EXHIBIT 10.5.1

 

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LEASE AGREEMENT

 

Dated as of December 27, 2001

 

between

 

STATE STREET BANK AND TRUST COMPANY

OF CONNECTICUT, NATIONAL ASSOCIATION,

not individually, but solely

as Owner Trustee for Digital Hospital Trust 2001-1,

as Lessor

 

and

 

HEALTHSOUTH MEDICAL CENTER, INC.,

as Lessee

 

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This Lease Agreement is subject to a security interest in favor of First Union
National Bank, as the agent for the Lenders and respecting the Security
Documents, as the agent for the Secured Parties (the “Agent”) under a Security
Agreement dated as of December 27, 2001, between State Street Bank and Trust
Company of Connecticut, National Association, not individually, but solely as
Owner Trustee for Digital Hospital Trust 2001-1 and the Agent, as amended,
modified, extended, supplemented, restated and/or replaced from time to time in
accordance with the applicable provisions thereof. This Lease Agreement has been
executed in several counterparts. To the extent, if any, that this Lease
Agreement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease Agreement may be created through the transfer or
possession of any counterpart other than the original counterpart containing the
receipt therefor executed by the Agent on the signature page hereof.

 

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TABLE OF CONTENTS

 

ARTICLE I

   1

1.1

  

Definitions

   1

1.2

  

Interpretation

   2

ARTICLE II

   2

2.1

  

Property

   2

2.2

  

Lease Term

   2

2.3

  

Title

   3

2.4

  

Lease Supplements

   3

ARTICLE III

   3

3.1

  

Rent

   3

3.2

  

Payment of Basic Rent

   4

3.3

  

Supplemental Rent

   4

3.4

  

Performance on a Non-Business Day

   4

3.5

  

Rent Payment Provisions

   4

3.6

  

Payment of Cost Overruns

   5

ARTICLE IV

   5

4.1

  

Taxes; Utility Charges

   5

ARTICLE V

   5

5.1

  

Quiet Enjoyment

   5

ARTICLE VI

   6

6.1

  

Net Lease

   6

6.2

  

No Termination or Abatement

   6

ARTICLE VII

   7

7.1

  

Ownership of the Properties

   7

ARTICLE VIII

   8

8.1

  

Condition of the Properties

   8

8.2

  

Possession and Use of the Properties

   9

8.3

  

Integrated Properties

   10

ARTICLE IX

   10

9.1

  

Compliance With Legal Requirements, Insurance Requirements and Manufacturer’s
Specifications and Standards

   10

ARTICLE X

   11

10.1

  

Maintenance and Repair; Return

   11

10.2

  

Environmental Inspection

   12

ARTICLE XI

   13

11.1

  

Modifications

   13

ARTICLE XII

   14

12.1

  

Warranty of Title

   14

ARTICLE XIII

   15

13.1

  

Permitted Contests Other Than in Respect of Indemnities

   15

13.2

  

Impositions, Utility Charges, Other Matters; Compliance with Legal Requirements

   16

ARTICLE XIV

   16

14.1

  

Public Liability and Workers’ Compensation Insurance

   16

 

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14.2

  

Permanent Hazard and Other Insurance

   16

14.3

  

Coverage

   17

ARTICLE XV

   18

15.1

  

Casualty and Condemnation

   18

15.2

  

Environmental Matters

   20

15.3

  

Notice of Environmental Matters

   21

ARTICLE XVI

   22

16.1

  

Termination Upon Certain Events

   22

16.2

  

Procedures

   22

ARTICLE XVII

   22

17.1

  

Lease Events of Default

   22

17.2

  

Surrender of Possession

   26

17.3

  

Reletting

   27

17.4

  

Damages

   27

17.5

  

Power of Sale

   28

17.6

  

Final Liquidated Damages

   28

17.7

  

Environmental Costs

   28

17.8

  

Waiver of Certain Rights

   29

17.9

  

Assignment of Rights Under Contracts

   29

17.10

  

Remedies Cumulative

   29

17.11

  

Limitation Regarding Certain Lease Events of Default

   29

ARTICLE XVIII

   30

18.1

  

Lessor’s Right to Cure Lessee’s Lease Defaults

   30

ARTICLE XIX

   30

19.1

  

Provisions Relating to Lessee’s Exercise of its Purchase Option

   30

19.2

  

No Purchase or Termination With Respect to Less than All of a Property

   30

ARTICLE XX

   31

20.1

  

Purchase Option or Sale Option-General Provisions

   31

20.2

  

Lessee Purchase Option

   31

20.3

  

Third Party Sale Option

   32

ARTICLE XXI

   32

21.1

  

[Intentionally Omitted]

   32

ARTICLE XXII

   33

22.1

  

Sale Procedure

   33

22.2

  

Application of Proceeds of Sale

   35

22.3

  

Indemnity for Excessive Wear

   35

22.4

  

Appraisal Procedure

   35

22.5

  

Certain Obligations Continue

   36

22.6

  

Extended Remarketing Period

   36

ARTICLE XXIII

   37

23.1

  

Holding Over

   37

ARTICLE XXIV

   37

24.1

  

Risk of Loss

   37

ARTICLE XXV

   38

25.1

  

Assignment

   38

25.2

  

Subleases

   38

 

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ARTICLE XXVI    39

26.1

   No Waiver    39 ARTICLE XXVII    39

27.1

   Acceptance of Surrender    39

27.2

   No Merger of Title    39 ARTICLE XXVIII    39

28.1

   Incorporation of Covenants    39 ARTICLE XXIX    40

29.1

   Notices    40 ARTICLE XXX    40

30.1

   Miscellaneous    40

30.2

   Amendments and Modifications    41

30.3

   Successors and Assigns    41

30.4

   Headings and Table of Contents    41

30.5

   Counterparts    41

30.6

   GOVERNING LAW    41

30.7

   Calculation of Rent    41

30.8

   Memoranda of Lease and Lease Supplements    41

30.9

   Allocations between the Lenders and the Holders    42

30.10

   Limitations on Recourse    42

30.11

   WAIVERS OF JURY TRIAL    42

30.12

   Exercise of Lessor Rights    42

30.13

   SUBMISSION TO JURISDICTION; VENUE; ARBITRATION    43

30.14

   USURY SAVINGS PROVISION    43

30.15

   Lessor Certification    44

 

EXHIBITS

 

EXHIBIT A - Lease Supplement No.         

EXHIBIT B - Memorandum of Lease and Lease Supplement No.         

 

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LEASE AGREEMENT

 

THIS LEASE AGREEMENT dated as of December 27, 2001 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, this
“Lease”) is between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association, having its principal office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, not individually,
but solely as Owner Trustee for Digital Hospital Trust 2001-1, as lessor (the
“Lessor”), and HEALTHSOUTH MEDICAL CENTER, INC., an Alabama corporation, having
its principal place of business at One HealthSouth Parkway, Birmingham, Alabama
35243, as lessee (the “Lessee”).

 

W I T N E S S E T H:

 

A. WHEREAS, subject to the terms and conditions of the Participation Agreement
and the Agency Agreement, Lessor will (i) purchase or ground lease various
parcels of real property, some of which will (or may) have existing Improvements
thereon, from one (1) or more third parties designated by Lessee and (ii) fund
the acquisition, installation, testing, use, development, construction,
operation, maintenance, repair, refurbishment and restoration of the Properties
by the Construction Agent; and

 

B. WHEREAS, the Term shall commence with respect to each Property upon the
Property Closing Date with respect thereto; provided, Basic Rent with respect
thereto shall not be payable until the applicable Rent Commencement Date; and

 

C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease from
Lessor, each Property;

 

NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

1.1 Definitions.

 

For purposes of this Lease, capitalized terms used in this Lease and not
otherwise defined herein shall have the meanings assigned to them in Appendix A
to that certain Participation Agreement dated as of December 27, 2001 (as
amended, modified, extended, supplemented, restated and/or replaced from time to
time in accordance with the applicable provisions thereof, the “Participation
Agreement”) among Lessee, HEALTHSOUTH Corporation, as the Guarantor, Lessor, the
various banks and other lending institutions which are parties thereto from time
to time, as the Holders, the various banks and other lending institutions which
are parties thereto from time to time, as the Lenders, and First Union National
Bank, as agent for the Lenders and respecting the Security Documents, as the
agent for the Secured

 

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Parties. Unless otherwise indicated, references in this Lease to articles,
sections, paragraphs, clauses, appendices, schedules and exhibits are to the
same contained in this Lease.

 

  1.2 Interpretation.

 

The rules of usage set forth in Appendix A to the Participation Agreement shall
apply to this Lease.

 

ARTICLE II

 

  2.1 Property.

 

Subject to the terms and conditions hereinafter set forth and contained in the
respective Lease Supplement relating to each Property, Lessor hereby leases to
Lessee and Lessee hereby leases from Lessor, each Property.

 

  2.2 Lease Term.

 

The term of this Lease with respect to each Property (the “Term”) shall begin
upon the Property Closing Date for such Property (in each case the “Commencement
Date”) and shall end on the date that is seven (7) years and six (6) months
after the Initial Closing Date, unless the Term is earlier terminated or is
extended pursuant to the next paragraph. Notwithstanding the foregoing, Lessee
shall not be obligated to pay Basic Rent until the Rent Commencement Date with
respect to such Property.

 

Lessee may, not less than two hundred forty (240) days and no more than three
hundred sixty (360) days prior to the date that is seven (7) years and six (6)
months or twelve (12) years and six (6) months after the Initial Closing Date,
as applicable, by irrevocable notice to Lessor, the Lenders, the Holders and the
Agent make written request to extend the Expiration Date for all, but not less
than all, the Properties for an additional period of five years (a “Renewal
Term”). There shall be no more than two consecutive Renewal Terms. Lessor, each
Lender, each Holder and the Agent shall each make a determination, in the
absolute and sole discretion of each such party, not later than thirty (30) days
after receipt of such notice as to whether or not such party will agree to
extend the Expiration Date as requested; provided, however, that failure by any
such party to make a timely response to Lessee’s request for extension of the
Expiration Date shall be deemed to constitute a refusal by such party to the
extension of the Expiration Date. In response to a request for an extension of
the Expiration Date, if (a) Lessor, each Lender, each Holder and the Agent shall
agree to the requested extension, then the Term shall be extended and shall
expire on the date five (5) years after the then current expiration date or (b)
Lessor, any Lender, any Holder or the Agent shall refuse (or be deemed to have
refused) to agree to the requested extension, then the Term shall not be
extended and shall expire on the then current Expiration Date. In addition to
the foregoing with respect to a Renewal Term, the Financing Parties may require
certain amendments to the Operative Agreements, including without limitation
changing the interest rate, Holder Yield, any fees and the Maximum Residual
Guarantee Amount, or certain conditions to be met prior to the effectiveness of
the Renewal

 

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Term, including without limitation updated appraisals. In the event a Lender or
Holder does not agree to permit the Renewal Term, then the Lessee may replace
such Lender or Holder on terms mutually agreeable to the Lessee and such Lender
or Holder and in accordance with the terms and conditions of the Operative
Agreements.

 

  2.3 Title.

 

Each Property is leased to Lessee without any representation or warranty,
express or implied, by Lessor and subject to the rights of parties in possession
(if any), the existing state of title (including without limitation the
Permitted Liens) and all applicable Legal Requirements. Lessee shall in no event
have any recourse against Lessor for any defect in Lessor’s title to any
Property or any interest of Lessee therein other than for Lessor Liens.

 

  2.4 Lease Supplements.

 

On or prior to each Commencement Date, Lessee and Lessor shall each execute and
deliver a Lease Supplement for the Property to be leased effective as of such
Commencement Date in substantially the form of EXHIBIT A hereto.

 

ARTICLE III

 

  3.1 Rent.

 

(a) Lessee shall pay Basic Rent in arrears on each Payment Date, and on any date
on which this Lease shall terminate with respect to any or all Properties during
the Term; provided, however, with respect to each individual Property Lessee
shall have no obligation to pay Basic Rent with respect to such Property until
the Rent Commencement Date with respect to such Property (notwithstanding that
Basic Rent for such Property shall accrue from and including the Scheduled
Interest Payment Date immediately preceding such Rent Commencement Date).

 

(b) Basic Rent shall be due and payable in lawful money of the United States and
shall be paid by wire transfer of immediately available funds on the due date
therefor (or within the applicable grace period) to such account or accounts at
such bank or banks as Lessor shall from time to time direct.

 

(c) Lessee’s inability or failure to take possession of all or any portion of
any Property when delivered by Lessor, whether or not attributable to any act or
omission of Lessor, the Construction Agent, Lessee or any other Person or for
any other reason whatsoever, shall not delay or otherwise affect Lessee’s
obligation to pay Rent for such Property in accordance with the terms of this
Lease.

 

(d) Lessee shall make all payments of Rent prior to 12:00 Noon, Charlotte, North
Carolina time, on the applicable date for payment of such amount.

 

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  3.2 Payment of Basic Rent.

 

Basic Rent shall be paid absolutely net to Lessor or its designee, so that this
Lease shall yield to Lessor the full amount thereof, without setoff, deduction
or reduction.

 

  3.3 Supplemental Rent.

 

Lessee shall pay or cause to be paid to the Agent (on behalf of the Person
entitled thereto) any and all Supplemental Rent when and as the same shall
become due and payable, and if Lessee fails to pay any Supplemental Rent within
five (5) Business Days after demand is made upon Lessee for payment, Lessor
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise in the case of nonpayment of Basic Rent. All such payments
of Supplemental Rent shall be in the full amount thereof, without setoff,
deduction or reduction. Lessee shall pay or cause to be paid to the appropriate
Person, as Supplemental Rent due and owing to such Person, among other things,
on demand, (a) any and all payment obligations (except for amounts payable as
Basic Rent) owing from time to time under the Operative Agreements by any Person
to the Agent, any Lender, any Holder or any other Person, (b) interest at the
applicable Overdue Rate on any installment of Basic Rent not paid when due
(subject to the applicable grace period) for the period for which the same shall
be overdue and on any payment of Supplemental Rent not paid when due or demanded
by the appropriate Person (subject to any applicable grace period) for the
period from the due date or the date of any such demand, as the case may be,
until the same shall be paid and (c) amounts referenced as Supplemental Rent
obligations pursuant to Section 8.3 of the Participation Agreement. It shall be
an additional Supplemental Rent obligation of Lessee to pay to the appropriate
Person all rent and other amounts when such become due and owing from time to
time under each Ground Lease and without the necessity of any notice from Lessor
with regard thereto. The expiration or other termination of Lessee’s obligations
to pay Basic Rent hereunder shall not limit or modify the obligations of Lessee
with respect to Supplemental Rent. Unless expressly provided otherwise in this
Lease, in the event of any failure on the part of Lessee to pay and discharge
any Supplemental Rent as and when due, Lessee shall also promptly pay and
discharge any fine, penalty, interest or cost which may be assessed or added for
nonpayment or late payment of such Supplemental Rent, all of which shall also
constitute Supplemental Rent.

 

  3.4 Performance on a Non-Business Day.

 

If any Basic Rent is required hereunder on a day that is not a Business Day,
then such Basic Rent shall be due on the corresponding Scheduled Interest
Payment Date or, to the extent such Basic Rent is not due on a Scheduled
Interest Payment Date, then on the next succeeding Business Day. If any
Supplemental Rent is required hereunder on a day that is not a Business Day,
then such Supplemental Rent shall be due on the next succeeding Business Day.

 

  3.5 Rent Payment Provisions.

 

Lessee shall make payment of all Basic Rent and Supplemental Rent when due
(subject to the applicable grace periods) regardless of whether any of the
Operative Agreements pursuant to which same is calculated and is owing shall
have been rejected, avoided or

 

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disavowed in any bankruptcy or insolvency proceeding involving any of the
parties to any of the Operative Agreements. Such provisions of such Operative
Agreements and their related definitions are incorporated herein by reference
and shall survive any termination, amendment or rejection of any such Operative
Agreements.

 

  3.6 Payment of Cost Overruns.

 

Lessee shall make payments of prepaid rent to the Lessor, during the
Construction Period, of cost overruns as directed by the Lessor in accordance
with Section 3.3. of the Agency Agreement.

 

ARTICLE IV

 

  4.1 Taxes; Utility Charges.

 

Lessee shall pay or cause to be paid all Impositions, other than Impositions
with respect to Lessor Liens, with respect to the Properties and/or the use,
occupancy, operation, repair, access, maintenance or operation thereof and all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents, utilities and operating expenses of any kind or
type used in or on any Property and related real property during the Term. Upon
Lessor’s reasonable request, Lessee shall provide from time to time Lessor with
evidence of all such payments referenced in the foregoing sentence. Lessee shall
be entitled to receive any credit or refund with respect to any Imposition or
utility charge paid by Lessee. Unless an Event of Default shall have occurred
and be continuing, the amount of any credit or refund received by Lessor on
account of any Imposition or utility charge paid by Lessee, net of the costs and
expenses incurred by Lessor in obtaining such credit or refund, shall be
promptly paid over to Lessee. All charges for Impositions or utilities imposed
with respect to any Property for a period during which this Lease expires or
terminates shall be adjusted and prorated on a daily basis between Lessor and
Lessee, and each party shall pay or reimburse the other for such party’s pro
rata share thereof.

 

ARTICLE V

 

  5.1 Quiet Enjoyment.

 

Subject to the rights of Lessor contained in Sections 17.2, 17.3 and 20.3 and
the other terms of this Lease and the other Operative Agreements and so long as
no Event of Default shall have occurred and be continuing, Lessee shall
peaceably and quietly have, hold and enjoy each Property for the applicable
Term, free of any claim or other action by Lessor or anyone rightfully claiming
by, through or under Lessor (other than Lessee) with respect to any matters
arising from and after the applicable Commencement Date.

 

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ARTICLE VI

 

  6.1 Net Lease.

 

This Lease shall constitute a net lease, and the obligations of Lessee hereunder
are absolute and unconditional. Lessee shall pay or cause to be paid all
operating expenses arising out of the use, operation and/or occupancy of each
Property. Any present or future law to the contrary notwithstanding, this Lease
shall not terminate, nor shall Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of Lessee hereunder be affected (except as expressly
herein permitted and by performance of the obligations in connection therewith)
for any reason whatsoever, including without limitation by reason of: (a) any
damage to or destruction of any Property or any part thereof; (b) any taking of
any Property or any part thereof or interest therein by Condemnation or
otherwise; (c) any prohibition, limitation, restriction or prevention of
Lessee’s use, occupancy or enjoyment of any Property or any part thereof, or any
interference with such use, occupancy or enjoyment by any Person or for any
other reason; (d) any title defect, Lien or any matter affecting title to any
Property; (e) any eviction by paramount title or otherwise; (f) any default by
Lessor hereunder; (g) any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding relating to or affecting the Agent,
any Lender, Lessor, Lessee, any Holder or any Governmental Authority; (h) the
impossibility or illegality of performance by Lessor, Lessee or both; (i) any
action of any Governmental Authority or any other Person; (j) Lessee’s
acquisition of ownership of all or part of any Property; (k) breach of any
warranty or representation with respect to any Property or any Operative
Agreement; (1) any defect in the condition, quality or fitness for use of any
Property or any part thereof; or (m) any other cause or circumstance whether
similar or dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The parties intend that the
obligations of Lessee hereunder shall be covenants, agreements and obligations
that are separate and independent from any obligations of Lessor hereunder and
shall continue unaffected unless such covenants, agreements and obligations
shall have been modified or terminated in accordance with an express provision
of this Lease. Lessor and Lessee acknowledge and agree that the provisions of
this Section 6.1 have been specifically reviewed and subject to negotiation.

 

  6.2 No Termination or Abatement.

 

Lessee shall remain obligated under this Lease in accordance with its terms and
shall not take any action to terminate, rescind or avoid this Lease,
notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting any Person or any
Governmental Authority, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator of
any Person or any Governmental Authority or by any court with respect to any
Person, or any Governmental Authority. Lessee hereby waives all right (a) to
terminate or surrender this Lease (except as permitted under the terms of the
Operative Agreements) or (b) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid

 

6

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strict compliance with its obligations under this Lease. Notwithstanding any
such statute or otherwise, Lessee shall be bound by all of the terms and
conditions contained in this Lease.

 

ARTICLE VII

 

  7.1 Ownership of the Properties.

 

(a) Lessor and Lessee intend that (i) for financial accounting purposes with
respect to Lessee (A) this Lease will be treated as an “operating lease”
pursuant to Statement of Financial Accounting Standards No. 13, as amended, (B)
Lessor will be treated as the owner and lessor of each Property and (C) Lessee
will be treated as the lessee of each Property, but (ii) for federal and all
state and local income tax purposes, bankruptcy purposes, regulatory purposes,
commercial law and real estate purposes and all other purposes (A) this Lease
will be treated as a financing arrangement and (B) Lessee will be treated as the
owner of the Properties and will be entitled to all tax benefits ordinarily
available to owners of property similar to the Properties for such tax purposes.
Notwithstanding the foregoing, neither party hereto has made, or shall be deemed
to have made, any representation or warranty as to the availability of any of
the foregoing treatments under applicable accounting rules, tax, bankruptcy,
regulatory, commercial or real estate law or under any other set of rules.
Lessee shall claim the cost recovery deductions associated with each Property,
and Lessor shall not, to the extent not prohibited by Law, take on its tax
return a position inconsistent with Lessee’s claim of such deductions.

 

(b) For all purposes other than as set forth in Section 7.1(a)(i), Lessor and
Lessee intend this Lease to constitute a finance lease and not a true lease. In
order to secure the obligations of Lessee now existing or hereafter arising
under any and all Operative Agreements, Lessee hereby conveys, grants, assigns,
transfers, hypothecates, mortgages and sets over to Lessor, for the benefit of
the Secured Parties, a first priority security interest (but subject to the
security interest in the assets granted by Lessee in favor of the Agent in
accordance with the Security Agreement) in and lien on all right, title and
interest of Lessee (now owned or hereafter acquired) in and to all Properties,
to the extent such is personal property and irrevocably grants and conveys a
lien, deed of trust and mortgage on all right, title and interest of Lessee (now
owned or hereafter acquired) in and to all Properties to the extent such is real
property. Lessor and Lessee further intend and agree that, for the purpose of
securing the obligations of Lessee and/or the Construction Agent now existing or
hereafter arising under the Operative Agreements, (i) this Lease shall be a
security agreement and financing statement within the meaning of Article 9 of
the Uniform Commercial Code respecting each of the Properties and all proceeds
(including without limitation insurance proceeds thereof) to the extent such is
personal property and an irrevocable grant and conveyance of a lien, deed of
trust and mortgage on each of the Properties and all proceeds (including without
limitation insurance proceeds thereof) to the extent such is real property; (ii)
the acquisition of title by Lessor (or to the extent applicable, a leasehold
interest pursuant to a Ground Lease) in each Property referenced in Article II
constitutes a grant by Lessee to

 

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Lessor of a security interest, lien, deed of trust and mortgage in all of
Lessee’s right, title and interest in and to each Property and all proceeds
(including without limitation insurance proceeds thereof) of the conversion,
voluntary or involuntary, of the foregoing into cash, investments, securities or
other property, whether in the form, of cash, investments, securities or other
property, and an assignment of all rents, profits and income produced by each
Property; and (iii) notifications to Persons holding such property, and
acknowledgments, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of Lessee shall be deemed to have been given
for the purpose of perfecting such lien, security interest, mortgage lien and
deed of trust under applicable law. Lessee shall promptly take such actions as
necessary (including without limitation the filing of Uniform Commercial Code
Financing Statements, Uniform Commercial Code Fixture Filings and memoranda (or
short forms) of this Lease and the various Lease Supplements) to ensure that the
lien, security interest, mortgage lien and deed of trust in each Property and
the other items referenced above will be deemed to be a perfected lien, security
interest, mortgage lien and deed of trust of first priority under applicable law
and will be maintained as such throughout the Term.

 

ARTICLE VIII

 

  8.1 Condition of the Properties.

 

LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH PROPERTY “AS-IS WHERE-IS”
WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY LESSOR
(EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR OF LESSOR LIENS) AND
IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE RIGHTS OF ANY
PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY STATE OF FACTS REGARDING ITS
PHYSICAL CONDITION OR WHICH AN ACCURATE SURVEY MIGHT SHOW, (D) ALL APPLICABLE
LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY EXIST ON
THE DATE HEREOF AND/OR THE DATE OF THE APPLICABLE LEASE SUPPLEMENT. NEITHER
LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER HAS MADE OR SHALL BE DEEMED
TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED)
(EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR OF LESSOR LIENS) OR
SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE, VALUE,
HABITABILITY, USE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR
USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY
OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY
PART THEREOF), AND NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER
SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREON OR THE FAILURE
OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT.
LESSEE HAS OR PRIOR TO THE COMMENCEMENT DATE WILL HAVE BEEN AFFORDED FULL
OPPORTUNITY TO INSPECT EACH PROPERTY AND

 

8

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THE IMPROVEMENTS THEREON (IF ANY), IS OR WILL BE (INSOFAR AS LESSOR, THE AGENT,
EACH LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH THE RESULTS OF ITS
INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS OF THE RESULTS
OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE
PRECEDING SENTENCE, AS BETWEEN LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS,
ON THE ONE (1) HAND, AND LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.

 

  8.2 Possession and Use of the Properties.

 

(a) Subsequent to the Completion Date, at all times during the Term (i) with
respect to each Property, such Property shall be a Permitted Facility and shall
be used by Lessee in the ordinary course of its business and (ii) with respect
to the Property referenced in Lease Supplement No. 1, such Property shall also
be operated as a hospital. Lessee shall pay, or cause to be paid, all charges
and costs required in connection with the use of the Properties as contemplated
by this Lease. Lessee shall not commit or permit any waste of the Properties or
any part thereof.

 

(b) The address stated in Section 12.2 of the Participation Agreement is the
principal place of business and chief executive office of Lessee (as such terms
are used in the Uniform Commercial Code of any applicable jurisdiction), and
Lessee will provide Lessor with prior written notice of any change of location
of its principal place of business or chief executive office. The location of
Lessee for purposes of the Uniform Commercial Code is Alabama, and Lessee will
provide Lessor and the Agent with prior written notice of any change in its
location for purposes of the Uniform Commercial Code. Regarding a particular
Property, each Lease Supplement correctly identifies the initial location of the
related Equipment (if any) and Improvements (if any) and contains an accurate
legal description for the related parcel of Land or a copy of the Ground Lease
(if any). The Equipment and Improvements respecting each particular Property
will be located only at the location identified in the applicable Lease
Supplement.

 

(c) Lessee will not attach or incorporate any item of Equipment to or in any
other item of equipment or personal property or to or in any real property in a
manner that could give rise to the assertion of any Lien on such item of
Equipment by reason of such attachment or the assertion of a claim that such
item of Equipment has become a fixture and is subject to a Lien in favor of a
third party that is prior to the Liens thereon created by the Operative
Agreements.

 

(d) On the Commencement Date for each Property, Lessor and Lessee shall execute
a Lease Supplement in regard to such Property which shall contain an Equipment
Schedule that has a general description of the Equipment which shall comprise
the Property, an Improvement Schedule that has a general description of the
Improvements which shall comprise the Property and a legal description of the
Land to be leased hereunder (or in the case of any Property subject to a Ground
Lease to be subleased hereunder) as of such date. Each Property subject to a
Ground Lease shall be deemed to be ground subleased from Lessor to Lessee as of
the Commencement Date, and such

 

9

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ground sublease shall be in effect until this Lease is terminated or expires, in
each case in accordance with the terms and provisions hereof. Lessee shall
satisfy and perform all obligations imposed on Lessor under each Ground Lease.
Simultaneously with the execution and delivery of each Lease Supplement, such
Equipment, Improvements, Land, ground subleasehold interest, all additional
Equipment and all additional Improvements which are financed under the Operative
Agreements after the Commencement Date and the remainder of such Property shall
be deemed to have been accepted by Lessee for all purposes of this Lease and to
be subject to this Lease.

 

(e) At all times during the Term with respect to each Property, Lessee will
comply with all obligations under and (to the extent no Event of Default exists
and provided that such exercise will not impair the value, utility or remaining
useful life of such Property) shall be permitted to exercise all rights and
remedies under, all operation and easement agreements and related or similar
agreements applicable to such Property.

 

  8.3 Integrated Properties.

 

On the Rent Commencement Date for each Property, Lessee shall, at its sole cost
and expense, cause such Property and the applicable property subject to a Ground
Lease to constitute (and for the duration of the Term shall continue to
constitute) all of the equipment, facilities, rights, other personal property
and other real property necessary or appropriate to operate, utilize, maintain
and control a Permitted Facility in a commercially reasonable manner.

 

ARTICLE IX

 

  9.1 Compliance With Legal Requirements, Insurance Requirements and
Manufacturer’s Specifications and Standards.

 

Subject to the terms of Article XIII relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply with all applicable Legal
Requirements (including without limitation all Environmental Laws) and all
Insurance Requirements relating to the Properties, (b) procure, maintain and
comply with all licenses, permits, orders, approvals, consents and other
authorizations required for the acquisition, installation, testing, use,
development, construction, operation, maintenance, repair, refurbishment and
restoration of the Properties, and (c) comply with all manufacturer’s
specifications and standards, including without limitation the acquisition,
installation, testing, use, development, construction, operation, maintenance,
repair, refurbishment and restoration of the Properties, whether or not
compliance therewith shall require structural or extraordinary changes in any
Property or interfere with the use and enjoyment of any Property. Lessor agrees
to take such actions as may be reasonably requested by Lessee in connection with
the compliance by Lessee of its obligations under this Section 9.1.

 

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ARTICLE X

 

  10.1 Maintenance and Repair; Return.

 

(a) Lessee, at its sole cost and expense, shall maintain each Property in good
condition, repair and working order (ordinary wear and tear excepted) and in the
repair and condition as when originally delivered to Lessor, subject to
Modifications made or required to be made pursuant to the Operative Agreements,
and make all necessary repairs thereto and replacements thereof, of every kind
and nature whatsoever, whether interior or exterior, ordinary or extraordinary,
structural or nonstructural or foreseen or unforeseen, in each case as required
by Section 9.1 and on a basis consistent with the operation and maintenance of
properties or equipment comparable in type and function to the applicable
Property, such that such Property is capable of being immediately utilized by a
third party and in compliance with standard industry practice subject, however,
to the provisions of Article XV with respect to Casualty and Condemnation.

 

(b) Lessee shall not use or locate any component of any Property outside of the
Approved State therefor. Lessee shall not move or relocate any component of any
Property beyond the boundaries of the Land (comprising part of such Property)
described in the applicable Lease Supplement, except for the temporary removal
of Equipment and other personal property for repair or replacement.

 

(c) If any component of any Property becomes worn out, lost, destroyed, damaged
beyond repair or otherwise permanently rendered unfit for use, Lessee, at its
own expense, will within a reasonable time replace such component with a
replacement component which is free and clear of all Liens (other than Permitted
Liens) and has a value, utility and useful life at least equal to the component
replaced (assuming the component replaced had been maintained and repaired in
accordance with the requirements of this Lease); provided, however, that nothing
in this Section shall prevent the Lessee from discontinuing the use, operation
or maintenance of any Equipment or disposing of such if, in all such cases such
Equipment is obsolete or no longer necessary for the operation of the Permitted
Facility and such discontinuance or disposal does not, in the aggregate with all
prior discontinuances and disposals, decrease the value of the Property by more
than $500,000 or adversely affect the utility or useful life of the Property.
All components which are added to any Property shall immediately become the
property of (and title thereto shall vest in) Lessor and shall be deemed
incorporated in such Property and subject to the terms of this Lease as if
originally leased hereunder.

 

(d) Upon reasonable advance notice, Lessor and its agents shall have the right
to inspect each Property and all maintenance records with respect thereto at any
reasonable time during normal business hours but shall not, in the absence of an
Event of Default, materially disrupt the business of Lessee.

 

(e) Lessee shall cause to be delivered to Lessor (at Lessee’s sole expense) one
(1) or more additional Appraisals (or reappraisals of Property) as Lessor may
request if any one (1) of Lessor, the Agent, the Trust Company, any Lender or
any Holder is

 

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required pursuant to any applicable Legal Requirement to obtain such Appraisals
(or reappraisals) and upon the occurrence of any Event of Default.

 

(f) Lessor shall under no circumstances be required to build any improvements or
install any equipment on any Property, make any repairs, replacements,
alterations or renewals of any nature or description to any Property, make any
expenditure whatsoever in connection with this Lease or maintain any Property in
any way. Lessor shall not be required to maintain, repair or rebuild all or any
part of any Property, and Lessee waives the right to (i) require Lessor to
maintain, repair, or rebuild all or any part of any Property, or (ii) make
repairs at the expense of Lessor pursuant to any Legal Requirement, Insurance
Requirement, contract, agreement, covenant, condition or restriction at any time
in effect.

 

(g) Lessee shall, upon the expiration or earlier termination of this Lease with
respect to a Property, if Lessee shall not have exercised its Purchase Option
with respect to such Property and purchased such Property, surrender such
Property (i) to Lessor pursuant to the exercise of the applicable remedies upon
the occurrence of a Lease Event of Default or (ii) pursuant to the second
paragraph of Section 22.1(a) hereof, to Lessor or the third party purchaser, as
the case may be, subject to Lessee’s obligations under this Lease (including
without limitation the obligations of Lessee at the time of such surrender under
Sections 9.1, 10.1 (a) through (f), 10.2, 11.1, 12.1, 22.1 and 23.1).

 

(h) [Intentionally Omitted].

 

(i) [Intentionally Omitted].

 

(j) The provisions of this Section 10.1 are essential to this Lease, and upon
application to any court of law or equity having jurisdiction in the premises,
Lessor shall be entitled to a decree against Lessee requiring specific
performance of the covenants of Lessee set forth in this Section 10.1.

 

  10.2 Environmental Inspection.

 

If Lessee has not given notice of exercise of its Purchase Option on the
Expiration Date pursuant to Section 20.1 or for whatever reason Lessee does not
purchase a Property in accordance with the terms of this Lease, then not more
than one hundred eighty (180) days nor less than sixty (60) days prior to the
Expiration Date, Lessee at its expense shall cause to be delivered to Lessor a
Phase I environmental site assessment recently prepared (no more than thirty
(30) days prior to the date of delivery) by an independent recognized
professional reasonably acceptable to Lessor, and in form, scope and content
reasonably satisfactory to Lessor.

 

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ARTICLE XI

 

  11.1 Modifications.

 

(a) Lessee at its sole cost and expense, at any time and from time to time
without the consent of Lessor may make modifications, alterations, renovations,
improvements and additions to any Property or any part thereof and substitutions
and replacements therefor (collectively, “Modifications”), and Lessee shall make
any and all Modifications required to be made pursuant to all Legal
Requirements, Insurance Requirements and manufacturer’s specifications and
standards; provided, that: (i) no Modification shall materially impair the
value, utility or useful life of any Property from that which existed
immediately prior to such Modification; (ii) each Modification shall be done
expeditiously and in a good and workmanlike manner; (iii) no Modification shall
adversely affect the structural integrity of any Property; (iv) to the extent
required by Section 14.2(a), Lessee shall maintain builders’ risk insurance at
all times when a Modification is in progress; (v) subject to the terms of
Article XIII relating to permitted contests, Lessee shall pay all costs and
expenses and discharge any Liens arising with respect to any Modification; (vi)
each Modification shall comply with the requirements of this Lease (including
without limitation Sections 8.2 and 10.1); and (vii) no Improvement shall be
demolished or otherwise rendered unfit for use unless Lessee shall finance the
proposed replacement Modification outside of this lease facility; provided,
further, Lessee shall not make any Modification (unless required by any Legal
Requirement) to the extent any such Modification, individually or in the
aggregate, shall or could reasonably be expected to have a Material Adverse
Effect. Except as expressly provided in this Section, all Modifications shall
immediately and without further action upon their incorporation into the
applicable Property (1) become property of Lessor, (2) be subject to this Lease
and (3) be titled in the name of Lessor. Lessee shall not remove or attempt to
remove any Modification from any Property. Each Ground Lease for a Property
shall expressly provide for the provisions of the foregoing sentence. Lessee, at
its own cost and expense, will pay for the repairs of any damage to any Property
caused by the removal or attempted removal of any Modification.

 

Modifications made by Lessee that (A) are not required to be made pursuant to
Legal Requirements, Insurance Requirements or manufacturer’s specifications or
standards, (B) are not financed or paid for wholly or partially by the Lessor or
with proceeds of any Casualty or Condemnation, (C) are not required replacements
pursuant to Article 15 of the Lease or any other provision of any Operative
Agreement and (D) can be removed without adversely affecting the value, utility
or useful life of the Property or the operation of the Property as a Permitted
Facility, may be removed by Lessee prior to the Expiration Date, provided, if
such Modifications are not removed by such date then title to such Modifications
shall revert to Lessor. Lessee at its sole cost and expense shall repair in a
good and workmanlike manner any and all damage done to any Property due to the
removal, detachment, attempted removal or attempted detachment of any
Modification from a Property and all such repairs shall be completed by the
earlier of (Y) thirty (30) days after such removal, detachment, attempted
removal or attempted detachment of the applicable Modification from the
applicable Property and (Z) the

 

13

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Expiration Date. Lessee shall not remove or attempt to remove any Modification
titled to Lessor from any Property.

 

Lessee may install any removable trade fixtures, machinery, equipment, inventory
or other property (and all right, title and interest in and to such property
shall belong to the Lessee or a third party other than any Financing Party) that
(A) is not required to be made pursuant to Legal Requirements, Insurance
Requirements or manufacturer’s specifications or standards, (B) is not financed
or paid for wholly or partially by the Lessor or with proceeds of any Casualty
or Condemnation, (C) is not a required replacement pursuant to Article 15 of the
Lease or any other provision of any Operative Agreement and (D) can be removed
without adversely affecting the value, utility or useful life of the Property or
the operation of the Property as a Permitted Facility, may be removed by Lessee
prior to the Expiration Date, provided, if such property is not removed by such
date then title to such property shall automatically transfer to and vest in the
Lessor. Lessee at its sole cost and expense shall repair in a good and
workmanlike manner any and all damage done to any Property due to the removal,
detachment, attempted removal or attempted detachment of any property from a
Property and all such repairs shall be completed by the earlier of (Y) thirty
(30) days after such removal, detachment, attempted removal or attempted
detachment of the applicable Modification from the applicable Property and (Z)
the Expiration Date. Lessee shall not remove or attempt to remove any
Modification titled to Lessor from any Property.

 

(b) The construction process provided for in the Agency Agreement is
acknowledged by Lessor to be consistent with and in compliance with the terms
and provisions of this Article XI.

 

ARTICLE XII

 

  12.1 Warranty of Title.

 

(a) Lessee hereby acknowledges and shall cause title in each Property (including
without limitation all Equipment, all Improvements, all replacement components
to each Property and all Modifications) immediately and without further action
to vest in and become the property of Lessor and to be subject to the terms of
this Lease (provided, respecting each Property subject to a Ground Lease,
Lessor’s interest therein is acknowledged to be a leasehold interest pursuant to
such Ground Lease) from and after the date hereof or such date of incorporation
into any Property. Lessee agrees that, subject to the terms of Article XIII
relating to permitted contests, Lessee shall not directly or indirectly create
or allow to remain, and shall promptly discharge at its sole cost and expense,
any Lien, defect, attachment, levy, title retention agreement or claim upon any
Property, any component thereof or any Modifications or any Lien, attachment,
levy or claim with respect to the Rent or with respect to any amounts held by
Lessor, the Agent, any Lender or any Holder pursuant to any Operative Agreement,
other than Permitted Liens. Lessee shall promptly notify Lessor in the event it
receives actual knowledge that a Lien other than a Permitted Lien has occurred
with respect to a

 

14

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Property, the Rent or any other such amounts, and Lessee represents and warrants
to, and covenants with, Lessor that the Liens in favor of Lessor and/or the
Agent created by the Operative Agreements are (and until the Financing Parties
under the Operative Agreements have been paid in full shall remain) first
priority perfected Liens subject only to Permitted Liens and Lessor Liens. At
all times subsequent to the Commencement Date respecting a Property, Lessee
shall (i) cause a valid, perfected, first priority Lien on each applicable
Property to be in place in favor of the Agent (for the benefit of the Secured
Parties) and (ii) file, or cause to be filed, all necessary documents under the
applicable real property law and Article 9 of the Uniform Commercial Code to
perfect such title and Liens.

 

(b) Nothing contained in this Lease shall be construed as constituting the
consent or request of Lessor, expressed or implied, to or for the performance by
any contractor, mechanic, laborer, materialman, supplier or vendor of any labor
or services or for the furnishing of any materials for any construction,
alteration, addition, repair or demolition of or to any Property or any part
thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR
ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO
ANYONE HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT
NO MECHANIC’S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL
ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO ANY PROPERTY.

 

ARTICLE XIII

 

  13.1 Permitted Contests Other Than in Respect of Indemnities.

 

Except to the extent otherwise provided for in Section 11 of the Participation
Agreement, Lessee, on its own or on Lessor’s behalf but at Lessee’s sole cost
and expense, may contest, by appropriate administrative or judicial proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Legal Requirement, Imposition or
utility charge payable pursuant to Section 4.1 or any Lien, attachment, levy,
encumbrance or encroachment, and Lessor agrees not to pay, settle or otherwise
compromise any such item, provided, that (a) the commencement and continuation
of such proceedings shall suspend the collection of any such contested amount
from, and suspend the enforcement thereof against, the applicable Properties,
Lessor, each Holder, the Agent and each Lender; (b) there shall not be imposed a
Lien (other than Permitted Liens) on any Property and no part of any Property
nor any Rent would be in any danger of being sold, forfeited, lost or deferred;
(c) at no time during the permitted contest shall there be a risk of the
imposition of criminal liability or material civil liability on Lessor, any
Holder, the Agent or any Lender for failure to comply therewith; and (d) in the
event that, at any time, there shall be a material risk of extending the
application of such item beyond the end of the Term, then Lessee shall deliver
to Lessor an Officer’s Certificate certifying as to the matters set forth in
clauses (a), (b) and (c) of this Section 13.1. Lessor, at Lessee’s sole cost and
expense, shall execute and deliver to Lessee such authorizations and other
documents as may reasonably be required in connection with any such

 

15

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contest and, if reasonably requested by Lessee and required under local
procedural rules or regulations, shall join as a party therein at Lessee’s sole
cost and expense; provided, however, Lessor shall not join as a party therein in
the event each Lender, each Holder and the Lessor agrees that the Lessor shall
forfeit the benefit of its indemnity under the Operative Agreements with respect
to such contest.

 

  13.2 Impositions, Utility Charges, Other Matters; Compliance with Legal
Requirements.

 

Except with respect to Impositions, Legal Requirements, utility charges and such
other matters referenced in Section 13.1 which are the subject of ongoing
proceedings contesting the same in a manner consistent with the requirements of
Section 13.1, subject to the obligation of Lessor to pay Impositions required to
remove any Lessor Lien, Lessee shall cause (a) all Impositions, utility charges
and such other matters to be timely paid, settled or compromised, as
appropriate, with respect to each Property and (b) each Property to comply with
all applicable Legal Requirements.

 

ARTICLE XIV

 

  14.1 Public Liability and Workers’ Compensation Insurance.

 

During the Term for each Property, Lessee shall procure and carry, at Lessee’s
sole cost and expense, commercial general liability and umbrella liability
insurance for claims for injuries or death sustained by persons or damage to
property while on such Property or respecting the Equipment and such other
public liability coverages as are then customarily carried by similarly situated
companies conducting business similar to that conducted by Lessee. Such
insurance shall be on terms and in amounts that are no less favorable than
insurance maintained by Lessee with respect to similar properties and equipment
that it owns and are then carried by similarly situated companies conducting
business similar to that conducted by Lessee, and in no event shall have a
minimum combined single limit per occurrence coverage (i) for commercial general
liability of less than $1,000,000 and (ii) for umbrella liability of less than
$25,000,000. The policies shall name Lessee as the insured and shall be endorsed
to name Lessor, the Holders, the Agent and the Lenders as additional insureds.
The policies shall also specifically provide that such policies shall be
considered primary insurance which shall apply to any loss or claim before any
contribution by any insurance which Lessor, any Holder, the Agent or any Lender
may have in force. In the operation of the Properties, Lessee shall comply with
applicable workers’ compensation laws and protect Lessor, each Holder, the Agent
and each Lender against any liability under such laws.

 

  14.2 Permanent Hazard and Other Insurance.

 

(a) During the Term for each Property, Lessee shall keep such Property insured
against all risk of physical loss or damage by fire and other risks and shall
maintain all risk builders’ risk insurance during construction of any
Improvements or Modifications in each case in amounts no less than the Property
Cost of such Property

 

16

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from time to time and on terms that (i) are no less favorable than insurance
covering other similar properties owned by Lessee, (ii) subject to subsection
(iii) below, are then carried by similarly situated companies conducting
business similar to that conducted by Lessee and (iii) regarding builder’s all
risk insurance, shall cover all Casualty and all Force Majeure Events except
Uninsurable Force Majeure Events. Such all risk builder’s risk insurance shall
not have a deductible in excess of $100,000 per occurrence (provided, from and
after the earlier to occur of the delivery of the insurance certificate
referenced in Section 17.1 (a) and January 15, 2002, such deductible shall not
be in excess of $25,000 per occurrence) with respect to any Construction Period
Property and, with respect to each Construction Period Property as of the
applicable Property Closing Date, such insurance shall be in effect for a term
covering the period from such Property Closing Date through and including the
Completion Date of such Property. The policies shall name Lessee as the insured
and shall be endorsed to name Lessor and the Agent (on behalf of the Secured
Parties) as an additional insured and loss payee; provided, so long as no Event
of Default exists, any loss payable under the insurance policies required by
this Section for losses up to $1,000,000 will be paid to Lessee.

 

(b) If, during the Term with respect to a Property the area in which such
Property is located is designated a “flood-prone” area pursuant to the Flood
Disaster Protection Act of 1973, or any amendments or supplements thereto or is
in a zone designated A or V, then Lessee shall comply with the National Flood
Insurance Program as set forth in the Flood Disaster Protection Act of 1973. In
addition, Lessee will fully comply with the requirements of the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as each may
be amended from time to time, and with any other Legal Requirement, concerning
flood insurance to the extent that it applies to any such Property. During the
Term, Lessee shall, in the operation and use of each Property, maintain workers’
compensation insurance consistent with that carried by similarly situated
companies conducting business similar to that conducted by Lessee and containing
minimum liability limits of no less than $100,000. In the operation of each
Property, Lessee shall comply with workers’ compensation laws applicable to
Lessee, and protect Lessor, each Holder, the Agent and each Lender against any
liability under such laws.

 

  14.3 Coverage.

 

(a) As of the date of this Lease and annually thereafter during the Term, Lessee
shall furnish the Agent (on behalf of Lessor, and the other beneficiaries of
such insurance coverage) and Lessor with certificates prepared by the insurers
or insurance broker of Lessee showing the insurance required under Sections 14.1
and 14.2 to be in effect, naming (to the extent of their respective interests)
Lessor, in its individual and trust capacity, the Holders, the Agent and the
Lenders as additional insureds and loss payees and evidencing the other
requirements of this Article XIV. All such certificates must be in form and
substance satisfactory to Lessor and the Agent. All such insurance shall be at
the cost and expense of Lessee and provided by nationally recognized,
financially sound insurance companies having an A+ or better rating by A.M.
Best’s Key Rating Guide. Lessee shall cause such certificates to include a
provision for thirty (30)

 

17

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days’ advance written notice by the insurer to the Agent (on behalf of Lessor
and the other beneficiaries of such insurance coverage) and Lessor in the event
of cancellation or material alteration of such insurance. If an Event of Default
has occurred and is continuing and the Agent (on behalf of Lessor and the other
beneficiaries of such insurance coverage) so requests, Lessee shall deliver to
the Agent (on behalf of Lessor and the other beneficiaries of such insurance
coverage) and Lessor copies of all insurance policies required by Sections 14.1
and 14.2.

 

(b) Lessee agrees that the insurance policy or policies required by Sections
14.1, 14.2(a) and 14.2(b) shall include an appropriate clause pursuant to which
any such policy shall provide that it will not be invalidated should Lessee or
any Contractor, as the case may be, waive, at any time, any or all rights of
recovery against any party for losses covered by such policy or due to any
breach of warranty, fraud, action, inaction or misrepresentation by Lessee or
any Person acting on behalf of Lessee. Lessee hereby waives any and all such
rights against Lessor, the Holders, the Agent and the Lenders to the extent of
payments made to any such Person under any such policy.

 

(c) Neither Lessor nor Lessee shall carry separate insurance concurrent in kind
or form or contributing in the event of loss with any insurance required under
this Article XIV, except that Lessor may carry separate liability insurance at
Lessor’s sole cost so long as (i) Lessee’s insurance is designated as primary
and in no event excess or contributory to any insurance Lessor may have in force
which would apply to a loss covered under Lessee’s policy and (ii) each such
insurance policy will not cause Lessee’s insurance required under this Article
XIV to be subject to a coinsurance exception of any kind. This provision shall
not limit the Agent, any Lender or any Holder from carrying separate insurance.

 

(d) Lessee shall pay or cause to be paid as they become due all premiums for the
insurance required by Section 14.1 and Section 14.2, shall renew or replace each
policy prior to the expiration date thereof or otherwise maintain the coverage
required by such Sections without any lapse in coverage.

 

ARTICLE XV

 

  15.1 Casualty and Condemnation.

 

(a) Subject to the provisions of the Agency Agreement and this Article XV and
Article XVI (in the event Lessee delivers, or is obligated to deliver or is
deemed to have delivered, a Termination Notice), and prior to the occurrence and
continuation of a Default or an Event of Default, Lessee shall be entitled to
receive (and Lessor hereby irrevocably assigns to Lessee all of Lessor’s right,
title and interest in) any condemnation proceeds, award, compensation or
insurance proceeds under Sections 14.2(a) or 14.2(b) hereof to which Lessee or
Lessor may become entitled by reason of their respective interests in a Property
(i) if all or a portion of such Property is damaged or destroyed in whole or in
part by a Casualty or (ii) if the use, access, occupancy, easement rights or
title

 

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to such Property or any part thereof is the subject of a Condemnation; provided,
however, if a Default or an Event of Default shall have occurred and be
continuing or if such award, compensation or insurance proceeds shall exceed
$1,000,000, then such award, compensation or insurance proceeds shall be paid
directly to Lessor or, if received by Lessee, shall be held in trust for Lessor,
and shall be paid over by Lessee to Lessor and held in accordance with the terms
of this paragraph (a). All amounts held by Lessor hereunder on account of any
award, compensation or insurance proceeds either paid directly to Lessor or
turned over to Lessor shall be held as security for the performance of Lessee’s
obligations hereunder and under the other Operative Agreements and when all such
obligations of Lessee with respect to such matters (and all other obligations of
Lessee which should have been satisfied pursuant to the Operative Agreements as
of such date) have been satisfied, all amounts so held by Lessor shall be paid
over to Lessee.

 

(b) To the extent no Lease Event of Default shall have occurred and be
continuing, Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation. Lessee shall pay all
expenses regarding each such proceeding or action referenced in the previous
sentence. At Lessee’s reasonable request, and at Lessee’s sole cost and expense,
Lessor and the Agent shall participate in any such proceeding, action,
negotiation, prosecution or adjustment. Lessor and Lessee agree that this Lease
shall control the rights of Lessor and Lessee in and to any such award,
compensation or insurance payment.

 

(c) If Lessee shall receive notice of a Casualty or a Condemnation of a Property
or any interest therein where damage to the affected Property is estimated to
equal or exceed twenty-five percent (25%) of the Property Cost of such Property,
Lessee shall give notice thereof to Lessor promptly after Lessee’s receipt of
such notice. In the event such a Casualty or Condemnation occurs (regardless of
whether Lessee gives notice thereof), then Lessee shall be deemed to have
delivered a Termination Notice to Lessor and the provisions of Sections 16.1 and
16.2 shall apply.

 

(d) In the event of a Casualty or a Condemnation (regardless of whether notice
thereof must be given pursuant to paragraph (c)), this Lease shall terminate
with respect to the applicable Property in accordance with Section 16.1 if
Lessee, within thirty (30) days after such occurrence, delivers to Lessor a
notice to such effect.

 

(e) If pursuant to this Section 15.1 this Lease shall continue in full force and
effect following a Casualty or Condemnation with respect to the affected
Property, Lessee shall, at its sole cost and expense (subject to reimbursement
in accordance with Section 15.1(a)) promptly and diligently repair any damage to
the applicable Property caused by such Casualty or Condemnation in conformity
with the requirements of Sections 10.1 and 11.1, using the as-built Plans and
Specifications or manufacturer’s specifications for the applicable Improvements,
Equipment or other components of the applicable Property (as modified to give
effect to any subsequent Modifications, any Condemnation affecting the
applicable Property and all applicable Legal Requirements), so as to restore the
applicable Property to the same or a greater remaining economic

 

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value, useful life, utility, condition, operation and function as existed
immediately prior to such Casualty or Condemnation (assuming all maintenance and
repair standards have been satisfied). In such event, title to the applicable
Property shall remain with Lessor.

 

(f) In no event shall a Casualty or Condemnation affect Lessee’s obligations to
pay Rent pursuant to Article III.

 

(g) Notwithstanding anything to the contrary set forth in Section 15.1 (a) or
Section 15.1(e), if during the Term with respect to a Property to which Section
15.1(c) does not apply a Casualty occurs with respect to such Property or Lessee
receives notice of a Condemnation with respect to such Property, and following
such Casualty or Condemnation, the applicable Property cannot reasonably be
restored, repaired or replaced on or before the day one hundred eighty (180)
days prior to the Expiration Date or the date nine (9) months after the
occurrence of such Casualty or Condemnation (if such Casualty or Condemnation
occurs during the Term) to the same or a greater remaining economic value,
useful life, utility, condition, operation and function as existed immediately
prior to such Casualty or Condemnation (assuming all maintenance and repair
standards have been satisfied) or on or before such day such Property is not in
fact so restored, repaired or replaced, then Lessee shall be required to
exercise its Purchase Option for such Property on the next Payment Date
(notwithstanding the limits on such exercise contained in Section 20.2) and pay
Lessor the Termination Value for such Property; provided, if any Default or
Event of Default has occurred and is continuing, Lessee shall also promptly (and
in any event within three (3) Business Days) pay Lessor any award, compensation
or insurance proceeds received on account of any Casualty or Condemnation with
respect to any Property; provided, further, that if no Default or Event of
Default has occurred and is continuing, any Excess Proceeds shall be paid to
Lessee. If a Default or an Event of Default has occurred and is continuing and
any Loans, Holder Advances or other amounts are owing with respect thereto, then
any Excess Proceeds (to the extent of any such Loans, Holder Advances or other
amounts owing with respect thereto) shall be paid to Lessor, held as security
for the performance of Lessee’s obligations hereunder and under the other
Operative Agreements and applied to such obligations upon the exercise of
remedies in connection with the occurrence of an Event of Default, with the
remainder of such Excess Proceeds in excess of such Loans, Holder Advances and
other amounts owing with respect thereto being distributed to the Lessee.

 

(h) The provisions of Sections 15.1(a)-15.1(g) shall only apply to a Property
after the Completion Date for such Property.

 

  15.2 Environmental Matters.

 

Promptly upon Lessee’s actual knowledge of the presence of Hazardous Substances
in any portion of any Property or Properties in concentrations and conditions
that constitute an Environmental Violation and which, in the reasonable opinion
of Lessee, the cost to undertake any legally required response, clean up,
remedial or other action will or might result in a cost to Lessee of more than
$100,000, Lessee shall notify Lessor in writing of such condition.

 

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In the event of any Environmental Violation (regardless of whether notice
thereof must be given), Lessee shall, not later than thirty (30) days after
Lessee has actual knowledge of such Environmental Violation, either deliver to
Lessor a Termination Notice with respect to the applicable Property or
Properties pursuant to Section 16.1, if applicable, or, at Lessee’s sole cost
and expense, promptly and diligently undertake and diligently complete any
response, clean up, remedial or other action (including without limitation the
pursuit by Lessee of appropriate action against any off-site or third party
source for contamination) necessary to remove, cleanup or remediate the
Environmental Violation in accordance with all Environmental Laws. Any such
undertaking shall be timely completed in accordance with prudent industry
standards. If Lessee does not deliver a Termination Notice with respect to such
Property pursuant to Section 16.1, Lessee shall, upon completion of remedial
action by Lessee, cause to be prepared by a reputable environmental consultant
acceptable to Lessor a report describing the Environmental Violation and the
actions taken by Lessee (or its agents) in response to such Environmental
Violation, and a statement by the consultant that the Environmental Violation
has been remedied in full compliance with applicable Environmental Law. Not less
than sixty (60) days and not more than one hundred eighty (180) days prior to
any time that Lessee elects to cease operations with respect to any Property or
to remarket any Property pursuant to Section 20.1 hereof or any other provision
of any Operative Agreement, Lessee at its expense shall cause to be delivered to
Lessor a Phase I environmental site assessment respecting such Property recently
prepared (no more than thirty (30) days prior to the date of delivery) by an
independent recognized professional acceptable to Lessor in its reasonable
discretion and in form, scope and content satisfactory to Lessor in its
reasonable discretion. Notwithstanding any other provision of any Operative
Agreement, if Lessee fails to comply with the foregoing obligation regarding the
Phase I environmental site assessment, Lessee shall be obligated to purchase
such Property for its Termination Value and shall not be permitted to exercise
(and Lessor shall have no obligation to honor any such exercise) any rights
under any Operative Agreement regarding a sale of such Property to a Person
other than Lessee or any Affiliate of Lessee.

 

  15.3 Notice of Environmental Matters.

 

Promptly, but in any event within thirty (30) days from the date Lessee has
actual knowledge thereof, Lessee shall provide to Lessor written notice of any
pending or threatened claim, action or proceeding involving any Environmental
Law or any Release on or in connection with any Property or Properties. All such
notices shall describe in reasonable detail the nature of the claim, action or
proceeding and Lessee’s proposed response thereto. In addition, Lessee shall
provide to Lessor, within thirty (30) days of receipt, copies of all material
written communications with any Governmental Authority relating to any
Environmental Law in connection with any Property. Lessee shall also promptly
provide such detailed reports of any such material environmental claims as may
reasonably be requested by Lessor.

 

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ARTICLE XVI

 

  16.1 Termination Upon Certain Events.

 

If Lessee has delivered, or is deemed to have delivered, written notice of a
termination of this Lease with respect to the applicable Property to Lessor in
the form described in Section 16.2(a) (a “Termination Notice”) pursuant to the
provisions of this Lease, then following the applicable Casualty, Condemnation
or Environmental Violation, this Lease shall terminate with respect to the
affected Property on the applicable Termination Date.

 

  16.2 Procedures.

 

(a) A Termination Notice shall contain: (i) notice of termination of this Lease
with respect to the affected Property on a Payment Date not more than sixty (60)
days after Lessor’s receipt of such Termination Notice (the “Termination Date”);
and (ii) a binding and irrevocable agreement of Lessee to pay the Termination
Value for the applicable Property and purchase such Property on such Termination
Date.

 

(b) On each Termination Date, Lessee shall pay to Lessor the Termination Value
for the applicable Property, and Lessor shall convey such Property or the
remaining portion thereof, if any, to Lessee (or Lessee’s designee), all in
accordance with Section 20.2.

 

ARTICLE XVII

 

  17.1 Lease Events of Default.

 

If any one (1) or more of the following events (each a “Lease Event of Default”)
shall occur:

 

(a) Lessee shall fail to make payment of (i) any Basic Rent (except as set forth
in clause (ii) within five (5) Business Days after the same has become due and
payable or (ii) any Termination Value, on the date any such payment is due and
payable, or any payment of Basic Rent or Supplemental Rent due on the due date
of any such payment of Termination Value, or any amount due on the Expiration
Date;

 

(b) Lessee shall fail to make payment of any Supplemental Rent (other than
Supplemental Rent referred to in Section 17.1(a)(ii)) or any other Credit Party
shall fail to make any payment of any amount under any Operative Agreement which
has become due and payable within five (5) Business Days after receipt of notice
that such payment is due;

 

(c) Lessee shall fail to maintain insurance as required by Article XIV of this
Lease or to deliver any requisite annual certificate with respect thereto within
ten (10)

 

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days of the date after receipt of notice of Lessee’s failure to provide such
certificate when due under the terms hereof;

 

(d) (i) Lessee shall fail to observe or perform any term, covenant, obligation
or condition of Lessee under this Lease (including without limitation the
Incorporated Covenants) or any other Operative Agreement to which Lessee is a
party other than those set forth in Sections 17.1(a), (b) or (c) hereof, or any
other Credit Party shall fail to observe or perform any term, covenant,
obligation or condition of such Credit Party under any Operative Agreement other
than those set forth in Section 17.1(b) hereof and such failure shall continue
for thirty (30) days (or with respect to the Incorporated Covenants, the grace
period, if any, applicable thereto) after the earlier of (A) notice thereof to
the Lessee or such Credit Party and (B) the date the Lessee or such Credit Party
otherwise has notice thereof, or (ii) any representation or warranty made by
Lessee or any other Credit Party set forth in this Lease (including without
limitation the Incorporated Representations and Warranties) or in any other
Operative Agreement or in any document entered into in connection herewith or
therewith or in any document, certificate or financial or other statement
delivered in connection herewith or therewith shall be false or inaccurate in
any material way when made;

 

(e) An Agency Agreement Event of Default shall have occurred and be continuing;

 

(f) Any Credit Party or any Subsidiary of any Credit Party shall default (beyond
applicable periods of grace and/or notice and cure) in the payment when due of
any principal of or interest on any Indebtedness having an outstanding principal
amount of at least $25,000,000; or any other event or condition shall occur
which results in a default of any such Indebtedness or enables the holder of any
such Indebtedness or any Person acting on such holder’s behalf to accelerate the
maturity thereof;

 

(g) The liquidation or dissolution of any Credit Party, or the suspension of the
business of any Credit Party, or the filing by any Credit Party of a voluntary
petition or an answer seeking reorganization, arrangement, readjustment of its
debts or for any other relief under the United States Bankruptcy Code, as
amended, or under any other insolvency act or law, state or federal, now or
hereafter existing, or any other action of any Credit Party indicating its
consent to, approval of or acquiescence in, any such petition or proceeding; the
application by any Credit Party for, or the appointment by consent or
acquiescence of any Credit Party of a receiver, a trustee or a custodian of any
Credit Party for all or a substantial part of its property; the making by any
Credit Party of any assignment for the benefit of creditors; the inability of
any Credit Party or the admission by any Credit Party in writing of its
inability to pay its debts as they mature or any Credit Party is generally not
paying its debts and other financial obligations as they become due and payable;
or any Credit Party taking any corporate action to authorize any of the
foregoing;

 

(h) The filing of an involuntary petition against any Credit Party in bankruptcy
or seeking reorganization, arrangement, readjustment of its debts or for any

 

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other relief under the United States Bankruptcy Code, as amended, or under any
other insolvency act or law, state or federal, now or hereafter existing; or the
involuntary appointment of a receiver, a trustee or a custodian of any Credit
Party for all or a substantial part of its property; or the issuance of a
warrant of attachment, execution or similar process against any substantial part
of the property of any Credit Party, and the continuance of any of such events
for ninety (90) days undismissed or undischarged;

 

(i) The adjudication of any Credit Party as bankrupt or insolvent;

 

(j) The entering of any order in any proceedings against any Credit Party or any
Subsidiary of any Credit Party decreeing the dissolution, divestiture or
split-up of any Credit Party or any Subsidiary of any Credit Party, and such
order remains in effect for more than sixty (60) days;

 

(k) Any report, certificate, financial statement or other instrument delivered
to Lessor by or on behalf of any Credit Party pursuant to the terms of this
Lease or any other Operative Agreement is false or misleading in any material
respect when made or delivered;

 

(l) Any Parent Credit Agreement Event of Default shall have occurred and be
continuing and shall not have been waived;

 

(m) A final judgment or judgments for the payment of money shall be rendered by
a court or courts against any Credit Party or any Subsidiary of any Credit Party
in excess of $1,000,000, in the aggregate, over amounts paid by insurance
policies (other than self-insurance), and (i) the same shall not be discharged
(or provision shall not be made for such discharge), or a stay of execution
thereof shall not be procured, within thirty (30) days from the date of entry
thereof, or (ii) any Credit Party or any such Subsidiary shall not, within said
period of thirty (30) days, or such longer period during which execution of the
same shall have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal, or (iii) such judgment or judgments shall not be
discharged (or provisions shall not be made for such discharge) within thirty
(30) days after a decision has been reached with respect to such appeal and the
related stay has been lifted;

 

(n) Any Credit Party or any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $2,000,000 which it shall
have become liable to pay to the PBGC or to a Pension Plan under Title IV of
ERISA; or notice of intent to terminate a Pension Plan or Pension Plans having
aggregate Unfunded Liabilities in excess of $2,000,000 shall be filed under
Title IV of ERISA by any Credit Party or any member of the Controlled Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a trustee
to be appointed to administer any such Pension Plan or Pension Plans or a
proceeding shall be instituted by a fiduciary of any such Pension Plan or
Pension Plans against any Credit Party or any member of the Controlled Group to
enforce Section 515 or 4219(c)(5) of ERISA; or a condition shall exist by reason
of

 

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which the PBGC would be entitled to obtain a decree adjudicating that any such
Pension Plan or Pension Plans must be terminated;

 

(o) (i) As a result of one (1) or more transactions after the date of this
Lease, any “person” or “group” (each as used in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act), who are not as of the Initial Closing Date owners of one
percent (1%) or more of the voting stock of the Parent, either (A) becomes the
“beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of voting stock of the Parent (or securities convertible into or
exchangeable for such voting stock) representing 15% or more of the combined
voting power of all voting stock of the Parent (on a fully diluted basis) or (B)
otherwise has the ability, directly or indirectly, to elect a majority of the
board of directors of the Parent; or (ii) during any period of up to 24
consecutive months, commencing on the Initial Closing Date, individuals who at
the beginning of such period were directors of the Parent shall cease for any
reason (other than the death, disability or retirement of an officer of the
Parent that is serving as a director at such time so long as another officer of
the Parent replaces such Person as a director) to constitute a majority of the
board of directors of the Parent; or (iii) any Person or two or more Persons
acting in concert shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation thereof, will
result in its or their acquisition, of the power to exercise, directly or
indirectly, a controlling influence on the management or policies of the Parent;

 

(p) Any Operative Agreement shall cease to be in full force and effect;

 

(q) Except as to any Credit Party which is released in connection with the
Operative Agreements, the guaranty given by the Guarantor under the
Participation Agreement or any provision thereof shall cease to be in full force
and effect, or the Guarantor or any Person acting by or on behalf of the
Guarantor shall deny or disaffirm the Guarantor’s obligations under such
guaranty, or the Guarantor shall default in the due performance or observance of
any term, covenant or agreement on its part to be performed or observed pursuant
to any guaranty;

 

(r) Lessee shall fail to deposit or maintain Cash Equivalents equal to the
amount required by Section 5.11 of the Participation Agreement in the Cash
Collateral Account;

 

(s) Lessee shall fail to purchase all Tranche A Notes in accordance with the
terms of the Operative Agreements, including without limitation Section 8.3(w)
of the Participation Agreement;

 

(t) there shall occur (i) any cancellation, revocation, suspension or
termination of any Medicare Certification, Medicare Provider Agreement, Medicaid
Certification or Medicaid Provider Agreement affecting the Parent, any
Subsidiary or any Contract Provider, or (ii) the loss of any other permits,
licenses, authorizations, certifications or approvals from any federal, state or
local Governmental Authority or termination of any contract with any such
authority, in either case which cancellation,

 

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revocation, suspension, termination or loss (X) in the case of any suspension or
temporary loss only, continues for a period greater than 60 days and (Y) results
in the suspension or termination of operations of the Parent or any Subsidiary
or in the failure of the Parent or any Subsidiaries or any Contract Provider to
be eligible to participate in Medicare or Medicaid programs or to accept
assignments of rights to reimbursement under Medicaid Regulations or Medicare
Regulations, if and only if such Person, in the ordinary course of business,
participates in the Medicare or Medicare programs or accepts assignments of
rights to reimbursement thereunder; provided that any such events described in
this Section 17.1(t) shall constitute an Event of Default only if such event
shall result either singly or in the aggregate in the termination, cancellation,
suspension or material impairment of operations or rights to reimbursement which
produce 5% or more of the Parent’s gross revenues (on an annualized basis); or

 

(u) Lessee shall fail to deliver to Lessor and the Agent an insurance
certificate on or prior to January 15, 2002 that evidences all risk builder’s
risk and all risk of physical loss or damage insurance with respect to the
Digital Hospital Property including (i) a deductible amount of $25,000 or less
per occurrence, (ii) coverage from January 15, 2002 through the Completion Date,
(iii) policy limit amounts of not less than $200,000,000 per occurrence and (iv)
all other terms and conditions required pursuant to the Lease which are not in
conflict with or less stringent than (i), (ii) or (iii) above.

 

then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination (provided,
notwithstanding the foregoing, this Lease shall be deemed to be automatically
terminated without the giving of notice upon the occurrence of a Lease Event of
Default under Sections 17.1(g), (h), (i) or (j)), and this Lease shall
terminate, and all rights of Lessee under this Lease shall cease. Lessee shall,
to the fullest extent permitted by law, pay as Supplemental Rent all costs and
expenses incurred by or on behalf of Lessor or any other Financing Party,
including without limitation reasonable fees and expenses of counsel, as a
result of any Lease Event of Default hereunder.

 

A POWER OF SALE HAS BEEN GRANTED IN THIS LEASE. A POWER OF SALE MAY ALLOW LESSOR
TO TAKE THE PROPERTIES AND SELL THE PROPERTIES WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON THE OCCURRENCE OF A LEASE EVENT OF DEFAULT.

 

  17.2 Surrender of Possession.

 

If a Lease Event of Default shall have occurred and be continuing, and whether
or not this Lease shall have been terminated pursuant to Section 17.1, Lessee
shall, upon thirty (30) days written notice, surrender to Lessor possession of
the Properties. Lessor may enter upon and repossess the Properties by such means
as are available at law or in equity, and may remove Lessee and all other
Persons and any and all personal property and Lessee’s equipment and personalty
and severable Modifications from the Properties. Lessor shall have no liability
by reason of any such entry, repossession or removal performed in accordance
with applicable law. Upon the written demand of Lessor, Lessee shall return the
Properties promptly to Lessor, in the

 

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manner and condition required by, and otherwise in accordance with the
provisions of, Section 22.1(c) hereof.

 

  17.3 Reletting.

 

If a Lease Event of Default shall have occurred and be continuing, and whether
or not this Lease shall have been terminated pursuant to Section 17.1, Lessor
may, but shall be under no obligation to, relet any or all of the Properties,
for the account of Lessee or otherwise, for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the Term) and on such conditions (which may include concessions or
free rent) and for such purposes as Lessor may determine, and Lessor may
collect, receive and retain the rents resulting from such reletting. Lessor
shall not be liable to Lessee for any failure to relet any Property or for any
failure to collect any rent due upon such reletting.

 

  17.4 Damages.

 

Neither (a) the termination of this Lease as to all or any of the Properties
pursuant to Section 17.1; (b) the repossession of all or any of the Properties;
nor (c) the failure of Lessor to relet all or any of the Properties, the
reletting of all or any portion thereof, nor the failure of Lessor to collect or
receive any rentals due upon any such reletting, shall relieve Lessee of its
liabilities and obligations hereunder, all of which shall survive any such
termination, repossession or reletting. If any Lease Event of Default shall have
occurred and be continuing and notwithstanding any termination of this Lease
pursuant to Section 17.1, Lessee shall forthwith pay to Lessor all Rent and
other sums due and payable hereunder to and including without limitation the
date of such payment. Thereafter, on the days on which the Basic Rent or
Supplemental Rent, as applicable, are payable under this Lease or would have
been payable under this Lease if the same had not been terminated pursuant to
Section 17.1 and until the end of the Term hereof or what would have been the
Term in the absence of such termination, Lessee shall pay Lessor, as current
liquidated damages (it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the Basic Rent and Supplemental
Rent that are payable under this Lease or would have been payable by Lessee
hereunder if this Lease had not been terminated pursuant to Section 17.1, less
the net proceeds, if any, which are actually received by Lessor with respect to
the period in question of any reletting of any Property or any portion thereof;
provided, that Lessee’s obligation to make payments of Basic Rent and
Supplemental Rent under this Section 17.4 shall continue only so long as Lessor
shall not have received the amounts specified in Section 17.6. In calculating
the amount of such net proceeds from reletting, there shall be deducted all of
Lessor’s, any Holder’s, the Agent’s and any Lender’s reasonable expenses in
connection therewith, including without limitation repossession costs, brokerage
or sales commissions, fees and expenses for counsel and any necessary repair or
alteration costs and expenses incurred in preparation for such reletting. To the
extent Lessor receives any damages pursuant to this Section 17.4, such amounts
shall be regarded as amounts paid on account of Rent. Lessee specifically
acknowledges and agrees that its obligations under this Section 17.4 shall be
absolute and unconditional under any and all circumstances and shall be paid
and/or performed, as the case may be, without notice or demand and without any
abatement, reduction, diminution, setoff, defense, counterclaim or recoupment
whatsoever.

 

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  17.5 Power of Sale.

 

Without limiting any other remedies set forth in this Lease, Lessor and Lessee
agree that Lessee has granted, pursuant to Section 7.1(b) hereof and each Lease
Supplement, a Lien against the Properties WITH POWER OF SALE, and that, upon the
occurrence and during the continuance of any Lease Event of Default, Lessor
shall have the power and authority, to the extent provided by law, after prior
notice and lapse of such time as may be required by law, to foreclose its
interest (or cause such interest to be foreclosed) in all or any part of the
Properties.

 

  17.6 Final Liquidated Damages.

 

If a Lease Event of Default shall have occurred and be continuing, whether or
not this Lease shall have been terminated pursuant to Section 17.1 and whether
or not Lessor shall have collected any current liquidated damages pursuant to
Section 17.4, Lessor shall have the right to recover, by demand to Lessee and at
Lessor’s election, and Lessee shall pay to Lessor, as and for final liquidated
damages, but exclusive of the indemnities payable under Section 11 of the
Participation Agreement (which, if requested, shall be paid concurrently), and
in lieu of all current liquidated damages beyond the date of such demand (it
being agreed that it would be impossible accurately to determine actual damages)
the Termination Value. Upon payment of the amount specified pursuant to the
first sentence of this Section 17.6, Lessee shall be entitled to receive from
Lessor, either at Lessee’s request or upon Lessor’s election, in either case at
Lessee’s cost, an assignment of Lessor’s entire right, title and interest in and
to the Properties, Improvements, Fixtures, Modifications, Equipment and all
components thereof, in each case in recordable form and otherwise in conformity
with local custom and free and clear of the Lien of this Lease (including
without limitation the release of any memoranda of Lease and/or the Lease
Supplement recorded in connection therewith) and any Lessor Liens. The
Properties shall be conveyed to Lessee “AS-IS, WHERE-IS” and in their then
present physical condition. If any statute or rule of law shall limit the amount
of such final liquidated damages to less than the amount agreed upon, Lessor
shall be entitled to the maximum amount allowable under such statute or rule of
law; provided, however, Lessee shall not be entitled to receive an assignment of
Lessor’s interest in the Properties, the Improvements, Fixtures, Modifications,
Equipment or the components thereof unless Lessee shall have paid in full the
Termination Value. Lessee specifically acknowledges and agrees that its
obligations under this Section 17.6 shall be absolute and unconditional under
any and all circumstances and shall be paid and/or performed, as the case may
be, without notice or demand and without any abatement, reduction, diminution,
setoff, defense, counterclaim or recoupment whatsoever.

 

  17.7 Environmental Costs.

 

If a Lease Event of Default shall have occurred and be continuing, and whether
or not this Lease shall have been terminated pursuant to Section 17.1, Lessee
shall pay directly to any third party (or at Lessor’s election, reimburse
Lessor) for the cost of any environmental testing and/or remediation work
undertaken respecting any Property, as such testing or work is deemed
appropriate in the reasonable judgment of Lessor, and shall indemnify and hold
harmless Lessor and each other Indemnified Person therefrom. Lessee shall pay
all amounts referenced in the immediately preceding sentence within ten (10)
days of any request by Lessor for such

 

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payment. The provisions of this Section 17.7 shall not limit the obligations of
Lessee under any Operative Agreement regarding indemnification obligations,
environmental testing, remediation and/or work.

 

  17.8 Waiver of Certain Rights.

 

If this Lease shall be terminated pursuant to Section 17.1, Lessee waives, to
the fullest extent permitted by Law, (a) any notice of re-entry or the
institution of legal proceedings to obtain re-entry or possession; (b) any right
of redemption, re-entry or possession; (c) the benefit of any laws now or
hereafter in force exempting property from liability for rent or for debt; and
(d) any other rights which might otherwise limit or modify any of Lessor’s
rights or remedies under this Article XVII.

 

  17.9 Assignment of Rights Under Contracts.

 

If a Lease Event of Default shall have occurred and be continuing, and whether
or not this Lease shall have been terminated pursuant to Section 17.1, Lessee
shall upon Lessor’s demand immediately assign, transfer and set over to Lessor
all of Lessee’s right, title and interest in and to each agreement executed by
Lessee in connection with the acquisition, installation, testing, use,
development, construction, operation, maintenance, repair, refurbishment and
restoration of the Properties (including without limitation all right, title and
interest of Lessee with respect to all warranty, performance, service and
indemnity provisions), as and to the extent that the same relate to the
acquisition, installation, testing, use, development, construction, operation,
maintenance, repair, refurbishment and restoration of the Properties or any of
them.

 

  17.10   Remedies Cumulative.

 

The remedies herein provided shall be cumulative and in addition to (and not in
limitation of) any other remedies available at law, equity or otherwise,
including without limitation any mortgage foreclosure remedies.

 

  17.11   Limitation Regarding Certain Lease Events of Default.

 

Notwithstanding anything contained herein or in any other Operative Agreement to
the contrary, upon the occurrence and during the continuance of a Lease Event of
Default attributable solely to Sections 17.1(o) or (t) or any other Lease Event
of Default that occurs as a direct result of the occurrence of a Material
Adverse Effect pursuant to subsections (a), (b) or (e) of the definition of
Material Adverse Effect, the maximum aggregate amount that the Lessor, or any
Person acting by or through the Lessor, including without limitation the Agent,
the Lenders and the Holders, shall be entitled to recover from the Credit
Parties on account of such Lease Event of Default attributable solely to
Sections 17.1(o) or (t) shall be an amount equal to 89.9% of the aggregate
Property Cost for all Properties, provided, this Section 17.11 shall not in any
way limit any Full Recourse Event of Default or any indemnity payment to any
Indemnified Person, including without limitation, the indemnities set forth in
Sections 11.1 through 11.7 of the Participation Agreement and such indemnity
payment shall not be included in the calculation set forth above. The Lessee
nonetheless acknowledges and agrees that even though the

 

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maximum aggregate recovery from the Credit Parties is limited as aforesaid, the
Lessor’s right of recovery from the Properties (as opposed to any recovery from
the Credit Parties) is not so limited and the Lessor shall be entitled to
recover 100% of the amounts owed to the Lessor in accordance with the Operative
Agreements from its interest in the Properties.

 

ARTICLE XVIII

 

  18.1 Lessor’s Right to Cure Lessee’s Lease Defaults.

 

Lessor, without waiving or releasing any obligation or Lease Event of Default,
may (but shall be under no obligation to) remedy any Lease Event of Default for
the account and at the sole cost and expense of Lessee, including without
limitation the failure by Lessee to maintain the insurance required by Article
XIV, and may, to the fullest extent permitted by law, and notwithstanding any
right of quiet enjoyment in favor of Lessee, enter upon any Property, and take
all such action thereon as may be necessary or appropriate therefor. No such
entry shall be deemed an eviction of any lessee. All out-of-pocket costs and
expenses so incurred (including without limitation fees and expenses of
counsel), together with interest thereon at the Overdue Rate from the date on
which such sums or expenses are paid by Lessor, shall be paid by Lessee to
Lessor on demand.

 

ARTICLE XIX

 

  19.1 Provisions Relating to Lessee’s Exercise of its Purchase Option.

 

Subject to Section 19.2, in connection with any termination of this Lease with
respect to any Property pursuant to the terms of Section 16.2, or in connection
with Lessee’s exercise of its Purchase Option, upon the date on which this Lease
is to terminate with respect to any Property, and upon tender by Lessee of the
amounts set forth in Sections 16.2(b) or 20.2, as applicable, Lessor shall
execute and deliver to Lessee (or to Lessee’s designee) at Lessee’s cost and
expense an assignment (by deed or other appropriate instrument) of Lessor’s
entire interest in such Property, in each case in recordable form and otherwise
in conformity with local custom and free and clear of any Lessor Liens
attributable to Lessor but without any other warranties (of title or otherwise)
from Lessor. Such Property shall be conveyed to Lessee “AS-IS, WHERE-IS” and in
then present physical condition.

 

  19.2 No Purchase or Termination With Respect to Less than All of a Property.

 

Lessee shall not be entitled to exercise its Purchase Option or the Sale Option
separately with respect to a portion of any Property consisting of Land,
Equipment, Improvements and/or any interest pursuant to a Ground Lease but shall
be required to exercise its Purchase Option or the Sale Option with respect to
an entire Property.

 

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ARTICLE XX

 

  20.1 Purchase Option or Sale Option-General Provisions.

 

The provisions of this Section 20.1 regarding the Sale Option are subject to the
provisions of Section 22.6. Not less than one hundred eighty (180) days and no
more than two hundred forty (240) days prior to the Expiration Date (as such may
have been extended beyond the seventh annual anniversary of the Initial Closing
Date pursuant to Section 2.2) or, respecting the Purchase Option only not less
than sixty (60) days prior to the applicable Payment Date (such Expiration Date
or, respecting the Purchase Option only, any such Payment Date being hereinafter
referred to as the “Election Date”). Lessee may give Lessor irrevocable written
notice (the “Election Notice”) that Lessee is electing to exercise either (a)
the option to purchase all, but not less than all, the Properties on the
applicable Election Date (the “Purchase Option”) or (b) with respect to an
Election Notice given in connection with the Expiration Date only, the option to
remarket all, but not less than all, the Properties to a Person other than
Lessee or any Affiliate of Lessee and cause a sale of such Properties to occur
on the applicable Election Date (subject to Section 22.6) pursuant to the terms
of Section 22.1 (the “Sale Option”). If Lessee does not give an Election Notice
indicating the Purchase Option or the Sale Option at least one hundred eighty
(180) days and not more than two hundred forty (240) days prior to the
Expiration Date, then Lessee shall be deemed to have elected for the Purchase
Option to apply on the Expiration Date.

 

  20.2 Lessee Purchase Option.

 

Provided, no Default or Event of Default shall have occurred and be continuing
(other than those that will be cured by the payment of the Termination Value for
all the Properties) and provided, that the Election Notice has been
appropriately given specifying the Purchase Option, Lessee shall purchase all
the Properties on the applicable Election Date at a price equal to the
Termination Value for such Properties (which the parties do not intend to be a
“bargain” purchase price).

 

Subject to Section 19.2, in connection with any termination of this Lease with
respect to any Property pursuant to the terms of Section 16.2, or in connection
with Lessee’s exercise of its Purchase Option, upon the date on which this Lease
is to terminate with respect to a Property or all of the Properties, and upon
tender by Lessee of the amounts set forth in Section 16.2(b) or this Section
20.2, as applicable, Lessor shall execute, acknowledge (where required) and
deliver to Lessee, at Lessee’s cost and expense, each of the following: (a) a
termination or assignment (as requested by the Lessee) of each applicable Ground
Lease and special or limited warranty Deeds conveying each Property (to the
extent it is real property not subject to a Ground Lease) to Lessee free and
clear of the Lien of this Lease, the Lien of the Credit Documents and any Lessor
Liens; (b) a Bill of Sale conveying each Property (to the extent it is personal
property) to Lessee free and clear of the Lien of this Lease, the Lien of the
Credit Documents and any Lessor Liens; (c) any real estate tax affidavit or
other document required by law to be executed and filed in order to record the
applicable Deed and/or the applicable Ground Lease termination; and (d) FIRPTA
affidavits. All of the foregoing documentation must be in

 

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form and substance reasonably satisfactory to Lessor. The applicable Property
shall be conveyed to Lessee “AS-IS, WHERE-IS” and in then present physical
condition.

 

If any Property is the subject of remediation efforts respecting Hazardous
Substances at the applicable Election Date which could materially and adversely
impact the Fair Market Sales Value of such Property (with materiality determined
in Lessor’s discretion), then Lessee shall be obligated to purchase each such
Property pursuant to Section 20.2.

 

On the applicable Election Date on which Lessee has elected to exercise its
Purchase Option, Lessee shall pay (or cause to be paid) to Lessor, the Agent and
all other parties, as appropriate, the sum of all costs and expenses incurred by
any such party in connection with the election by Lessee to exercise its
Purchase Option and all Rent and all other amounts then due and payable or
accrued under this Lease and/or any other Operative Agreement.

 

  20.3 Third Party Sale Option.

 

(a) Provided, that (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the Election Notice has been appropriately given specifying
the Sale Option, Lessee shall undertake to cause a sale of the Properties on the
applicable Election Date (all as specified in the Election Notice), in
accordance with the provisions of Section 22.1 hereof.

 

(b) In the event Lessee exercises the Sale Option then, as soon as practicable
and in all events not less than sixty (60) days and not more than one hundred
eighty (180) days prior to the Sale Date, Lessee at its expense shall cause to
be delivered to Lessor a Phase I environmental site assessment for each of the
Properties recently prepared (no more than thirty (30) days old prior to the
date of delivery) by an independent recognized professional reasonably
acceptable to Lessor and in form, scope and content reasonably satisfactory to
Lessor. In the event that Lessor shall not have received such environmental site
assessment by the date sixty (60) days prior to the Sale Date or in the event
that such environmental assessment shall reveal the existence of any material
violation of Environmental Laws, other material Environmental Violation or
potential material Environmental Violation (with materiality determined in each
case by Lessor in its reasonable discretion), then Lessee on the Sale Date shall
pay to Lessor an amount equal to the Termination Value for all the Properties
and any and all other amounts due and owing hereunder. Upon receipt of such
payment and all other amounts due under the Operative Agreements, Lessor shall
transfer to Lessee all of Lessor’s right, title and interest in and to all the
Properties in accordance with Section 19.1.

 

ARTICLE XXI

 

  21.1 [Intentionally Omitted].

 

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ARTICLE XXII

 

  22.1 Sale Procedure.

 

(a) The provisions of this Section 22.1 are subject to the provisions of Section
22.6. During the Marketing Period, Lessee, on behalf of Lessor, shall obtain
bids for the cash purchase of all the Properties in connection with a sale to
one (1) or more third party purchasers to be consummated on the Sale Date for
the highest price available, shall notify Lessor promptly of the name and
address of each prospective purchaser and the cash price which each prospective
purchaser shall have offered to pay for each such Property and shall provide
Lessor with such additional information about the bids and the bid solicitation
procedure as Lessor may reasonably request from time to time. All such
prospective purchasers must be Persons other than Lessee or any Affiliate of
Lessee. On the Sale Date, Lessee shall pay (or cause to be paid) to Lessor and
all other parties, as appropriate, the sum of all costs and expenses incurred by
Lessor and/or the Agent (as the case may be) in connection with such sale of one
or more Properties, all Rent and all other amounts then due and payable or
accrued under this Lease and/or any other Operative Agreement.

 

Lessor may reject any and all bids and may solicit and obtain bids by giving
Lessee written notice to that effect. Lessor may elect to retain one or more of
the Properties by giving Lessee prior written notice of Lessor’s election to
retain the same, and promptly upon receipt of such notice, Lessee shall
surrender, or cause to be surrendered, each of the Properties specified in such
notice in accordance with the terms and conditions of Section 10.1. Upon
acceptance of any bid, Lessor agrees, at Lessee’s request and expense, to
execute a contract of sale with respect to such sale, so long as the same is
consistent with the terms of this Article 22 and provides by its terms that it
is nonrecourse to Lessor.

 

Unless Lessor shall have elected to retain one or more of the Properties
pursuant to the provisions of the preceding paragraph, Lessee shall arrange for
Lessor to sell all the Properties free and clear of the Lien of this Lease and
any Lessor Liens attributable to Lessor, without recourse or warranty (of title
or otherwise), for cash on the Sale Date to the purchaser or purchasers offering
the highest cash sales price, as identified by Lessee or Lessor, as the case may
be. To effect such transfer and assignment, Lessor shall execute, acknowledge
(where required) and deliver to the appropriate purchaser each of the following:
(a) special or limited warranty Deeds conveying each such Property (to the
extent it is real property titled to Lessor) and an assignment of the Ground
Lease conveying the leasehold interest of Lessor in each such Property (to the
extent it is real property and subject to a Ground Lease) to the appropriate
purchaser free and clear of the Lien of this Lease, the Lien of the Credit
Documents and any Lessor Liens; (b) a Bill of Sale conveying each such Property
(to the extent it is personal property) titled to Lessor to the appropriate
purchaser free and clear of the Lien of this Lease, the Lien of the Credit
Documents and any Lessor Liens; (c) any real estate tax affidavit or other
document required by law to be executed and filed in order to record each Deed
and/or each Ground Lease assignment; and (d) FIRPTA affidavits, as appropriate.
All of the foregoing

 

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documentation must be in form and substance reasonably satisfactory to Lessor.
Lessee shall surrender the Properties so sold or subject to such documents to
each purchaser in the condition specified in Section 10.1, or in such other
condition as may be agreed between Lessee and such purchaser. Lessee shall not
take or fail to take any action which would have the effect of unreasonably
discouraging bona fide third party bids for any Property. If any Property (i) is
not sold on the Sale Date in accordance with the terms of this Section 22.1, or
(ii) is retained by Lessor pursuant to an affirmative election made by Lessor
pursuant to the second sentence of the second paragraph of this Section 22.1
(a), then (x) Lessee shall be obligated to pay Lessor on the Sale Date an amount
equal to the Maximum Residual Guarantee Amount and (y) Lessor shall retain each
applicable Property for subsequent marketing in accordance with the provisions
of Section 22.6.

 

(b) If the Properties are sold on a Sale Date to one (1) or more third party
purchasers in accordance with the terms of Section 22.1(a), Lessee hereby
unconditionally promises to pay to Lessor on the Sale Date all Rent and all
other amounts then due and owing pursuant to the Operative Agreements. If the
aggregate purchase price paid for all the Properties is less than the sum of the
aggregate Property Cost for all the Properties (hereinafter such difference
shall be referred to as the “Deficiency Balance”), then Lessee hereby
unconditionally promises to pay to Lessor on the Sale Date the lesser of (i) the
Deficiency Balance, or (ii) the Maximum Residual Guarantee Amount for all the
Properties. On a Sale Date if (x) Lessor receives the aggregate Termination
Value for all the Properties from one (1) or more third party purchasers, (y)
Lessor and such other parties receive all other amounts specified in the last
sentence of the first paragraph of Section 22. l(a) and (z) the aggregate
purchase price paid for all the Properties on such date exceeds the sum of the
aggregate Property Cost for all the Properties, then Lessee may retain such
excess. If one or more of the Properties are retained by Lessor pursuant to an
affirmative election made by Lessor pursuant to the provisions of Section
22.1(a), then Lessee hereby unconditionally promises to pay to Lessor on the
Sale Date all Rent and all other amounts then due and owing pursuant to the
Operative Agreements and an amount equal to the Maximum Residual Guarantee
Amount for the Properties so retained. Any payment of the foregoing amounts
described in this Section 22. l(b) shall be made together with a payment of all
other amounts referenced in the last sentence of the first paragraph of Section
22.1(a).

 

(c) In the event that all the Properties are either sold to one (1) or more
third party purchasers on the Sale Date or retained by Lessor in connection with
an affirmative election made by Lessor pursuant to the provisions of Section
22.1 (a), then in either case on the applicable Sale Date Lessee shall provide
Lessor or such third party purchaser (unless otherwise agreed by such third
party purchaser) with (i) all permits, certificates of occupancy, governmental
licenses and authorizations necessary to use, operate, repair, access and
maintain each such Property for the purpose it is being used by Lessee, and (ii)
such manuals, permits, easements, licenses, intellectual property, know-how,
rights- of-way and other rights and privileges in the nature of an easement as
are reasonably necessary or desirable in connection with the use, operation,
repair, access to or maintenance of each such Property for its intended purpose
or otherwise as Lessor or such third party purchaser(s) shall reasonably request
(and a royalty-free license or

 

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similar agreement to effectuate the foregoing on terms reasonably agreeable to
Lessor or such third party purchaser(s), as applicable). All assignments,
licenses, easements, agreements and other deliveries required by clauses (i) and
(ii) of this paragraph (c) shall be in form reasonably satisfactory to Lessor or
such third party purchaser(s), as applicable, and to the extent lawfully
assignable shall be fully assignable (including without limitation both primary
assignments and assignments given in the nature of security) without payment of
any fee, cost or other charge. Lessee shall also execute any documentation
requested by Lessor or such third party purchaser(s), as applicable, evidencing
the continuation or assignment of each Ground Lease.

 

  22.2 Application of Proceeds of Sale.

 

Lessor shall transfer to the Agent the proceeds of sale of any Property for
application and distribution in accordance with Section 8.7 of the Participation
Agreement.

 

  22.3 Indemnity for Excessive Wear.

 

If the sum of (a) the proceeds of the sale described in Section 22.1 with
respect to the Properties, if any, plus (b) the amount previously paid by the
Lessee with respect to the Maximum Residual Guarantee Amount (less any portion
of the Maximum Residual Guarantee Amount repaid to the Lessee pursuant to the
Operative Agreements, including without limitation Section 8.7(b)(viii) of the
Participation Agreement) shall be less than the Termination Value with respect
to the Properties, and on the Expiration Date it shall have been reasonably
determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Properties shall have been impaired by greater than expected wear
and tear during the term of the Lease, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor’s written statement the amount of such excess
wear and tear determined by the Appraisal Procedure.

 

  22.4 Appraisal Procedure.

 

For determining the Fair Market Sales Value of the Properties or any other
amount which may, pursuant to any provision of any Operative Agreement, be
determined by an appraisal procedure, Lessor and Lessee shall use the following
procedure (the “Appraisal Procedure”). Lessor and Lessee shall endeavor to reach
a mutual agreement as to such amount for a period of ten (10) days from
commencement of the Appraisal Procedure under the applicable section of the
Lease, and if they cannot agree within ten (10) days, then two (2) qualified
appraisers, one (1) chosen by Lessee and one (1) chosen by Lessor, shall
mutually agree thereupon, but if either party shall fail to choose an appraiser
within twenty (20) days after notice from the other party of the selection of
its appraiser, then the appraisal by such appointed appraiser shall be binding
on Lessee and Lessor. If the two (2) appraisers cannot agree within twenty (20)
days after both shall have been appointed, then a third appraiser shall be
selected by the two (2) appraisers or, failing agreement as to such third
appraiser within thirty (30) days after both shall have been appointed, by the
American Arbitration Association. The decisions of the three (3) appraisers
shall be given within twenty (20) days of the appointment of the third appraiser
and the decision of the appraiser most different from the average of the other
two (2) shall be discarded and such average shall be binding on Lessor and
Lessee; provided, that if the

 

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highest appraisal and the lowest appraisal are equidistant from the third
appraisal, the third appraisal shall be binding on Lessor and Lessee. The fees
and expenses of the appraiser appointed by Lessee shall be paid by Lessee; the
fees and expenses of the appraiser appointed by Lessor shall be paid by Lessor
(such fees and expenses not being indemnified pursuant to Section 11 of the
Participation Agreement); and the fees and expenses of the third appraiser shall
be divided equally between Lessee and Lessor.

 

  22.5 Certain Obligations Continue.

 

During the Marketing Period, the obligation of Lessee to pay Rent with respect
to the Properties (including without limitation the installment of Basic Rent
due on the Sale Date) shall continue undiminished until payment in full to
Lessor of the sale proceeds, if any, the Maximum Residual Guarantee Amount, the
amount due under Section 22.3, if any, and all other amounts due to Lessor or
any other Person with respect to all Properties or any Operative Agreement.
Lessor shall have the right, but shall be under no duty, to solicit bids, to
inquire into the efforts of Lessee to obtain bids or otherwise to take action in
connection with any such sale, other than as expressly provided in this Article
XXII.

 

  22.6 Extended Remarketing Period.

 

To the extent Lessee has properly elected the Sale Option and not caused each of
the Properties to be sold to a third party purchaser by the Expiration Date in
accordance with the provisions of Sections 20.1, 20.3 and 22.1 through 22.5,
then on the Expiration Date Lessee shall pay to Lessor the Maximum Residual
Guarantee Amount and all Rent and all other amounts then due and owing pursuant
to the Operative Agreements. For a period not to exceed one (1) year beginning
on the Expiration Date (the “Extended Remarketing Period”). Lessor shall have a
right to market and offer for sale its right, title and interest in the
Properties to third party purchasers and during such time, Lessor shall have
exclusive control of the bid process. During the Extended Remarketing Period,
Lessee shall have vacated the Properties and relinquished all of its right,
title and interest therein, but Lessee shall continue to be responsible for the
satisfaction of all matters described in (and compliance with) Section 3.3.

 

To the extent Lessor sells one or more of the Properties to a third party
purchaser during the Extended Remarketing Period, Lessor shall deliver the
documentation specified in the third paragraph of Section 22.1 (a) and the sales
proceeds paid by such third party purchaser for each such Property shall be paid
to the Agent (on behalf of Lessor) for allocation and distribution in accordance
with Section 8.7(b)(iii) of the Participation Agreement. If with respect to any
of the Properties so sold, Advances were used to pay for Excluded Costs while
any such Property was a Construction Period Property, then Section 8.7(b)(viii)
shall apply.

 

To the extent Lessor does not sell any particular Property during the Extended
Remarketing Period, then the Fair Market Sales Value of each such Property as of
the Expiration Date shall be determined pursuant to the Appraisal Procedure.
Lessor shall cause the Lenders and the Holders to contribute ratably (based on
such Lender’s or such Holder’s proportion of the aggregate Loans or aggregate
Holder Advances, respectively), but not jointly and severally, to the Agent (on
behalf of Lessor) an aggregate amount equal to the portion of such appraised
value

 

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of each such Property (as determined pursuant to the Appraisal Procedure) which
would be payable to Lessee pursuant to Section 8.7(b)(viii) of the Participation
Agreement if such Property had been sold for such appraised value on the
Expiration Date.

 

ARTICLE XXIII

 

  23.1 Holding Over.

 

If Lessee shall for any reason remain in possession of a Property after the
expiration or earlier termination of this Lease as to such Property (unless such
Property is conveyed to Lessee), such possession shall be as a tenancy at
sufferance during which time Lessee shall continue to pay Supplemental Rent that
would be payable by Lessee hereunder were the Lease then in full force and
effect with respect to such Property and Lessee shall continue to pay Basic Rent
at the lesser of the highest lawful rate and one hundred ten percent (110%) of
the last payment of Basic Rent due with respect to such Property prior to such
expiration or earlier termination of this Lease. Such Basic Rent shall be
payable from time to time upon demand by Lessor and such additional amount of
Basic Rent shall be applied by Lessor ratably to the Lenders and the Holders
based on their relative amounts of the then outstanding aggregate Property Cost
for all Properties. During any period of tenancy at sufferance, Lessee shall,
subject to the second preceding sentence, be obligated to perform and observe
all of the terms, covenants and conditions of this Lease, but shall have no
rights hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue their occupancy and use of such Property. Nothing
contained in this Article XXIII shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the expiration or earlier
termination of this Lease as to any Property (unless such Property is conveyed
to Lessee) and nothing contained herein shall be read or construed as preventing
Lessor from maintaining a suit for possession of such Property or exercising any
other remedy available to Lessor at law or in equity.

 

ARTICLE XXIV

 

  24.1 Risk of Loss.

 

During the Term, unless Lessee shall not be in actual possession of any Property
in question solely by reason of Lessor’s exercise of its remedies of
dispossession under Article XVII, the risk of loss or decrease in the enjoyment
and beneficial use of such Property as a result of the damage or destruction
thereof by fire, the elements, casualties, thefts, riots, wars or otherwise is
assumed by Lessee, and Lessor shall in no event be answerable or accountable
therefor.

 

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ARTICLE XXV

 

  25.1 Assignment.

 

(a) Lessee may not assign this Lease or any of its rights or obligations
hereunder or with respect to any Property in whole or in part to any Person
without the prior written consent of the Agent, the Lenders, the Holders and
Lessor.

 

(b) No assignment by Lessee (referenced in this Section 25.1 or otherwise) or
other relinquishment of possession to any Property shall in any way discharge or
diminish any of the obligations of Lessee to Lessor hereunder and Lessee shall
remain directly and primarily liable under the Operative Agreements as to any
rights or obligations assigned by Lessee or regarding any Property in which
rights or obligations have been assigned or otherwise transferred.

 

  25.2 Subleases.

 

(a) Promptly, but in any event within five (5) Business Days, following the
execution and delivery of any sublease permitted by this Article XXV, Lessee
shall notify Lessor of the execution of such sublease. As of the date of each
Lease Supplement, Lessee shall lease the respective Property described in such
Lease Supplement from Lessor, and any existing tenant respecting such Property
shall automatically be deemed to be a subtenant of Lessee and not a tenant of
Lessor.

 

(b) Without the prior written consent of the Agent, any Lender, any Holder or
Lessor and subject to the other provisions of this Section 25.2, Lessee may
sublet any Property or portion thereof to any Subsidiary of the Parent or up to
thirty percent (30%), in the aggregate, of the square footage of the applicable
Property to any healthcare providers or businesses related to the operations of
the Property in accordance with market and industry practices and standards,
provided in all cases the Lessee shall remain primarily liable with respect to
the Company Obligations. Except as referenced in the immediately preceding
sentence, no other subleases shall be permitted unless consented to in writing
by Lessor. All subleasing shall be done on market terms and shall in no way
diminish the fair market value or useful life of any applicable Property.

 

(c) No sublease (referenced in this Section 25.2 or otherwise) or other
relinquishment of possession to any Property shall in any way discharge or
diminish any of Lessee’s obligations to Lessor hereunder and Lessee shall remain
directly and primarily liable under this Lease as to such Property, or portion
thereof, so sublet. The term of any such sublease shall not extend beyond the
Term. Each sublease shall be expressly subject and subordinate to this Lease.

 

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ARTICLE XXVI

 

  26.1 No Waiver.

 

No failure by Lessor or Lessee to insist upon the strict performance of any term
hereof or to exercise any right, power or remedy upon a default hereunder, and
no acceptance of full or partial payment of Rent during the continuance of any
such default, shall constitute a waiver of any such default or of any such term.
To the fullest extent permitted by law, no waiver of any default shall affect or
alter this Lease, and this Lease shall continue in full force and effect with
respect to any other then existing or subsequent default.

 

ARTICLE XXVII

 

  27.1 Acceptance of Surrender.

 

No surrender to Lessor of this Lease or of all or any portion of any Property or
of any part of any thereof or of any interest therein shall be valid or
effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or the Agent or any representative or agent of Lessor or the Agent, other
than a written acceptance, shall constitute an acceptance of any such surrender.

 

  27.2 No Merger of Title.

 

There shall be no merger of this Lease or of the leasehold estate created hereby
by reason of the fact that the same Person may acquire, own or hold, directly or
indirectly, in whole or in part, (a) this Lease or the leasehold estate created
hereby or any interest in this Lease or such leasehold estate, (b) any right,
title or interest in any Property, (c) any Notes, or (d) a beneficial interest
in Lessor.

 

ARTICLE XXVIII

 

  28.1 Incorporation of Covenants.

 

Reference is made to the Parent Credit Agreement and the representations and
warranties of Lessee contained in Article VI of the Parent Credit Agreement
(hereinafter referred to as the “Incorporated Representations and Warranties”)
and the covenants contained in Articles VII and VIII of the Parent Credit
Agreement (hereinafter referred to as the “Incorporated Covenants”). Lessee
agrees with Lessor that the Incorporated Representations and Warranties and the
Incorporated Covenants (and all other relevant provisions of the Parent Credit
Agreement related thereto, including without limitation the defined terms
contained in Section 1.1 thereof which are used in the Incorporated
Representations and Warranties and the Incorporated Covenants, hereinafter
referred to as the “Additional Incorporated Terms”) are hereby incorporated by
reference into this Lease to the same extent and with the same effect as if set
forth fully herein and shall inure to the benefit of Lessor, without giving
effect to any waiver,

 

39

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

amendment, modification or replacement of the Parent Credit Agreement or any
term or provision of the Incorporated Representations and Warranties or the
Incorporated Covenants occurring subsequent to the date of this Lease, except to
the extent otherwise specifically provided in the following provisions of this
paragraph. In the event a waiver is granted under the Parent Credit Agreement or
an amendment or modification is executed with respect to the Parent Credit
Agreement, and such waiver, amendment and/or modification affects the
Incorporated Representations and Warranties, the Incorporated Covenants or the
Additional Incorporated Terms, then such waiver, amendment or modification shall
be effective with respect to the Incorporated Representations and Warranties,
the Incorporated Covenants and the Additional Incorporated Terms as incorporated
by reference into this Lease only if consented to in writing by the Agent
(acting upon the direction of the Majority Secured Parties). In the event of any
replacement of the Parent Credit Agreement with a similar credit facility (the
“New Facility”) the representations and warranties, covenants and additional
terms contained in the New Facility which correspond to the representations and
warranties, covenants contained in Article VI and Articles VII and VIII,
respectively, and such additional terms (each of the foregoing contained in the
Parent Credit Agreement) shall become the Incorporated Representations and
Warranties, the Incorporated Covenants and the Additional Incorporated Terms
only if consented to in writing by the Agent (acting upon the direction of the
Majority Secured Parties) and, if such consent is not granted or if the Parent
Credit Agreement is terminated and not replaced, then the representations and
warranties and covenants contained in Article VI and Articles VII and VIII,
respectively, and such additional terms (each of the foregoing contained in the
Parent Credit Agreement (together with any modifications or amendments approved
in accordance with this paragraph)) shall continue to be the Incorporated
Representations and Warranties, the Incorporated Covenants and the Additional
Incorporated Terms hereunder.

 

ARTICLE XXIX

 

  29.1 Notices.

 

All notices required or permitted to be given under this Lease shall be in
writing and delivered as provided in the Participation Agreement.

 

ARTICLE XXX

 

  30.1 Miscellaneous.

 

Anything contained in this Lease to the contrary notwithstanding, all claims
against and liabilities of Lessee or Lessor arising from events commencing prior
to the expiration or earlier termination of this Lease shall survive such
expiration or earlier termination. If any provision of this Lease shall be held
to be unenforceable in any jurisdiction, such unenforceability shall not affect
the enforceability of any other provision of this Lease and such jurisdiction or
of such provision or of any other provision hereof in any other jurisdiction.

 

40

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  30.2 Amendments and Modifications.

 

Neither this Lease nor any Lease Supplement may be amended, waived, discharged
or terminated except in accordance with the provisions of Section 12.4 of the
Participation Agreement.

 

  30.3 Successors and Assigns.

 

All the terms and provisions of this Lease shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

 

  30.4 Headings and Table of Contents.

 

The headings and table of contents in this Lease are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

 

  30.5 Counterparts.

 

This Lease may be executed in any number of counterparts, each of which shall be
an original, but all of which shall together constitute one (1) and the same
instrument.

 

  30.6 GOVERNING LAW.

 

THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NORTH CAROLINA (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW), EXCEPT TO THE
EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE REQUIRED
TO APPLY.

 

  30.7 Calculation of Rent.

 

All calculation of Rent payable hereunder shall be computed based on the actual
days elapsed over a year of three hundred sixty (360) days or, to the extent
such Rent is based on the Prime Lending Rate, the actual days elapsed over a
year of three hundred sixty-five (365) (or three hundred sixty-six (366), as
applicable) days.

 

  30.8 Memoranda of Lease and Lease Supplements.

 

This Lease shall not be recorded; provided, Lessor and Lessee shall promptly
record (a) a memorandum of this Lease and the applicable Lease Supplement (in
substantially the form of EXHIBIT B attached hereto) or a short form lease (in
form and substance reasonably satisfactory to Lessor) regarding each Property
promptly after the acquisition thereof in the local filing office with respect
thereto, in all cases at Lessee’s cost and expense, and as required under
applicable law to sufficiently evidence this Lease and any such Lease Supplement
in the applicable real estate filing records.

 

41

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  30.9 Allocations between the Lenders and the Holders.

 

Notwithstanding any other term or provision of this Lease to the contrary, the
allocations of the proceeds of the Properties and any and all other Rent and
other amounts received hereunder shall be subject to the inter-creditor
provisions between the Lenders and the Holders contained in the Operative
Agreements (or as otherwise agreed among the Lenders and the Holders from time
to time).

 

  30.10  Limitations on Recourse.

 

Notwithstanding anything contained in this Lease to the contrary, except for
Lessor Liens arising by, through or under the Trust Company which shall be the
responsibility of the Trust Company and Lessor Liens arising by, through or
under the Lessor which shall be the responsibility of the Lessor, Lessee agrees
to look solely to Lessor’s estate and interest in the Properties (and in no
circumstance to the Agent, the Lenders, the Holders or otherwise to Lessor) for
the collection of any judgment requiring the payment of money by Lessor in the
event of liability by Lessor, and no other property or assets of Lessor or any
shareholder, owner or partner (direct or indirect) in or of Lessor, or any
director, officer, employee, beneficiary, Affiliate of any of the foregoing
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies of Lessee under or with respect to this Lease, the
relationship of Lessor and Lessee hereunder or Lessee’s use of the Properties or
any other liability of Lessor to Lessee. Nothing in this Section shall be
interpreted so as to limit the terms of Sections 6.1 or 6.2 or the provisions of
Section 12.9 of the Participation Agreement.

 

  30.11  WAIVERS OF JURY TRIAL.

 

EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE FULLEST
EXTENT ALLOWED BY APPLICABLE LAW, WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LEASE AND FOR ANY COUNTERCLAIM THEREIN.

 

  30.12  Exercise of Lessor Rights.

 

Lessee hereby acknowledges and agrees that the rights and powers of Lessor under
this Lease have been assigned to the Agent pursuant to the terms of the Security
Agreement and the other Operative Agreements. Lessor and Lessee hereby
acknowledge and agree that (a) the Agent shall, in its discretion, direct and/or
act on behalf of Lessor pursuant to the provisions of Sections 8.2(h) and 8.6 of
the Participation Agreement, (b) all notices to be given to Lessor shall be
given to the Agent and (c) all notices to be given by Lessor may be given by the
Agent, at its election.

 

42

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  30.13  SUBMISSION TO JURISDICTION; VENUE; ARBITRATION.

 

THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO
JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY REFERENCE HEREIN,
MUTATIS MUTANDIS.

 

  30.14  USURY SAVINGS PROVISION.

 

IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN STRICT
COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. TO THE EXTENT
ANY RENT OR PAYMENTS HEREUNDER ARE HEREINAFTER CHARACTERIZED BY ANY COURT OF
COMPETENT JURISDICTION AS THE REPAYMENT OF PRINCIPAL AND INTEREST THEREON, THIS
SECTION 30.14 SHALL APPLY. ANY SUCH RENT OR PAYMENTS SO CHARACTERIZED AS
INTEREST MAY BE REFERRED TO HEREIN AS “INTEREST.” ALL AGREEMENTS AMONG THE
PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF THIS PARAGRAPH WHICH
SHALL OVERRIDE AND CONTROL ALL SUCH AGREEMENTS, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER WRITTEN OR ORAL. IN NO WAY, NOR IN ANY EVENT OR
CONTINGENCY (INCLUDING WITHOUT LIMITATION PREPAYMENT OR ACCELERATION OF THE
MATURITY OF ANY OBLIGATION), SHALL ANY INTEREST TAKEN, RESERVED, CONTRACTED FOR,
CHARGED, OR RECEIVED UNDER THIS LEASE OR OTHERWISE, EXCEED THE MAXIMUM
NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY POSSIBLE
CONSTRUCTION OF ANY OF THE OPERATIVE AGREEMENTS OR ANY OTHER DOCUMENT OR
AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS OF THE MAXIMUM
NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE PROVISIONS OF
THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS SHALL BE
AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER
APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW
DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS
CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR
UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF
THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE BEEN
EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF THE
COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF INTEREST,
OR REFUNDED TO LESSEE OR ANY OTHER PAYOR THEREOF, IF AND TO THE EXTENT SUCH
AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF PAYMENTS DEEMED
TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF
THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT TO RECEIVE ANY INTEREST
WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH DEMAND, AND LESSOR DOES NOT
INTEND TO CHARGE OR RECEIVE ANY UNEARNED INTEREST

 

43

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IN THE EVENT OF SUCH DEMAND. ALL INTEREST PAID OR AGREED TO BE PAID TO LESSOR
SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE AMORTIZED, PRORATED,
ALLOCATED, AND SPREAD THROUGHOUT THE FULL STATED TERM (INCLUDING WITHOUT
LIMITATION ANY RENEWAL OR EXTENSION) OF THIS LEASE SO THAT THE AMOUNT OF
INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED THE MAXIMUM NONUSURIOUS
AMOUNT PERMITTED BY APPLICABLE LAW.

 

  30.15  Lessor Certification.

 

It is Lessee’s policy not to contract with “Ineligible Persons”. An “Ineligible
Person” is defined as any individual or entity who: (a) is currently excluded,
debarred or otherwise ineligible to participate in the Federal healthcare
programs or in the Federal procurement or non-procurement programs; and (b) has
been convicted of a criminal offense related to the provision of healthcare
items or services, but has not yet been excluded, debarred or otherwise declared
ineligible. In connection therewith, Lessee is required to verify that its
contractors are not listed on the General Services Administration’s List of
Parties Excluded from Federal Programs and the list of Excluded
Individuals/Entities maintained by the Office of Inspector General of the
Department of Health and Human Services. Lessor hereby certifies that it (a) has
not received written notice that it is currently excluded, debarred or otherwise
ineligible to participate in the Federal healthcare programs or in the Federal
procurement or non-procurement programs; and (b) has not been convicted of a
criminal offense related to the provision of healthcare items or services.

 

[signature pages follow]

 

44

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

IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed and
delivered as of the date first above written.

 

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not
individually, but solely as Owner Trustee for Digital Hospital Trust 2001-1, as
Lessor

By:

 

/s/ Deborah A. Ibrahim

Name:

 

Deborah A. Ibrahim

Title:

 

Assistant Secretary

 

[signature pages continue]

 

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

 

HEALTHSOUTH MEDICAL CENTER, INC., as Lessee

By:

 

/s/ Malcolm E. McVay

Name:

 

Malcolm E. McVay

Title:

 

Vice President and Treasurer

 

[signature pages continue]

 

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

 

Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as the date hereof FIRST UNION NATIONAL BANK, as the Agent By:  

/s/ Evander S. Jones, Jr.

Name:

 

Evander S. Jones, Jr.

Title:

 

Vice President

 

[signature pages end]

 

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

 

EXHIBIT A TO THE LEASE

 

LEASE SUPPLEMENT NO.        

 

THIS LEASE SUPPLEMENT NO.          (this “Lease Supplement”) dated as of
                    , 200   between STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not
individually, but solely as Owner Trustee for Digital Hospital Trust 2001-1, as
lessor (the “Lessor”), and HEALTHSOUTH MEDICAL CENTER, INC., an Alabama
corporation, as lessee (the “Lessee”).

 

WHEREAS, Lessor is the owner or will be the owner of the Property described on
Schedule 1 hereto (the “Leased Property”) and wishes to lease the same to
Lessee;

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

SECTION 1. Definitions; Rules of Usage. For purposes of this Lease Supplement,
capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in Appendix A to the Participation Agreement, dated as
of December 27, 2001, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as Owner Trustee for Digital Hospital Trust
2001-1, the various banks and other lending institutions which are parties
thereto from time to time, as the Holders, the various banks and other lending
institutions which are parties thereto from time to time, as the Lenders, and
First Union National Bank, as the Agent for the Lenders and respecting the
Security Documents, as the Agent for the Secured Parties, as such may be
amended, modified, extended, supplemented, restated and/or replaced from time to
time.

 

SECTION 2. The Properties. Attached hereto as Schedule 1 is the description of
the Leased Property, with an Equipment Schedule attached hereto as Schedule 1-A.
an Improvement Schedule attached hereto as Schedule 1-B and [a legal description
of the Land / a copy of the Ground Lease] attached hereto as Schedule 1-C.
Effective upon the execution and delivery of this Lease Supplement by Lessor and
Lessee, the Leased Property shall be subject to the terms and provisions of the
Lease. Without further action, any and all additional Equipment funded under the
Operative Agreements and any and all additional Improvements made to the Land
shall be deemed to be titled to the Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement.

 

This Lease Supplement shall constitute a mortgage, deed of trust, security
agreement and financing statement under the laws of the state in which the
Leased Property is situated. The maturity date of the obligations secured hereby
shall be [                     ] unless extended to not later than
[                     ].

 

A-1

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

For purposes of provisions of the Lease and this Lease Supplement related to the
creation and enforcement of the Lease and this Lease Supplement as a security
agreement and a fixture filing, Lessee is the debtor and Lessor is the secured
party. The mailing addresses of the debtor (Lessee herein) and of the secured
party (Lessor herein) from which information concerning security interests
hereunder may be obtained are set forth on the signature pages hereto. A carbon,
photographic or other reproduction of the Lease and this Lease Supplement or of
any financing statement related to the Lease and this Lease Supplement shall be
sufficient as a financing statement for any of the purposes referenced herein.

 

SECTION 3. Use of Property. At all times during the Term with respect to each
Property, Lessee will comply with all obligations under and (to the extent no
Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.

 

SECTION 4. Ratification; Incorporation by Reference. Except as specifically
modified hereby, the terms and provisions of the Lease and the Operative
Agreements are hereby ratified and confirmed and remain in full force and
effect. The Lease is hereby incorporated herein by reference as though restated
herein in its entirety.

 

SECTION 5. Original Lease Supplement. The single executed original of this Lease
Supplement marked “THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART” on the
signature page thereof and containing the receipt of the Agent therefor on or
following the signature page thereof shall be the original executed counterpart
of this Lease Supplement (the “Original Executed Counterpart”). To the extent
that this Lease Supplement constitutes chattel paper, as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction, no
security interest in this Lease Supplement may be created through the transfer
or possession of any counterpart other than the Original Executed Counterpart.

 

SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED TO AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NORTH CAROLINA (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE
A PARTICULAR PROPERTY IS LOCATED ARE REQUIRED TO APPLY.

 

SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies set
forth in the Lease, in the event that a court of competent jurisdiction rules
that the Lease constitutes a mortgage, deed of trust or other secured financing
as is the intent of the parties, then Lessor and Lessee agree that Lessee hereby
grants a Lien against the Leased Property WITH POWER OF SALE, and that, upon the
occurrence of any Lease Event of Default, Lessor shall have the power and
authority, to the extent provided by law, after prior notice and lapse of such
time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.

 

A-2

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

SECTION 8. Counterpart Execution. This Lease Supplement may be executed in any
number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.

 

For purposes of the provisions of this Lease Supplement concerning this Lease
Supplement constituting a security agreement and fixture filing, the addresses
of the debtor (Lessee herein) and the secured party (Lessor herein), from whom
information may be obtained about this Lease Supplement, are as set forth on the
signature pages hereto.

 

[The remainder of this page has been intentionally left blank.]

 

A-3

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

IN WITNESS WHEREOF, each of the parties hereto has caused this Lease Supplement
to be duly executed by an officer thereunto duly authorized as of the date and
year first above written.

 

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not
individually, but solely as Owner Trustee for Digital Hospital Trust 2001-1, as
Lessor By:    

Name: 

   

Title:

   

 

State Street Bank and Trust Company of Connecticut, National Association        
           

Attn:

       

 

HEALTHSOUTH MEDICAL CENTER, INC.,

as Lessee

By:    

Name: 

   

Title:

   

 

[LESSEE ADDRESS]                    

Attn:

       

 

Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.

 

FIRST UNION NATIONAL BANK, as the Agent By:    

Name: 

   

Title:

   

First Union National Bank

c/o Wachovia Securities, Inc.

301 South College Street, TW-6

Charlotte, North Carolina 28288-0166

Attention: Gabrielle Altschuler

 

A-4

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

 

SCHEDULE 1

TO LEASE SUPPLEMENT NO. ____

 

(Description of the Leased Property)

 

A-5

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

 

SCHEDULE 1-A

TO LEASE SUPPLEMENT NO. ____

 

(Equipment)

 

A-6

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

 

SCHEDULE 1-B

TO LEASE SUPPLEMENT NO. ____

 

(Improvements)

 

A-7

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

 

SCHEDULE 1-C

TO LEASE SUPPLEMENT NO. ____

 

[(Land)/

(Ground Lease)]

 

A-8

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

 

EXHIBIT B TO THE LEASE

 

[MODIFY OR SUBSTITUTE SHORT FORM LEASE AS

NECESSARY FOR LOCAL LAW REQUIREMENTS]

 

Recordation requested by:

 

Moore & Van Allen, PLLC

 

After recordation return to:

 

Moore & Van Allen, PLLC (WMA)

100 North Tryon Street, Floor 47

Charlotte, NC 28202-4003

 

                                Space above this line

                                for Recorder’s use

 

MEMORANDUM OF LEASE AGREEMENT

AND

LEASE SUPPLEMENT NO. ____

 

THIS MEMORANDUM OF LEASE AGREEMENT AND LEASE SUPPLEMENT NO.         
(“Memorandum”), dated as of                     , 200  , is by and between STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association, not individually, but solely as Owner Trustee for Digital
Hospital Trust 2001-1, with an office at [                                ]
(hereinafter referred to as “Lessor”) and HEALTHSOUTH MEDICAL CENTER, INC., an
Alabama corporation, with an office at [                            ]
(hereinafter referred to as “Lessee”).

 

WITNESSETH:

 

That for value received, Lessor and Lessee do hereby covenant, promise and agree
as follows:

 

1. Demised Premises and Date of Lease. Lessor has leased to Lessee, and Lessee
has leased from Lessor, for the Term (as hereinafter defined), certain real
property and other property located in                         , which is
described in the attached Schedule 1 (the “Property”), pursuant to the terms of
a Lease Agreement between Lessor and Lessee dated as of December 27, 2001 (as
such may be amended, modified, extended, supplemented, restated and/or replaced
from time to time, “Lease”) and a Lease Supplement No.          between Lessor
and Lessee dated as of                      (the “Lease Supplement”).

 

B-1

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

The Lease and the Lease Supplement shall constitute a mortgage, deed of trust
and security agreement and financing statement under the laws of the state in
which the Property is situated. The maturity date of the obligations secured
thereby shall be                 , unless extended to not later than
                    .

 

For purposes of provisions of the Lease and the Lease Supplement related to the
creation and enforcement of the Lease and the Lease Supplement as a security
agreement and a fixture filing, Lessee is the debtor and Lessor is the secured
party. The mailing addresses of the debtor (Lessee herein) and of the secured
party (Lessor herein) from which information concerning security interests
hereunder may be obtained are as set forth on the signature pages hereof. A
carbon, photographic or other reproduction of this Memorandum or of any
financing statement related to the Lease and the Lease Supplement shall be
sufficient as a financing statement for any of the purposes referenced herein.

 

2. Term, Renewal, Extension and Purchase Option. The term of the Lease for the
Property (“Term”) commenced as of                 , 200   and shall end as of
                , 200  , unless the Term is extended or earlier terminated in
accordance with the provisions of the Lease. The Lease contains provisions for
renewal and extension. The tenant has a purchase option under the Lease.

 

3. Tax Payer Numbers.

 

Lessor’s tax payer number:                             .

 

Lessee’s tax payer number:                             .

 

4. Mortgage; Power of Sale. Without limiting any other remedies set forth in the
Lease, in the event that a court of competent jurisdiction rules that the Lease
constitutes a mortgage, deed of trust or other secured financing as is the
intent of the parties, then Lessor and Lessee agree that Lessee has granted,
pursuant to the terms of the Lease and the Lease Supplement, a Lien against the
Property WITH POWER OF SALE, and that, upon the occurrence and during the
continuance of any Lease Event of Default, Lessor shall have the power and
authority, to the extent provided by law, after prior notice and lapse of such
time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Property.

 

5. Effect of Memorandum. The purpose of this instrument is to give notice of the
Lease and the Lease Supplement and their respective terms, covenants and
conditions to the same extent as if the Lease and the Lease Supplement were
fully set forth herein. This Memorandum shall not modify in any manner the
terms, conditions or intent of the Lease or the Lease Supplement and the parties
agree that this Memorandum is not intended nor shall it be used to interpret the
Lease or the Lease Supplement or determine the intent of the parties under the
Lease or the Lease Supplement.

 

[The remainder of this page has been intentionally left blank.]

 

B-2

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

IN WITNESS WHEREOF, the parties hereto have duly executed this instrument as of
the day and year first written.

 

LESSOR:

 

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not
individually, but solely as Owner Trustee for Digital Hospital Trust 2001-1

By:    

Name: 

   

Title: 

   

 

State Street Bank and Trust Company of Connecticut, National Association        
           

Attn: 

       

 

LESSEE:

 

HEALTHSOUTH MEDICAL CENTER, INC.

By:    

Name: 

   

Title: 

   

 

[LESSEE ADDRESS]                    

Attn: 

       

 

B-3

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

 

SCHEDULE 1

 

(Description of Property)

 

B-4

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

 

[CONFORM TO STATE LAW REQUIREMENTS]

 

STATE OF                         

   )           )   

ss:

COUNTY OF                         

   )     

 

The foregoing Memorandum of Lease Agreement and Lease Supplement No.         
was acknowledged before me, the undersigned Notary Public, in the County of
                         this          day of                     , by
                        , as                          of STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not individually, but solely as Owner Trustee for Digital Hospital
Trust 2001-1, on behalf of the Owner Trustee.

 

[Notarial Seal]

               

Notary Public

 

My commission expires:                         

 

STATE OF                         

   )           )   

ss:

COUNTY OF                         

   )     

 

The foregoing Memorandum of Lease Agreement and Lease Supplement No.            
was acknowledged before me, the undersigned Notary Public, in the County of
                         this              day of                     , by
                    , as                      of HEALTHSOUTH MEDICAL CENTER,
INC., an Alabama corporation, on behalf of the corporation.

 

[Notarial Seal]

                Notary Public

 

My commission expires:                         

 

B-5