provide Landlord with a copy of any and all documents and information regarding
the proposed Transfer and the proposed transferee as Landlord reasonably
requests. No Transfer, including, without limitation, a Transfer under Section
13.1.2, releases Tenant from any liability or obligation under this Lease and
Tenant remains liable to Landlord after such a Transfer as a principal and not
as a surety. If Landlord consents to any Transfer, Tenant will pay to Landlord,
as Additional Rent, 50% of any amount Tenant receives on account of the Transfer
in excess of the amounts this Lease otherwise requires Tenant to pay. Any
attempted Transfer in violation of this Lease is null and void and constitutes a
breach of this Lease.

 

13.1.2 Transfers to Affiliates. Tenant, without Landlord’s consent (provided
that Tenant is not in default in the performance of its obligations under this
Lease), may cause a Transfer to an Affiliate if Tenant (a) notifies Landlord at
least 30 days prior to such Transfer; (b) delivers to Landlord, at the time of
Tenant’s notice, current financial statements of Tenant and the proposed
transferee that are reasonably acceptable to Landlord; and (c) the transferee
assumes and agrees in a writing reasonably acceptable to Landlord to perform
Tenant’s obligations under this Lease and to observe all terms and conditions of
this Lease. Landlord’s right described in Section 13.1.1 to share in any profit
Tenant receives from a Transfer permitted under this Section 13.1.2 and
Landlord’s recapture right under Section 13.1.1 does not apply to any Transfer
this Section 13.1.2 permits.

 

13.1.3 Tenant’s Right to Mortgage. Notwithstanding the restrictions in Section
13.1.1 above, Tenant shall have the right, from time to time, without Landlord’s
consent, to mortgage Tenant’s leasehold estate (but not Landlord’s interest in
the Property) to a Permitted Mortgagee (as defined below) if (and only if) such
Permitted Mortgagee executes and delivers to Landlord a written agreement
providing that (i) such Permitted Mortgagee shall have no lien against
Landlord’s fee simple title to the Demised Premises; (ii) such Permitted
Mortgagee’s lien is subject in all respects to the rights of Landlord under this
Lease, including its interest in the Building and the Tenant Improvements that
will become the property of Landlord upon the expiration or earlier termination
of this Lease; (iii) if a

 

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default should occur under the agreements between Tenant and such Permitted
Mortgagee, such Permitted Mortgagee will provide Landlord notice of its intent
to foreclose its lien and notice that is has foreclosed such lien; (iv) upon a
foreclosure or other acquisition of Tenant’s interest in this Lease, such
Permitted Mortgagee shall acquire Tenant’s interest in this Lease subject to all
of the obligations of Tenant (including all monetary obligations whether or not
arising after such foreclosure) and all of the rights of Landlord under this
Lease; and (v) any assignment or subletting of the Demised Premises by a
purchaser at foreclosure or other assignee of a Permitted Mortgagee shall be
subject to the terms of this Article 13. The term “Permitted Mortgagee” shall
mean a third party institutional lender that is granted a mortgage to secure
Tenant’s obligation to pay a commercial loan related to Tenant’s business
operations.

 

13.2 Costs. Tenant will pay to Landlord, as Additional Rent, all costs and
expenses Landlord incurs in connection with any Transfer, including, without
limitation, reasonable attorneys fees and costs, regardless whether Landlord
consents to the Transfer.

 

ARTICLE 14

DEFAULTS; REMEDIES

 

14.1 Events of Default. The occurrence of any of the following constitutes an
Event of Default by Tenant under this Lease:

 

14.1.1 Failure to Pay Rent. Tenant fails to pay Basic Rent, any monthly
installment of Property Expenses or any other Additional Rent amount as and when
due and such failure continues for five days after Landlord notifies Tenant.

 

14.1.2 Failure to Perform. Tenant breaches or fails to perform any of Tenant’s
nonmonetary obligations under this Lease and the breach or failure continues for
a period of 30 days after Landlord notifies Tenant of Tenant’s breach or
failure; provided that if Tenant cannot reasonably cure its breach or failure
within a 30 day period, Tenant’s breach or failure is not an Event of Default if
Tenant commences to cure its breach or failure within the 30 day period and
thereafter diligently pursues the cure and effects the cure within a period of
time that does not exceed 60 days after the expiration of the 30 day period.
Notwithstanding any contrary language contained in this Section 14.1.2, Tenant
is not entitled to any notice or cure period before an uncurable breach of this
Lease (or failure) becomes an Event of Default.

 

14.1.3 Misrepresentation. The existence of any material misrepresentation or
omission in any financial statements, correspondence or other information
provided to Landlord by or on behalf of Tenant in connection with (a) Tenant’s
negotiation or execution of this Lease; (b) Landlord’s evaluation of Tenant as a
prospective tenant at the Property; (c) any proposed or attempted Transfer; or
(d) any consent or approval Tenant requests under this Lease.

 

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14.1.4 Other Defaults. (a) Tenant makes a general assignment or general
arrangement for the benefit of creditors; (b) a petition for adjudication of
bankruptcy or for reorganization or rearrangement is filed by Tenant; (c) a
petition for adjudication of bankruptcy or for reorganization or rearrangement
is filed against Tenant and is not dismissed within 60 days; (d) a trustee or
receiver is appointed to take possession of substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease and possession is
not restored to Tenant within 30 days; or (e) substantially all of Tenant’s
assets, substantially all of Tenant’s assets located at the Premises or Tenant’s
interest in this Lease is subjected to attachment, execution or other judicial
seizure not discharged within 30 days. If a court of competent jurisdiction
determines that any act described in this section does not constitute an Event
of Default, and the court appoints a trustee to take possession of the Premises
(or if Tenant remains a debtor in possession of the Premises) and such trustee
or Tenant Transfers Tenant’s interest hereunder, then Landlord is entitled to
receive, as Additional Rent, the amount by which the Rent (or any other
consideration) paid in connection with the Transfer exceeds the Rent otherwise
payable by Tenant under this Lease.

 

14.1.5 Notice Requirements. The notices required by this Section 14.1 are
intended to satisfy any and all notice requirements imposed by the Laws and are
not in addition to any such requirements.

 

14.2 Remedies. Upon the occurrence of any Event of Default, Landlord, at any
time and from time to time, and without preventing Landlord from exercising any
other right or remedy, may exercise any one or more of the following remedies:

 

14.2.1 Termination of Tenant’s Possession; Re-entry and Relettinq Right.
Terminate Tenant’s right to possess the Premises by any lawful means with or
without terminating this Lease, in which event Tenant will immediately surrender
possession of the Premises to Landlord. Unless Landlord specifically states that
it is terminating this Lease, Landlord’s termination of Tenant’s right to
possess the Premises is not to be construed as an election by Landlord to
terminate this Lease or Tenant’s obligations and liabilities under this Lease.
In such event, this Lease continues in full force and effect (except for
Tenant’s right to possess the Premises) and Tenant continues to be obligated for
and must pay all Rent as and when due under this Lease. If Landlord terminates
Tenant’s right to possess the Premises, Landlord is not obligated to but may
re-enter the Premises and remove all persons and property from the Premises.
Landlord may store any property Landlord removes from the Premises in a public
warehouse or elsewhere at the cost and for the account of Tenant. Upon such
re-entry, Landlord is not obligated to but may relet all or any part of the
Premises to a third party or parties for Tenant’s account. Tenant is immediately
liable to Landlord for all Re-entry Costs and must pay Landlord the same within
five days after Landlord’s notice to Tenant. Landlord may relet the Premises for
a period shorter or longer than the remaining Term. If Landlord relets all or
any part of the Premises, Tenant will continue to pay Rent when due under this
Lease and Landlord will refund to Tenant the Net Rent Landlord actually receives
from the reletting up to a maximum amount equal to the Rent Tenant paid that
came due after Landlord’s reletting. If the Net Rent Landlord actually receives
from reletting exceeds such Rent, Landlord will apply the excess sum to future
Rent due under this Lease. Landlord may retain any surplus Net Rent remaining at
the expiration of the Term.

 

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14.2.2 Termination of Lease. Terminate this Lease effective on the date Landlord
specifies in its termination notice to Tenant. Upon termination, Tenant will
immediately surrender possession of the Premises to Landlord. If Landlord
terminates this Lease, Landlord may recover from Tenant and Tenant will pay to
Landlord on demand all damages Landlord incurs by reason of Tenant’s default,
including, without limitation, (a) all Rent due and payable under this Lease as
of the effective date of the termination; (b) any amount necessary to compensate
Landlord for any detriment proximately caused Landlord by Tenant’s failure to
perform its obligations under this Lease or which in the ordinary course would
likely result from Tenant’s failure to perform, including, but not limited to,
any Re-entry Costs, (c) an amount equal to the difference between the present
worth, as of the effective date of the termination, of the Basic Rent for the
balance of the Term remaining after the effective date of the termination
(assuming no termination) and the present worth, as of the effective date of the
termination, of a fair market Rent for the Premises for the same period (as
Landlord reasonably determines the fair market Rent) and (d) Property Expenses
to the extent Landlord is not otherwise reimbursed for such Property Expenses.
For purposes of this section, Landlord will compute present worth by utilizing a
discount rate of 8% per annum. Nothing in this section limits or prejudices
Landlord’s right to prove and obtain damages in an amount equal to the maximum
amount allowed by the Laws, regardless whether such damages are greater than the
amounts set forth in this section.

 

14.2.3 [Intentionally deleted].

 

14.2.4 Self Help. Perform the obligation on Tenant’s behalf without waiving
Landlord’s rights under this Lease, at law or in equity and without releasing
Tenant from any obligation under this Lease. Tenant will pay to Landlord, as
Additional Rent, all sums Landlord pays and obligations Landlord incurs on
Tenant’s behalf under this section.

 

14.2.5 Other Remedies. Any other right or remedy available to Landlord under
this Lease, at law or in equity.

 

14.3 Costs. Tenant will reimburse and compensate Landlord on demand and as
Additional Rent for any actual loss Landlord incurs in connection with,
resulting from or related to any breach or default of Tenant under this Lease,
regardless whether the breach or default constitutes an Event of Default, and
regardless whether suit is commenced or judgment is entered. Such loss includes
all reasonable legal fees, costs and expenses (including paralegal fees and
other professional fees and expenses) Landlord incurs investigating,
negotiating, settling or enforcing any of Landlord’s rights or remedies or
otherwise protecting Landlord’s interests under this Lease. Tenant will also
indemnify, defend (with counsel reasonably acceptable to Landlord), protect and
hold harmless the Landlord Parties from and against all Claims Landlord or any
of the other Landlord Parties incurs if Landlord or any of the other Landlord
Parties becomes or is made a party to any claim or action (a) instituted by
Tenant or by or against any person holding any interest in the Premises by,
under or through Tenant; (b) for foreclosure of any lien for labor or material
furnished to or for Tenant or such other person; or (c) otherwise arising out of
or resulting from any act or omission of Tenant or such other person. In
addition to the foregoing, Landlord is entitled to reimbursement of all of
Landlord’s fees, expenses and damages, including, but not limited to, reasonable
attorneys fees and paralegal and other professional

 

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fees and expenses, Landlord incurs in connection with protecting its interests
in any bankruptcy or insolvency proceeding involving Tenant, including, without
limitation, any proceeding under any chapter of the Bankruptcy Code; by
exercising and advocating rights under Section 365 of the Bankruptcy Code; by
proposing a plan of reorganization and objecting to competing plans; and by
filing motions for relief from stay. Such fees and expenses are payable on
demand, or, in any event, upon assumption or rejection of this Lease in
bankruptcy.

 

14.4 Waiver and Release by Tenant. Tenant waives and releases all Claims Tenant
may have resulting from Landlord’s re-entry and taking possession of the
Premises by any lawful means and removing and storing Tenant’s property as
permitted under this Lease, regardless whether this Lease is terminated, and, to
the fullest extent allowable under the Laws, Tenant will release, indemnify,
defend (with counsel reasonably acceptable to Landlord), protect and hold
harmless the Landlord Parties from and against any and all Claims occasioned
thereby. No such reentry is to be considered or construed as a forcible entry by
Landlord.

 

14.5 Landlord’s Default. If Landlord defaults in the performance of any of its
obligations under this Lease, Tenant will notify Landlord of the default and
Landlord will have 30 days after receiving such notice to cure the default. If
Landlord is not reasonably able to cure the default within a 30 day period,
Landlord will have an additional reasonable period of time to cure the default
as long as Landlord commences the cure within the 30 day period and thereafter
diligently pursues the cure. In no event is Landlord liable to Tenant or any
other person for consequential, special or punitive damages, including, without
limitation, lost profits.

 

14.6 No Waiver. Except as specifically set forth in this Lease, no failure by
Landlord or Tenant to insist upon the other party’s performance of any of the
terms of this Lease or to exercise any right or remedy upon a breach thereof,
constitutes a waiver of any such breach or of any breach or default by the other
party in its performance of its obligations under this Lease. No acceptance by
Landlord of full or partial Rent from Tenant or any third party during the
continuance of any breach or default by Tenant of Tenant’s performance of its
obligations under this Lease constitutes Landlord’s waiver of any such breach or
default. Except as specifically set forth in this Lease, none of the terms of
this Lease to be kept, observed or performed by a party to this Lease, and no
breach thereof, are waived, altered or modified except by a written instrument
executed by the other party. One or more waivers by a party to this Lease is not
to be construed as a waiver of a subsequent breach of the same covenant, term or
condition. No statement on a payment check from a party to this Lease or in a
letter accompanying a payment check is binding on the other party. The party
receiving the check, with or without notice to the other party, may negotiate
such check without being bound to the conditions of any such statement.

 

ARTICLE 15

CREDITORS; ESTOPPEL CERTIFICATES

 

15.1 Subordination. This Lease, all rights of Tenant in this Lease, and all
interest or estate of Tenant in the Property, is subject and subordinate to the
lien of any Mortgage. Tenant, on Landlord’s demand, will

 

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execute and deliver to Landlord or to any other person Landlord designates any
instruments, releases or other documents reasonably required to confirm the
self-effectuating subordination of this Lease as provided in this section to the
lien of any Mortgage. The subordination to any future Mortgage provided for in
this section is expressly conditioned upon the mortgagees agreement that as long
as Tenant is not in default in the payment of Rent or the performance and
observance of any covenant, condition, provision, term or agreement to be
performed and observed by Tenant under this Lease, beyond any applicable grace
or cure period this Lease provides Tenant, the holder of the Mortgage will not
disturb Tenant’s rights under this Lease. The lien of any existing or future
Mortgage will not cover Tenant’s moveable trade fixtures or other personal
property of Tenant located in or on the Premises.

 

15.2 Attornment. If any ground lessor, holder of any Mortgage at a foreclosure
sale or any other transferee acquires Landlord’s interest in this Lease, the
Premises or the Property, Tenant will attorn to the transferee of or successor
to Landlord’s interest in this Lease, the Premises or the Property (as the case
may be) and recognize such transferee or successor as landlord under this Lease.

 

Tenant waives the protection of any statute or rule of law that gives or
purports to give Tenant any right to terminate this Lease or surrender
possession of the Premises upon the transfer of Landlord’s interest.

 

15.3 Mortgagee Protection Clause. Tenant will give the holder of any Mortgage,
by registered mail, a copy of any notice of default Tenant serves on Landlord,
provided that Landlord or the holder of the Mortgage previously notified Tenant
(by way of notice of assignment of rents and leases or otherwise) of the address
of such holder. Tenant further agrees that if Landlord fails to cure such
default within the time provided for in this Lease, then Tenant will provide
written notice of such failure to such holder and such holder will have an
additional 15 days within which to cure the default. If the default cannot be
cured within the additional 15 day period, then the holder will have such
additional time as may be necessary to effect the cure if, within the 15 day
period, the holder has commenced and is diligently pursuing the cure (including
without limitation commencing foreclosure proceedings if necessary to effect the
cure).

 

15.4 Estoppel Certificates.

 

15.4.1 Contents. Upon Landlord’s written request, Tenant will execute,
acknowledge and deliver to Landlord a written statement in form satisfactory to
Landlord certifying: (a) that this Lease (and all guaranties, if any) is
unmodified and in full force and effect (or, if there have been any
modifications, that the Lease is in full force and effect, as modified, and
stating the modifications); (b) that this Lease has not been canceled or
terminated; (c) the last date of payment of Rent and the time period covered by
such payment; (d) whether there are then existing any breaches or defaults by
Landlord under this Lease known to Tenant, and, if so, specifying the same; (e)
specifying any existing claims or defenses in favor of Tenant against the
enforcement of this Lease (or of any guaranties); and (f) such other factual
statements as Landlord, any lender, prospective lender, investor or purchaser
may request. Tenant will deliver the statement to Landlord within 10 Business
Days after Landlord’s request. Landlord may give any such statement by Tenant to
any lender, prospective lender, investor or purchaser of all or any part of the
Property and any such party may conclusively rely upon such statement as true
and correct.

 

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15.4.2 Failure to Deliver. If Tenant does not timely deliver the statement
referenced in Section 15.4.1 to Landlord, (a) Landlord may execute and deliver
the statement to any third party on behalf of Tenant and (b) such failure
constitutes an Event of Default under this Lease. Further, if Tenant so fails to
timely deliver the statement, Landlord and any lender, prospective lender,
investor or purchaser may conclusively presume and rely, except as otherwise
represented by Landlord, (i) that the terms and provisions of this Lease have
not been changed; (ii) that this Lease has not been canceled or terminated;
(iii) that not more than one month’s Rent has been paid in advance; and (iv)
that Landlord is not in default in the performance of any of its obligations
under this Lease. In such event, Tenant is estopped from denying the truth of
such facts.

 

ARTICLE 16

TERMINATION OF LEASE

 

16.1 Surrender of Premises. Tenant will surrender the Premises to Landlord at
the expiration or earlier termination of this Lease in good order, condition and
repair, reasonable wear and tear, permitted Alterations and damage by casualty
or condemnation excepted, and will surrender all keys to Landlord or Property
Manager at the place then fixed for Tenant’s payment of Basic Rent or as
Landlord may otherwise direct. Tenant will also inform Landlord of all
combinations on locks, safes and vaults, if any, in the Premises or on the
Property. Tenant will at such time remove all of its property from the Premises
and, if Landlord so requests, all previously specified Alterations Tenant placed
on the Premises. Tenant will promptly repair any damage to the Premises caused
by such removal. If Tenant does not surrender the Premises in accordance with
this section, Tenant will release, indemnify, defend (with counsel reasonably
acceptable to Landlord) protect and hold harmless Landlord from and against any
Claim resulting from Tenant’s delay in so surrendering the Premises, including,
without limitation, any Claim made by any succeeding occupant founded on such
delay. All property of Tenant not removed on or before the last day of the Term
is deemed abandoned. Tenant appoints Landlord as Tenant’s agent to remove, at
Tenant’s sole cost and expense, all of Tenant’s property from the Premises upon
termination of this Lease and to cause its transportation and storage for
Tenant’s benefit, all at the sole cost and risk of Tenant, and Landlord will not
be liable for damage, theft, misappropriation or loss thereof or in any manner
in respect thereto.

 

16.2 Holding Over. If Tenant possesses the Premises after the Term expires or is
otherwise terminated without executing a new lease but with Landlord’s written
consent, Tenant is deemed to be occupying the Premises as a tenant from
month-to-month, subject to all provisions, conditions and obligations of this
Lease applicable to a month-to-month tenancy, except that (a) Basic Rent will
equal the greater of Basic Rent payable by Tenant in the last Lease Year of the
Term or Landlord’s then current basic rent for the Premises according to
Landlord’s rental rate schedule for prospective tenants, and (b) either Landlord
or Tenant may terminate the month-to-month tenancy at any time upon 30 days
prior written notice to the other party. If Tenant possesses the Premises after
the Term expires or is otherwise terminated without executing a new lease and
without Landlord’s written consent, Tenant is deemed to be occupying the
Premises without

 

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claim of right (but subject to all terms and conditions of this Lease) and, in
addition to Tenant’s liability for failing to surrender possession of the
Premises as provided in Section 16.1, Tenant will pay Landlord a charge for each
day of occupancy after expiration of the Term in an amount equal to 150% of
Tenant’s then-existing Rent (on a daily basis).

 

ARTICLE 17

ADDITIONAL PROVISIONS

 

17.1 Initial Improvements.

 

17.1.1 Building Improvements. Landlord will provide, at no cost to Tenant, the
Building Improvements in accordance with the Work Letter.

 

17.1.2 Tenant Improvements. Landlord will cause to be constructed, at Tenant’s
sole cost and expense, all Tenant Improvements in accordance with the Work
Letter.

 

17.2 Parking. There will be no monthly parking charge for parking at the
Property. Parking at the Property by Tenant is subject to the other provisions
of this Lease, including without limitation, the Building Rules. In no event
will Landlord be liable for any loss, damage or theft of, to or from any vehicle
at the Property.

 

ARTICLE 18

MISCELLANEOUS PROVISIONS

 

18.1 Notices. All Notices must be in writing and must be sent by personal
delivery, United States registered or certified mail (postage prepaid) or by an
independent overnight courier service, addressed to the addresses specified in
the Basic Terms or at such other place as either party may designate to the
other party by written notice given in accordance with this section. Notices
given by mail are deemed delivered within three Business Days after the party
sending the Notice deposits the Notice with the United States Post Office.
Notices delivered by courier are deemed delivered on the next Business Day after
the day the party delivering the Notice timely deposits the Notice with the
courier for overnight (next day) delivery.

 

18.2 Transfer of Landlord’s Interest. If Landlord Transfers any interest in the
Premises for any reason other than collateral security purposes, the transferor
is automatically relieved of all obligations on the part of Landlord accruing
under this Lease from and after the date of the Transfer, provided that the
transferor will deliver to the transferee any funds the transferor holds in
which Tenant has an interest (such as a security deposit). Landlord’s covenants
and obligations in this Lease bind each successive Landlord only during and with
respect to its respective period of ownership. However, notwithstanding any such
Transfer, the transferor remains entitled to the benefits of Tenant’s indemnity
and insurance obligations (and similar obligations) under this Lease with
respect to matters arising or accruing during the transferors period of
ownership.

 

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18.3 Successors. The covenants and agreements contained in this Lease bind and
inure to the benefit of Landlord, its successors and assigns, bind Tenant and
its successors and assigns and inure to the benefit of Tenant and its permitted
successors and assigns.

 

18.4 Captions and Interpretation. The captions of the articles and sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular includes the plural and the plural includes the singular.

 

18.5 Relationship of Parties. This Lease does not create the relationship of
principal and agent, or of partnership, joint venture, or of any association or
relationship between Landlord and Tenant other than that of landlord and tenant.

 

18.6 Entire Agreement; Amendment. The Basic Terms and all exhibits, addenda and
schedules attached to this Lease are incorporated into this Lease as though
fully set forth in this Lease and together with this Lease contain the entire
agreement between the parties with respect to the improvement and leasing of the
Premises. All preliminary and contemporaneous negotiations, including, without
limitation, any letters of intent or other proposals and any drafts and related
correspondence, are merged into and superseded by this Lease. No subsequent
alteration, amendment, change or addition to this Lease (other than to the
Building Rules) is binding on Landlord or Tenant unless it is in writing and
signed by the party to be charged with performance.

 

18.7 Severability. If any covenant, condition, provision, term or agreement of
this Lease is, to any extent, held invalid or unenforceable, the remaining
portion thereof and all other covenants, conditions, provisions, terms and
agreements of this Lease, will not be affected by such holding, and will remain
valid and in force to the fullest extent permitted by law.

 

18.8 Landlord’s Limited Liability. Tenant will look solely to Landlord’s
interest in the Property for recovering any judgment or collecting any
obligation from Landlord or any other Landlord Party. Tenant agrees that neither
Landlord nor any other Landlord Party will be personally liable for any judgment
or deficiency decree.

 

18.9 Survival. All of Tenant’s obligations under this Lease (together with
interest on payment obligations at the Maximum Rate) accruing prior to
expiration or other termination of this Lease survive the expiration or other
termination of this Lease. Further, all of Tenant’s release, indemnification,
defense and hold harmless obligations under this Lease survive the expiration or
other termination of this Lease, without limitation.

 

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18.10 Attorneys Fees. If either Landlord or Tenant commences any litigation or
judicial action to determine or enforce any of the provisions of this Lease, the
prevailing party in any such litigation or judicial action is entitled to
recover all of its costs and expenses (including, but not limited to, reasonable
attorneys fees, costs and expenditures) from the nonprevailing party.

 

18.11 Brokers. Landlord and Tenant each represents and warrants to the other
that it has not had any dealings with any realtors, brokers, finders or agents
in connection with this Lease (except as may be specifically set forth in the
Basic Terms) and agrees to release, indemnify, defend and hold the other
harmless from and against any Claim based on the failure or alleged failure to
pay any realtors, brokers, finders or agents (other than any brokers specified
in the Basic Terms) and from any cost, expense or liability for any
compensation, commission or changes claimed by any realtors, brokers, finders or
agents (other than any brokers specified in the Basic Terms) claiming by,
through or on behalf of it with respect to this Lease or the negotiation of this
Lease. Landlord will pay any brokers named in the Basic Terms in accordance with
the applicable listing agreement for the Property.

 

18.12 Governing Law. This Lease is governed by, and must be interpreted under,
the internal laws of the State. Any suit arising from or relating to this Lease
must be brought in the County; Landlord and Tenant waive the right to bring suit
elsewhere.

 

18.13 Time is of the Essence. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

 

18.14 Joint and Several Liability. All parties signing this Lease as Tenant of
this Lease are jointly and severally liable for performing all of Tenant’s
obligations under this Lease.

 

18.15 Tenant’s Waiver. Any claim Tenant may have against Landlord for default in
performance of any of Landlord’s obligations under this Lease is deemed waived
unless Tenant notifies Landlord of the default within 30 days after Tenant
obtained actual knowledge of the default.

 

18.16 Tenant’s Organization Documents; Authority. If Tenant is an entity,
Tenant, within 10 days after Landlord’s written request, will deliver to
Landlord (a) Certificate(s) of Good Standing from the state of formation of
Tenant and, if different, the State, confirming that Tenant is in good standing
under the laws governing formation and qualification to transact business in
such state(s); and (b) a copy of Tenant’s organizational documents and any
amendments or modifications thereof, certified as true and correct by an
appropriate official of Tenant. Tenant and each individual signing this Lease on
behalf of Tenant represents and warrants that they are duly authorized to sign
on behalf of and to bind Tenant and that this Lease is a duly authorized
obligation of Tenant.

 

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18.17 Provisions are Covenants and Conditions. All provisions of this Lease,
whether covenants or conditions, are deemed both covenants and conditions.

 

18.18 Force Majeure. If Landlord is delayed or prevented from performing any act
required in this Lease (excluding, however, the payment of money) by reason of
Tenant Delay or Force Majeure, Landlord’s performance of such act is excused for
the longer of the period of the delay or the period of delay caused by such
Tenant Delay or Force Majeure and the period of the performance of any such act
will be extended for a period equivalent to such longer period.

 

18.19 Management. Property Manager is authorized to manage the Property. Tenant
has selected and approved Property Manager. Promptly after the effective date of
this Lease, Landlord will enter into negotiations with Property Manager over the
terms of a management agreement but will not enter into the management agreement
unless the terms thereof are acceptable to Landlord and Tenant. The Management
Agreement shall expressly recognize the right of Landlord or Tenant to terminate
the Management Agreement if the Property Manager fails to properly perform its
obligations thereunder. The Property Manager shall act as Landlord’s agent for
managing and operating the Property. If Property Manager is terminated for any
reason, Tenant shall have the right to approve the replacement Property Manager
which approval shall not be unreasonably withheld or delayed.

 

18.20 Quiet Enjoyment. Landlord covenants that Tenant will quietly hold, occupy
and enjoy the Premises during the Term, subject to the terms and conditions of
this Lease, free from molestation or hindrance by Landlord or any person
claiming by, through or under Landlord, if Tenant pays all Rent as and when due
and keeps, observes and fully satisfies all other covenants, obligations and
agreements of Tenant under this Lease.

 

18.21 No Recording. Tenant will not record this Lease or a Memorandum of this
Lease without Landlord’s prior written consent, which consent Landlord may grant
or withhold in its sole and absolute discretion.

 

18.22 Nondisclosure of Lease Terms. The terms and conditions of this Lease
constitute proprietary information of Landlord that Tenant will keep
confidential. Tenant, without Landlord’s consent (which consent Landlord may
grant or withhold in its sole and absolute discretion), will not directly or
indirectly disclose the terms and conditions of this Lease to any other person
or entity other than Tenant’s employees and agents who have a legitimate need to
know such information (and who will also keep the same in confidence).

 

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18.23 Construction of Lease and Terms. The terms and provisions of this Lease
represent the results of negotiations between Landlord and Tenant, each of which
are sophisticated parties and each of which has been represented or been given
the opportunity to be represented by counsel of its own choosing, and neither of
which has acted under any duress or compulsion, whether legal, economic or
otherwise. Consequently, the terms and provisions of this Lease must be
interpreted and construed in accordance with their usual and customary meanings,
and Landlord and Tenant each waive the application of any rule of law that
ambiguous or conflicting terms or provisions contained in this Lease are to be
interpreted or construed against the party who prepared the executed Lease or
any earlier draft of the same. Landlord’s submission of this instrument to
Tenant for examination or signature by Tenant does not constitute a reservation
of or an option to lease and is not effective as a lease or otherwise until
Landlord and Tenant both execute and deliver this Lease. The parties agree that,
regardless of which party provided the initial form of this Lease, drafted or
modified one or more provisions of this Lease, or compiled, printed or copied
this Lease, this Lease is to be construed solely as an offer from Tenant to
lease the Premises, executed by Tenant and provided to Landlord for acceptance
on the terms set forth in this Lease, which acceptance and the existence of a
binding agreement between Tenant and Landlord may then be evidenced only by
Landlord’s execution of this Lease. In the event that any provision of this
Lease conflicts with any provision of the Work Letter, the provisions of the
Work Letter will control.

 

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Landlord and Tenant each caused this Lease to be executed and delivered by its
duly authorized representative to be effective as of the Effective Date.

 

LANDLORD: OPUS WEST LP,

a Delaware limited partnership

By:

  Opus West Corporation,
a Minnesota corporation,
its general partner     By:        

Name:

       

Title:

    TENANT: HORIZON HEALTH CORPORATION,

a Delaware corporation

By:

   

Name:

   

Title:

   

 

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EXHIBIT “A”

 

DEFINITIONS

 

Additional Rent means any charge, fee or expense (other than Basic Rent) payable
by Tenant under this Lease, however denoted.

 

Affiliate means any person or corporation that, directly or indirectly,
controls, is controlled by or is under common control with Tenant. For purposes
of this definition, control means possessing the power to direct or cause the
direction of the management and policies of the entity by the ownership of a
majority of the voting securities of the entity.

 

Alteration means any change, alteration, addition or improvement to the Premises
or Property.

 

Bankruptcy Code means the United States Bankruptcy Code as the same now exists
and as the same may be amended, including any and all rules and regulations
issued pursuant to or in connection with the United States Bankruptcy Code now
in force or in effect after the Effective Date.

 

Basic Rent means the basic rent amounts specified in the Basic Terms.

 

Basic Terms means the terms of this Lease identified as the Basic Terms before
Article 1 of the Lease.

 

BOMA Standards means the Standard Method for Measuring Floor Area in Office
Buildings approved June 7, 1996, by the American National Standards Institute,
Inc. and the Building Owners and Managers Association International (ANSI/BOMA
Z65.1-1996).

 

Building means that certain office building to be constructed on the Land in
accordance with the Work Letter attached to this Lease as EXHIBIT C.

 

Building Improvements means the base building improvements to the Premises.

 

Building Rules means those certain rules attached to this Lease as EXHIBIT E, as
Landlord may amend the same from time to time.

 

Business Days means any day other than Saturday, Sunday or a legal holiday in
the State.

 

Business Hours means Monday through Friday from 7:00 a.m. to 6:00 p.m. and on
Saturdays from 8:00 a.m. to 1:00 p.m., excluding holidays.

 

City means Lewisville, Texas.

 

Claims means all claims, actions, demands, liabilities, damages, costs,
penalties, forfeitures, losses or expenses, including, without limitation,
reasonable attorneys fees and the costs and expenses of enforcing any
indemnification, defense or hold harmless obligation under the Lease.

 

Commencement Date means the Delivery Conditions (as set forth in Section 7 of
the Work Letter) are satisfied.

 

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Commencement Date Memorandum means the form of memorandum attached to the Lease
as EXHIBIT D.

 

Condemning Authority means any person or entity with a statutory or other power
of eminent domain.

 

“Contractor” means Opus West Construction Corporation.

 

County means Denton County, Texas.

 

Delivery Date means the target date for Landlord’s delivery of the Premises to
Tenant, which is the delivery date specified in the Basic Terms.

 

Effective Date means the date set forth on the first page of this Lease.

 

Event of Default means the occurrence of any of the events specified in Section
14.1 of the Lease.

 

Force Majeure means acts of God; strikes; lockouts; labor troubles; inability to
procure materials; governmental laws or regulations; casualty, orders or
directives of any legislative, administrative, or judicial body or any
governmental department; inability to obtain any governmental licenses,
permissions or authorities (despite commercially reasonable pursuit of such
licenses, permissions or authorities); acts of war, terrorism and/or
bioterrorism; and other similar or dissimilar causes beyond Landlord’s
reasonable control.

 

Hazardous Materials means any of the following, in any amount: (a) any petroleum
or petroleum product, asbestos in any form, urea formaldehyde and
polychlorinated biphenyls; (b) any radioactive substance; (c) any toxic,
infectious, reactive, corrosive, ignitable or flammable chemical or chemical
compound; and (d) any chemicals, materials or substances, whether solid, liquid
or gas, defined as or included in the definitions of hazardous substances,
hazardous wastes, hazardous materials, extremely hazardous wastes, restricted
hazardous wastes, toxic substances, toxic pollutants, solid waste, or words of
similar import in any federal, state or local statute, law, ordinance or
regulation now existing or existing on or after the Effective Date as the same
may be interpreted by government offices and agencies.

 

Hazardous Materials Laws means any federal, state or local statutes, laws,
ordinances or regulations now existing or existing after the Effective Date that
control, classify, regulate, list or define Hazardous Materials.

 

Improvement Allowance means the amount (per rentable square foot of the
Premises) specified in the Basic Terms for the cost of designing and installing
the Tenant Improvements.

 

Improvements means, collectively, the Building Improvements and the Tenant
Improvements.

 

Land means that certain parcel of land legally described on the attached EXHIBIT
B.

 

Landlord means only the owner or owners of the Property at the time in question.

 

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Landlord Parties means Landlord and Property Manager and their respective
officers, directors, partners, shareholders, members and employees.

 

Landlord’s Management Fee means a management fee payable by Tenant to Landlord
equal to three percent (3%) of Operating Expenses; provided that no Landlord’s
Management Fee shall be charged on the management fee payable to the Property
Manager.

 

Laws means any law, regulation, rule, order, statute or ordinance of any
governmental or private entity in effect on or after the Effective Date and
applicable to the Property or the use or occupancy of the Property, including,
without limitation, Hazardous Materials Laws, Building Rules and Permitted
Encumbrances.

 

Lease means this Office Lease Agreement, as the same may be amended or modified
after the Effective Date.

 

Lease Year means each consecutive 12 month period during the Term, commencing on
the Commencement Date, except that if the Commencement Date is not the first day
of a calendar month, then the first Lease Year is a period beginning on the
Commencement Date and ending on the last day of the calendar month in which the
Commencement Date occurs plus the following 12 consecutive calendar months.

 

Management Agreement means a management agreement between Landlord and Property
Manager, the terms of which have been approved by Tenant.

 

Maximum Rate means interest at a rate equal to the lesser of (a) 18% per annum
or (b) the maximum interest rate permitted by law.

 

Mortgage means any mortgage, deed of trust, security interest or other security
document of like nature that at any time may encumber all or any part of the
Property and any replacements, renewals, amendments, modifications, extensions
or refinancings thereof, and each advance (including future advances) made under
any such instrument.

 

Net Rent means all rental Landlord actually receives from any reletting of all
or any part of the Premises, less any indebtedness from Tenant to Landlord other
than Rent (which indebtedness is paid first to Landlord) and less the Re-entry
Costs (which costs are paid second to Landlord).

 

Notices means all notices, demands or requests that may be or are required to be
given, demanded or requested by either party to the other as provided in the
Lease.

 

Operating Expenses means all expenses Landlord incurs in connection with
maintaining, repairing and operating the Property, as determined by Landlord’s
accountant in accordance with generally accepted accounting principles
consistently followed, including, but not limited to, the following: insurance
premiums and deductible amounts under any insurance policy (to the extent paid
by Landlord); maintenance and repair costs; steam, electricity, water, sewer,
gas and other utility charges to the extent not separately metered; fuel;
lighting; window washing; janitorial services; trash and rubbish removal;
property association fees and dues and all payments under any Permitted
Encumbrance (except Mortgages) affecting the Property; management fees and other
expenses charged by Property Manager under the Management Agreement; Landlord’s
Management Fee; wages payable to persons at the level of manager

 

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and below whose duties are connected with maintaining and operating the Property
(but only for the portion of such persons time allocable to the Property),
together with all payroll taxes, unemployment insurance, vacation allowances and
disability, pension, profit sharing, hospitalization, retirement and other
so-called fringe benefits paid in connection with such persons (allocated in a
manner consistent with such persons wages); amounts paid to contractors or
subcontractors for work or services performed in connection with maintaining and
operating the Property; all costs of uniforms, supplies and materials used in
connection with maintaining, repairing and operating the Property; any expense
imposed upon Landlord, its contractors or subcontractors pursuant to law or
pursuant to any collective bargaining agreement covering such employees; all
services, supplies, repairs, replacements or other expenses for maintaining and
operating the Property; costs of complying with Laws; and such other expenses as
may ordinarily be incurred in connection with maintaining and operating an
office complex similar to the Property. The term Operating Expenses also
includes expenses Landlord incurs in connection with public sidewalks adjacent
to the Property, any pedestrian walkway system (either above or below ground)
and any other public facility to which Landlord or the Property is from time to
time subject in connection with operating the Property. The term “Operating
Expenses” does not include the cost of any capital improvement to the Property
other than replacements required for normal maintenance and repair; the cost of
repairs, restoration or other work occasioned by fire, windstorm or other
insured casualty other than the amount of any deductible under any insurance
policy (regardless whether the deductible is payable by Landlord in connection
with a capital expenditure); expenses Landlord incurs in connection with leasing
or procuring tenants or renovating space for new or existing tenants; legal
expenses incident to Landlord’s enforcement of any lease; interest or principal
payments on any mortgage or other indebtedness of Landlord; or allowance or
expense for depreciation or amortization. Notwithstanding the foregoing, if
Landlord installs equipment in, or makes improvements or alterations to, the
Property to reduce energy, maintenance or other costs, or to comply with any
Laws, Landlord may include in Operating Expenses reasonable charges for
reasonable charges for depreciation of the investment so as to amortize the
investment over the reasonable life of the equipment, improvement or alteration
on a straight line basis.

 

Permitted Encumbrances means all Mortgages, liens, easements, declarations,
encumbrances, covenants, conditions, reservations, restrictions and other
matters now or after the Effective Date affecting title to the Property.

 

Premises means that all of the floor area of the Building.

 

Property means, collectively, the Land, Building and all other improvements on
the Land.

 

Property Expenses means the total amount of Property Taxes and Operating
Expenses due and payable with respect to the Property during any calendar year
of the Term.

 

Property Manager means the Property Manager specified in the Basic Terms or any
other agent Landlord may appoint from time to time to manage the Property,
subject to the terms of this Lease.

 

Property Taxes means any general real property tax, improvement tax, assessment,
special assessment, reassessment, commercial rental tax, tax, in lieu tax, levy,
charge, penalty or similar imposition imposed by any authority having the direct
or indirect power to tax, including but not limited to, (a) any city, county,
state or federal entity, (b) any school, agricultural, lighting,

 

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drainage or other improvement or special assessment district, (c) any
governmental agency, or (d) any private entity having the authority to assess
the Property under any of the Permitted Encumbrances. The term Property Taxes
includes all charges or burdens of every kind and nature Landlord incurs in
connection with using, occupying, owning, operating, leasing or possessing the
Property, without particularizing by any known name and whether any of the
foregoing are general, special, ordinary, extraordinary, foreseen or unforeseen;
any tax or charge for fire protection, street lighting, streets, sidewalks, road
maintenance, refuse, sewer, water or other services provided to the Property.
The term Property Taxes does not include Landlord’s state or federal income,
franchise, estate or inheritance taxes or any taxes (such as, by way of example
but not limitation, impact fees and permitting fees) that are required to be
paid by Landlord pursuant to the Work Letter. If Landlord is entitled to pay any
of the above listed assessments or charges in installments over a period of two
or more calendar years, then only such installments of the assessments or
charges (including interest thereon) as are actually due in a calendar year will
be included within the term Property Taxes for such calendar year. Property
Taxes for any calendar year shall be net of any tax abatements received by
Landlord for such calendar year.

 

Punch List means a list of Tenant Improvements items that were either (a) not
properly completed by Contractor or (b) in need of repair, which list is
prepared in accordance with the Work Letter.

 

Re-entry Costs means all costs and expenses Landlord incurs re-entering or
reletting all or any part of the Premises, including, without limitation, all
costs and expenses Landlord incurs (a) maintaining or preserving the Premises
after an Event of Default; (b) recovering possession of the Premises, removing
persons and property from the Premises (including, without limitation, court
costs and reasonable attorneys fees) and storing such property; (c) reletting,
renovating or altering the Premises; and (d) real estate commissions,
advertising expenses and similar expenses paid or payable in connection with
reletting all or any part of the Premises. Re-entry Costs also includes the
value of free rent and other concessions Landlord gives in connection with
re-entering or reletting all or any part of the Premises.

 

Rent means, collectively, Basic Rent and Additional Rent.

 

Rent Commencement Date means the earlier of (a) the Commencement Date; or (b)
the date Tenant commences business operations in the Premises.

 

State means the State of Texas.

 

Structural Alterations means any Alterations involving the structural,
mechanical, electrical, plumbing, fire/life safety or heating, ventilating and
air conditioning systems of the Building.

 

Substantial Completion means the date upon which the Delivery Conditions
referred to in Sections 7.1., 7.3 and 7.4 of the Work Letter have been
satisfied.

 

Taking means the exercise by a Condemning Authority of its power of eminent
domain on all or any part of the Property, either by accepting a deed in lieu of
condemnation or by any other manner.

 

Single Tenant Office Lease Agreement           Horizon Health Corporation    A-5
    

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Tenant means the tenant identified in the Lease and such tenants permitted
successors and assigns. In any provision relating to the conduct, acts or
omissions of Tenant, the term Tenant includes the tenant identified in the Lease
and such tenants agents, employees, contractors, invitees, successors, assigns
and others using the Premises or on the Property with Tenant’s expressed or
implied permission.

 

Tenant Delays means any delays caused or contributed to by Tenant, including,
without limitation, with respect to Tenant Improvements, Tenant’s failure to
submit a space plan for Tenant Improvements, Tenant’s failure to timely approve
the Final Plans and any delays caused by any revisions Tenant proposes to the
Final Plans.

 

Tenant Improvements means all initial improvements to the Premises (other than
Building Improvements) to be installed by Landlord and paid for by Tenant,
subject to the Improvement Allowance, as more particularly set forth in the Work
Letter.

 

Tenant Improvements Costs means all of Landlord’s direct and indirect costs of
causing the Tenant Improvements to be designed and installed, plus five percent
(5%) of the sum of all such direct and indirect costs for the general
contractor’s overhead and profit, including without limitation, construction
costs and all costs the general contractor incurs in connection with obtaining
permits for the Tenant Improvements.

 

Term means the initial term of this Lease specified in the Basic Terms and, if
applicable, any renewal term then in effect.

 

Transfer means an assignment, mortgage, pledge, transfer, sublease or other
encumbrance or conveyance (voluntarily, by operation of law or otherwise) of
this Lease or the Premises or any interest in this Lease or the Premises. The
term Transfer also includes any assignment, mortgage, pledge, transfer or other
encumbering or disposal (voluntarily, by operation of law or otherwise) of any
ownership interest in Tenant that results or could result in a change of control
of Tenant.

 

Warranty Terms means, collectively, the punch list and construction warranty
provisions of Section 9 of the Work Letter.

 

Single Tenant Office Lease Agreement           Horizon Health Corporation    A-6