Exhibit 10.4
 
GROUND LEASE AGREEMENT
 
between
 
FLOYD HEALTHCARE MANAGEMENT, INC., d/b/a FLOYD MEDICAL CENTER,
as Landlord
 
and
 
ROME LTH PARTNERS, LP,
as Tenant
 
dated December 18, 2009

 

--------------------------------------------------------------------------------

 

GROUND LEASE AGREEMENT
 
THIS GROUND LEASE AGREEMENT (this “Lease”) is made and entered into effective as
of the 18th day of December, 2009 (the “Effective Date”), by and between FLOYD
HEALTHCARE MANAGEMENT, Inc., d/b/a Floyd Medical Center, a Georgia non-profit
corporation, (“Landlord”), and ROME LTH PARTNERS, LP, a Texas limited
partnership (“Tenant”).
 
WITNESSETH:
 
WHEREAS, pursuant to that certain Lease, Transfer and Reversion Agreement
between The Hospital Authority of Floyd County and Floyd Healthcare Management,
Inc., dated December 17, 1996, as such document subsequently has been amended,
(the “Medical Center Master Lease”) Landlord is the holder of a long-term
leasehold interest in a tract of real property located in Rome, Floyd County,
Georgia, which is more particularly described on Exhibit A-1 attached hereto and
made a part hereof (the “Medical Center Land”).  The Hospital Authority of Floyd
County, Georgia, (the “Hospital Authority”) joins this Lease for those limited
purposes set forth in the Joinder attached to this Lease;
 
WHEREAS, Landlord currently operates a hospital known as the Floyd Medical
Center (the “Medical Center”) on the Medical Center Land; and
 
WHEREAS, Tenant desires to lease from Landlord a portion of the Medical Center
Land more particularly described on Exhibit A-2, attached hereto and made a part
hereof (the “LTACH Land”), together with the Leased Property defined in Section
2.1 of this Lease, and Landlord desires Tenant to construct a long term acute
care hospital building (the “LTACH”) on the LTACH Land upon the terms and
conditions set forth herein.
 
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Landlord and Tenant
agree as follows:
 
ARTICLE I
 
DEFINED TERMS
 
Section 1.1.    Defined Terms.  In addition to other terms defined in this
Lease, for all purposes of this Lease:
 
(a)           “Additional Rent” means any and all amounts other than Base Rent
payable by Tenant to Landlord or to any other Person as required under this
Lease including, without limitation, the Impositions.
 
(b)           “Affiliate” means, as to the entity in question, any person or
entity that controls, is controlled by, or is under common control with, the
entity in question; and the term “control” means possession of the power to
direct or cause the direction of the management and policies of an entity
whether through ownership of voting securities, by contract or otherwise.

 

--------------------------------------------------------------------------------

 
 
(c)           “Base Rent” is defined in Section 3.1.
 
(d)           “Building Plans” shall mean the plans and specifications listed in
Exhibit D attached hereto and made a part thereof, as the same may be modified
or supplemented in accordance with the terms of this Lease.
 
(e)           “Cash/Credit Consideration” is defined in Section 16.4.
 
(f)            The “Commencement Date” is defined as the earlier of (i) thirty
(30) days after the Required Completion Date or (ii) thirty (30) days after a
certificate of occupancy is issued for the Leased Property by the governmental
entity having jurisdiction over such matters.
 
(g)           “Competitor” is defined in Section 10.1(b).
 
(h)           “Condemning Authority” shall mean an authority having the power of
eminent domain.
 
(i)           “Construction Loan” shall mean the construction loan obtained by
Tenant in connection with the construction of the LTACH Improvements.
 
(j)           “County” means Floyd County, Georgia.
 
(k)           “Debtor Relief Laws” means the Bankruptcy Code of the United
States, as amended, and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally.
 
(l)           “Default Rate” shall mean an annual rate of interest equal to two
percent (2%) above the annual rate of interest set by SunTrust Bank (or any
successor thereto) as its “Prime Rate” from time to time.
 
(m)           “Event of Default” is defined in Section 13.1(a).
 
(n)           “Floyd Healthcare Management Sublease” shall mean the sublease
entered into between Tenant and Floyd Healthcare Management, Inc.
 
(o)           “Floyd Healthcare Subtenant” is defined as Floyd Healthcare
Management, Inc., and its successors and permitted assigns under the Floyd
Healthcare Management Sublease and this Lease.
 
(p)           “Foreclosure” shall mean any procedure recognized under Georgia
law to foreclose the lien granted under any Mortgage.
 
(q)           “General Contract” shall mean the contract between Tenant and the
General Contractor for the construction of the LTACH Improvements.

 
2

--------------------------------------------------------------------------------

 

(r)           “General Contractor” shall mean Brasfield & Gorrie.  Should Tenant
be unable to enter into a construction contract with Brasfield & Gorrie despite
reasonable efforts or should Tenant desire to replace the General Contractor
pursuant to the terms of its construction contract, then Tenant may seek to
engage other construction contractors; provided, however, that Tenant shall
consult with Landlord to select alternate contractors, and that any contractor
to be selected by Tenant shall have at least ten (10) years experience
constructing buildings at least comparable in size and complexity (but not
necessarily use) to the LTACH Improvements.
 
(s)           “Guarantor” means The Cirrus Group, LLC, a Texas limited liability
company.
 
(t)           “Hazardous Materials” is defined in Section 15.1(a).
 
(u)           “Hazardous Substances” is defined in Section 15.1(a).
 
(v)           “Impositions” is defined in Section 6.1.
 
(w)           “Institutional Lender” means an insurance company, bank, credit
union, trust company, pension, profit or retirement fund or other financial
institution that are in the business of making commercial real estate loans.
 
(x)           “Landlord Event of Default” is defined in Section 13.2(a).
 
(y)           “Landlord RFR” is defined in Section 16.1.
 
(z)           “Laws” means any constitution, statute, code, ordinance,
regulation, judicial or administrative decision or other rule of law, whether
federal, state, or local.
 
(aa)           “Lease Year” means with respect to the first “Lease Year,” the
period commencing on the first day of the month following the Effective Date (if
the Effective Date is other than the first day of the month) and ending twelve
(12) months thereafter on the day before the anniversary of the first day of the
month following the Effective Date (if the Effective Date is other than the
first day of the month); and, with respect to each subsequent “Lease Year,” the
twelve (12) month period commencing on the next day following the end of the
previous Lease Year.
 
(bb)           “Leased Property” is defined in Section 2.1 to mean the LTACH
Land, together with all rights, members, and appurtenances in any manner
appertaining or belonging.
 
(cc)           “Leasehold Mortgage” means a Mortgage granted by Tenant to a
Leasehold Mortgagee, as defined below.
 
(dd)           “Leasehold Mortgagee” means the person or entity holding a
Leasehold Mortgage on the Tenant’s leasehold interest, provided that, at the
time of issuance of the Leasehold Mortgage, the Leasehold Mortgagee shall: (i)
not be an Affiliate of Tenant or of an Affiliate of an Affiliate of Tenant, (ii)
not be a Competitor, (iii) be an Institutional Lender, and (iv) as of the date
of issuance of the Leasehold Mortgage be actively engaged in commercial real
estate financing and have total assets, excluding its interest in the Leasehold
Mortgage, in excess of $1,000,000,000.00.  Any transferee of a Leasehold
Mortgage from the initial holder of such Leasehold Mortgagee (such initial
holder being a Leasehold Mortgagee) that is not a Competitor shall also
constitute a Leasehold Mortgagee (whether or not such transferee would have
originally qualified as a Leasehold Mortgagee).

 
3

--------------------------------------------------------------------------------

 
 
(ee)           “Legal Requirement” or “Legal Requirements” means, as the case
may be, any one or more of all present and future Laws, codes, ordinances,
orders, judgments, decrees, injunctions, rules, regulations and requirements,
even if unforeseen or extraordinary, of every duly constituted governmental
authority or agency (but excluding those which by their terms are not applicable
to and do not impose any obligation on Tenant, Landlord or the Leased Property)
and all covenants, restrictions and conditions as set forth on Exhibit B, which
may be applicable to Tenant, Landlord (with respect to the Leased Property) or
to all or any part of or interest in Leased Property, or to the use, manner of
use, occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of the Leased Property, even if compliance therewith
(i) necessitates structural changes or improvements (including changes required
to comply with the Americans with Disabilities Act) or results in interference
with the use or enjoyment of the Leased Property or (ii) requires Tenant to
carry insurance other than as required by the provisions of this Lease.
 
(ff)           “LTACH Exclusive Parking Rights” shall mean those certain rights
of Tenant to demand and have the exclusive use of certain parking spaces as set
forth in the REA.
 
(gg)           “LTACH Improvements” means all of the buildings, structures,
fixtures, other improvements and completed Subtenant improvements as set forth
in the Building Plans constructed or placed upon the LTACH Land after the
Effective Date and during the Term together with the Tenant Improvements.  The
LTACH Improvements shall include, without limitation, an approximately fifty-two
thousand nine hundred forty-four (52,944) square foot building for the long term
acute care hospital building containing approximately forty-five (45) private
rooms (including an intensive care unit specifically to serve the long term
acute care hospital).
 
(hh)           “Mortgage” means a mortgage, deed of trust, deed to secure debt,
assignment of lease, security agreement or other method of financing or
refinancing.
 
(ii)            “Mortgagee” means the holder or holders from time to time of a
promissory note or notes executed by Tenant evidencing a loan payable to the
order of a Person and secured by a Mortgage upon the leasehold interest of
Tenant created hereby.
 
(jj)            “Offer Property” is defined in Section 16.2(a).
 
(kk)           “Permitted Encumbrances” means Impositions, Legal Requirements,
the Medical Center Master Lease, the REA, and those covenants, restrictions,
reservations, conditions, encroachments, easements, encumbrances and other
matters of title that affect the Leased Property as of the date of this Lease as
set forth on Exhibit B or arising during the Term of this Lease in accordance
with the provisions of this Lease.
 
(ll)           “Person” means any person, corporation, limited liability
company, partnership (general or limited), joint venture, association, trust,
governmental entity or other business entity or organization.

 
4

--------------------------------------------------------------------------------

 
 
(mm)       “Physicians” is defined in Section 5.2(a).
 
(nn)         “Prime Rate” is defined as the rate announced from time to time by
SunTrust Bank (or any successor thereto) as its prime rate.
 
(oo)         “Principal Subtenant” is defined as The Specialty Hospital, LLC, a
Georgia limited liability company.
 
(pp)         “Principal Subtenant Sublease” shall mean the sublease between
Tenant, as landlord, and the Principal Subtenant, as tenant.
 
(qq)         “Qualified Operator” is defined in Section 10.1(b).
 
(rr)           The “REA” is defined as the Declaration of Covenants,
Restrictions and Easements executed by Landlord, Tenant and the Hospital
Authority and delivered as of even date herewith and recorded in the real estate
records of the Office of the Clerk of the Superior Court of Floyd County,
Georgia.  A copy of the fully executed REA is attached to this Lease as Exhibit
E.
 
(ss)         “Realization Proceeding” is defined as any foreclosure or other
proceeding or other transaction to enable the holder of a Leasehold Mortgage to
realize the benefit of the collateral encumbered by such Leasehold Mortgage.
 
(tt)          “Rent” means Base Rent and Additional Rent.
 
(uu)        “Required Completion Date” is defined in Section 4.3(d).
 
(vv)        “RFR Transaction” is defined in Section 16.2(a).
 
(ww)      “ROFR Notice” is defined in Section 16.2(a).
 
(xx)        “Site Plan” means the site plan dated December 19, 2008, and revised
February 19, 2009, depicting the LTACH Improvements and prepared by Tenant, a
copy of which is attached hereto as Exhibit C and made a part hereof.
 
(yy)        “Subtenants” shall mean any and all subtenants of Tenant with
respect to any portion of the LTACH Improvements, including, but not limited to,
the Principal Subtenant and Floyd Healthcare Subtenant, and each a “Subtenant.”
 
(zz)         “Tenant’s Architect” shall mean Earl Swennson Associates, Inc., and
other third party consultants, subject to Landlord’s approval in its sole and
absolute discretion.
 
(aaa)      “Tenant Improvements” is defined in Section 4.3(a).
 
(bbb)     “Term” shall mean the term of this Lease provided in Section 2.2, as
such term may be extended from time to time.

 
5

--------------------------------------------------------------------------------

 
 
ARTICLE II
 
GRANT AND TERM OF LEASE
 
Section 2.1.    Leasing Clause.  Subject to the terms and conditions contained
in this Lease and in consideration for the rents herein reserved and the
covenants, agreements, and stipulations herein made, Landlord hereby does lease
the LTACH Land, together with all rights, members and appurtenances in any
manner appertaining or belonging thereto (collectively, the “Leased Property”)
to Tenant and Tenant does hereby rent and take the Leased Property from
Landlord, upon and subject to the covenants and conditions hereinafter set
forth.
 
Section 2.2.    Term of Lease.  TO HAVE AND TO HOLD the Leased Property for a
term commencing on the Effective Date and ending on March 31, 2049 (the
“Expiration Date”), unless earlier terminated as provided herein.
 
Section 2.3.    Extension of Term of Medical Center Master Lease.  Should the
term of the Medical Center Master Lease, which expires on March 31, 2049, be
extended by amendment thereto, then subject to the terms of Section 2.4 below,
the Term and the Expiration Date hereunder shall also be extended automatically
for so long as the Medical Center Master Lease is extended by the parties
thereto until the Term reaches eighty (80) years, at which time this Lease shall
expire.
 
Section 2.4.    End of Term.
 
(a)           In the event the Medical Center Master Lease terminates on its
expiration date of March 31, 2049, or any other date thereafter prior to the
expiration of eighty (80) years after the Effective Date, then Tenant shall have
the right, provided that no Event of Default shall exist under this Lease at
such time, to require that Landlord purchase the LTACH Improvements for a
purchase price equal to the value determined in accordance with Section
2.4(b).  The closing shall occur at such location in Floyd County, Georgia, as
may be designated by Tenant at a time during regular business hours on a
business day to be designated by Tenant at least one hundred twenty (120) days
after the purchase price has been determined under Section 2.4(b); provided
that, if, by the date provided for closing, the Term of the Medical Center
Master Lease has been extended and the Term of this Lease extended pursuant to
Section 2.3, then the prior exercise by Tenant of its right to require Landlord
to purchase the LTACH Improvements under this Section 2.4(a) shall be of no
force or effect (it being understood, however, that such right may be exercised
again upon the subsequent expiration of the Medical Center Master Lease prior to
the date on which the Term of this Lease reaches eighty (80) years).  At the
closing, Landlord and Tenant shall execute and deliver such documents as may be
reasonably required in order to transfer and convey the LTACH Improvements to
Landlord, and Landlord shall pay to Tenant the purchase price for such
Improvements in immediately available funds.

 
6

--------------------------------------------------------------------------------

 

(b)           In the event Tenant has the right to require Landlord to purchase
the LTACH Improvements and elects to exercise such right, the purchase price
shall be determined in accordance with the provisions of this Section
2.4(b).  In the event Tenant has the right to require that Landlord purchase the
LTACH Improvements pursuant to Section 2.4(a), Tenant shall exercise such right
by delivering written notice of exercise to Landlord on any date between ninety
(90) days prior to the expiration of this Lease and ninety (90) days following
the expiration of this Lease.  For a period of thirty (30) days following the
delivery of such notice to Landlord, Landlord and Tenant shall endeavor in good
faith to agree upon a value of the LTACH Improvements.  If Landlord and Tenant
are able to agree upon such value within such thirty (30) day period, then such
agreed upon value shall be the purchase price determined under this Section
2.4(b).  In the event Landlord and Tenant do not agree upon the value of the
LTACH Improvements for any reason within such thirty (30) day period, then
Tenant shall obtain an appraisal of the LTACH Improvements from an MAI appraiser
selected by Tenant, who is familiar with inpatient and acute care hospital
properties in the Southeastern United States.  Upon receipt of such appraisal,
Tenant shall provide a copy of the same to Landlord.  If Landlord is in
agreement with the value of the LTACH Improvements as determined in Tenant’s
appraisal, then such appraised value shall be the purchase price of the LTACH
Improvements under Section 2.4(a).  In the event Landlord does not agree with
the value of the LTACH Improvements as determined in Tenant’s appraisal,
Landlord shall have a period of thirty (30) days following receipt of Tenant’s
appraisal in which to obtain a second appraisal from an MAI appraiser selected
by Landlord, who is familiar with inpatient and acute care hospital properties
in the Southeastern United States.  Upon receipt of the second appraisal,
Landlord shall provide a copy of the same to Tenant.  If Landlord does not
provide its appraisal to Tenant within the time specified, then Landlord shall
be presumed to have approved the value of the LTACH Improvements as determined
in Tenant’s appraisal.  If the two appraisals agree upon the value of the LTACH
Improvements, then such agreed upon value shall be the purchase price for the
LTACH Improvements under Section 2.4(a).  In the event the difference between
the two appraisals does not exceed five percent (5%) of the lower value of the
two appraised values, then the purchase price in Section 2.4(a) will be the
average of the two values determined in such appraisals.  In the event the
difference between the two appraisals is more than five percent (5%) of the
lower value, a third MAI appraiser who is familiar with inpatient and acute care
hospital properties in the Southeastern United States shall be selected by
Landlord and Tenant jointly to appraise the LTACH Improvements.  In the event
Landlord and Tenant are unable to agree upon the third MAI appraiser, then the
third appraiser who is familiar with inpatient and acute care hospital
properties in the Southeastern United States shall be selected by the Atlanta
office of the American Arbitration Association. Upon receipt of the third
appraisal, Landlord and Tenant shall both be provided copies.  If two of the
appraisals establish the same value for the LTACH Improvements, then the value
established in such two appraisals will be the purchase price of the LTACH
Improvements under Section 2.4(a).  If no two appraisals establish the same
value, then the value will be the average of the two appraised values that are
the closest to each other, with the third appraised value being discarded.  For
purposes of the appraisals to be obtained in this Section 2.4(b), each appraisal
shall presume a lease term equal to the period between the date of the appraisal
and the remainder of an eighty (80) year term commencing on the Effective
Date.  Each appraiser shall independently and confidentially conduct the
required appraisal.  Tenant shall pay the cost of the appraiser obtained by
Tenant and Landlord shall pay the cost of the appraiser obtained by
Landlord.  Landlord and Tenant shall split equally the cost of designating the
third appraiser and the cost of the third appraisal in preparation of its
appraisal.

(c)           In the event Tenant has the right to require Landlord to purchase
the LTACH Improvements under the terms of Section 2.4(a) and exercises such
right and Landlord does not consummate such purchase for any reason, then Tenant
will have the right to require that the Hospital Authority purchase the LTACH
Improvements under the same terms as provided in this Section 2.4.  In executing
this Lease, the Hospital Authority expressly affirms its obligations under this
Section 2.4(c).

 
7

--------------------------------------------------------------------------------

 
 
Section 2.5.    Severability of Section 2.3.
 
(a)           Landlord and Tenant acknowledge and agree that Section 2.3 of this
Lease shall be fully severable.  Should the provisions of Section 2.3 ever be
found to be illegal, invalid or unenforceable pursuant to the Georgia Hospital
Authorities Law or any other Legal Requirement or should Tenant request to
Landlord, in writing, that Section 2.3 of this Lease be severed, then (i)
Section 2.3 shall be deemed to be omitted from this Lease as if it never
existed, (ii) this Lease shall be construed and enforced as if Section 2.3 had
never comprised a part hereof, (iii) the remainder of this Lease shall remain in
full force and effect and shall not be affected by Section 2.3 or by its
severance, and (iv) the Term of this Lease shall be valid and in full force and
effect until March 31, 2049, at which time this Lease shall terminate.  It is
agreed that the provisions of Section 2.4 shall be the sole remedy available to
Tenant in the event of any severance of Section 2.3 or in the event Section 2.3
is otherwise unenforceable and that the rights of Tenant under Section 2.4(b)
shall be exercisable only during the one-hundred eighty (180) day period
provided in Section 2.4(b).
 
(b)           As a condition of the inclusion of Section 2.3 into this Lease,
Tenant acknowledges and agrees that Landlord and the Hospital Authority make no
representation or warranty, express or implied, to Tenant or to any other
Person, as to the legality, enforceability, or validity of Section 2.3 or any
other provisions of this Lease relating thereto.  Tenant hereby forever waives
all claims, demands, obligations, and causes of action against and further
releases Landlord and Hospital Authority, and their Affiliates, from any and all
liability pertaining to the legality, enforceability, or validity of Section 2.3
and the effect that Section 2.3 may have upon the legality, enforceability, or
validity of this Lease.  Under no circumstances shall Landlord or Hospital
Authority be obligated to become liable for or subject to any liability,
indebtedness, cost, commitment, or obligation, whether known or unknown, fixed
or contingent, recorded or unrecorded, currently existing or hereafter arising
or otherwise because of Section 2.3 of this Lease.  This Section 2.5(b) shall
survive the expiration or termination of this Lease.
 
ARTICLE III
 
RENT

 
Section 3.1.    Annual Base Rent.  Beginning on the Commencement Date, Tenant
agrees to pay Landlord, without prior demand therefor, and without set-off or
deduction, a yearly base minimum rent in the amount of Twenty-six Thousand Four
Hundred Eighteen and No/100 Dollars ($26,418.00), payable in monthly
installments, each in the amount of Two Thousand Two Hundred One  and 50/100
Dollars ($2,201.50) plus an annual parking charge in an amount pursuant to the
paragraph below (collectively, the base minimum rent and parking charge shall be
defined herein as the “Base Rent”).  In the event the Commencement Date falls on
a day other than the first day of a calendar month, then the monthly installment
of Base Rent shall be prorated for such month.  In the event this Lease expires
or is terminated on a day that is other than the last day of a calendar month,
then the Base Rent for the month in which the Term expires or is terminated
shall be prorated.  Tenant shall pay the Base Rent to Landlord at Landlord’s
address set forth in Section 17.5 of this Lease, or at such other place as
Landlord may from time to time designate to Tenant in writing (in accordance
with Section 17.5 of this Lease), in funds which at the time of such payment
shall be legal tender for the payment of public or private debts in the United
States of America.

 
8

--------------------------------------------------------------------------------

 
 
Beginning on the Commencement Date, Tenant shall also pay to Landlord an annual
parking charge that shall be part of the Base Rent and initially shall be equal
to the product of One Hundred and No/100 Dollars ($100.00) multiplied by the
number of parking spaces which are allocated for Tenant’s use under Section 2.2
of the REA (initially, 120 spaces), being initially Twelve Thousand and No/100
Dollars ($12,000.00) per year.  In the event Tenant should demand the LTACH
Exclusive Parking Rights, as provided for in the REA, then from and after the
date that Tenant begins to have such exclusive parking, the amount of the
parking charge that shall be part of the Base Rent shall be increased to One
Hundred Twenty-Five Percent (125%) of the parking charge then in effect at the
time that Tenant begins to have such exclusive parking, with the amount prorated
for any partial calendar year.  Both the minimum rent and the parking charge
that comprise the Base Rent shall be subject to adjustment pursuant to Section
3.5 below.
 
Section 3.2.    Additional Rent.  From and after the Commencement Date, Tenant
hereby agrees to pay all Additional Rent to Landlord or to such other Person as
Landlord may direct or as is required under this Lease at such time as such
Additional Rent is due and payable as required under this Lease.
 
Section 3.3.    Late Charge.  If any installment of Base Rent is not paid within
ten (10) days after the same is due (after giving effect to any applicable
notice and/or cure periods under this Lease), Tenant shall pay to Landlord on
demand, as Additional Rent, a late charge equal to three percent (3%) on such
overdue installment of Base Rent.
 
Section 3.4.    Interest.  In addition to the late charge provided in Section
3.3, if Tenant shall fail to make payment of any installment of Base Rent or any
Additional Rent within ten (10) days after the date when each such payment is
due (after giving effect to any applicable notice and/or cure periods under this
Lease), Tenant shall pay to Landlord interest at a rate equal to the Default
Rate on the amount unpaid computed from the date such payment of Base Rent or
Additional Rent was due up to and including the date of payment.
 
Section 3.5.    Adjustment to Base Rent.  The initial amount of Base Rent is set
forth in Section 3.1 above.  On the fifth (5th) anniversary of the Commencement
Date, and on every fifth (5th) anniversary of the Commencement Date thereafter,
the Base Rent shall increase by ten percent (10%) over the Base Rent then in
effect.

 
9

--------------------------------------------------------------------------------

 
 
ARTICLE IV

 
GOVERNMENTAL APPROVALS; BUILDING PLANS; CONSTRUCTION OF IMPROVEMENTS;
ALTERATIONS; LANDLORD APPROVAL; EASEMENTS
 
Section 4.1.    Site Plan Approvals.  Landlord and Tenant expressly approve the
Site Plan attached hereto as Exhibit C and made a part hereof for all
purposes.  Tenant agrees not to materially modify or amend the Site Plan without
Landlord’s prior written approval, such approval not to be unreasonably
withheld, delayed or conditioned.
 
Section 4.2.    Building Plans.  Landlord and Tenant have approved the Building
Plans except as provided below.  Any changes in the Building Plans during the
initial construction of the LTACH Improvements which (i) are made to the
exterior of the LTACH Improvements, (ii) are made to the two-story connector
between the LTACH Improvements and the main hospital building and (iii) are made
to the interior of the LTACH Improvements that materially affect the access to
the two-story connector from the LTACH Improvements shall require the approval
of Landlord, such approval not to be unreasonably withheld, delayed or
conditioned.  Any other change to the Building Plans shall not require the
approval of Landlord under this Lease.  In the event Landlord does not respond
to any requested change within five (5) days after drawings and other materials
pertaining to the proposed change have been delivered to Landlord, such proposed
change shall be deemed approved.  Any approval by Landlord of the Building Plans
will not in any way be construed or deemed to constitute a representation or
warranty by Landlord as to the adequacy or sufficiency of the Building Plans or
the improvements to which they relate, for any reason, purpose or condition, but
such approval will merely be the consent of Landlord as may be required
hereunder.  Notwithstanding the foregoing, changes in the Building Plans which,
in the determination of Tenant, must be made in order to accommodate any Legal
Requirements, shall not require Landlord’s prior written approval, but Tenant
shall provide Landlord with a copy of such change and explanation of the basis
for the change.
    
Section 4.3.    Construction of Improvements.
    
(a)           Tenant covenants and agrees, at its sole expense, to construct, or
cause to be constructed, with all commercially reasonable due diligence the
LTACH Improvements in a good and workmanlike manner and substantially in
accordance with the Site Plan and the Building Plans, subject to the terms of
Section 4.2 or changes to accommodate reasonably unforeseeable conditions.  The
LTACH Improvements shall include interior partitions, interior mechanical,
plumbing, electric, finishes and other tenant improvements required to produce
completed space ready for use and occupancy in accordance with the Site Plan and
the Building Plans (such partitions, finishes and other tenant improvements
being, collectively, the “Tenant Improvements”), to the extent provided in the
Building Plans.  The LTACH Improvements shall be constructed by the General
Contractor; provided that Tenant reserves the right to replace the General
Contractor under the circumstances provided in the agreement between Tenant and
the General Contractor and subject to the limitations set forth in Section
1.1(r).  In addition to the other insurance requirements set forth in this
Lease, from the commencement of construction until completion of the LTACH
Improvements, Tenant shall maintain or cause its contractors to maintain,
general liability and other types of insurance meeting the requirements of
Exhibit H attached hereto and made a part hereof.

 
10

--------------------------------------------------------------------------------

 
 
(b)           In the event Tenant fails to commence construction of the LTACH
Improvements on or before January 15, 2010, then either party, by written notice
to the other sent prior to the commencement of construction, may terminate this
Lease effective on the date such written notice is received by the other
party.  Notwithstanding anything to the contrary contained herein, the
provisions of Article XI of this Lease shall not apply to a termination of this
Lease pursuant to this Section 4.3(b).  Construction of the LTACH Improvements
shall be deemed commenced upon Tenant’s delivery to General Contractor of a
notice to proceed with construction.  The date on which construction is to be
commenced shall be extended on a day-for-day basis by any delay due to
unforeseeable causes beyond Tenant’s reasonable control and without Tenant’s
fault or gross negligence, including, but not limited to, acts of God, fires,
floods, strikes, war, terrorist activity, changes in the Site Plan or Building
Plans ordered by Landlord or its employees, agents or representatives or any
governmental authority, delays caused by Landlord (either in its capacity as
landlord under this Lease or as tenant under the Floyd Healthcare Management
Sublease) or its employees, agents or representatives or any governmental
authority, unusually severe weather conditions not reasonably foreseeable, and
delays caused by the tenant under the Principal Subtenant Sublease, but
excluding delays caused by the acts or omissions of Tenant’s contractors,
subcontractors, material or equipment suppliers (except to the extent that
Landlord refuses to accept substitute materials), architects or engineers, or
the failure or inability of Tenant to provide sufficient capital and/or secure
adequate financing to fund costs of construction in excess of those funds to be
obtained under the Construction Loan.  Landlord shall diligently and promptly
respond to all of Tenant’s and its contractors’ inquiries regarding the
construction of the LTACH Improvements so as not to delay the completion of the
LTACH Improvements.
 
(c)           Tenant covenants and warrants to Landlord that (i) all materials
and equipment furnished will be new, unless otherwise specified, (ii) the LTACH
Improvements will be of good quality, free from faults and defects, and
(iii) the LTACH Improvements will be in full compliance with all applicable
Legal Requirements.  Without limiting the generality of the foregoing, if within
one (1) year after the date of substantial completion of all of the LTACH
Improvements, or within such longer period of time as may be prescribed by law
or the terms of any applicable special warranty required by the Site Plan and
Building Plans, any of such LTACH Improvements or any part or element thereof is
found to be defective or not in accordance with the Site Plan and Building
Plans, Tenant shall correct or cause the same to be corrected promptly after
receipt of written notice from Landlord to do so, unless Landlord has previously
given Tenant a written acceptance of such condition.

 
11

--------------------------------------------------------------------------------

 

(d)           In the event the LTACH Improvements are not substantially
completed in substantial accordance with the Site Plan and Building Plans by
February 28, 2011, (the “Required Completion Date”), then Landlord may
thereafter, upon one hundred twenty (120) days written notice to Tenant, at
Landlord’s option, purchase the LTACH Improvements and terminate this Lease;
provided, however, this right and option shall terminate if Tenant substantially
completes construction of the LTACH Improvements substantially in accordance
with the Site Plan and Building Plans within ninety (90) days after delivery of
such written notice to Tenant (the “Completion Cure Date”).  Landlord may
exercise the foregoing option by delivering written notice thereof within thirty
(30) days after the Required Completion Date.  Time shall be of the essence in
delivering such notice.  If Landlord does not deliver notice exercising its
right to purchase the LTACH Improvements within the thirty (30) day period
provided, then Landlord’s right to purchase the LTACH Improvements under this
Section 4.3(d) shall irrevocably terminate.  The LTACH Improvements shall be
substantially complete when such improvements are completed substantially in
accordance with the Site Plan and Building Plans and a certificate of occupancy
for the LTACH Improvements by the appropriate governmental authority has been
issued and a copy thereof has been delivered to Landlord.  The substantial
completion of the LTACH Improvements shall be determined in accordance with the
General Contract.  The Required Completion Date shall be extended on a
day-for-day basis by any delay due to reasonably unforeseeable causes beyond
Tenant’s control and without Tenant’s fault or negligence, specifically
including within such causes or delay beyond Tenant’s control, but not limited
to, acts of God, fires, floods, strikes, war, terrorist activity, changes in the
Site Plan and Building Plans ordered by Landlord (either in its capacity as
Landlord hereunder or as tenant under the Floyd Hospital Management Sublease),
its employees, agents or representatives or any governmental authority, delays
caused by Landlord, its employees, agents or representatives or any governmental
authority, unusual weather conditions not reasonably anticipatable, and delays
caused by the tenant under the Principal Subtenant Sublease, and specifically
including delays caused by the acts or omissions of Tenant’s contractors,
subcontractors, material or equipment suppliers, architects or engineers, but
excluding the failure or inability of Tenant to provide sufficient capital to
fund costs of construction.
 
(e)           The purchase price for the purchase of the LTACH Improvements
pursuant to the option set forth in Section 4.3(d) shall be equal to the amount
of the following costs incurred by Tenant through and including the date
Landlord closes the purchase of the LTACH Improvements:  (a) all amounts
actually paid to third party contractors, material and equipment suppliers,
architects, engineers and other consultants which have been incurred in
connection with the design and construction of the LTACH Improvements (including
without limitation all amounts paid to acquire the rights to utilize the
Building Plans, payments and/or reimbursements made in the ordinary course or
otherwise reasonably required in connection with the design and construction of
the LTACH Improvements); (b) any amounts that are owed by Tenant as retainage
under any construction contract; (c) amounts paid as fees, reimbursements and
other costs required to close the loan to finance the construction of the LTACH
Improvements; (d) any fees required to be paid to equity investors at the
initial closing; and (e) any amount owing to third parties in connection with
the construction of the LTACH Improvements which have not been paid and any
other costs or expenses that were incurred in connection with the construction
of the LTACH Improvements and financed with the proceeds of any construction
loan obtained by Tenant from a financial institution in connection with the
development of the LTACH Land, including any other capital contributed by the
Tenant; provided that [1] any fees or other compensation paid to any Affiliate
of Tenant shall either (i) be as provided in the development budget approved by
the Leasehold Mortgagee providing the construction financing, with a copy of the
same being provided to Landlord upon approval of the same by the Leasehold
Mortgagee, or (ii) otherwise be in amounts consistent with amounts that would
have been payable to third parties in arms length transactions for the services
rendered or other items provided by such Affiliates, and [2] such purchase price
shall not include any amounts in excess of budgeted amounts for work required as
a result of the gross negligence or willful misconduct of Tenant.  At closing,
Landlord shall either assume the obligations of Tenant under the General
Contract, contract with Tenant’s Architect and any other contracts which Tenant
has entered into with respect to the design and/or construction of the LTACH
Improvements which have not been fully performed or pay to Tenant at closing
such amount as shall be required in order to terminate such contracts (whether
such termination is through the exercise of a termination right in such contract
or by negotiation with the parties to such contracts).  Any amounts payable with
respect to such contracts shall be included in the purchase price.  Landlord may
exercise the foregoing option by delivering written notice within the time
provided in Section 4.3(d); provided, however, this right and option shall
terminate if Tenant achieves substantial completion of the LTACH Improvements
substantially in accordance with the Building Plans before the later of (x) the
Completion Cure Date or (y) delivery of such notice to Tenant.  The closing of
such purchase shall take place on the date which is thirty (30) days after the
date the purchase option is exercised as provided above, unless such day is a
Saturday, Sunday, or legal holiday, in which event the closing shall be on the
next business day thereafter.  At least ten (10) days prior to the closing,
Tenant shall furnish Landlord with a detailed breakdown of the amounts that are
included in the calculation of such purchase price.  Such purchase price shall
be paid in full at the closing of such purchase, although Landlord may, at its
option, use all or any portion of such purchase price as may be necessary to
discharge any mortgages or other liens affecting the LTACH Land.  Any mechanic’s
or materialmen’s lien claims not released at closing may be bonded in accordance
with applicable legal requirements.  In the event that, after giving effect to
any bonding, the aggregate amount required to pay and discharge all such
mortgages or liens exceeds such purchase price, Tenant shall pay all such
additional sums and obtain full releases and discharges of any such mortgages or
other liens at closing.  At the closing, Tenant shall execute a termination of
this Lease and a quit claim deed for the LTACH Improvements to Landlord and
return the LTACH Land to Landlord, free and clear of all Mortgages and other
encumbrances whatsoever, excepting real estate taxes not yet due and payable and
other Permitted Encumbrances.

 
12

--------------------------------------------------------------------------------

 
 
(f)           The following are conditions precedent to Tenant’s obligations to
construct the LTACH Improvements:
 
(i)           Tenant shall have received all governmental permits and approvals
necessary or appropriate for the development and construction of the LTACH
Improvements, all of which shall be on terms and conditions approved by both
Tenant and Landlord (whose approval shall not be unreasonably withheld,
conditioned or delayed), including, but not limited to (A) all approvals
required under Legal Requirements; (B) all permits and approvals necessary for
the commencement of construction of the LTACH Improvements; and (C) tap permits
or connections for water and sanitary sewer service to the LTACH Land; provided,
that Tenant shall be required to use commercially reasonable efforts to
diligently pursue the receipt of such governmental permits and approvals.
 
(ii)           Tenant and Landlord shall have reasonably determined the location
and boundaries of the LTACH Land, which shall be consistent with Exhibit A-2.
 
(iii)          Tenant shall have prepared or caused to be prepared using
reasonable diligence and Landlord shall have approved, in writing, the Site
Plan, survey (which shall be delivered to Landlord contemporaneously with the
delivery of such survey to Tenant’s lender), and metes and bounds description
for the LTACH Land.

 
13

--------------------------------------------------------------------------------

 
 
  (iv)           Tenant shall have obtained using reasonable diligence and
approved, in its reasonable discretion, a commitment for title insurance.
 
Section 4.4.    Alterations.  At any time during the Term (after the completion
of the initial LTACH Improvements), Tenant, at its sole expense, may make
interior, exterior and structural alterations and additions to any portion of
the LTACH Improvements; provided, that (i) with respect to any alterations made
to the exterior of the LTACH Improvements, made to the two-story connector
between the LTACH Improvements and the main hospital building or are made to the
interior of the LTACH Improvements that materially affect access to the
two-story connector from the LTACH Improvements, Tenant shall first obtain
Landlord’s prior written consent, which shall not be unreasonably withheld,
conditioned or delayed and (ii) the additions and alterations shall be
constructed expeditiously with good materials in a good and workmanlike manner
and in accordance with all Legal Requirements.  In the event any consent is
requested, such consent shall be presumed except to the extent disapproved in
writing by written notice delivered to Tenant within thirty (30) days after the
date of delivery of the written request for such consent to Landlord.  All
alterations and additions made in accordance with this Section shall become part
of the LTACH Improvements and shall remain the property of Tenant during the
Term.
 
Section 4.5.    Zoning and Permits.  To the extent not previously obtained,
Tenant, at its sole cost and expense shall be responsible for and shall obtain
all governmental permits and approvals necessary or appropriate for the
construction of the LTACH Improvements including, but not limited to, (i) all
approvals required under land use laws and ordinances, (ii) all required
planning and zoning approvals, (iii) all required building permits and
approvals, and (iv) tap permits or connections for water and sanitary sewer
services to the Leased Property.  Landlord agrees, upon Tenant’s request to
cooperate and assist Tenant in Tenant’s efforts to secure any necessary
approvals or permits and to join in applications for zoning matters, building
permits, certificates of occupancy, and all other applications for licenses,
permits and approvals for which the signature of Landlord or the owner is
required by applicable law.
 
Section 4.6.    Surrender of LTACH Improvements.  All LTACH Improvements (with
the exception only of movable trade fixtures, furniture, furnishings, or other
personal property owned by Tenant or any Subtenant) shall be surrendered to and
become the absolute property of Landlord upon the expiration or earlier
termination of the Term, whether by expiration of time or otherwise as provided
herein.

 
14

--------------------------------------------------------------------------------

 

Section 4.7.    Mechanic’s and Materialmen’s Liens.  Tenant will not create or
permit to be created or to remain, and will promptly discharge, at its sole cost
and expense, any lien, encumbrance or charge upon the LTACH Land, any part
thereof or upon Tenant’s leasehold interest, which arises out of the use or
occupancy of the LTACH Land by Tenant (other than any Leasehold Mortgage arising
in accordance with the terms of this Lease) or by reason of any labor or
materials furnished or claimed to have been furnished to Tenant or by reason of
any construction, addition, alteration or repair of any part of the LTACH
Land.  If any such lien is filed against the LTACH Land, Tenant shall, within
sixty (60) days after notice of the filing thereof, cause such lien to be
released or discharged with respect to the LTACH Land by payment or bonding
(provided that, no new bond will be required if the claim arises by, through or
under any subcontractor or material supplier of the General Contractor and the
General Contractor has provided a payment bond).  Nothing contained in this
Lease shall be construed as constituting the consent or request of Landlord,
expressed or implied, to or for the performance by any contractor, laborer,
materialman, or vendor of any labor or services or for the furnishing of any
materials for any construction, alteration, addition, repair or demolition of or
to the Leased Property, or any part thereof.  Notice is hereby given that
Landlord will not be liable for any labor, services or materials furnished or to
be furnished to Tenant, or to anyone holding the Leased Property or any part
thereof through or under Tenant, and that no mechanic’s or other liens for any
such labor, services or materials shall attach to or affect the interest of
Landlord in and to the Leased Property.  After prior written notice to Landlord,
Tenant shall not be required to discharge or remove any lien referred to in this
Section so long as Tenant (or any Subtenant, the General Contractor or any
direct subcontractor of the General Contractor) shall contest, in good faith and
at its expense, the existence, the amount or the validity thereof or the amount
of the damages caused thereby by appropriate proceedings which shall operate
during the pendency thereof to prevent (i) the collection of, or other
realization upon, the lien so contested, (ii) the sale, forfeiture or loss of
any of the Leased Property, any Base Rent or any Additional Rent to satisfy the
same, (iii) any interference with the use or occupancy of any of the Leased
Property, and (iv) any interference with the payment of any Base Rent or any
Additional Rent.  In no event shall Tenant pursue any contest with respect to
any lien that exposes Landlord to any defeasance of its interest in the Leased
Property.  Tenant agrees that each such contest shall be promptly and diligently
prosecuted to a final conclusion, except that Tenant shall have the right to
attempt to settle or compromise such contest through negotiations.  Tenant shall
indemnify and hold Landlord harmless against any and all losses, judgments,
decrees and costs (including reasonable attorneys’ fees and expenses) in
connection with any such contest and shall, promptly after the final
determination of such contest, fully pay and discharge the amounts which shall
be levied, assessed, charged or imposed or be determined to be payable therein
or in connection therewith, together with all penalties, fines, interest, costs
and expenses thereof or in connection therewith, and perform all acts the
performance of which shall be ordered or decreed as a result thereof.
 
Section 4.8.    Landlord Approval.  Landlord has an interest in assuring that
the LTACH Improvements shall complement the Medical Center and all present and
future development on the Medical Center Land and the buildings, structures,
landscaping and related improvements located thereon.  Therefore, Landlord shall
have the right to approve any plans and designs of any new construction on the
LTACH Land or any exterior modifications or additions to the buildings,
improvements and landscaping situated on the LTACH Land, including, without
limitation, the LTACH Improvements, which approval shall not be unreasonably
withheld conditioned or delayed; provided, that in no event shall the LTACH
Improvements contain a long term acute care hospital of more than approximately
sixty-one thousand five hundred (61,500) square feet unless a larger long term
acute care hospital is consented to by Landlord, which consent may be given or
withheld at Landlord’s sole and absolute discretion.  Any approval requested by
Tenant from Landlord shall be deemed given except to the extent disapproved by
Landlord in written notice from Landlord received by Tenant within thirty (30)
days after Landlord’s receipt of Tenant’s request.

 
15

--------------------------------------------------------------------------------

 

Section 4.9.    Pedestrian Connection Hallway.  Tenant acknowledges and agrees
that Tenant shall construct a pedestrian connection hallway on the LTACH Land
between the main hospital building of the Medical Center and the LTACH, as
provided on the Site Plan and the Building Plans.  Tenant shall be responsible
for the cost in connection with the construction of the pedestrian connection
hallway in accordance with the Site Plan and Building Plans.  The costs for
maintenance and insurance of such hallway shall be the responsibility of Tenant
in accordance with the provisions of the REA, which provides for easement rights
in favor of the Landlord to cross through the lobby and interior hallways of the
LTACH to reach the pedestrian connection hallway and other buildings on the
Medical Center Land.  Tenant shall, at all times throughout the Term, operate
and maintain the pedestrian connection hallway in a state of good condition and
repair, suitable for use for pedestrian ingress and egress as set forth herein,
including, without limitation, maintenance and repair of surfaces, removal of
all paper, debris, rubbish, filth, and refuse, and the provision of utility
services.
 
Section 4.10.    Easements.  Landlord and Tenant agree that the REA provides for
appropriate easements, covenants, and restrictions for utilities, parking on the
Medical Center Land, and other matters.  Landlord shall have the right to grant
similar easements, leases, and licenses to others for the use of parking areas
on the Medical Center Land as shall be determined, as and to the extent provided
in the REA.
 
Nothing contained herein shall be construed or deemed to constitute a
dedication, express or implied, of any real property to or for any public use or
purpose whatsoever.  In connection with the use and enjoyment of the rights
granted and declared herein for the benefit of Tenant, Tenant shall comply with
all Legal Requirements.
 
Section 4.11.    Expansion Space.  From the period commencing January 15, 2010,
and expiring on January 14, 2013, Landlord may request in writing that Tenant
construct an expansion to the LTACH Improvements of up to fifty thousand four
hundred forty-one (50,441) square feet on three (3) floors of the LTACH
Improvements (the “Expansion Space”) and leasing of such Expansion Space to one
or more proposed users (collectively, the “Expansion Space Users”).  Landlord
will be responsible for providing proposed Expansion Space Users who will occupy
the entire Expansion Space.
 
All Expansion Space Users and the terms and conditions of the subleases covering
the Expansion Space (collectively, the “Expansion Space Subleases”), together
with any guarantors of any Expansion Space Users and the terms and conditions of
any guaranties of Expansion Space Subleases which may be required by Tenants,
must be acceptable to Tenant in Tenant’s sole and absolute discretion.  In any
event, all Expansion Space Subleases must be triple-net, inclusive of the share
of each premises in the Expansion Space of any capital expenditures required to
operate and maintain the LTACH Improvements.  Prior to any request that Tenant
undertakes to construct the Expansion Space, (i) Landlord shall obtain and
provide to Tenant the consent of the Hospital Authority under the Medical Center
Master Lease for the construction of the Expansion Space, and (ii) Landlord
shall provide to Tenant such consent for the construction of the Expansion Space
that may be required under the REA, both of which consents shall be in form and
substance acceptable to Tenant in Tenant’s sole and absolute discretion.  The
items required under the foregoing provisions of this paragraph are herein
collectively called the “Expansion Space Precondition Documents.”  Upon receipt
and approval of the Expansion Space Precondition Documents, Tenant will seek
such financing as is required in order to finance the construction of the
Expansion Space.

 
16

--------------------------------------------------------------------------------

 
 
Landlord recognizes that Tenant’s existing lender will have a lien on the
Expansion Space under its existing mortgage or deed of trust.  Therefore, the
existing lender will likely be approached by Tenant to provide financing for the
Expansion Space.  If Tenant cannot obtain financing from the existing lender,
Tenant will seek other financing in order to refinance the existing debt owed to
existing lender and obtain construction financing for the construction of the
Expansion Space in the LTACH Improvements.  Landlord acknowledges that, if the
business terms and economics of such refinancing are less favorable to Tenant
than the existing indebtedness with the existing lender, Landlord agrees to make
Tenant financially whole in such amounts and manner as may be required by the
circumstances, as Tenant may determine.
 
If the terms of the refinancing relative to the new debt for the construction of
the Expansion Space are such that such new debt (and/or preferred return on any
equity funding) would not be adequately provided by the income stream from the
Expansion Space Subleases, Landlord acknowledges that the Expansion Space
Subleases will have to be modified or amended in such manner as to provide an
income stream under such Expansion Space Subleases as will be capable of meeting
the proposed debt service for such new debt.  If Tenant fails to approve any of
the Precondition Documents or if Tenant cannot obtain financing for the
construction of the Expansion Space, then Landlord will have the right to
deliver a written notice to Tenant (the “Landlord Purchase Notice”) setting
forth Landlord’s desire to purchase the LTACH Improvements from Tenant.  The
date of delivery of the Landlord Purchase Notice is herein called the “Landlord
Purchase Notice Delivery Date.”  Tenant may also deliver to Landlord a written
notice (the “Tenant Purchase Notice”) advising Landlord that the terms and
conditions under which the Expansion Space could be constructed are not
satisfactory to Tenant.  In the event of the delivery of the Tenant Purchase
Notice, Landlord will have thirty (30) days from the receipt of the Tenant
Purchase Notice to deliver the Landlord Purchase Notice.  Failure to deliver the
Landlord Purchase Notice within such thirty (30) day period will constitute a
waiver of any purchase right that Landlord may have under this Section.  In the
event Landlord delivers the Landlord Purchase Notice in accordance with this
Section, then Landlord and Tenant agree that they will in good faith negotiate a
price and terms of sale in order for Tenant to sell the LTACH Improvements to
Landlord during a period of sixty (60) days, following the Landlord Purchase
Notice Delivery Date, provided that, the parties agree that neither party has
any obligation to buy or sell the LTACH Improvements.  Further, in the event
Landlord and Tenant are not able to agree upon the terms of such sale and
consummate the same within such sixty (60) day period, then neither party shall
have any further obligation to negotiate or pursue the sale of the LTACH
Improvements by Tenant to Landlord.
 
17

--------------------------------------------------------------------------------

 
ARTICLE V

 
USE OF LEASED PROPERTY
 
Section 5.1.    Use of Leased Property.
 

(a)           The Leased Property shall be used subject to and in accordance
with this Article V.  So long as the Principal Subtenant Sublease remains in
effect, the portion of the LTACH Improvements leased thereunder shall be used
only (i) as a licensed long term acute care hospital facility and (ii) for such
other uses as may be necessary, incidental, profitable or complimentary for such
use, subject to the restrictions contained in Section 5.2.  So long as any
portion of the LTACH Improvements is leased to Floyd Healthcare Management,
Inc., or its Affiliate, successor or assign, such premises may be utilized for
any purposes permitted under the applicable Floyd Healthcare Management
Sublease.  Upon expiration or earlier termination of the Principal Subtenant
Sublease, the portions of the LTACH that were subject to the Principal Subtenant
Sublease as well as any other portions of the LTACH Improvements not subleased
to Floyd Healthcare Management, Inc., or its Affiliate, successor or assign,
shall not be utilized for any use that is prohibited by this Lease or the REA,
including, by way of example and not limitation, those prohibited uses and
restrictions set forth in Section 5.2 below.  Tenant may request in writing
Landlord’s interpretation of a proposed use of the Leased Property to determine
if it is Landlord’s opinion that such a proposed use would be in violation of
the uses precluded in this Article V.  Landlord shall advise Tenant in writing
within ten (10) days of receipt of Tenant’s request if in Landlord’s opinion
such proposed use would create a violation of the uses precluded by this
Article V.  If Landlord advises that the proposed use would be in violation,
then the proposed use shall be precluded on the Leased Property.  If Landlord
fails to timely respond then the proposed use shall be deemed to be permitted
under this Lease.
 
(b)           In no event shall the Leased Property be used for any purpose
which would constitute a public or private nuisance or waste or which would
violate any of the provisions of any Permitted Encumbrances, (including, without
limitation, the Medical Center Master Lease), any Legal Requirements or any
covenants or restrictions applicable to the Leased Property.  Tenant agrees that
with respect to the Permitted Encumbrances (including, without limitation, the
Medical Center Master Lease) and any such covenants or restrictions existing as
of the date of this Lease, Tenant shall observe, perform and comply with and
carry out the provisions thereof required therein to be observed and performed
by Landlord.
 
(c)           Tenant shall not permit any unlawful occupation, business or trade
to be conducted on the Leased Property or any use to be made thereof contrary to
applicable Legal Requirements.  Tenant shall not use, occupy or permit any of
the Leased Property to be used or occupied, nor do or permit anything to be done
in or on any of the Leased Property, in a manner which would (i) make void or
voidable any insurance which Tenant is required hereunder to maintain then in
force with respect to any of the Leased Property, (ii) affect the ability of
Tenant to obtain any insurance which Tenant is required to furnish hereunder, or
(iii) cause any injury or damage to any of the LTACH Improvements except
ordinary wear and tear.
 
(d)           Subject to all of the provisions of this Lease, so long as no
Event of Default exists hereunder, Landlord covenants to do no act to disturb
the peaceful and quiet occupation and enjoyment of the Leased Property by
Tenant; provided that Landlord may enter upon and examine any of the Leased
Property during business hours upon reasonable notice (or at any time and
without notice in case of emergency) and exercise any rights and privileges
granted to Landlord under the provisions of this Lease and at law.
 
Section 5.2.    Restrictions.
 
(a)           Landlord and Tenant acknowledge and agree that contemporaneously
with execution of this Lease, Tenant is entering into the Principal Subtenant
Sublease and the Floyd Healthcare Management Sublease.  The practice of medicine
on the LTACH Land shall be conducted only by physicians (“Physicians”) licensed
to engage in the private practice of medicine for the care and treatment of
human beings and other related activities incidental thereto, and for no other
purpose.

 
18

--------------------------------------------------------------------------------

 
 
(b)           Physicians who conduct a medical practice and related activities
on the LTACH Land and any other medical providers who conduct healthcare
activities on the LTACH Land shall not be permitted to provide any of the
following services or procedures, except for the limited purpose of serving the
patients admitted to the long term acute care hospital on the LTACH Land: (i)
any form of testing for diagnostic or therapeutic purposes, provision or
operation of a laboratory (including, without limitation, a pathology laboratory
or a clinical laboratory), diagnostic imaging services (which include, without
limitation, the following testing facilities: fluoroscopy, x-ray, plain film
radiography, computerized tomography (CT) ultrasound, radiation therapy,
mammography and breast diagnostics, nuclear medicine testing and magnetic
resonance imaging), and (ii) physical therapy services or respiratory therapy
service. In no event shall any of the services set forth above be offered and/or
provided to any patient other than an admitted patient at one of the forty-five
(45) beds at the long term acute care hospital operated pursuant to the
Principal Subtenant Sublease, except with the prior written consent of the
Landlord, which may be given or withheld at Landlord’s sole and absolute
discretion.
 
(c)           In no event shall the LTACH Land or any part thereof be used for
the following activities without the prior written consent of Landlord, which
consent may be given or withheld in its sole and absolute discretion: (i) the
operation of an acute care general hospital, a specialty hospital (other than a
long term acute care hospital as described in Section 5.2(a) above), a
rehabilitation center, an extended care facility (other than a long term acute
care hospital as described in Section 5.2(a) above), a nursing home, an
outpatient or inpatient clinic, surgical center, emergency center, diagnostic
imaging services, a laboratory, a home health service, a birthing center, a
health maintenance organization or similar direct care provider, an ambulance
service, a kidney dialysis center, or an inhalation or physical therapy center,
(ii) any purpose that is in violation of any law, code, ordinance, zoning
ordinance or condition or governmental rule or regulation, (iii) any purpose
reasonably deemed by Landlord or its insurer to be extrahazardous on account of
fire risk, (iv) any purpose that would reasonably cause a cancellation of any
insurance policy covering the Medical Center, (v) any operation which creates a
nuisance, (vi) any use that results in any noise or sound that would be
reasonably objectionable to the occupants of the Medical Center due to
intermittence, beat, frequency, shrillness, or loudness of the noise, (vii) any
use that results in any obnoxious odor, (viii) any use that results in the use
of any portion of the Leased Property for the storage of any inflammable,
combustible, or explosive fluid, or chemical substance, other than reasonable
amounts of cleaning fluids and solvents or other materials required in the
normal operations at the Leased Property, (ix) any use that causes improper
dumping, disposal, treatment, storage, incineration, or reduction of wastes,
garbage, or refuse, or (x) any retail use, including, without limitation, any
restaurant, snack bar (other than vending machines offering beverages and light
snacks), sandwich shop, gift shop, pharmacy, entertainment facility, theater,
department store, specialty retail shop, or any other similar use; provided
that, any determination under the foregoing clauses (iii), (iv), (v), (vi),
(vii) and (viii) shall take into account and not preclude those activities which
are in the normal course of operating a long term acute care hospital
facility.  Tenant shall indemnify and hold harmless Landlord against all costs,
expenses, damages, liability, or loss caused by any violation hereof of any
provision of this Article V.

 
19

--------------------------------------------------------------------------------

 
 
(d)           No drugs or medicines may be dispensed on the LTACH Land to
persons other than the patients of Physicians that are admitted to the
facilities on the LTACH Land.  The installation and use of any diagnostic,
laboratory or radiology equipment on the LTACH Land shall be subject to the
prior written approval of Landlord, which shall not be unreasonably withheld,
and prior to the installation of any such equipment on the LTACH Land, Landlord
shall be provided with a list of such equipment and its intended use.
 
ARTICLE VI

 
TAXES AND ASSESSMENTS
 
Section 6.1.    Payment of Taxes.  Subject to the provisions of Section 6.3
hereof relating to contests, during the Term, Tenant shall annually return or
cause to be returned the Leased Property, the LTACH Land, and the LTACH
Improvements for real estate and personal property taxes, and shall pay or cause
to be paid on or before the last day on which such may be paid without penalty,
all real estate and personal property taxes, water rents, sewer charges, other
impositions, and assessments that are levied or assessed upon the Leased
Property, the LTACH Land, and the LTACH Improvements during the Term, including,
without limitation (all of the preceding and following being herein collectively
called the “Impositions”):  all taxes of every kind and nature (including real,
ad valorem, and personal property taxes) on or with respect to the LTACH Land,
LTACH Improvements or Leased Property; all charges and/or taxes imposed by any
governmental body for any easement or agreement maintained for the benefit of
the LTACH Land, LTACH Improvements or Leased Property; all general and special
assessments (payable in installments if permitted), levies, permits, inspection
and license fees on or with respect to the LTACH Land, LTACH Improvements or
Leased Property; all water and sewer rents and other utility charges on or with
respect to the LTACH Land, LTACH Improvements or Leased Property; and all other
public charges and/or taxes whether of a like or different nature, even if
unforeseen or extraordinary, imposed or assessed upon or with respect to the
LTACH Land, LTACH Improvements or Leased Property, prior to or during the Term,
against Landlord, Tenant or any of the Leased Property as a result of or arising
in respect of the occupancy, leasing, use, maintenance, operation, management,
repair or possession thereof, or any activity conducted on the LTACH Land, LTACH
Improvements or Leased Property, or the Base Rent or Additional Rent, including
without limitation, rent tax, sales tax, occupancy tax or excise tax levied by
any governmental body on or with respect to such Base Rent or Additional
Rent.  If received by Landlord, Landlord shall promptly deliver to Tenant any
bill or invoice with respect to any Imposition.  Nothing herein shall obligate
Tenant to pay, and the term “Impositions” shall exclude, federal, state or local
(i) transfer taxes as the result of a conveyance by (or suffered by) Landlord
(other than this Lease), (ii) franchise, capital stock or similar taxes if any,
of Landlord, (iii) income, excess profits or other taxes, if any, of Landlord,
determined on the basis of or measured by its net income, or (iv) any estate,
inheritance, succession, gift, capital levy or similar taxes, unless the taxes
referred to in clauses (ii) and (iii) above are in lieu of or a substitute for
any other tax or assessment upon or with respect to any of the Leased Property
which, if such other tax or assessment were in effect at the commencement of the
Term, would be payable by Tenant.  In the event that any assessment against any
of the Leased Property may be paid in installments, Tenant shall have the option
to pay such assessment in installments; and in such event, Tenant shall be
liable only for those installments which become due and payable during the
Term.  Tenant shall prepare and file all tax reports required by governmental
authorities which relate to the Impositions.  Tenant shall deliver to Landlord
copies of all settlements and notices pertaining to the Impositions which may be
issued by any governmental authority and receipts for payments of all
Impositions made during each calendar year of the Term, within ten (10) days
after payment thereof.

 
20

--------------------------------------------------------------------------------

 
 
Section 6.2.    Indemnity for Impositions.  Tenant will not permit any lien or
judgment for Impositions to be enforced against the LTACH Land or LTACH
Improvements.  Tenant agrees to indemnify and save Landlord harmless from the
payment of Impositions and any loss, cost, expense (including court costs and
reasonable attorneys’ fees), or liability ever incurred or suffered by Landlord
as a result of Tenant’s failure to pay the Impositions or any portion thereof in
accordance with the provisions hereof.
 
Section 6.3.    Tenant’s Right to Contest.  Tenant may in good faith and at its
sole cost and expense (in its own name or in the name of Landlord, or both, as
Tenant may determine appropriate) contest the validity or amount of (i) the
Impositions, and (ii) any other taxes, charges, assessments, or other amounts,
charged or assessed against the LTACH Land, LTACH Improvements or Leased
Property in which event the payment thereof may be deferred during the pendency
of such contest.  If requested by Tenant, Landlord will join Tenant as a party
to any such contest; provided, that Landlord shall not be obligated to incur any
expense in connection therewith.  Nothing herein contained, however, shall be
construed to authorize Tenant to allow or to permit the Leased Property, or any
part thereof, to be sold by any city, state, municipal, or other governmental
authority for the non-payment of any Impositions.
 
Section 6.4.    Allocation of Single Tax Bill.  Landlord and Tenant shall
cooperate in good faith for purposes of taking such action as may be reasonably
required to cause the taxing authority for Floyd County, Georgia, to issue
separate real and personal property tax bills for the Leased Property, the LTACH
Land, and the LTACH Improvements separate from the remainder of Medical Center
Land.  Notwithstanding the provisions of Section 6.1 above, if the taxing
authority for Floyd County, Georgia, will not issue separate real and personal
property tax bills for the Leased Property, the LTACH Land, and the LTACH
Improvements separate from the remainder of the Medical Center Land, then
Landlord shall annually return the Leased Property, the LTACH Land, and the
LTACH Improvements, and Landlord shall provide Tenant with a copy of such tax
bill within twenty (20) days of Landlord’s receipt of the same.  Upon receipt of
such tax bill, Tenant shall tender to Landlord on or before five (5) business
days prior to the last day on which such sum may be paid to the taxing authority
at the lowest possible rate, including, if available, any discount applicable
for early payment, the funds for the portion of the tax bill applicable to the
Leased Property the LTACH Land, and the LTACH Improvements during the Term, with
the amount of such reimbursement to be determined by Landlord in the exercise of
its reasonable judgment.
 
21

--------------------------------------------------------------------------------

 
ARTICLE VII
 
NET LEASE

This is a net lease and Base Rent, Additional Rent and all other sums payable
hereunder by Tenant shall be paid, except as otherwise expressly provided
herein, without notice, demand, setoff, counterclaim, recoupment, abatement,
suspension, deferment, diminution, deduction, reduction or defense.  It is
intended that the Base Rent provided for in this Lease shall be absolutely net
to Landlord throughout the Term, and accordingly, Tenant covenants and agrees to
pay, as they become due and payable and before they become delinquent, except as
otherwise expressly provided herein, all operating and capital expenses in
connection with the operation, maintenance, repair, restoration, use or
occupation of the Leased Property including, without limitation, the costs,
charges and assessments related to Impositions, utilities, insurance, and costs
payable pursuant to the REA.
 
ARTICLE VIII
 
TITLE AND CONDITION
 
Section 8.1.    Title and Condition.
 
(a)           The Leased Property are demised and let subject to (i) the
Permitted Encumbrances (including, without limitation, the Medical Center Master
Lease), (ii) all Legal Requirements, including any existing violation of any
thereof, and (iii) the condition of the Leased Property as of the commencement
of the Term; without representation or warranty by Landlord except as expressly
set forth in this Lease.  During the Term of this Lease, Landlord shall take no
action that would materially adversely affect Tenant’s rights hereunder unless
and to the extent that Tenant has consented in writing to such action.
 
(b)           Landlord represents and warrants to Tenant, with the understanding
that Tenant is entering into this Lease in reliance thereon, that as of the
Effective Date:
 
(i)           Landlord has the full power and authority to enter into and
perform this Lease according to its terms and the individual executing this
Lease on behalf of Landlord is authorized to do so;
 
(ii)           Landlord has not granted to any third party the right to use or
occupy any portion of the Leased Property, and Landlord is not aware of any
claim by any third party of the right to do so;
 
(iii)           Landlord has not received notice of and has no knowledge of any
existing or threatened action, suit or proceeding affecting the Leased Property
(including, without limitation, proposed or threatened condemnation), in any
court or before or by any federal, state, County or municipal or other
governmental instrumentality;
 
(iv)           Landlord has the authority to enter this Lease and the REA in
accordance with the terms of the Medical Center Master Lease, state and federal
law; and
 
(v)           There are no leases, rental or other contracts or agreements which
are not referenced in Exhibit B and which burden and encumber the Leased
Property.

 
22

--------------------------------------------------------------------------------

 
 
(c)           EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES MADE BY LANDLORD
HEREIN, LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED
PROPERTY “AS IS” AND “WITH ALL FAULTS”, AND TENANT ACKNOWLEDGES THAT LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PROPERTY,
INCLUDING ANY WARRANTY OR REPRESENTATION AS TO ITS HABITABILITY, ITS FITNESS FOR
USE OR PURPOSE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, OR AS TO
VALUE, COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION,
MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.  TENANT ACKNOWLEDGES
THAT THE LEASED PROPERTY IS OF ITS SELECTION AND TO ITS SPECIFICATIONS, AND THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO
IT.  TENANT SHALL NOT HAVE THE RIGHT TO TERMINATE THIS LEASE DUE TO ANY
CONDITION OF OR ANY LATENT OR OTHER DEFECT IN ANY OF THE LEASED PROPERTY.  IN
THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PROPERTY OF ANY
NATURE, WHETHER PATENT OR LATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT).  THE PROVISIONS OF THIS SECTION 8.1(c)
HAVE BEEN NEGOTIATED, AND THE FOREGOING PROVISIONS ARE INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF HABITABILITY, WITH RESPECT TO ANY
OF THE LEASED PROPERTY, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY
OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
 
(d)           Notwithstanding anything to the contrary set forth in this Lease,
Landlord shall be liable for and is not released from liability for clean up of
Hazardous Substances on, or under the LTACH Land prior to the Effective Date.
 
(e)           Tenant acknowledges and agrees that Tenant has examined the
condition of title to the Leased Property prior to the execution and delivery of
this Lease and has found such title to be satisfactory for the purposes
contemplated by this Lease.
 
(f)           Landlord represents and warrants to Tenant that Landlord has
received no written notice and has no knowledge of the existence of any
Hazardous Substance or Hazardous Material on or under the LTACH Land or the
Medical Center Land.

 
23

--------------------------------------------------------------------------------

 

Section 8.2.    Joinder.  Hospital Authority has executed the attached Joinder
to evidence, inter alia, its agreement to reinstate this Lease for a lease term
that shall not exceed the maximum term permitted by the Georgia Hospital
Authorities Law or any other Legal Requirement upon any termination of the
Medical Center Master Lease prior to the expiration thereof.  In such event,
Tenant agrees to attorn to the Hospital Authority.  Further, in such event, (i)
the Hospital Authority shall not be responsible for the return or repayment of
any security or other deposits made by Tenant with Landlord hereunder unless
Landlord has turned the same over to the Hospital Authority, and (ii) the
Hospital Authority shall not be liable or responsible for the cure or remedy of
any breach, violation, or default on the part of Landlord under this Lease that
occurred prior to termination of the Medical Center Master Lease, or of
Landlord’s right of possession of the Leased Property under the Medical Center
Master Lease.  Contemporaneously with the execution of this Lease, Landlord is
executing and delivering the Recognition, Non-Disturbance and Estoppel Agreement
in the form attached hereto as Exhibit F.
 
ARTICLE IX

 
REPAIR AND MAINTENANCE; COMPLIANCE WITH LAWS; INSURANCE
 
Section 9.1.    Repair and Maintenance.  Throughout the Term, Tenant, at its
sole cost and expense, shall keep and maintain all of the Leased Property,
including, without limitation, the LTACH Improvements in good repair and
condition and shall make all repairs, replacements and renewals, foreseen or
unforeseen, ordinary or extraordinary, necessary to put or maintain the Leased
Property and LTACH Improvements in such state of repair and condition, ordinary
wear and tear excepted.  Landlord shall not be required to maintain, repair or
rebuild all or any part of the Leased Property and LTACH Improvements.  Tenant
waives the right to (a) require Landlord to maintain, repair or rebuild all or
any part of the Leased Property and LTACH Improvements or (b) make repairs at
the expense of Landlord pursuant to any Legal Requirements, contract, easement,
covenant, condition or restriction at any time in effect.  In addition, Tenant
shall keep or cause to be kept the Leased Property and LTACH Improvements in a
safe and sanitary condition as required by all applicable Legal Requirements.
 
Tenant shall keep and maintain or cause to be kept and maintained the LTACH
Improvements in a safe, clean and attractive condition consistent with the
standards of maintenance and cleanliness in effect with respect to the balance
of the Medical Center Land and shall keep the LTACH Improvements, including
those items situated on the LTACH Land, free from any accumulations of dirt,
trash and other debris.  Tenant shall comply with and shall cause all of its
partners, officers, directors, employees, agents, contractors, invitees,
licensees and its sub-tenants and other occupants of any portion of the LTACH
Land to comply with all reasonable rules and regulations adopted from time to
time by Landlord relating to the use of the LTACH Land, including rules
regarding the placement of signage and landscaping.
 
Section 9.2.    Compliance with Laws.  During the Term, Tenant shall comply with
and cause the Leased Property and LTACH Improvements to be in compliance with
(i) all Legal Requirements applicable to the Leased Property and LTACH
Improvements or the uses conducted on the Leased Property and LTACH
Improvements, (ii) the provisions of any insurance policies required to be
maintained by Tenant with respect to the Leased Property and LTACH Improvements,
and (iii) the terms of any easements, covenants, conditions and restrictions
affecting the Leased Property and LTACH Improvements which are Permitted
Encumbrances or are created after the date of this Lease.  If any additions,
alterations, changes, repairs or other work of any nature, structural or
otherwise shall be required or ordered or become necessary at any time during
the Term because of any of these requirements, the entire expense of the same,
irrespective of when the same shall be incurred or become due, shall be the sole
liability of Tenant.

 
24

--------------------------------------------------------------------------------

 
 
Section 9.3.    Casualty Insurance.  Tenant at its sole expense shall keep all
LTACH Improvements on the Leased Property insured under the coverages listed on
Exhibit H.  Tenant shall furnish to Landlord evidence of coverage and any
renewals or replacements of this insurance.  Landlord shall be named an
additional insured under this policy.  Notwithstanding anything to the contrary
set forth herein, Tenant shall not be required to obtain and maintain the
insurance described in this Section until immediately prior to the termination
of the builder’s risk insurance on the LTACH Improvements described in Section
9.4 below.
 
Section 9.4.    Builder’s Risk Insurance.  Until completion of construction of
the LTACH Improvements, Tenant at its sole expense shall maintain or cause to be
maintained builder’s risk insurance covering the construction of the LTACH
Improvements, in an amount not less than the full insurable value of the LTACH
Improvements, and materials supplied in connection with the LTACH
Improvements.  Tenant shall furnish to Landlord evidence of coverage and any
renewals or replacements of this insurance.  Landlord shall be named as an
additional insured under this policy.  The Leasehold Mortgagee shall be a loss
payee under such builder’s risk insurance coverage.
 
Section 9.5.    Certificates.  Upon the full execution of this Lease, Tenant
shall deliver to Landlord certificates of the insurance required under this
Lease.  Each certificate shall provide that the insurer will not cancel the
policy except after thirty (30) days prior written notice to Landlord.  At least
ten (10) days prior to the expiration of each such insurance policy, Tenant
shall deliver to Landlord copies of a renewal policy or binder which shall
comply with the foregoing provisions with respect to prior notice of
cancellation thereof being given by the insurance company to Landlord.  In the
event of the failure of Tenant to procure and deliver such renewal policy or
policies or binder or binders therefor within the time above prescribed,
Landlord shall be permitted to do so and the premiums charged therefor shall be
borne and paid promptly by Tenant.
 
Section 9.6.    Liability Insurance.  Tenant agrees to maintain or cause to be
maintained at all times during the Term comprehensive general liability
insurance in which Landlord shall be named as an additional insured with limits
of liability as provided on Exhibit H.  All insurance policies required by this
provision shall be obtained by Tenant at Tenant’s expense.  Said insurance
policies shall provide for at least thirty (30) days notice to Landlord before
cancellation and shall include a waiver of subrogation by the insurance
carrier.  Leasehold Mortgagee shall be named as an additional insured.
 
Section 9.7.    Waiver of Subrogation.  Landlord and Tenant shall not be liable
to the other for loss or damage caused by fire or perils covered by insurance
policies maintained by the other party with respect to the LTACH Land or the
LTACH Improvements or any equipment or personal property contained therein, and
to the extent of such insurance, Landlord and Tenant, both on behalf of
themselves and their respective insurers, waive all rights of subrogation on
account of such loss or damage; provided, however, that this waiver shall not be
deemed operable to the extent of any reasonable “deductible” regarding the
applicable insurance coverage.

 
25

--------------------------------------------------------------------------------

 
 
Section 9.8.    Premiums.  All premiums and charges for all of said insurance
policies shall be paid by Tenant when due.  If Tenant shall fail and neglect to
make any payment when due, Landlord may, but shall not be obligated to, make
such payment or carry such policy, and the amount of any premium paid by
Landlord shall be repaid by Tenant promptly on demand.
 
ARTICLE X

 
ASSIGNMENT AND SUBLETTING
 
Section 10.1.    Right of Assignment, Sublease or Encumbrance.
 
(a)           Subject to the terms of Section 10.1(b), as applicable, Tenant may
freely sublease the Leased Property or any part thereof in connection with its
operation of the LTACH Improvements, and/or assign or encumber Tenant’s
leasehold interest in this Lease or its interest in the LTACH Improvements in
whole or in part at any time without the requirement of obtaining the prior
written approval of Landlord; provided, that (i) this Lease may not be assigned
to a Person that is a Competitor without, in each instance, the prior written
consent of Landlord, which may be given or withheld in Landlord’s sole and
absolute discretion, (ii) this Lease may not be assigned by Tenant to a Person
that is not a Qualified Operator without in each instance the prior written
consent of Landlord, which may be given or withheld in Landlord’s sole and
absolute discretion, and (iii) this Lease may be assigned to an entity
constituting a Leasehold Mortgagee (without regard to any assignment of an
existing Leasehold Mortgage to such entity) or any purchaser at a foreclosure
sale under a Leasehold Mortgage provided such Leasehold Mortgagee and/or
purchaser at a foreclosure sale is not a Competitor.  It is specifically agreed
that a Leasehold Mortgagee or purchaser at a foreclosure sale under a Leasehold
Mortgage need not be a Qualified Operator in order to take an assignment of this
Lease.  Tenant shall not be relieved of any of its obligations under this Lease
as a result of any assignment, sublease or other transfer, except as provided in
Section 10.2.

(b)           As used herein, the term “Competitor” shall mean (i) any Person
which owns or operates a hospital facility located in either Floyd, Polk,
Chattooga, Gordon or Bartow counties, Georgia, any Affiliate of such Person, any
successor or assign of such Person or an Affiliate, or any employee of any of
the aforesaid Person or Affiliate; or (ii) HCA Health Services of Georgia, Inc.,
a Georgia corporation, Redmond Park Hospital, L.L.C., a Georgia limited
liability company, any Affiliate of either of the aforesaid Persons, any
successor or assign of either of any of the aforesaid Persons, any employee of
any of the aforesaid Persons (during the term of such employment), or any Person
that owns and/or operates the healthcare facility currently known as the Redmond
Regional Medical Center.  As used herein, the term “Qualified Operator” shall
mean any Person which has directly or indirectly owned and/or has managed or
whose direct or indirect owners, or whose principals, managers and/or officers
have owned and/or managed for a period of at least five (5) years improved real
estate utilized by others for the provision of healthcare services which has a
financial profile consistent with investors of medical real estate.

(c)           In connection with any proposed assignment of this Lease, Tenant
shall provide to Landlord the following documentation and information:

(i)            the full name of any proposed assignee;

 
26

--------------------------------------------------------------------------------

 

(ii)            a disclosure statement describing the ownership of the proposed
assignee and the business conducted by such assignee;

(iii)            the intended use of the space to be leased or otherwise
occupied by the proposed assignee; and

(iv)            the form of transfer documentation.

Section 10.2.         Continuing Obligations of Tenant.  The making of any
assignment, encumbrance or subletting, in whole or in part, shall not operate to
relieve Tenant from Tenant’s obligations under this Lease and, notwithstanding
any such assignment, encumbrance or subletting, Tenant shall remain liable for
the payment of all Base Rent and Additional Rent and other charges and fees
payable under this Lease and for the due performance of all the covenants,
agreements, terms and provisions of this Lease to the full end of the term of
this Lease, whether or not there shall have been any prior termination of this
Lease by summary proceedings or otherwise; provided that, following Tenant’s
assignment of its entire interest in this Lease, the assigning Tenant shall be
completely relieved of any and all obligations accruing under this Lease after
the date of such assignment upon Landlord’s receipt of documentation evidencing
that the party to whom such interest in this Lease was assigned (i) has assumed
in writing all obligations of Tenant under this Lease from and after any such
assignment and (ii) is a permitted assignee under Section 10.1(a).  Any
instrument of transfer under this Section 10.2 shall be expressly made subject
to this Lease (including the use restrictions herein) and all rights, interest,
estates and options of Landlord hereunder.
 
Section 10.3.          Consent of Landlord.  Any consent by Landlord herein
contained or hereafter given to any act or acts for which Landlord’s consent is
by the terms hereof required, shall be held to apply only to the specific
transaction hereby or thereby approved.
 
Section 10.4.          Obligations of Assignee.  Any assignee shall take this
Lease subject to all the covenants and agreements herein contained as of the
date it takes possession.  In no event shall Landlord ever be required to
subordinate its leasehold estate in the Leased Property or any Mortgage or other
encumbrance upon same to any holder of any interest in, or encumbrance on, the
leasehold interest of Tenant in the Leased Property.
 
Section 10.5.          Assignment by Landlord.  Landlord may freely assign its
interest, either in whole or in part, under this Lease and in the Leased
Property, and in such event and upon such transfer, the assigning Landlord shall
be relieved of all obligations which accrue under this Lease from and after such
transfer; provided, however, any party to whom any interest under this Lease or
in the Leased Property may be transferred shall assume all obligations of
Landlord under this Lease from and after any such transfer.

 
27

--------------------------------------------------------------------------------

 

ARTICLE XI

 
FINANCING
 
Section 11.1.    Right to Mortgage Leasehold.  Tenant may freely pledge or grant
a mortgage, deed of trust, deed to secure debt or other assignment or pledge on
Tenant’s leasehold interest in this Lease or interest in the LTACH Improvements
in whole or in part at any time and from time to time, without the requirement
of obtaining any approval, consent or joinder of Landlord, provided that such
pledge or grant is to a Leasehold Mortgagee and provided further that Landlord
is notified prior to the closing of the creation of any such Leasehold Mortgage
or within thirty (30) days after the creation of such Leasehold Mortgage.
 
Section 11.2.    Notice of Leasehold Mortgage. At any time after Tenant has
granted a Leasehold Mortgage to a Leasehold Mortgagee, Tenant shall provide to
Landlord the address to which notices are specified to be sent to the person or
entity holding the Leasehold Mortgage).  It is specifically agreed that there
may be more than one Leasehold Mortgagee under this Lease.  Upon delivery to
Landlord of written notice of the Leasehold Mortgage, the Leasehold Mortgagee
thereunder shall be entitled to the benefit of all provisions of this Lease
pertaining to or granting any rights to Leasehold Mortgagee.  Reference to
Leasehold Mortgagee in the following Sections of this Article XI shall mean all
Leasehold Mortgagees in respect to which notice has been provided to Landlord
pursuant to this Section 11.2.
 
Section 11.3.    Default Notice.  Landlord, upon providing Tenant any notice of
(i) default under this Lease, or (ii) a termination of this Lease, shall at the
same time provide a copy of such notice to every Leasehold Mortgagee.  No such
notice by Landlord to Tenant shall be deemed to have been duly given unless and
until a copy thereof has been so provided to every Leasehold Mortgagee.  After
such notice has been given to a Leasehold Mortgagee, such Leasehold Mortgagee
shall have the same period, running concurrently, after the giving of such
notice upon it for remedying any default or causing the same to be remedied as
is given Tenant after the giving of such notice to Tenant plus, in each
instance, the additional periods of time specified in Sections 11.4 and 11.5 to
remedy, commence remedying, or cause to be remedied the defaults specified in
any such notice.  Landlord shall accept such performance by or at the
instigation of such performance by Leasehold Mortgagee as if the same had been
done by Tenant.  Tenant authorizes each Leasehold Mortgagee to take any such
action at such Leasehold Mortgagee’s option and does hereby authorize entry upon
the Leased Property by the Leasehold Mortgagee for such purpose.
 
Section 11.4.    Notice to Leasehold Mortgagee.
 
(a)           Notice.  Anything contained in this Lease to the contrary
notwithstanding, if any default shall occur that entitles Landlord to terminate
this Lease, Landlord shall have no right to terminate this Lease unless, during
or following the expiration of the period of time given Tenant to cure such
default, Landlord shall notify (such notice being herein called the “Termination
Notice”) every Leasehold Mortgagee of Landlord’s intent to so terminate at least
thirty (30) days in advance of the proposed effective date of such termination
if the nature of such default is the failure to pay a sum of money to Landlord
or pursuant to any Fee Mortgage, and at least sixty (60) days in advance of the
proposed effective date of such termination in the event of any other
default.  The provisions of Section 11.5 below shall apply if, during such
thirty (30) or sixty (60) day Termination Notice period, any Leasehold Mortgagee
shall:

 
28

--------------------------------------------------------------------------------

 

(i)           Notify Landlord of such Leasehold Mortgagee’s desire to nullify
such notice; and
 
(ii)          Pay or cause to be paid all Rent and other payments then due and
in arrears as specified in the Termination Notice and that may become due during
such thirty (30)-day period provided that any Leasehold Mortgagee shall not be
required to pay any amount before the same is due and owing under this Lease;
and
 
(iii)         Comply or in good faith, with reasonable diligence and continuity,
commence to comply with all nonmonetary requirements of this Lease then in
default and reasonably susceptible of being complied with by such Leasehold
Mortgagee; provided, however, that such Leasehold Mortgagee shall not be
required during such sixty (60)-day period to cure or commence to cure any
default consisting of Tenant’s failure to satisfy and discharge any lien,
charge, or encumbrance against the Tenant’s interest in this Lease junior in
priority to the lien of the mortgage held by such Leasehold Mortgagee.
 
(b)           Notice Address.  Any notice to be given by Landlord to a Leasehold
Mortgagee pursuant to any provision of this Section shall be deemed properly
addressed if sent to the address specified for Leasehold Mortgagee in the notice
referred to in Section 11.2 unless notice of a change of Mortgage ownership has
been given to Landlord setting forth the address of the party or parties to whom
the Mortgage was assigned.
 
Section 11.5.          Procedure on Default
 
(a)           Extension.  If Landlord shall elect to terminate this Lease by
reason of any default of Tenant, and a Leasehold Mortgagee shall have proceeded
in the manner provided for by Section 11.4 of this Section, the specified date
for the termination of this Lease as fixed by Landlord in its Termination Notice
shall be extended for a period of six (6) months, provided that such Leasehold
Mortgagee shall, during such six-month period:

(i)           Pay or cause to be paid the Rent and other monetary obligations of
Tenant under this Lease as the same become due, and continue its good faith
efforts to perform all of Tenant’s other obligations under this Lease, including
during any period during which the Leasehold Mortgagee has possession of the
Leased Property, the obligation to operate and maintain the LTACH Improvements
and the Leased Property in accordance with the standards of this Lease,
excepting (A) obligations of Tenant to satisfy or otherwise discharge any lien,
charge, or encumbrance against Tenant’s interest in this Lease junior in
priority to the lien of the mortgage held by such Leasehold Mortgagee and (B)
past non-monetary obligations then in default and not reasonably susceptible of
being cured by such Leasehold Mortgagee; and

 
29

--------------------------------------------------------------------------------

 
 
(ii)           If not enjoined or stayed, take steps to acquire or sell Tenant’s
interest in this Lease by Foreclosure of the Leasehold Mortgage or other
appropriate means and prosecute the same to completion with reasonable
diligence.
 
(b)           Further Extension.  If at the end of such six-month period such
Leasehold Mortgagee is complying with Section 11.5(a), this Lease shall not then
terminate; and the time for completion by such Leasehold Mortgagee of
proceedings pursuant to Section 11.5(a)(ii) above shall continue so long as such
Leasehold Mortgagee is enjoined or stayed and thereafter for so long as such
Leasehold Mortgagee proceeds to complete steps to acquire or sell Tenant’s
leasehold interest in this Lease by Foreclosure of the Leasehold Mortgage or by
other appropriate means with reasonable diligence and continuity, provided,
however, that notwithstanding anything to the contrary contained herein, all
extensions shall expire and this Lease shall terminate upon the expiration of
one (1) year following the end of such six (6)-month period referenced in
Section 11.5(a) above if any default giving rise to an extension of the term of
this Lease remains uncured at the end of such period.  Nothing in this Section
11.5(b), however, shall be construed to extend this Lease beyond the Term, or to
require a Leasehold Mortgagee to continue such Foreclosure proceedings after the
default has been cured. If the default shall be cured and the Leasehold
Mortgagee shall discontinue such Foreclosure proceedings, this Lease shall
continue in full force and effect as if Tenant had not defaulted under this
Lease.

(c)           Continuation.  If a Leasehold Mortgagee is complying with Section
11.5(a) and acquires the Tenant’s leasehold interest within the time provided in
Section 11.5(b), then upon the Leasehold Mortgagee’s acquisition of Tenant’s
leasehold interest herein by such Leasehold Mortgagee, this Lease shall continue
in full force and effect as if Tenant had not defaulted under this Lease.

(d)           Not Assignment.  The making of a Leasehold Mortgage as permitted
by this Section shall not be deemed to constitute an assignment or transfer of
this Lease or of the leasehold interest hereby created, nor shall any Leasehold
Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or
of the leasehold interest hereby created so as to require such Leasehold
Mortgagee, as such, to assume the performance of any of the terms, covenants, or
conditions on the part of the Tenant to be performed hereunder.  The purchaser
at any sale of this Lease and of the leasehold interest hereby created in any
proceedings for the Foreclosure of any Leasehold Mortgage, or the assignee or
transferee of this Lease and of the leasehold interest hereby created under any
instrument of assignment or transfer in lieu of the Foreclosure of any Leasehold
Mortgage, or any Leasehold Mortgagee or its nominee or designee who shall
acquire this Lease and the leasehold interest created hereby, whether by
Foreclosure, assignment in lieu thereof, or otherwise, or pursuant to a New
Lease (as hereinafter defined), shall be required to be a permitted assignee
under Article X of this Lease and shall not be a Competitor, and shall be
required to comply with all use restrictions and all other provisions of this
Lease and to perform all of the terms, covenants, and conditions on the part of
the Tenant to be performed hereunder from and after the date of such purchase
and assignment.

 
30

--------------------------------------------------------------------------------

 

(e)           Further Assignment.  Any acquiror of the leasehold interest of
Tenant pursuant to any Realization Proceedings, or any Leasehold Mortgagee (or
its nominee or designee) who shall acquire the leasehold interest by Realization
Proceedings or otherwise, or a tenant under a New Lease [as defined in Section
11.6], may, upon acquiring Tenant’s leasehold interest, without further consent
of Landlord, sell and assign the leasehold interest on such terms and to such
persons and organizations as are acceptable to such Leasehold Mortgagee or
acquiror, provided that such assignee shall be a permitted assignee pursuant to
Article X of this Lease and shall not be a Competitor and has delivered to
Landlord its written agreement to be bound by all of the provisions of this
Lease to the same extent as the original Tenant, including any and all use
restrictions and all other provisions of this Lease.

Section 11.6.    New Lease.  In the event of the termination of this Lease as a
result of Tenant’s default or in connection with any bankruptcy, insolvency or
similar proceeding involving either Landlord or Tenant, including any rejection
under Section 365 of the Bankruptcy Code, or otherwise, Landlord shall, in
addition to providing the notices of default and termination as required by
Sections 11.3 and 11.4 above, provide the Leasehold Mortgagee with written
notice that the Lease has been terminated, together with a statement of all sums
that would at the time be due under the Lease but for such termination, and of
all other defaults, if any, then known to Landlord.  Landlord agrees to enter
into a new lease (herein called a “New Lease”) of the Leased Property with such
Leasehold Mortgagee, or a designee that is a permitted assignee pursuant to
Article X of this Lease and shall not be a Competitor, for the remainder of the
term of this Lease, effective as of the date of termination, at the same Rent,
and upon the terms, covenants, restrictions, and conditions (but excluding
requirements that are not applicable or that have already been fulfilled) of
this Lease, provided:
 
(a)           Request.  Such Leasehold Mortgagee shall make written request upon
Landlord for such New Lease within sixty (60) days after the date such Leasehold
Mortgagee receives notice from Landlord of the termination of this Lease
pursuant to this Article XI.

(b)           Payment.  Such Leasehold Mortgagee or its designee shall pay or
cause to be paid to Landlord at the time of the execution and delivery of such
New Lease, any and all sums that are at the time of execution and delivery
thereof due pursuant to this Lease regardless of such termination and, in
addition thereto, all reasonable expenses, including reasonable attorney’s fees,
that Landlord shall have incurred by reason of such termination and the
execution and delivery of the New Lease and that have not otherwise been
received by Landlord from Tenant or other party in interest under Tenant.  Upon
the execution of such New Lease, Landlord shall allow to the tenant named
therein as an offset against the sums otherwise due under this Section 11.6 or
under the New Lease, an amount equal to the gross income derived by Landlord
from the Leased Property during the period from the date of termination of this
Lease to the date of the execution of such New Lease.  In the event of a
controversy as to the amount to be paid to Landlord pursuant to this Section
11.6, the payment obligation shall be satisfied if Landlord shall be paid the
amount not in controversy, and the Leasehold Mortgagee or its designee shall
agree to pay and additional sum ultimately determined to be due plus interest at
the Prime Rate.  The parties shall cooperate to determine any disputed amount
promptly in accordance with the terms of this Lease.

(c)           Other Defaults.  Such Leasehold Mortgagee or its designee shall
agree to remedy any of Tenant’s defaults of which said Leasehold Mortgagee was
notified by Landlord’s Notice of Termination and that are reasonably susceptible
of being so cured by Leasehold Mortgagee or its designee.

 
31

--------------------------------------------------------------------------------

 

(d)           Priority.  Any New Lease made pursuant to this Section 11.6 shall
be prior to any mortgage or other lien, charge, or encumbrance of the Leased
Property by which Tenant’s leasehold interest was also prior to this Lease on
the Effective Date, and the tenant under such New Lease shall have the same
right, title, and interest in and to any subleases, licenses, concessions or
similar rights or interests therein, and to the Leased Property and the
buildings and improvements thereon as Tenant had under this Lease; provided,
however, that Landlord shall not make any warranty of title, express or implied,
with respect to any New Lease, except for any liens, claims or encumbrances
created by Landlord or arising through Landlord as of the Effective
Date.  Notwithstanding the foregoing provisions of this Section 11.6(d), any New
Lease shall, in all events, be subject to the terms of the REA and the Medical
Center Master Lease.

(e)           New Lease Priorities.  If more than one Leasehold Mortgagee shall
request a New Lease pursuant to this Section 11.6, Landlord shall enter into
such New Lease with the Leasehold Mortgagee whose mortgage is prior in lien, or
with the designee of such Leasehold Mortgagee.  Landlord, without liability to
Tenant or any Leasehold Mortgagee with an adverse claim, may rely upon a title
insurance policy issued by a responsible title insurance company doing business
in the county in which the Leased Property is located naming Landlord and the
Tenant under such New Lease as insureds (and paid for by such Tenant), as the
basis for determining the appropriate Leasehold Mortgagee who is entitled to
such New Lease.
 
Section 11.7.    Leasehold Mortgagee Need Not Cure Specified Defaults.  Nothing
herein contained shall require any Leasehold Mortgagee or its designee as a
condition to its exercise of rights hereunder to cure any default of Tenant not
reasonably susceptible of being cured by such Leasehold Mortgagee or its
designee in order to comply with the provisions of Section 11.5 or as a
condition of entering into the New Lease provided for by Section 11.6 of this
Section, provided, however, such Leasehold Mortgagee shall be obligated to
remedy any continuing defaults under Article V or Article X which survive the
termination of this Lease and the execution of a New Lease.
 
Section 11.8.    Legal Proceedings.  Landlord shall give each Leasehold
Mortgagee prompt notice of any legal proceedings between Landlord and Tenant
involving obligations under this Lease.  Each Leasehold Mortgagee shall have the
right to intervene in any such proceedings and be made a party to such
proceedings, and the parties do hereby consent to such intervention; provided
that no Leasehold Mortgagee which intervenes shall be entitled to an award of
attorneys’ fees or other costs and expenses from Landlord.  In the event that
the Leasehold Mortgagee shall not elect to intervene or become a party to any
such proceedings, Landlord shall give the Leasehold Mortgagee notice of, and a
copy of any order or decision made in any such proceedings, which shall be
binding on any Leasehold Mortgagee not intervening after receipt of notice
thereof.
 
Section 11.9.    No Merger.  So long as any Leasehold Mortgage is in existence,
unless all Leasehold Mortgagees shall otherwise expressly consent in writing,
the leasehold interest to the Leased Property and the leasehold interest of
Tenant therein created by this Lease shall not merge but shall remain separate
and distinct, notwithstanding the acquisition of said leasehold interest and
said leasehold interest by Landlord or by Tenant on by a third party, by
purchase or otherwise.

 
32

--------------------------------------------------------------------------------

 
 
Section 11.10.        Erroneous Payments.  No payments made to Landlord by a
Leasehold Mortgagee shall constitute agreement that such payment was, in fact,
due under the terms of this Lease; and a Leasehold Mortgagee having made any
payment to Landlord pursuant to Landlord’s wrongful, improper or mistaken notice
or demand shall be entitled to the return of any such payment or portion thereof
provided such Leasehold Mortgagee shall have made demand therefor not later than
one (1) year after the date of such payment.
 
Section 11.11.        Bankruptcy.  In the event of any proceeding by either
Landlord or Tenant under the United States Bankruptcy Code (Title 11 U.S.C.) as
now or hereafter in effect:
 
(a)           Rejection by Tenant.  If the Lease is rejected in connection with
a bankruptcy proceeding by Tenant or a trustee in bankruptcy for Tenant, such
rejection shall be deemed an assignment by Tenant to the Leasehold Mortgagee (or
if there is more than one Leasehold Mortgagee, to the one highest in priority)
of the leasehold interest and all of Tenant’s interest under this Lease, in the
nature of an assignment in lieu of Foreclosure, and this Lease shall not
terminate and the Leasehold Mortgagee shall have all the rights and be charged
with all obligations of the Tenant under this Lease (as such obligations may be
affected by this Article XI), from and after the date of rejection, as if such
bankruptcy proceeding had not occurred, unless such Leasehold Mortgagee shall
reject such deemed assignment by notice in writing to Landlord within thirty
(30) days following the later of (i) rejection (or deemed rejection) of the
Lease by Tenant or Tenant’s trustee in bankruptcy; or (ii) approval of such
rejection by the bankruptcy court.  If any court of competent jurisdiction shall
determine that this Lease shall have been terminated notwithstanding the terms
of the preceding sentence as a result of rejection by Tenant or the trustee in
connection with any such proceeding, the rights of any Leasehold Mortgagee to a
new lease from Landlord pursuant to Section 11.6 hereof shall not be affected
thereby.

(b)           Rejection by Landlord.  If the Lease is rejected by Landlord or by
Landlord’s trustee in bankruptcy:

(i)           Tenant shall not have the right to treat this Lease as terminated
except with the prior written consent of all Leasehold Mortgagees; and the right
to treat this Lease as terminated in such event shall be deemed assigned to each
and every Leasehold Mortgagee, whether or not specifically set forth in any such
Leasehold Mortgage, so that the concurrence in writing of Tenant and each
Leasehold Mortgagee shall be required as a condition to treating this Lease as
terminated in connection with such proceeding.

 
33

--------------------------------------------------------------------------------

 

(ii)           If this Lease is not treated as terminated in accordance with
Section 11.11(b)(i) above, then this Lease shall continue in effect upon all the
terms and conditions set forth herein, including the covenant to pay Rent, and
all options to renew, but excluding requirements that are not then applicable or
pertinent to the remainder of the term hereof.  Thereafter Tenant or its
successors shall be entitled to any offsets against Rent payable hereunder for
any damages arising from such rejection and any such offset properly made shall
not be deemed a default under this Lease.  If Tenant shall fail to pay to
Landlord any amount previously offset within ten (10) days after a final and
nonappealable order or judgment that Tenant is required to pay such amount, then
Landlord shall have all rights and remedies (subject to all other terms and
conditions) provided in this Lease with respect to the nonpayment of Rent.  The
lien of any Leasehold Mortgage then in effect shall extend to the continuing
possessory rights of Tenant following such rejection with the same priority with
respect to each such Leasehold Mortgage as it would have enjoyed had such
rejection not taken place.
 
(iii)           If, in any bankruptcy or similar proceeding in which Landlord is
the debtor, the Leased Property are sold or proposed to be sold free and clear
of the interests of Tenant under this Lease, each of Tenant and any Leasehold
Mortgagees shall be entitled to notice thereof, to contest such sale or proposed
sale, and shall be entitled to petition for and to receive adequate protection
of their respective interests under this Lease.
 
Section 11.12.        Rights Against Tenant.  The rights of a Leasehold
Mortgagee hereunder shall not diminish any right or claim of Landlord against
Tenant pursuant to this Lease.
 
Section 11.13.        Lease Amendment Requested by Leasehold Mortgagee.  In the
event Tenant, at any time, seeks to obtain or modify a Leasehold Mortgage, then
Landlord agrees to amend this Lease from time to time to the extent requested by
the Leasehold Mortgagee, provided, however, any amendments that affect the Rent
or other sums of money payable by Tenant under this Lease, the Term of this
Lease or any extension rights under this Lease, rights of assignment or other
material obligations of Tenant under this Lease, the material rights of Landlord
under this Lease or the REA and/or the use restrictions under Article V of this
Lease be satisfactory to Landlord in its sole and absolute discretion.  All
reasonable expenses incurred by Landlord in connection with any such amendment
shall be paid by Tenant.
 
Section 11.14.        Mortgage of the Fee.  Any Mortgage that now or hereafter
covers all or any part of Landlord’s interest in the Leased Property shall be
subordinate to the rights and interests of Tenant under this Lease and of the
Leasehold Mortgage.  No foreclosure of any Mortgage of Landlord’s interest in
the Leased Property shall affect Tenant or Tenant’s possession of the Leased
Property under this Lease or the Leasehold Mortgage.  However, Tenant agrees
that, upon the foreclosure of any such Mortgages, or sale of the Leased Property
or any interest therein, pursuant to any such Mortgages, to attorn to the
purchaser at any such sale or foreclosure and to recognize such purchaser as
Landlord under this Lease; provided that, such purchaser agrees in writing to
recognize Tenant’s interest under this Lease.  The agreement of Tenant to attorn
contained in the immediately preceding sentence shall survive any such
foreclosure sale or trustee’s sale.
 
Section 11.15.        No Subordination of Fee.  Nothing contained in this Lease
shall be or ever will be construed as a subordination of Landlord’s leasehold
interest in the Leased Property or its reversionary interest in the LTACH
Improvements to any Leasehold Mortgage or as a subordination of the Hospital
Authority’s fee interest in the Leased Property or its reversionary interest in
the LTACH Improvements to any Leasehold Mortgage.  Upon the expiration or
termination of this Lease, except as specifically otherwise provided in this
Article XI, any Leasehold Mortgage of Tenant’s interest in the Leased Property
shall be null and void.

 
34

--------------------------------------------------------------------------------

 
 
Section 11.16.          Enforcement by Mortgagee.  The provisions of this Lease
shall be expressly enforceable by Leasehold Mortgagee and such Leasehold
Mortgagee’s successor or assign.
 
Section 11.17.         Amendment/Cancellation.  This Lease shall not be
surrendered, modified, amended or mutually cancelled by the Landlord and Tenant
without the consent of the Leasehold Mortgagee.  Notwithstanding the foregoing,
this Section 11.17 shall not apply to Landlord’s rights to terminate this Lease
as a result of any Event of Default, it being understood and agreed by Landlord
and Tenant that pursuant to Section 11.3 above, the Leasehold Mortgagee shall
receive a copy of all notices that Landlord provides to Tenant pursuant to this
Lease.
 
ARTICLE XII

 
CASUALTY AND CONDEMNATION
 
Section 12.1.    Casualty.
 
If the LTACH Improvements shall be damaged or rendered wholly or partially
untenantable by fire or other casualty during the Term, no Rent shall abate
during such period, whether the LTACH Land and LTACH Improvements are tenantable
or not.  Tenant shall promptly rebuild or repair the LTACH Improvements to
substantially their former condition.
 
Section 12.2.    Condemnation.
 
(a)           Unless this Lease is terminated pursuant to Section 12.2(b), if a
non-material portion of the LTACH Land and LTACH Improvements shall be taken by
condemnation or other eminent domain proceedings pursuant to any law, general or
special, by a Condemning Authority, or is sold to a Condemning Authority under
threat of the exercise of that power, this Lease shall continue and there shall
be no abatement of the Rent.  As used herein, the term “non-material portion”
with respect to the LTACH Land and/or LTACH Improvements shall mean any portion,
the taking of which would not materially interfere with the use of the LTACH
Improvements for the purposes contemplated under Section 5.1.
 
(b)           If all or a material portion of the LTACH Land and LTACH
Improvements is so taken or sold, Tenant may terminate this Lease by giving
written notice to Landlord.  As used herein, the term “material portion” with
respect to the LTACH Land and LTACH Improvements shall mean such portion of the
LTACH Land and/or LTACH Improvements which, if taken, would render the balance
of the LTACH Land and LTACH Improvements reasonably incapable of being
economically operated for the purposes set forth in Section 5.1.  This Lease
shall then terminate on the day following the vesting of title in the Condemning
Authority, except as provided below and except with respect to obligations and
liabilities of Landlord and Tenant under this Lease that have arisen on or
before the date of termination.  Base Rent and Additional Rent and other charges
under this Lease shall be prorated as of the date of termination, and upon
termination Tenant shall satisfy and cause to be released any mortgages
(including any Mortgage), liens or other encumbrances placed or suffered to be
placed on the Leased Property and LTACH Improvements by Tenant.  In the event
that Tenant shall fail to exercise its option to terminate this Lease as
provided in this subsection, or in the event that a part of the Leased Property
shall be taken under circumstances under which Tenant will have no such option,
Tenant shall be entitled to all condemnation proceeds from the Leased Property
taken by the Condemning Authority, but not those proceeds deriving from any
other portion of the Medical Center Land, and Tenant shall have the sole
responsibility for restoring the LTACH Improvements to a complete architectural
unit, to the extent reasonably feasible.

 
35

--------------------------------------------------------------------------------

 
 
(c)           Any award or compensation paid on account of any taking or sale
described in this Section 12.2 wherein this Lease is terminated shall be divided
between Landlord and Tenant as follows: first to Tenant for the value of
Tenant’s leasehold interest in the Leased Property taken (as determined by the
condemning authority) which amount shall be payable to any Mortgagee; next, to
Tenant for the value of the LTACH Improvements taken less the present value of
Landlord’s reversionary interest in those LTACH Improvements, and the balance to
Landlord.
 
ARTICLE XIII

 
DEFAULT; CERTAIN RIGHTS AND REMEDIES
 
Section 13.1.    Default by Tenant.
 
(a)           The occurrence of any one or more of the following events (any
such event being specified herein as a “failure” or “default”) shall constitute
an “Event of Default” under this Lease: (i) a failure by Tenant to make:  (x)
any payment of Base Rent which continues unremedied for a period of ten (10)
days after written notice thereof is given to Tenant by Landlord or (y) any
payment of Additional Rent or other sum herein required to be paid by Tenant
which continues unremedied for a period of thirty (30) days after written notice
thereof is given to Tenant by Landlord; or (ii) failure by Tenant to perform and
observe, or a violation or breach of, any other provision in this Lease, with
such default continuing for a period of thirty (30) days after written notice
thereof by Landlord to Tenant or, if such default is of such a nature that it
cannot reasonably be cured within such period of thirty (30) days, as
applicable, such period shall be extended for such longer time as is reasonably
necessary [but in no event to exceed a total of one (1) year] and such extension
period not to terminate any sooner than the termination of Leasehold Mortgagee’s
right to cure any such default; provided, that Tenant has commenced to cure such
default within said period of thirty (30) days, and is actively, diligently and
in good faith proceeding with continuity to remedy such default and provided
that any delay in curing such default shall not result in a material adverse
effect on the value of the Leased Property.
 
(b)           Upon the occurrence of any Event of Default, Landlord may
terminate this Lease, and exercise any and all other remedies available, at law
or in equity to obtain possession of the Leased Property; provided, however,
that as a condition precedent to Landlord’s right to terminate this Lease after
the occurrence of an Event of Default, Landlord shall have provided Tenant and
Leasehold Mortgagee with an additional written notice (the “Final Notice”) of
Landlord’s intent to terminate, and Tenant (or Leasehold Mortgagee, if
applicable) thereafter shall have failed to cure such Event of Default within
ninety (90) days after the delivery of such Final Notice.  Notwithstanding any
action by Landlord, unless and until any termination of this Lease, the
liability of Tenant for the Base Rent and Additional Rent shall not be
relinquished, diminished, or extinguished for the balance of the Term.

 
36

--------------------------------------------------------------------------------

 
 
(c)           In the event of any expiration or termination of this Lease
pursuant to Section 13.1(b), Tenant shall peaceably quit and surrender the
Leased Property to Landlord and Landlord may, without further notice, enter
upon, re-enter, possess, and repossess itself thereof, by force, summary
proceedings, ejectment, or otherwise, and may dispossess and remove Tenant and
all other persons and Property from the Leased Property (without being liable
for damages therefor or deemed guilty of any manner of trespass or constructive
eviction, and without prejudice to any remedies for arrears of Rent or breach of
covenant) and may have, hold and enjoy the Leased Property and the right to
receive all rental and other income of and from the same, or may otherwise
exercise any rights set forth in this Lease.  Any personalty or other property
belonging to Tenant or to any persons holding by, through, or under Tenant
otherwise found upon the Leased Property, may, at the option of Landlord, be
removed therefrom and stored in any public warehouse at the cost of and for the
account of Tenant, or may be deemed abandoned.
 
(d)           Upon any termination of this Lease pursuant to Section 13.1(b),
Tenant shall peaceably quit and surrender the Leased Property to Landlord and
Landlord may without further notice enter upon, re-enter, possess and repossess
itself thereof, by force, summary proceedings, ejectment or otherwise, and may
dispossess and remove Tenant and all other persons and property from the Leased
Property (without being liable for damages therefor or deemed guilty of any
manner of trespass or constructive eviction, and without prejudice to any
remedies for arrears of Rent or breach of covenant) and may have, hold and enjoy
the Leased Property and the right to receive all rental and other income of and
from the same, or may otherwise exercise any rights set forth in this
Lease.  Any personalty or other property belonging to Tenant or to any persons
holding by, through, or under Tenant otherwise found upon the Leased Property,
may, at the option of Landlord, be removed therefrom and stored in any public
warehouse at the cost of and for the account of Tenant, or may be deemed
abandoned.
 
(e)           If any statute or rule of law governing a proceeding in which
liquidated final damages are to be proved shall validly limit the amount thereof
to an amount less than the amount above agreed upon, Landlord shall be entitled
to the maximum amount allowable under such statute or rule of law.
 
(f)           No right or remedy conferred upon or reserved to Landlord in this
Lease is intended to be exclusive of any other right or remedy; and each and
every right and remedy shall be cumulative and in addition to any other right or
remedy contained in this Lease.  No delay or failure by Landlord to enforce its
rights under this Lease shall be construed as a waiver, modification or
relinquishment thereof.  In addition to the other remedies provided in this
Lease, Landlord shall be entitled, to the extent permitted by applicable law, to
injunctive relief in case of the violation or attempted or threatened violation
of any of the provisions of this Lease, or to specific performance of any of the
provisions of this Lease.
 
(g)           Tenant hereby waives and surrenders for itself and all those
claiming under it, including creditors of all kinds, any right and privilege
which it or any of them may have under any present or future law to redeem any
of the Leased Property or to have a continuance of this Lease after termination
of this Lease or of Tenant’s right of occupancy or possession pursuant to any
court order or any provision hereof.

 
37

--------------------------------------------------------------------------------

 
 
(h)           Each of Tenant and Landlord (herein called “Paying Party”) agrees
to pay to the other party (herein called “Demanding Party”) any and all
reasonable costs and expenses (including, without limitation, attorneys’ fees)
incurred by the Demanding Party in connection with any litigation or other
action instituted by the Demanding Party to enforce the obligations of the
Paying Party under this Lease, to the extent that the Demanding Party has
prevailed in any such litigation or other action.  Any amount payable by Tenant
to Landlord pursuant to this Section 13.1(h) shall be due and payable by Tenant
to Landlord as Additional Rent.
 
(i)           No waiver by a party of any breach by the other party of any of
its obligations, agreements or covenants hereunder shall be a waiver of any
subsequent breach of any obligation, agreement or covenant nor shall forbearing
by such party to seek a remedy for any breach by the other party shall be a
waiver of its rights and remedies with respect to such subsequent breach.
 
Section 13.2.    Default by Landlord.
    
(a)           The occurrence of any one or more of the following events (any
such event being specified herein as a “failure” or “default”) shall constitute
a “Landlord Event of Default” under this Lease:  failure by Landlord to perform
and observe, or a violation or breach of, any other provision in this Lease,
with such default continuing for a period of sixty (60) days after written
notice thereof by Tenant to Landlord or, if such default is of such a nature
that it cannot reasonably be cured within such period of sixty (60) days, as
applicable, such period shall be extended for such longer time as is reasonably
necessary; provided, that Landlord has commenced to cure such default within
said period of sixty (60) days, and is actively, diligently and in good faith
proceeding with continuity to remedy such default and provided that any delay in
curing such default shall not result in a material adverse effect on the value
of Tenant’s leasehold interest in the Leased Property.
 
(b)           If any Landlord Event of Default shall have occurred and shall
remain uncured after the applicable cure period, Tenant shall have the right at
its option, then or at any time thereafter, to do either one of the following
without demand upon or notice to Landlord:
 
(i)           Tenant may give Landlord notice of Tenant’s intention to terminate
this Lease on a date specified in such notice.  At the option of Tenant, upon
the date therein specified, unless the Landlord Event of Default for which the
termination is effected has been cured by Landlord, the Term shall expire and
terminate as if such date were the date hereinabove fixed for the expiration of
the Term, but Landlord shall remain liable for all its obligations hereunder
through the date of termination; or
 
(ii)           Tenant, without waiving or releasing any obligation of Landlord
hereunder, may (but shall be under no obligation to) cure the Landlord Event of
Default for the account and at the expense of Landlord.  All sums so paid by
Tenant and all costs and expenses (including reasonable attorneys’ fees) so
incurred, together with interest thereon at the Default Rate from the date on
which such sums or expenses are paid or incurred by Tenant, shall be paid by
Landlord to Tenant on demand.  The rights of Tenant hereunder to cure and to
secure payment from Landlord in accordance with this Section shall survive the
termination of this Lease.

 
38

--------------------------------------------------------------------------------

 
 
ARTICLE XIV

 
INDEMNIFICATION
 
Section 14.1.    Indemnification by Tenant.
 
Tenant shall indemnify, defend, save and hold Landlord harmless from and against
any and all liabilities, losses, or damages suffered or incurred by Landlord and
arising from the negligence or intentional wrongful act of Tenant or its
employees, officers, directors or agents.  In case any action or proceeding is
brought against Landlord by reason of any such claim against which Tenant has
agreed to defend, save and hold harmless pursuant to the preceding sentence,
Tenant covenants upon notice from Landlord to defend Landlord in such action,
with the expenses of such defense paid by Tenant, and Landlord will cooperate
and assist in the defense of such action or proceeding if reasonably requested
so to do by Tenant. The obligations of Tenant under this Section 14.1 shall
survive any expiration or termination of this Lease.
 
Section 14.2.    Indemnification by Landlord.
 
Landlord shall indemnify, defend, save and hold Tenant harmless from and against
any and all liabilities, losses, or damages suffered or incurred by Tenant
arising from the negligence or intentional wrongful act of Landlord or its
employees, officers, directors or agents.  In case any action or proceeding is
brought against Tenant by reason of any such claim against which Landlord has
agreed to defend, save and hold harmless pursuant to the preceding sentence,
Landlord covenants upon notice from Tenant to defend Tenant in such action, with
the expenses of such defense paid by Landlord, and Tenant will cooperate and
assist in the defense of such action or proceeding if reasonably requested so to
do by Landlord.  The obligations of Landlord under this Section 14.2 shall
survive any expiration or termination of this Lease.
 
39

--------------------------------------------------------------------------------

 
ARTICLE XV

 
HAZARDOUS SUBSTANCES
 
Section 15.1.    Hazardous Substances.

(a)           Tenant agrees that it will not on, about, or under the Leased
Property, make, treat or dispose of any “hazardous substances” as that term is
defined in the Comprehensive Environmental Response, Compensation and Liability
Act, and the rules and regulations promulgated pursuant thereto, as from time to
time amended, 42 U.S.C. § 9601 et seq. and Resource Conservation and Recovery
Act, 42 U.S.C. § 6941 (collectively, the “Act”); but the foregoing shall not
prevent the use of any hazardous substances in accordance with applicable Legal
Requirements.  Tenant covenants that it will at all times comply with the Act
and any other federal, state or local laws, rules or regulations governing
“Hazardous Materials”.  “Hazardous Materials” as used herein shall mean all
chemicals, petroleum, crude oil or any fraction thereof, hydrocarbons,
polychlorinated biphenyls (PCBs), asbestos, asbestos-containing materials and/or
products, urea formaldehyde, or any substances which are classified as
“hazardous” or “toxic” under the Act; hazardous waste as defined under the Solid
Waste Disposal Act, as amended 42 U.S.C. § 6901; air pollutants regulated under
the Clean Air Act, as amended, 42 U.S.C. § 7401, et seq.; pollutants as defined
under the Clean Water Act, as amended, 33 U.S.C. § 1251, et seq., any pesticide
as defined by Federal Insecticide, Fungicide, and Rodenticide Act, as amended, 7
U.S.C. § 136, et seq., any hazardous chemical substance or mixture or imminently
hazardous substance or mixture regulated by the Toxic Substances Control Act, as
amended, 15 U.S.C. § 2601, et seq., any substance listed in the United States
Department of Transportation Table at 45 CFR 172.101; any chemicals included in
regulations promulgated under the above listed statutes; any explosives,
radioactive material, and any chemical or other hazardous substance regulated by
state statutes similar to the federal statutes listed above and regulations
promulgated under such state statutes.
 
(b)           (i) To the extent required by the Act and/or any federal, state or
local laws, rules or regulations governing Hazardous Materials, Tenant shall
remove any hazardous substances (as defined in the Act) and Hazardous Materials
hereafter existing on the Leased Property and whether or not arising out of or
in any manner connected with Tenant’s use or occupancy (including, without
limitation, use for purposes of the construction of leasehold improvements) of
the Leased Property from and after the date of this Lease and continuing through
the end of the Term; provided, that Tenant shall not be responsible, to the
extent existing or occurring before the Effective Date arising as the direct
result of action taken by Landlord, or as a result of a condition existing prior
to the Effective Date, for (A) any of the foregoing removal obligations, (B) the
violation of any applicable federal, state or local environmental law with
respect to the Leased Property, and/or (C) the “release” or “threatened release”
of or failure to remove, as required by this Section 15.1(b)(i), hazardous
substances and Hazardous Materials, all of which shall be the responsibility of
Landlord, or for any of the foregoing relating to any hazardous substance or
Hazardous Material brought or kept on or in the Leased Property.
 
(ii)           Tenant shall and hereby does agree to defend, indemnify and hold
Landlord, its lenders, officers, directors, shareholders, beneficial owners,
partners, members, and employees, harmless from and against any and all causes
of actions, suits, demands or judgments of any nature whatsoever, losses,
damages, penalties, expenses, fees, claims, costs (including response and
remedial costs), and liabilities, including, but not limited to, reasonable
attorneys’ fees and costs of litigation, arising out of or in any manner
connected with (i) the violation of any applicable federal, state or local
environmental law with respect to the Leased Property, and/or (ii) the “release”
or “threatened release” of or failure to remove, as required by this Section
15.1, “hazardous substances” (as defined in the Act) and Hazardous Materials
from the Leased Property or any portion or portions thereof, hereafter existing
during the Term whether or not arising out of or in any manner connected with
Tenant’s occupancy of the Leased Property during the Term.  This indemnification
shall survive the expiration or earlier termination of this Lease but this
indemnification shall not apply if the violation, release or threatened release
has migrated from, on or under the Medical Center Land or if Tenant is not
otherwise responsible under Section 15.1(b)(i).

 
40

--------------------------------------------------------------------------------

 

(iii)           Landlord shall and hereby does agree to defend, indemnify and
hold Tenant, its lenders, officers, directors, shareholders, beneficial owners,
partners, members, and employees, harmless from and against any and all causes
of actions, suits, demands or judgments of any nature whatsoever, losses,
damages, penalties, expenses, fees, claims, costs (including response and
remedial costs), and liabilities, including, but not limited to, reasonable
attorneys’ fees and costs of litigation, arising out of or in any manner
connected with each of the following conditions or events existing or occurring
before the Effective Date (i) the violation of any applicable federal, state or
local environmental law with respect to the Leased Property, and/or (ii) the
“release” or “threatened release” of or failure to remove hazardous substances
and Hazardous Materials from the Leased Property or any portion or portions
thereof.  This indemnification shall survive the expiration or earlier
termination of this Lease.
 
(c)           Tenant agrees that it will not install any underground storage
tank at the Leased Property.  Tenant agrees that it will not store combustible
or flammable materials on the Leased Property in violation of the Act or any
other federal, state or local laws, rules or regulations governing Hazardous
Materials.
 
ARTICLE XVI

 
RIGHT OF FIRST REFUSAL
 
Section 16.1.    Principal Subtenant RFO; Principal Subtenant RFR.  It is
recognized that the Principal Subtenant has a right of first offer (the
“Principal Subtenant RFO”) and a right of first refusal (the “Principal
Subtenant RFR”) for Tenant’s leasehold estate under this Lease and the LTACH
Improvements.  The Principal Subtenant RFO and Principal Subtenant RFR shall be
subordinate to the right of first refusal of Landlord (“Landlord RFR”) in this
Article XVI.  Therefore, if the Principal Subtenant elects to exercise the
Principal Subtenant RFO or Principal Subtenant RFR and purchase Tenant’s
leasehold estate under this Lease and the LTACH Improvements, Landlord shall
then have the benefit of the Landlord RFR, prior to any right of the Principal
Subtenant to purchase Tenant’s leasehold estate under this Lease and the LTACH
Improvements under the Principal Subtenant RFO or Principal Subtenant RFR, all
as more particularly provided below in this Article.  However, if Landlord does
not exercise the Landlord RFR, then, subject to the terms of Section 16.2 with
respect to any changes in the offer that is subject to the Landlord RFR, the
Principal Subtenant may acquire the LTACH Improvements and Tenant’s leasehold
estate under this Lease pursuant to the Principal Subtenant RFO or Principal
Subtenant RFR.  Contemporaneously with the delivery of any notice to the
Principal Subtenant initiating the Principal Subtenant RFO, Tenant shall
delivery a copy of such notice to Landlord.
 
Section 16.2.    Right of First Refusal Regarding Tenant’s Interest.  Under the
circumstances provided in this Section 16.2, Landlord shall have the Landlord
RFR as set forth in this Section 16.2, which Landlord RFR shall terminate on the
expiration or earlier termination of this Lease.  The Landlord RFR shall apply
as follows:

 
41

--------------------------------------------------------------------------------

 

(a)           If Tenant shall receive a bona fide offer or counter offer from
any third party (including but not limited to a negotiated purchase and sale
agreement between Tenant and Principal Subtenant pursuant to the Principal
Subtenant RFO) to (A) purchase or otherwise acquire all or any portion of the
LTACH Improvements (including without limitation, the exercise by the Principal
Subtenant of its right of first offer under the Principal Subtenant Sublease),
or (B) sell, assign or transfer in one or more transactions with parties that
are not direct or indirect partners or other equity owners of Tenant or
Affiliates of any partners or other equity owners of Tenant more than fifty
percent (50%) of the ownership in Tenant (any such purchase, acquisition,
transfer or sale shall hereinafter be referred to as a “RFR Transaction”), which
offer Tenant desires to accept (or has accepted subject to Landlord RFR), then
in any such event Tenant shall promptly deliver to Landlord a written notice
(the “ROFR Notice”) setting forth the material terms and conditions of the
proposed RFR Transaction, and if available, a copy of the proposed offer or
counter offer with respect thereto.  Landlord may, by giving written notice to
Tenant within ten (10) days after Landlord’s receipt of the ROFR Notice, elect
to purchase the LTACH Land and the LTACH Improvements or other property interest
or right which is subject to the proposed RFR Transaction and described in the
ROFR Notice (which LTACH Land and LTACH Improvements or other property interest
or right is hereinafter called the “Offer Property”), on the same terms and
conditions as those set forth in the ROFR Notice except that, notwithstanding
the foregoing, Landlord shall have the greater of ninety (90) days from the date
on which the ROFR Notice is delivered to Landlord or the time period provided in
the ROFR Notice in which to close the RFR Transaction.  The failure of Landlord
to exercise the Landlord RFR with respect to any proposed RFR Transaction which
is subject to the Landlord RFR within the time provided herein shall result in
an irrevocable waiver of Landlord’s rights under this Section as to the RFR
Transaction subject to the ROFR Notice (subject to the terms of this Section
regarding a change in price) but shall not result in the termination of the
Landlord RFR hereunder (i.e., the Landlord RFR shall be a continuing right,
binding upon the purchaser or transferee of such Offer Property with respect to
all subsequent proposed RFR Transactions of the LTACH Land and the LTACH
Improvements or any portion thereof or interest therein).  Notwithstanding the
foregoing, in the event that Landlord does not exercise the Landlord RFR as
provided herein, Tenant shall be free to consummate a RFR Transaction of the
Offer Property to the party specified in the ROFR Notice (or any Affiliate
thereof) at a price and upon terms no less favorable to Tenant than those so
offered to Landlord pursuant to the ROFR Notice; provided that, the terms of the
RFR Transaction may be modified by Tenant without requiring a new ROFR Notice to
Landlord unless the purchase price applicable to the Offer Property is reduced
below ninety-five percent (95%) of the price set forth in the original ROFR
Notice.  If the purchase price is reduced below ninety-five percent (95%) of the
purchase price set forth in the original ROFR Notice, then the transaction shall
constitute a new RFR Transaction and be required to be submitted under a new
ROFR Notice.  If Landlord elects to exercise the Landlord RFR within the time
and in the manner herein provided, then such RFR Transaction shall be
consummated on or before the date which is the later of (i) the date specified
for closing in the terms of the ROFR Notice or (ii) ninety (90) days after the
date of delivery of the ROFR Notice to Landlord, at the price and otherwise in
accordance with the terms and conditions of such ROFR Notice applicable to
Landlord as herein provided.
 
Section 16.3.    Notwithstanding anything to the contrary in Section 16.2, if a
proposed RFR Transaction includes property in addition to the Offer Property,
Tenant shall not have the right to include the Offer Property in such RFR
Transaction unless the purchase price of the Offer Property is specifically set
forth in the offer or counteroffer which is the subject of the ROFR Notice.

 
42

--------------------------------------------------------------------------------

 

Section 16.4.    If any consideration to be paid to Tenant pursuant to any
proposed RFR Transaction as specified in the ROFR Notice is in a form other than
cash, seller take-back financing, cash earn-outs and/or any other form of
deferred cash consideration (collectively, “Cash/Credit Consideration”), then if
Landlord timely and properly exercises its Landlord RFR with respect to such RFR
Transaction, Landlord shall pay a purchase price for such proposed RFR
Transaction in an amount equal to the sum of the Cash/Credit Consideration in
accordance with the ROFR Notice together with an amount equal to the present
fair market value of any such non-Cash/Credit Consideration at the time of
consummation of such RFR Transaction.
 
Section 16.5.    Limitation.  The foregoing provisions of this Article XVI shall
not apply to a foreclosure sale, or a transfer by a deed or assignment in lieu
of foreclosure to a Leasehold Mortgagee or its nominee and shall not apply to
said Leasehold Mortgagee or nominee as a seller after foreclosure if it shall be
the purchaser at the foreclosure sale, or after a deed or assignment in lieu of
foreclosure.
 
ARTICLE XVII

 
MISCELLANEOUS
 
Section 17.1.    Estoppel Certificates.  Landlord and Tenant shall, at any time
and from time to time upon not less than ten (10) days prior request by the
other party, or any Leasehold Mortgagee, execute, acknowledge, and deliver to
the other party a statement in writing certifying (i) that this Lease is
unmodified and in full force and effect (or if there have been any
modifications, that the same is in full force and effect as modified and stating
the modifications) and, if so, the dates to which the Rent and any other charges
have been paid in advance, (ii) that no default hereunder on the part of the
Landlord or Tenant, as the case may be, exists (except that if any such default
does exist, the certifying party shall specify such default), and/or (iii) to
other reasonable matters that may be requested by Landlord, Tenant, any existing
or proposed Leasehold Mortgagee, it being intended that any such statement
delivered pursuant to this Section 17.1 may be relied upon by any prospective
purchaser, encumbrancer, existing or prospective Leasehold Mortgagees or any
proposed assignee of the Leased Property.
 
Section 17.2.    Release.  If requested by Landlord, Tenant shall, upon
termination of this Lease, execute and deliver to Landlord an appropriate
release, in form proper for recording, of all Tenant’s interest in the Leased
Property, subject however to the rights of any Leasehold Mortgagee under Article
XI.
 
Section 17.3.    Non-Merger.  There shall be no merger of this Lease, the
leasehold interest created hereby with Landlord’s leasehold estate or the fee
estate in and to the Leased Property by reason of the fact that this Lease, the
leasehold interest created thereby or any interest in either thereof, may be
held directly or indirectly by or for the account of any Person who shall own
the Landlord’s leasehold estate or fee estate in and to the Leased Property, or
any portion thereof, and no such merger shall occur unless and until all Persons
at the time having any interest in Landlord’s leasehold estate and the fee
estate and all Persons having any interest in this Lease, the leasehold interest
including the holder of any mortgage upon the fee estate in and to the Leased
Property, shall join in a written instrument effecting such merger.
 
Section 17.4.    Holdover.  Should the Tenant continue to occupy the Leased
Property after the expiration of the Term or after a forfeiture incurred,
whether with or against the consent of Landlord, such tenancy shall be a tenancy
from month to month and in no event a tenancy from year to year.

 
43

--------------------------------------------------------------------------------

 
 
Section 17.5.    Notices.  All communications, notices and exchanges of
information contemplated herein or required or permitted to be given in
connection with this Lease shall be in writing, and shall be deemed to have been
given and to be effective (i) when delivered personally (including delivery by
express or courier services), (ii) if mailed, on the date received or, if
earlier, on the fourth (4th) business day after being deposited in the United
States First Class Mail as Registered or Certified Mail, postage prepaid, return
receipt requested, or (iii) if sent by facsimile transmission, when transmitted,
with confirmation, but not later than 5:00 p.m. local time of addressee (with
request for assurance of receipt in a manner customary for communications of
such type), provided that such communications, notices and exchanges are
addressed or transmitted to the other party as follows:
 
If to Landlord:
Floyd Healthcare Management, Inc.
 
304 Turner McCall Boulevard
 
Rome, Georgia  30161
 
Attention:  President and CEO (currently Kurt Stuenkel)
   
With copy to:
Floyd Healthcare Management, Inc.
 
Corporate Support Center
 
420 E. Second Avenue, Suite 103
 
Rome, Georgia 30161
 
Attention:  General Counsel (currently C. Wade Monk, Esq.)
   
With additional copy to:
Epstein Becker & Green, P.C.
 
945 E. Paces Ferry Road, N.E., Suite 2700
 
Atlanta, Georgia 30326
 
Attention:  M. Maxine Hicks, Esq.
   
If to Tenant:
Rome LTH Partners, LP
 
9301 North Central Expressway, Suite 300
 
Dallas, TX 75231
 
Attention:  Jason K. Dodd
   
With copy to:
Owens, Clary & Aiken, L.L.P.
 
700 N. Pearl Street, Suite 1600
 
Dallas, Texas 75201
 
Attention:  Robert L. Owens, Esq.
   

Each party hereto shall have the right, by giving not less than five (5) days
prior written notice to the other parties hereto, to change any address of such
party for the purpose of notices under this Section 17.5.

 
44

--------------------------------------------------------------------------------

 

Section 17.6.    Successors and Assigns.  The word “Landlord” as used in this
Lease shall extend to and include any and all Persons, who at any time or from
time to time during the term of this Lease shall succeed to the interest and
estate of Landlord in the Leased Property; and all of the covenants, agreements,
conditions, and stipulations herein contained which inure to the benefit of and
are binding upon Landlord shall also inure to the benefit of and shall be,
jointly and severally, binding upon the successors, assigns, and grantees of
Landlord, and each of them, and any and all Persons who at any time or from time
to time during the term of this Lease shall succeed to the interest and estate
of Landlord in the Leased Property hereby demised.  The word “Tenant” as used in
this Lease shall extend to and include any and all Persons who at any time or
from time to time during the term of this Lease shall succeed to the interest
and estate of Tenant hereunder and all of the covenants, agreements, conditions,
and stipulations herein contained which inure to the benefit of or are binding
upon Tenant shall also inure to the benefit of and be jointly and severally
binding upon the successors, assigns, or other representatives of Tenant, and of
any and all Persons who shall at any time or from time to time during the term
of this Lease succeed to the interest and estate of Tenant hereby created in the
Leased Property.
 
Section 17.7.    Modifications.  This Lease may be modified only by written
agreement signed by Landlord and Tenant.
 
Section 17.8.    Descriptive Headings.  The descriptive headings of this Lease
are inserted for convenience in reference only and do not in any way limit or
amplify the terms and provisions of this Lease.
 
Section 17.9.    No Joint Venture.  The relationship between Landlord and Tenant
at all times shall remain solely that of Landlord and Tenant and shall not be
deemed a partnership or joint venture.
 
Section 17.10.         Partial Invalidity.  If any term or provision of this
Lease or the application thereof to any Person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to any Person or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each term of this Lease shall be valid and be in force to the fullest extent
permitted by law.
 
45

--------------------------------------------------------------------------------

 
Section 17.11.    Governing Law.  This Lease is being executed and delivered,
and is intended to be performed, in the State of Georgia and the laws of such
state and of the United States shall govern the rights and duties of the parties
hereto and the validity, construction, enforcement, and interpretation
hereof.  The exclusive venue for any action arising from this Lease shall be the
Floyd County, Georgia, Superior Court.
 
Section 17.12.    Entire Agreement.  This Lease and the exhibits hereto and
thereto contain the entire agreement of the parties in respect to the matters
provided herein and all prior understandings and agreements are hereby
superseded.  However, the terms of this Agreement do not supersede or affect the
terms of the REA or Medical Center Master Lease. In addition, where there is a
conflict between the terms of this Lease and the terms of any sublease,
including, by way of example and not limitation, the Principal Subtenant
Sublease or the Floyd Healthcare Management Sublease, the terms of this Lease
shall govern and control.
 
Section 17.13.    Multiple Counterparts.  This Lease may be executed in a number
of identical counterparts, each of which constitutes an original and all of
which constitute, collectively, one agreement; provided, however, that in making
proof of this Lease, it shall not be necessary for any party hereto to produce
or account for more than one such counterpart.
 
Section 17.14.    Time of Essence.  It is expressly agreed by the parties hereto
that time is of the essence with respect to this Lease.
 
Section 17.15.    Memorandum of Lease.  Each of Landlord and Tenant shall
execute, acknowledge and deliver to the other a written Memorandum of this Lease
to be recorded in the Floyd County, Georgia, public land records in order to
give public notice and protect the validity of this Lease.  In the event of any
discrepancy between the provisions of said recorded Memorandum of this Lease and
the provisions of this Lease, the provisions of this Lease shall
prevail.  Tenant agrees to pay when due and payable any and all charges,
recording costs and taxes required in connection with the recordation of such
Memorandum of Lease.
    
Section 17.16.    Consents and Approvals.  Except as otherwise specifically
provided by the terms of this Lease, whenever any consent or approval is
required to be obtained from or provided by any party to this Lease or any
matter is required to be to the satisfaction of such party or is subject to such
party’s discretion, such party shall not unreasonably withhold, condition or
delay such consent or approval and such matter shall be subject only to such
party’s reasonable satisfaction or discretion.
 
Section 17.17.    Remedies.  Each party to this Lease shall be liable to the
other hereto only for actual direct damages to such other party and in no event
shall either party be liable for any special, consequential or punitive damages.
 
Section 17.18.    No Brokers.  Landlord and Tenant each represent and warrant to
the other that they have dealt with no brokers in connection with this
transaction.  Landlord and Tenant each hereby agree to indemnify and hold
harmless the other from and against any and all damages and expenses (including
reasonable attorney’s fees and expenses actually incurred) arising or incurred
by the other by reason of any claim by any broker, agent, finder, or other
Person based upon any agreement made or alleged to have been made by the
indemnifying party in connection with this Lease.

 
46

--------------------------------------------------------------------------------

 
 
Section 17.19.    Guaranty.  Simultaneously with Tenant’s execution and delivery
of this Lease, Tenant shall cause the Guaranty of Lease in the form attached
hereto as Exhibit G to be executed and delivered by Guarantor.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
47

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this instrument the day and year
first above written.
 
LANDLORD
 
FLOYD HEALTHCARE MANAGEMENT,
INC., d/b/a FLOYD MEDICAL CENTER,
a Georgia non-profit corporation
   
By:
/s/ Kurt Stuenkel
Name:
Kurt Stuenkel
Title:
President and CEO    
[CORPORATE SEAL]
   
Attest:
   
By:
 
Title:
     
TENANT:
 
ROME LTH PARTNERS, LP,
a Texas limited partnership
   
By:
Rome LTH Managers, LLC,
 
a Texas limited liability company
     
By:
/s/ Jason K. Dodd    
Jason K. Dodd, Manager

Signature Page to Ground Lease
 
 

--------------------------------------------------------------------------------

 

JOINDER OF THE HOSPITAL AUTHORITY OF FLOYD COUNTY, GEORGIA
 
The Hospital Authority of Floyd County, Georgia (the “Hospital Authority”), a
hospital authority organized and duly existing pursuant to O.C.G.A. § 31-7-70,
et seq., as the current owner of the fee interest in the Medical Center Land,
hereby joins in this Lease for the following purposes:

1.           Approving the execution and delivery of this Lease.

2.           Acknowledging the terms and conditions of this Lease and Landlord’s
obligations with respect to the Medical Center Land as set forth in Sections
2.4(c), 6.4, 8.2, 14.2, and 15.1(b)(iii) of this Lease, and acknowledging that
Hospital Authority is making no warranty pursuant to Section 2.5(b) of this
Lease.

3.           In the event that the Medical Center Master Lease shall terminate,
Hospital Authority will reinstate the Lease for a term not to exceed the maximum
term permitted by the Georgia Hospital Authorities law or any other Legal
Requirement and recognize all of the rights of Tenant under the Lease without
further requirement for execution and delivery of any instrument to evidence the
relationship between Hospital Authority and Tenant and any Leasehold Mortgagee,
except that the term will comply with the limitations noted above in this
paragraph.  However, without limiting the foregoing, upon any such termination
of the Medical Center Master Lease, Hospital Authority agrees to execute and
deliver such documentation as may be reasonably requested in order to evidence
the reinstatement of the Lease and as reasonably required by any Leasehold
Mortgagee, and to confirm the term as provided in this paragraph.  In any such
event, Tenant shall attorn to Hospital Authority with respect to any provisions
of this Lease.

4.           In the event that the Medical Center Master Lease shall terminate,
Hospital Authority will ratify the REA (it being expressly stipulated and agreed
that any termination of this Lease shall not affect the REA) and recognize all
of the rights of Tenant under the REA without further requirement for execution
and delivery of any instrument to evidence the validity and effect of the
REA.  However, without limiting the foregoing, upon any such termination of the
Medical Center Master Lease, Hospital Authority agrees to execute and deliver
such documentation as may be reasonably requested in order to evidence the
reinstatement of REA.

5.           Without intending to limit the foregoing, Hospital Authority
expressly recognizes and agrees to perform its obligations under Section 2.4(c)
in the event circumstances arise that would require the purchase of the LTACH
Improvements by Hospital Authority.

Signed, sealed and delivered in the presence of:
 
THE HOSPITAL AUTHORITY OF
   
FLOYD COUNTY, GEORGIA
     
Witness
 
By:
     
Name:
     
Title:
       
Notary Public
       
[SEAL]
[NOTARY SEAL]
       
Attest:
 
My commission expires: ________________.
 
By:
     
Title:
 

 

--------------------------------------------------------------------------------

 

EXHIBIT A-1
 
LEGAL DESCRIPTION OF THE MEDICAL CENTER LAND
 
[ex10-4_pg51.jpg]

 

--------------------------------------------------------------------------------

 

[ex10-4_pg52.jpg]

 

--------------------------------------------------------------------------------

 

[ex10-4_pg53.jpg]

 

--------------------------------------------------------------------------------

 

[ex10-4_pg54.jpg]

 

--------------------------------------------------------------------------------

 

[ex10-4_pg55.jpg]

 

--------------------------------------------------------------------------------

 

TOGETHER WITH:

Legal Description (Former Radiation Oncology Tract)
All that tract or parcel of land situated, tying and being in Land Lot 244, of
the 23rd District, and 3rd Section of Floyd County, Georgia, and being In the
Third Ward of the City of Some and being Lots 1, 2, 3, 4 and 5 of Cantrell and
Helms Subdivision to the Fourth Ward (Deed Book WWW, Page 372) and a portion of
a now closed alley all being more particularly described as follows:
Beginning at a ½ inch rod placed at the intersection of the Northwesterly right
of way line of West 5th Street (40 foot right of way) and the Southwesterly
right of way line of North 4th Avenue (40 foot right of way); and running thence
South 41 degrees, 24 minutes, 44 seconds West along the Northwesterly right of
way line of West 5th Street a distance of 297.82 feet to a ½ inch rod placed;
thence North 48 degrees, 09 minutes, 24 seconds West a distance of 155.06 feet
to a ¾ inch rod found; thence North 41 degrees, 29 minutes, 59 seconds East a
distance of 296.72 feet to a ½ inch rod found on the Southwesterly right of way
line of North 4th Avenue; thence South 48 degrees, 33 minutes, 45 seconds East
along the Southwesterly right of way line of North 4th Avenue, a distance of
154.60 feet to the POINT OF BEGINNING.
Said property is described according to a Plat prepared by Vonny H. Blanton,
G.R.L.S. No.: 2376, dated December 11, 2008, entitled "Survey for The Hospital
Authority of Floyd County".

 

--------------------------------------------------------------------------------

 

EXHIBIT A-2
 
DESCRIPTION OF THE LTACH LAND

 
LEASE PARCEL DESCRIPTION

BEING A LEASE PARCEL LYING WHOLLY WITHIN THE  CAMPUS OF FLOYD MEDICAL CENTER,
LOCATED IN THE THIRD WARD OF THE CITY OF ROME, FLOYD COUNTY, GEORGIA, AND BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:

Commencing at an iron pin in the southerly right-of-way margin of Turner McCall
Boulevard, said iron pin being located at the point of curvature of a curve in
the intersection of the southerly right-of way margin of Turner McCall Boulevard
with the westerly right-of-way margin of North Fourth Avenue; thence, with the
southerly right-of-way margin of Turner McCall Boulevard, North 89°02’08” West a
distance of 288.33 feet to a hole found in concrete; thence, leaving said
southerly right of-way margin, South 13°38’54” West a distance of 78.66 feet to
a point in the most northeasterly corner of the Lease Parcel to be described,
and the true and actual Point of Beginning;

Thence South 01°00’46” West a distance of 31.00 feet to a point;
Thence South 88°59’13” East a distance of 7.00 feet to a point;
Thence South 01°00’47” West a distance of 37.67 feet to a point;
Thence North 88°59’13” West a distance of 7.00 feet to a point;
Thence South 01°00’47” West a distance of 31.00 feet to a point;
Thence North 88°59’13” West a distance of 127.50 feet to a point;
Thence South 01°00’47” West a distance of 23.76 feet to a point on the face of
an existing building;
Thence, with face of said building, North 88°59’12” West a distance of 23.67
feet to a point;
Thence, leaving face of said building, North 01°00’47” East a distance of 23.76
feet to a point;
Thence North 88°59’13” West a distance of 46.02 feet to a point;
Thence North 01°12’09” East a distance of 31.00 feet to a point;
Thence North 88°59’13” West a distance of 7.09 feet to a point;
Thence North 01°00’47” East a distance of 37.67 feet to a point;
Thence South 88°59’13” East a distance of 7.00 feet to a point;
Thence North 01°00’47” East a distance of 31.00 feet to a point;
Thence South 88°59’13” East a distance of 197.17 feet to the Point of Beginning.

The parcel thus described contains 20,741.24 square feet, or 0.476 acre, more or
less.

 

--------------------------------------------------------------------------------

 

EXHIBIT B
 
PERMITTED ENCUMBRANCES
 
 
1.
All taxes subsequent to the year 2009.

 
2.
Deed to Secure Debt from Rome LTH Partners, LP to Mutual of Omaha Bank, dated
December 18, 2009, filed for record in the Records of Floyd County, Georgia.

 
3.
Terms, conditions and obligations as contained in that certain Ground Lease
Agreement as evidenced by that certain Memorandum of Lease by and between Floyd
Healthcare Management, Inc., and Rome LTH Partners, LP, dated December 18, 2009,
filed for record in the aforesaid Records; as affected by that certain
Recognition, Non-Disturbance and Estoppel Agreement executed by Floyd Healthcare
Management, Inc., in favor of Mutual of Omaha Bank, dated December 18, 2009,
filed for record in the aforesaid Records.

 
4.
Terms, conditions and obligations as contained in that certain Lease as
evidenced by that certain Memorandum of Lease by and between Hospital Authority
of Floyd County, Georgia, a public body corporate and politic and Floyd
Healthcare Management, Inc., dated December 18, 2009, filed for record in the
aforesaid Records; as affected by that certain Recognition, Non-Disturbance and
Estoppel Agreement executed by Hospital Authority of Floyd County in favor of
Mutual of Omaha Bank, dated December 18, 2009, filed for record December 18,
2009, recorded in aforesaid Records.

 
5.
Conveyance and Reservation of Access Rights by and between the Department of
Transportation, State of Georgia and Hospital Authority of Floyd County, dated
December 30, 1985, filed for record December 31, 1985, at 3:45 p.m., recorded in
Deed Book 949, Page 116, aforesaid Records.

 
6.
Declaration of Covenants, Restrictions and Easements by Floyd Healthcare
Management, Inc., d/b/a Floyd Medical Center, a Georgia non-profit corporation,
dated as of December 18, 2009, filed for record in aforesaid Records.

 
7.
Declaration of Easements and Restrictions by Hospital Authority of Floyd County,
Georgia, a Georgia hospital authority, dated as of June 10, 2004, filed for
record June 18, 2004, at 11:07 a.m., recorded in Deed Book 1878, Page 902,
aforesaid Records; as modified by that certain Modification of Declaration of
Easements and Restrictions by and between Hospital Authority of Floyd County,
Georgia, a Georgia hospital authority and 330 Physicians Center, L.P., f./k/a
Floyd Physicians Center, L.P., a Georgia limited partnership, dated as of
December 22, 2005, filed for record January 4, 2006, at 11:09 a.m., recorded in
Deed Book 1986, Page 590, aforesaid Records.

 
8.
All those easements, encroachments, yard lights, fifteen (15”) inch reinforced
concrete pipe, thirty-six (36”) inch reinforced concrete pipe, waterlines, drop
inlet, curbing and canopy as disclosed by that certain survey entitled
“ALTA/ACSM Land Title Land Survey to: Mutual of Omaha Bank,, Rome LTH Partners,
LP and First American Title Insurance Company”, prepared by Williams, Sweitzer
and Barnum, Inc., bearing the seal and certification of Robert L. Moss, Georgia
Registered Land Surveyor No. 1498, dated November 19, 2009, last revised
December 22, 2009.

 

--------------------------------------------------------------------------------

 

EXHIBIT C
 
SITE PLAN
 
[ex10-4_pg60.jpg]
 
 

--------------------------------------------------------------------------------

 

EXHIBIT D
 
BUILDING PLANS
 
[ex10-4_pg61.jpg]

 

--------------------------------------------------------------------------------

 

[ex10-4_pg62.jpg]

 

--------------------------------------------------------------------------------

 

[ex10-4_pg63.jpg]

 

--------------------------------------------------------------------------------

 

[ex10-4_pg64.jpg]

 

--------------------------------------------------------------------------------

 

EXHIBIT D Continued

[ex10-4_pg65.jpg]

 

--------------------------------------------------------------------------------

 

EXHIBIT D Continued

[ex10-4_pg66.jpg]
 

--------------------------------------------------------------------------------

 
EXHIBIT D Continued

[ex10-4_pg67.jpg]
 

--------------------------------------------------------------------------------

 
EXHIBIT D Continued

[ex10-4_pg68.jpg]

 

--------------------------------------------------------------------------------

 

EXHIBIT E
 
DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS
 
[DOCUMENT FOLLOWS]

 

--------------------------------------------------------------------------------

 

EXHIBIT F
 
RECOGNITION, NON-DISTURBANCE, AND ESTOPPEL AGREEMENT

[DOCUMENT FOLLOWS]

 
1

--------------------------------------------------------------------------------

 

EXHIBIT G
 
GUARANTY OF LEASE
 
GUARANTY
 
IN CONSIDERATION OF the execution and delivery of that certain Ground Lease
Agreement, dated as of December 18, 2009 (together with any amendments thereto,
hereinafter called “Lease”), by FLOYD HEALTHCARE MANAGEMENT, INC., d/b/a FLOYD
MEDICAL CENTER, a Georgia non-profit corporation, the Landlord therein named
(“Landlord”), to ROME LTH PARTNERS, LP, a Texas limited partnership, the Tenant
therein named ( “Tenant”), and in further consideration of other good and
valuable consideration to the undersigned, THE CIRRUS GROUP, LLC, a Texas
limited liability company (“Guarantor”), the receipt and sufficiency of which
are hereby acknowledged, Guarantor, intending to be legally bound, hereby
irrevocably and unconditionally guarantees to Landlord (i) the full and prompt
payment when due of all obligations by Tenant accruing under the Lease up to but
not on or after the CO Date (hereafter defined) [collectively, the
“Obligations”].  As used herein, the term “CO Date” shall mean the date on which
the final certificate of occupancy with respect to (i) the building shell of the
LTACH Improvements and (ii) the build-out of the space demised to The Specialty
Hospital LLC, a Georgia limited liability company, under the Principal Subtenant
Sublease, is issued by the City of Rome, Georgia (but not including any permit
or authorization from the City of Rome, Georgia, State of Georgia or other
governmental authority pertaining to the operation of the long-term acute care
hospital to be located within the LTACH Improvements).  Should the final
certificate of occupancy for items (i) and (ii) above be issued separately, then
the CO Date shall be the date that the latter of the two final certificates of
occupancy is issued.  Once the CO Date has occurred, the liability of Guarantor
under this Guaranty shall terminate with respect to all Obligations, whether or
not they have been performed and whether or not there is then existing any
default under the Lease.  Further, all non-monetary Obligations of Guarantor
under this Guaranty shall be terminated as to any Obligations accruing in the
event Landlord terminates the Lease pursuant to Section 4.3(d) of the
Lease.  Terms used herein with their initial letters capitalized which have been
specifically defined in the Lease shall have the same meaning herein as in the
Lease unless such terms are otherwise defined in this Guaranty.
 
This Guaranty is an absolute, irrevocable and unconditional guaranty of payment
and of performance of the Obligations.  Guarantor’s liability hereunder is
direct and is independent of Tenant’s liability with respect to the Obligations,
and may be enforced without Landlord being required to resort to any other
right, remedy or security and this Guaranty shall be enforceable against
Guarantor without the necessity for any suit or proceedings on Landlord’s part
of any kind or nature whatsoever against Tenant or the joinder of Tenant in any
suit or proceeding, and without the necessity of any notice of non-payment,
non-performance or non-observance of any of the Obligations by Tenant or of any
notice of acceptance of this Guaranty or of Landlord’s intention to act in
reliance hereon or of any other notice or demand to which Guarantor might
otherwise be entitled, all of which Guarantor hereby expressly waives; and
Guarantor hereby expressly agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall in nowise be terminated, affected or
impaired by reason of the assertion or the failure to assert by Landlord against
Tenant, of any of the rights or remedies reserved to Landlord pursuant to the
provisions of the Lease.

 
1

--------------------------------------------------------------------------------

 
 
This Guaranty shall be a continuing Guaranty, and (whether or not Guarantor
shall have notice or knowledge of any of the following) the liability and
obligations of Guarantor hereunder shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
discharged or in any way impaired by (a) any exercise or non-exercise of any
right, power, remedy or privilege under or in respect of the Lease or this
Guaranty or any waiver, consent or approval by Landlord with respect to any of
the covenants, terms, conditions or agreements contained in the Lease or any
indulgences, forbearances or extensions of time for performance or observance
allowed to Tenant from time to time and for any length of time; (b) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceeding relating to Tenant, or its properties; (c) any
limitation on the liability or obligation of Tenant under the Lease or its
estate in bankruptcy or of any remedy for the enforcement thereof, resulting
from the operation of any present or future provision of the federal or any
state bankruptcy law or any other statute or from the decision of any court; (d)
any security provided for the Obligations; and/or (e) any sale, assignment,
transfer or conveyance (1) by Landlord of all or any portion of the Premises (as
such term is defined in the Lease) or of Landlord’s interest in the Lease, or
(2) of any ownership interest in the Landlord.
 
All of Landlord’s rights and remedies under the Lease and under this Guaranty
are intended to be distinct, separate and cumulative and no such right or remedy
therein or herein mentioned is intended to be in exclusion of or a waiver of any
of the others or of any rights or remedies provided by law.
 
The Guarantor hereby waives any requirement that the Landlord protect, secure,
perfect or insure any security interest or lien or any property subject thereto
or exhaust any right or take any action against any person or entity or any
collateral (including any rights relating to marshaling of assets).
 
The liability and obligations of the Guarantor under this Guaranty shall be
absolute and unconditional, not subject to any reduction, limitation,
impairment, termination, defense, offset, counterclaim or recoupment whatsoever
(all of which are hereby expressly waived by the Guarantor) whether by reason of
any claim of any character whatsoever, including, without limitation, any claim
of waiver, release, surrender, alteration or compromise, or by reason of any
liability at any time to the Guarantor or otherwise, whether based upon any
obligations or any other agreements or otherwise, howsoever arising, whether out
of action or inaction or otherwise and whether resulting from default, willful
misconduct of Tenant, negligence or otherwise, and without limiting the
foregoing irrespective of (and whether or not Guarantor shall have notice or
knowledge of):  (a) any amendment to the Lease; (b) the absence of any action on
the part of the Landlord to obtain payment for or performance of the Obligations
from the Tenant; (c) any insolvency, bankruptcy, reorganization or dissolution,
or any proceeding of the Tenant or the Guarantor, including, without limitation,
rejection of the guaranteed Obligations in such bankruptcy; (d) the absence of
notice or any delay in any action to enforce any Obligations or to exercise any
right or remedy against the Guarantor or the Tenant, whether hereunder, under
any Obligations or under any agreement or any indulgence, compromise or
extension granted; or (e) the termination or cessation of a corporate
relationship between Guarantor and Tenant.

 
2

--------------------------------------------------------------------------------

 
 
Until such time as all the Obligations have been fully and indefeasibly paid to
Landlord and performed in full or this Guaranty is terminated, Guarantor shall
have no rights (direct or indirect) of subrogation, contribution, reimbursement,
indemnification or other rights of payment or recovery from any person or entity
(including, without limitation, the Tenant) for any payments made by the
Guarantor hereunder, and Guarantor hereby waives and releases absolutely and
unconditionally, any such rights of subrogation, contribution, reimbursement,
indemnification and other rights of payment or recovery which it may now have or
hereafter acquire.  If any amount shall be paid to the Guarantor in violation of
the preceding sentence and the Obligations shall not have been paid in full,
such amount shall be deemed to have been paid to the Guarantor for the benefit
of, and held in trust for the benefit of, the Landlord and shall forthwith be
paid to the Landlord to be credited and applied upon the Obligations, whether
matured or unmatured, in accordance with the terms of the Lease.  The Guarantor
acknowledges that it will derive substantial direct and indirect benefit from
the granting, execution and delivery of the Lease by the Landlord and that the
waiver set forth in this paragraph is knowingly made in contemplation of such
benefits.  The provisions of this paragraph shall survive the payment and
performance of the Obligations and the termination of this Guaranty.
 
Guarantor represents and warrants to Landlord that (a) the execution and
delivery of this Guaranty has been duly authorized by the appropriate officers
of Guarantor and does not contravene any law, or any contractual or legal
restriction, applicable to it, (b) no authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for its execution, delivery and performance of this Guaranty,
(c) there are no conditions precedent to the effectiveness of this Guaranty that
have not been satisfied or waived, (d) Guarantor will, directly or indirectly,
benefit from the transaction which is the subject of the Lease, and (e) neither
the execution, delivery or performance of this Guaranty, nor compliance with the
terms and provisions hereof, conflicts or will conflict with or results or
result in a default under or a breach of any of the terms, conditions or
provisions of the limited liability company agreement of the Guarantor or of any
contract to which the Guarantor is a party or by which it is bound.
 
This Guaranty shall be legally binding upon Guarantor and its successors and
assigns and shall inure to the benefit of Landlord, Landlord’s Mortgagee and the
Hospital Authority (as such term is defined in the Lease) and each of their
respective successors and assigns.  Reference herein to Landlord shall be deemed
to include Landlord and its successors and assigns.  Reference herein to Tenant
shall be deemed to include Tenant and its successors and assigns.  Without
limiting the generality of the foregoing, the Landlord may assign or otherwise
transfer (whether as an outright assignment or transfer or as collateral) all or
any portion of its rights and obligations under the Lease to any other person or
entity (any such person or entity, a “Landlord Assign”) and such Landlord Assign
shall thereupon become vested (on a non-exclusive basis, as an additional
beneficiary) with all the benefits in respect thereof granted to the Landlord
herein or otherwise.

 
3

--------------------------------------------------------------------------------

 

THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF GEORGIA WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
GUARANTOR HEREBY SUBMITS TO PERSONAL JURISDICTION IN SAID STATE AND THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SAID STATE (AND ANY APPELLATE
COURTS TAKING APPEALS THEREFROM) FOR THE ENFORCEMENT OF GUARANTOR’S OBLIGATIONS
HEREUNDER, AND WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAW OF ANY OTHER
STATE TO OBJECT TO JURISDICTION WITHIN SUCH STATE FOR THE PURPOSES OF SUCH
ACTION, SUIT, PROCEEDING OR LITIGATION TO ENFORCE SUCH OBLIGATIONS. GUARANTOR
HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, (A) THAT IT IS NOT
SUBJECT TO SUCH JURISDICTION OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE
BROUGHT OR IS NOT MAINTAINABLE IN THOSE COURTS OR THAT THIS GUARANTY MAY NOT BE
ENFORCED IN OR BY THOSE COURTS OR THAT IT IS EXEMPT OR IMMUNE FROM EXECUTION,
(B) THAT THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, OR
(C) THAT THE VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER (BUT NOTHING
HEREIN SHALL AFFECT THE RIGHT OF LANDLORD OR ANY LANDLORD ASSIGN TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).  IN THE EVENT ANY SUCH ACTION,
SUIT, PROCEEDING OR LITIGATION IS COMMENCED, GUARANTOR AGREES THAT SERVICE OF
PROCESS MAY BE MADE, AND PERSONAL JURISDICTION OVER GUARANTOR OBTAINED, BY
SERVICE OF A COPY OF THE SUMMONS, COMPLAINT AND OTHER PLEADINGS REQUIRED TO
COMMENCE SUCH LITIGATION UPON GUARANTOR AT GUARANTOR’S ADDRESS SET FORTH HEREIN.
 
GUARANTOR AND LANDLORD (BY ITS ACCEPTANCE OF THIS GUARANTY) HEREBY MUTUALLY
WAIVE TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE ARISING HEREUNDER.  The
provisions of this paragraph shall survive the payment and performance of the
Obligations and the termination of this Guaranty.
 
All notices and other communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered to it, if to the
Guarantor, at:
 
The Cirrus Group, LLC
9301 North Central Expressway, Suite 300
Dallas, Texas 75231
Attn:  Jason K. Dodd
Telephone:  (214) 953-1722
Telecopy:  (214) 953-0278

With a copy to:

Owens, Clary & Aiken, L.L.P.
Attn:  Robert L. Owens
700 North Pearl, Suite 1600
Dallas, Texas 75201
Telephone:  (214) 698-2156
Telecopy:  (214) 698-2121

 
4

--------------------------------------------------------------------------------

 

and if to Landlord or any successor thereof or Landlord Assign at its address as
may be designated by such party in a written notice to the other party.  All
such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
 
Except for provisions of this Guaranty which by their terms survive the
termination hereof, this Guaranty shall terminate as provided in the first
paragraph of this Guaranty.
 
IN WITNESS WHEREOF, Guarantor, intending to be legally bound hereby, has caused
this Guaranty to be executed by its duly authorized officer as of December 18,
2009.
 

 
THE CIRRUS GROUP, LLC,
 
a Texas limited liability company
     
By:
   
Name:
   
Title:
 

 
5

--------------------------------------------------------------------------------

 

EXHIBIT H
 
REQUIRED INSURANCE

1.           Casualty Insurance.  Tenant shall maintain or cause to be
maintained “all risks” coverage insurance for 100% of the replacement cost of
the LTACH Improvements.  Such insurance shall name Landlord as additional
insured.  Tenant shall, at Landlord's request from time to time, provide
Landlord with a current certificate of insurance throughout the Term evidencing
Tenant's compliance.  Tenant shall obtain the agreement of Tenant's insurers to
notify Landlord that a policy is due to expire at least thirty (30) days prior
to such expiration.   Leasehold Mortgagee shall be named as a loss payee and any
insurance proceeds shall be payable in accordance with the terms of the
Leasehold Mortgage or as otherwise provided in the Lease.  Notwithstanding
anything to the contrary set forth herein, Tenant shall not be required to
obtain and maintain the insurance described in this paragraph until immediately
prior to the termination of the builder’s risk insurance on the LTACH
Improvements described in Section 9.4 of the Lease.
 
2.           Liability Insurance.  Tenant shall maintain or cause to be
maintained comprehensive general liability insurance with limits of liability in
respect of personal injury of at least One Million and No/100 Dollars
($1,000,000.00) for each person and at least One Million and No/100 Dollars
($1,000,000.00) for each occurrence, and in respect of property damage and at
least a Two Million and No/100 Dollars ($2,000,000.00) aggregate limit (each of
such amounts shall be subject to be increased from time to time as Landlord may
reasonably request to reflect declines in the purchasing power of the
dollar).  Said insurance policies shall provide for at least thirty (30) days
notice to Landlord before cancellation and shall include a waiver of subrogation
by the insurance carrier.  Landlord and Leasehold Mortgagee shall be named as an
additional insureds.

 

--------------------------------------------------------------------------------