Document:

Exhibit 10.7

 

AGREEMENT OF SALE AND PURCHASE

 

NEW LIFECARE HOSPITALS OF PITTSBURGH, LLC AND

 

NEW LIFECARE HOSPITALS OF NORTH TEXAS, LLC (COLLECTIVELY, SELLER)

 

&

 

DOC-LIFECARE FT. WORTH LTACH, LLC AND

 

DOC-LIFECARE PITTSBURGH LTACH, LLC (COLLECTIVELY, BUYER)

 

	
PROPERTIES:
    	
225 PENN AVENUE, PITTSBURGH, PA
    
	
 
    	
6201 OVERTON RIDGE BLVD, FORT   WORTH, TX
    

 

EFFECTIVE DATE:                          MARCH 28, 2014

 

 

TABLE OF CONTENTS

 

	
CONTENTS
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    
	
1.
    	
Agreement to Sell and Purchase
    	
 
    	
1
    
	
2.
    	
Purchase Price
    	
 
    	
2
    
	
3.
    	
Closing
    	
 
    	
2
    
	
4.
    	
Condition of Title
    	
 
    	
3
    
	
5.
    	
Representations and Warranties
    	
 
    	
4
    
	
6.
    	
Conditions of Buyer’s Obligations
    	
 
    	
5
    
	
7.
    	
Possession
    	
 
    	
9
    
	
8.
    	
Prorations
    	
 
    	
9
    
	
9.
    	
Condemnation
    	
 
    	
10
    
	
10.
    	
Default by Buyer
    	
 
    	
11
    
	
11.
    	
Default by Seller
    	
 
    	
11
    
	
12.
    	
Risk of Loss
    	
 
    	
12
    
	
13.
    	
Brokerage
    	
 
    	
12
    
	
14.
    	
Operation of the Property Prior to Closing
    	
 
    	
13
    
	
15.
    	
Notice
    	
 
    	
14
    
	
16.
    	
Indemnity by Seller
    	
 
    	
15
    
	
17.
    	
Further Assurances
    	
 
    	
15
    
	
18.
    	
Like Kind Exchanges
    	
 
    	
15
    
	
19.
    	
Miscellaneous
    	
 
    	
15
    
	
20.
    	
Disclosure
    	
 
    	
17
    

 

	
EXHIBIT “A”
    	
–
    	
LEGAL DESCRIPTION
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
EXHIBIT “B”
    	
–
    	
ESCROW AGREEMENT
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
EXHIBIT “C”
    	
–
    	
TENANT ESTOPPEL CERTIFICATE
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
EXHIBIT “D”
    	
–
    	
NON-FOREIGN PERSON CERTIFICATION
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Schedule 1(d)
    	
 
    	
List of Records and Plans
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Schedule 1(e)
    	
 
    	
List of Guarantees and Warranties
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Schedule 1(f)
    	
 
    	
List of Licenses and Permits
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Schedule 1(g)
    	
 
    	
Permitted Exceptions
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Schedule 6(b)
    	
 
    	
Contingent Rent Cap
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Schedule 6(h)
    	
 
    	
Disclosure Materials
    	
 
    	
 
    

 

ii

 

AGREEMENT OF SALE AND PURCHASE

 

THIS AGREEMENT OF SALE AND PURCHASE (this “Agreement”) is made by and between NEW LIFECARE HOSPITALS OF PITTSBURGH, LLC, a Delaware, and NEW LIFECARE HOSPITALS OF NORTH TEXAS, LLC, a Delaware ( each a “Seller” and collectively, “Seller”), and DOC-LIFECARE FT. WORTH LTACH, LLC, a Wisconsin limited liability company, and DOC-LIFECARE PITTSBURGH LTACH, LLC, a Wisconsin limited liability company (each a “Buyer” and collectively, “Buyer”).  This Agreement is to be effective as of the date on which Buyer receives this Agreement and the Escrow Agreement (as defined below) executed by Seller (the “Effective Date”).  Buyer shall provide Seller with written notice of the Effective Date of this Agreement.

 

In consideration of the covenants and provisions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.                                      Agreement to Sell and Purchase.  Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller the Property, subject to the terms and conditions of this Agreement.  For the purposes of this Agreement, the term “Property” shall exclude all oil, gas and other minerals on, in and under the Property (waiving, however, all use of the surface of the Property for mining, drilling, exploration or other purposes in connection with the foregoing reservation) and mean and include the following:

 

(a)                         All of that certain real property legally described in the attached Exhibit “A”, including, without limitation, the land, buildings, improvements, fixtures (including, without limitation, the sprinkling, plumbing, heating, cooling, ventilating, air conditioning, electrical, lighting and other systems), easements and all other right, title and interest appurtenant and otherwise relating thereto (collectively, the “Real Property”).

 

(b)                         Intentionally Omitted.

 

(c)                          Intentionally Omitted.

 

(d)                         Copies of the 2013 financial statements maintained in connection with the operation of the Real Property; all preliminary, final and proposed building plans and specifications relating to the Real Property; and all surveys, structural reviews, grading plans, topographical maps, architectural drawings and engineering, soils, seismic, geologic, environmental, and architectural reports, studies, certificates, and similar documents relating to the Real Property; all of which are listed on the attached Schedule 1(d) (collectively, the “Records and Plans”).

 

(e)                          All of Seller’s right, title and interest in and to all guarantees and warranties relating to the Property and the fixtures located therein; all of which are listed on the attached Schedule 1(e) (collectively, the “Guarantees and Warranties”).

 

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(f)                           All of Seller’s right, title and interest in and to all certificates of occupancy, approvals, dedications, subdivision maps, and entitlements issued, approved or granted by governmental or quasi-governmental entities or otherwise relating to the Property; and any and all development rights and other intangible rights, titles, interests, privileges, and appurtenances owned by Seller and in any way relating to or used in connection with the Property and/or the operation of the business conducted on the Real Property; all of which are listed on the attached Schedule 1(f) (collectively, the “Licenses and Permits”).

 

2.                                      Purchase Price.  The purchase price for the Property is Forty Million and 00/100 Dollars ($40,000,000.00) (the “Purchase Price”), payable by Buyer as follows:

 

(a)                         Three Hundred Fifty Thousand and 00/100 Dollars ($350,000.00) (the “Deposit”) by wire transfer payable to First American Title Insurance Company (“Escrow Agent”), which sum shall be delivered to Escrow Agent within three (3) business days following the Effective Date.  The Deposit shall be held in an interest bearing, federally insured account, by Escrow Agent in accordance with the Escrow Agreement attached hereto as Exhibit “B” (the “Escrow Agreement”) and this Agreement pending consummation of this transaction. Any interest earned on the Deposit shall be paid to Buyer unless Seller shall be entitled to the Deposit by reason of a default by Buyer, in which case such interest shall be paid to Seller.  Upon expiration of the Due Diligence Period, if Buyer has not terminated this Agreement as provided herein, the Deposit shall become nonrefundable except in the event of a Seller default.  Buyer’s Federal Tax I.D. Number is 80-0941870; Seller’s respective Federal Tax I.D. Numbers are 90-0948759 and 80-0904279.

 

(b)                         The balance of the Purchase Price (the Purchase Price minus the Deposit), subject to adjustments pursuant to this Agreement, including, but not limited to, those adjustments set forth in Section 8 of this Agreement, shall be paid to Seller at Closing (as defined below) in cash by wire transfer of immediately available federal funds, or by certified check (or by plain check from the Title Company (as defined below)).

 

(c)                          For the purposes of this Agreement, the Purchase Price shall be deemed to be allocated to the respective portions of the Property situated in the Commonwealth of Pennsylvania $14,200,000 and the State of Texas $25,800,000 (collectively, the “Allocated Values”).

 

3.                                      Closing.  Closing shall be held on the date that is ten (10) days after the later of:  (i) expiration date of the Due Diligence Period (as defined below) or (ii) the date upon which title to the Property is acceptable or deemed acceptable to Buyer pursuant to Section 4 below (or on the next business day thereafter if such date is not a business day) (the “Closing Date”), or on such earlier date as Buyer shall designate by at least five (5) days advance written notice to Seller; provided, however, in no event shall the Closing Date be later than March 31, 2014.  Closing shall be an escrow closing with the Title Company (as defined below) acting as the closing escrow agent (“Closing”).  It is agreed that the time of Closing and the obligation of Seller to deliver the Deed (as defined in Section 6(i) below) to Buyer at Closing are of the

 

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essence of this Agreement.  Notwithstanding anything to the contrary contained herein, Buyer shall have the right to extend the Closing Date for an additional thirty (30) days upon written notice to Seller.

 

4.                                      Title.  From and after the Effective Date, Buyer shall have the right to order a title insurance commitment prepared in accordance with all of the terms and conditions of this Agreement (the “Title Commitment”).

 

(a)                         The Title Commitment shall be prepared in accordance with the current ALTA Form or, as applicable, TLTA Form, issued by First American Title Insurance Company acceptable to Buyer (the “Title Company”), agreeing to issue, upon recording of the special warranty deed described in this Agreement, an ALTA or, as applicable, TLTA owner’s title insurance policy to Buyer and an ALTA or, as applicable, TLTA Lender’s title insurance policy issued to Buyer’s lender(s), if applicable, in the amount of the Purchase Price (allocated pursuant to the Allocated Values) insuring title to the Real Property to be in the condition called for by this Agreement and containing a “fifty-year chain-of-title search,” a zoning endorsement on ALTA Form 3.1 (with parking), a survey endorsement insuring that the survey accurately depicts the Real Property (including boundaries, improvements, easements and encroachments), a contiguity endorsement, an access endorsement, an endorsement for “gap coverage,” a location endorsement and an owner’s comprehensive endorsement, a utility facilities endorsement, and a tax parcel endorsement all if available in the state containing portions of the Real Property.  Buyer shall cause the Title Company at or prior to Closing to down date the Title Commitment to the date and time of the recording of the Deed and provide a “title mark-up” showing the final form of the title insurance policy (including the above referenced endorsements) to be issued, which mark-up shall obligate the Title Company to issue the final title insurance policy in such form.  The title mark-up and final title insurance policy shall be free from the standard requirements and exceptions except as required in the state containing portions of the Real Property and shall be subject only to liens, encumbrances or exceptions specifically approved by Buyer (such items, the Master Lease and any permitted subleases, the “Permitted Exceptions”). A written statement of the obligee of the amount of any lien or encumbrance to be discharged by Seller shall be provided by Seller within ten (10) days after the title evidence is furnished to Buyer.

 

(b)                         Title Defects. Within ten (10) days of Buyer’s receipt of the latter of the Title Commitment or the Survey (as defined in Section 6 (g) below) but not later than two (2) days prior to Closing, Buyer shall object in writing to any condition of title not satisfactory to Buyer, in Buyer’s sole discretion (hereinafter referred to as a “Title Defect”). If any objection is made, Seller shall have until prior to Closing in which to attempt to correct such Title Defect, but Seller shall not be obligated to correct Title Defects.  Notwithstanding the foregoing, Seller agrees to use all commercially reasonable efforts to cure any and all Title Defects of an ascertainable monetary value not in excess of $25,000.00 per Property or $100,000.00 in the aggregate.  If the Title Defect cannot be corrected, or Seller elects not to cure such Title Defect, prior to Closing, or as otherwise extended by agreement of Buyer and Seller, Buyer may, at its option, (a) declare this Agreement null and void and as a result Seller shall return the Deposit

 

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together with all accrued interest forthwith to Buyer or (b) elect to accept such title as Seller is able to convey and proceed to Closing, without any deduction in the Purchase Price for the Property. If Buyer fails to notify Seller that Buyer is terminating this Agreement pursuant to this Section within three (3) business days of the expiration of the ten (10) day period, Buyer shall be deemed to have selected option (b) in the previous sentence.

 

5.                                      Representations and Warranties.  Each Seller as to itself and the portion of the Real Property owned by it represents and warrants that all of Seller’s representations and warranties relating to this Agreement are true, correct and complete as of the Effective Date of this Agreement and shall be deemed reaffirmed as true, correct and complete as of Closing. Each Seller acknowledges that the representations and warranties made in this Agreement by Seller are a material inducement to Buyer’s entering into this Agreement and purchasing the Property and that Buyer is entitled to rely upon these representations and warranties despite any and all investigation undertaken by Buyer. All of Seller’s representations and warranties relating to this Agreement shall survive the Closing of the transactions contemplated herein for a period of one (1) year.  In addition to any other representations and warranties set forth in this Agreement, each Seller, limited as provided above, hereby further represents, warrants and covenants to Buyer as follows:

 

(a)                         Each Seller holds fee simple title to the Real Property subject to the Permitted Exceptions.  New LifeCare Hospitals of Pittsburgh, LLC is validly qualified and duly existing in the Commonwealth of Pennsylvania, duly organized under the laws of the State of Delaware and has the power and authority to enter into this Agreement and to consummate the transactions herein contemplated.  New LifeCare Hospitals of North Texas, LLC is validly qualified and duly existing in the State of Texas, duly organized under the laws of the State of Delaware and has the power and authority to enter into this Agreement and to consummate the transactions herein contemplated

 

(b)                         Neither the execution and delivery of this Agreement, nor compliance with the terms and conditions of this Agreement by Seller, nor the consummation of the sale and conveyance of the Property to Buyer, constitutes or will constitute a violation or breach of the operating agreement of Seller, as the same may have been amended from time to time, or of any agreement or other instrument to which Seller is a party, to which it is subject or by which it is bound.

 

(c)                          The execution and delivery of this Agreement have been approved by the members of Seller and no further action is required on the part of Seller to consummate the transaction contemplated hereby. The person executing this Agreement on behalf of Seller shall have all requisite authority to execute this Agreement, and this Agreement, as executed, is valid, legal and binding upon Seller. There are no proceedings pending or threatened by or against Seller in bankruptcy, insolvency or reorganization in any state or federal court.

 

(d)                         There are no management, employment, service, equipment, supply, maintenance, water, sewer or other utility or concession agreements or agreements with

 

4

 

municipalities (including improvement or development escrows or bonds) with respect to or affecting the Property which will burden the Property or Buyer after Closing (other than those set forth on Schedule 1(c) or which are the obligation of master tenant) in any manner whatsoever, except for instruments of record.

 

(e)                          At Closing, there shall be no existing leases, whether oral or written, agreements of sale, options, rights of first refusal, rights of first offer, tenancies, licenses or any other claims to possession or use affecting the Property except for the Master Lease (as defined in Section 6(b) below) and any subleases permitted hereby.

 

(f)                           Seller has no knowledge of, and has received no notice from, any governmental authority requiring any work, repairs, construction, alterations or installations on or in connection with the Property, or asserting any violation of any federal, state, county or municipal laws, ordinances, codes, orders, regulations or requirements affecting any portion of the Property, including, without limitation, the Americans with Disabilities Act and any applicable environmental laws or regulations. There is no action, suit or proceeding pending or, to the actual knowledge of Seller, threatened against or affecting Seller or the Property or any portion thereof or relating to or arising out of the ownership of the Property, in any court or before or by any federal, state, county or municipal department, commission, board, bureau or agency or other governmental instrumentality.

 

(g)                          To Seller’s knowledge, no assessments or charges of any kind or nature (deferred or otherwise) for any public improvements have been made against the Property which remain unpaid, no improvements to the Property or any roads or facilities abutting the Property have been made or ordered for which a lien, assessment or charge can be filed or made, and Seller has no actual knowledge of any plans for improvements by any governmental or quasi-governmental authority which might result in a special assessment against the Property.  Seller has incurred no obligations relating to the installation of or connection to any sanitary sewers or storm sewers which shall be enforceable against the Property; and all public improvements ordered, advertised, commenced or completed prior to the date of this Agreement shall be paid for in full by Seller prior to Closing, unless such improvements are to be paid by a special assessment assessed against the Property, which assessment is to be paid in installments. In such case, Seller shall only be responsible for the assessments due prior to Closing and the Buyer shall pay all assessments due after Closing.

 

(h)                         All certificates of occupancy and licenses necessary for operation of the Property, as presently conducted, have been issued by all authorities having jurisdiction thereof; and all such certificates of occupancy and licenses are in full force and effect. Seller has not received any written notice of suspension or cancellation of any certificates of occupancy or licenses.

 

(i)                             Seller warrants, represents and covenants that, to Seller’s knowledge:  (i) there has been no disposal, burial or placement of Hazardous Substances (as defined below) on the Property; (ii) the Property and Seller are not in violation of any Environmental Laws (as

 

5

 

defined below); and no other person or entity has used all or part of the Property in violation of any Environmental Laws; (iii) there is no contamination, pollution resulting from a condition on or under the Property; (iv) there are no storage tanks on or under the Property other than above ground storage tanks for generator diesel fuel; (v) environmental conditions associated with the Property are in compliance with all Environmental Laws; and (vi) Seller has disclosed to Buyer all information in Seller’s possession relating to the environmental condition of the Property.  Seller has not received any information from neighboring property owners indicating they have any concerns about existing environmental conditions which could affect the Property or suggesting they might look to Seller for contribution to clean up such condition.

 

In the event Buyer shall discover such Hazardous Substances and/or violations of Environmental Laws, tanks or other “recognized environmental condition” (as that phrase is defined by the most recent American Society for Testing and Materials practice standards) on the Property at any time prior to Closing, in addition to its other rights and remedies at law or equity or under this Agreement, Buyer shall have as its sole remedy the right to terminate this Agreement upon written notice thereof to Seller, whereupon Escrow Agent shall return the Deposit to Buyer together with all interest thereon; and thereafter this Agreement shall be deemed void and neither party shall have any further rights or obligations hereunder; provided, however, that, if Seller had knowledge of such environmental condition and failed to disclose the same to Buyer in breach of this Agreement, Seller shall immediately reimburse Buyer for all Buyer’s costs and expenses incurred in connection with the transaction contemplated by this Agreement not to exceed Seventy-Five Thousand and 00/100 Dollars ($75,000.00).  The foregoing reimbursement obligation of Seller shall survive on termination of this Agreement by Buyer or Seller.  Notwithstanding anything to the contrary herein, the effect of the representations and warranties made in this Subparagraph shall not be diminished or deemed to be waived by any inspections, tests or investigations made by Buyer or its agents.

 

For purposes of this Agreement, the term “Environmental Law(s)” shall mean all federal, state and local laws including statutes, regulations, codes and other governmental standards, restrictions, rulings, judgments, orders and requirements in effect now or at any time in the future or past relating to the use, storage, disposal, release, emission, dispersal, spilling, leaking, burial, migration, seepage, movement, discharge, management, investigation, remediation, monitoring, regulation relating to air pollutants, water pollutants, process wastewater, solid or hazardous waste, chemicals, gases, vapors, water pollutants, groundwater, effluents, stormwater runoff, surface water runoff, the environment, Hazardous Substances or employee health and safety, including, but not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Occupational Safety and Health Act of 1970 (all as the same may have been amended), regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency.

 

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For purposes of this Agreement, the term “Hazardous Substance(s)” shall mean all hazardous, toxic, flammable, explosive or radioactive substances, wastes and materials; any pollutants or contaminants (including, but not limited to, petroleum products, asbestos, raw materials and natural substances that include hazardous constituents); and any other similar substances or materials that are regulated under Environmental Laws other than medical waste or products utilized and disposed of in compliance with Environmental Laws.

 

(j)                                    Except as may be expressly represented herein, in the exhibits and schedules attached hereto and in the documents to be executed and delivered by Seller to Buyer at Closing, Buyer agrees that the Property shall be sold, and Buyer shall accept possession of the Property at Closing, on an “AS-IS, WHERE-IS” basis.

 

6.                                      Conditions of Buyer’s Obligations.  For the purposes of this Agreement “Due Diligence Period” shall mean the thirty (30) day period from and after the Effective Date (or, if earlier, until the Closing).  The obligation of Buyer under this Agreement to purchase the Property from Seller is contingent on the satisfaction of the following conditions within each condition’s respective time-period (any one of which may be waived in whole or in part by Buyer within each condition’s time period):

 

(a)                         At Closing, all of the representations and warranties by Seller set forth in this Agreement shall be true and correct in all respects as though such representations and warranties were made at and as of Closing, and Seller shall have performed, observed and complied with all covenants, agreements and conditions required by this Agreement except to the extent waived by Buyer.

 

(b)                         Within the Due Diligence Period, Buyer (as landlord) and LifeCare Holdings, LLC (as master tenant, herein so called) shall have agreed upon on the terms and conditions of a new absolute net master lease (the “Master Lease”) for the Property and that certain property subject to that certain Lease Agreement currently in effect, by and between DOC-LifeCare Plano LTACH, LLC, an affiliate of Buyer, and New LifeCare Hospitals of North Texas, LLC, an affiliate of Seller, as amended on October 22, 2013 (the “Plano Master Lease”).  The Master Lease shall be on substantially the same terms and conditions as the Plano Master Lease, including the same remaining term and same extension or renewal options contained in the Plano Master Lease.  The Master Lease shall require the master tenant to pay monthly base rent in an amount equal to the monthly base rent currently being paid under the Plano Master Lease, plus a monthly base rent amount of Two Hundred Seventy Thousand and 00/100 ($270,000.000), consisting of a monthly base rent amount of One Hundred Eighty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($183,333.33) for the Fort Worth facility and a monthly base rent amount of Eighty-Six Thousand Six Hundred Sixty-Six and 67/100 Dollars ($86,666.67) for the Pittsburgh facility, for calendar year 2014. On January 1, 2015, and each anniversary thereafter during the term of the Master Lease, annual base rent shall increase by the CPI adjustment set forth in the Plano Master Lease.  In addition to base rent and additional rent payable under the Master Lease, the Master Lease will require the master tenant to pay contingent rent in an amount equal to ten percent (10%) of the amount by which the aggregate gross revenues for the Plano, Fort Worth and Pittsburgh facilities exceed the then-

 

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current adjusted revenue baseline (the “Adjusted Revenue Baseline”) for such lease year (the “Contingent Rent”), but in no event shall Contingent Rent exceed the Contingent Rent Cap for such lease year (the “Contingent Rent Cap”).  The annual Adjusted Revenue Baseline and Contingent Rent Cap amounts are set forth on Schedule 6(b) attached to this Agreement.  Contingent Rent shall be paid within sixty (60) days after each anniversary date of the Master Lease for the entire term and any extension or renewal terms of the Master Lease.  Contingent Rent will be determined by Buyer and master tenant and will be paid in a single lump-sum annually, and will not be cumulative.  The Contingent Rent payable under the Master Lease is a separate obligation of the master tenant and shall be in addition to the base rent and additional rent payable under the Master Lease.  Adjustments to the base rent and/or additional rent shall have no impact on Contingent Rent, and adjustments to the Adjusted Revenue Baseline and Contingent Rent, and amounts paid as Contingent Rent shall have no impact on the base rent or other additional rent amounts to be paid by the master tenant under the Master Lease.  The Master Lease shall permit the master tenant to sublease each of the facilities, in whole but not in part, but master tenant shall remain primarily liable for all of master tenant’s obligations under the Master Lease.  The terms of such subleases to nonaffiliated parties (other than those in effect on the Effective Date) shall be reasonably acceptable to Buyer.  Because the Master Lease is an absolute net master lease, master tenant shall be responsible for all maintenance, repair, replacement, property management, utilities, and all other obligations (payment and performance) for each of the facilities.

 

(c)                          Master tenant shall execute and deliver the Master Lease on the Closing Date.  Master tenant shall also execute and deliver to Buyer, on or before the Closing Date, a duly executed original of (i) a Subordination Non-Disturbance and Attornment Agreement (“SNDA”) in the form reasonably required by Buyer’s lender, and (ii) a certificate in the form attached hereto as Exhibit “C” (“Estoppel Certificate”).  If the Estoppel Certificate and SNDA have not been delivered to Buyer in the required form or in a form otherwise acceptable to Buyer on or before the Closing Date, then Buyer, at its option, may terminate this Agreement by delivering notice of such termination to Seller; and in such event the Deposit and all accrued interest shall be returned to Buyer and this Agreement thereupon shall become void and there shall be no further obligations or liability on any of the parties hereto.

 

(d)                         Within the Due Diligence Period, Buyer verifying that the Property is in every respect acceptable to Buyer based on an investigation and review by Buyer, its agents and contractors of the Property, all information that is required to be provided to Buyer by Seller pursuant to this Agreement and all information that is available to Buyer relating to the Property and the transactions contemplated herein, including, but not limited to, the Disclosure Materials (as defined below).  This contingency shall also include, without limitation, Buyer obtaining, at Buyer’s expense, a physical inspection of the Property, which discloses no “Defects,” as that term is defined herein. For purposes of this Agreement, a “Defect” is defined as a condition or conditions, or evidence of a condition or conditions, that has the potential to: (i) impair the health or safety of occupants of the Property; (ii) result in the violation of any applicable public or private law, standard or covenant; or (iii) cost, in the aggregate, an amount in excess of $5,000 to

 

8

 

repair, correct, or remediate excluding, however, those matters which are the obligation of the master tenant.

 

(e)                          Within the Due Diligence Period, Buyer obtaining, at Buyer’s expense, written environmental assessments and/or evaluations of the Property (including “Phase I” assessments and, if Buyer deems necessary, “Phase II” assessments, including laboratory testing of soil, water and other substances) from qualified environmental consultants of Buyer’s choice, confirming that: (i) the Property complies with all Environmental Laws; (ii) there are no liabilities (potential, contingent or otherwise) affecting the Property arising under any Environmental Laws; (iii) except as described in Section 5(i)(iv) there are no underground or aboveground storage tanks, associated pipes or equipment located on or at the Real Property; (iv) there are no Hazardous Substances on, under, at, in or migrating to or from the Real Property; (v) no portion of the Real Property has been designated as wetland, shoreland, floodplain or conservancy land; (vi) no portion of the Real Property has been filled in a manner affecting the structural integrity of the buildings thereon; and (viii) the Property is not affected in any manner or degree by a “recognized environmental condition” (as that phrase is defined by the most recent American Society for Testing and Materials practice standards).

 

(f)                           Within the Due Diligence Period, Buyer verifying to Buyer’s satisfaction that all applicable public and private laws, rules, standards, covenants and requirements, including, without limitation, all zoning, subdivision, building and use restrictions and all easements and matters of record, allow the conveyance of the Property from Seller to Buyer, and are consistent with Buyer’s Intended Use; Buyer obtaining, or Buyer verifying to Buyer’s satisfaction that Buyer will be able to obtain, all public and private permits, certificates and other approvals, consents and all variances, exemptions, waivers, zoning changes and land divisions required for the conveyance of the Property from Seller to Buyer, and Buyer’s Intended Use. The term “Buyer’s Intended Use” shall mean and include, without limitation, medical and other healthcare related uses.

 

(g)                          Within the Due Diligence Period, Buyer obtaining a current ALTA survey of the Property (the “Survey”) at Buyer’s expense, that: (i) is satisfactory to Buyer in all respects (in Buyer’s sole discretion); (ii) is prepared by a licensed, insured and qualified surveyor selected by Buyer; (iii) is certified to Buyer, Buyer’s lender(s) (if any) and the applicable title company; (iv) includes all Table A requirements, except Item 5 of Table A; (v) shows and discloses no encroachments onto the Property or over the boundaries of the Property, and no easements or other matters that would materially adversely affect Buyer’s intended use of the Property; and (vi) is sufficient to remove the standard title exceptions relating to surveys without adding any new exceptions other than as permitted above.  In addition, the Survey shall locate all public utilities, water courses, drains, sewers and roads (including vacated streets and alleys) crossing or adjacent to the Property, and contain an acceptable certification by the surveyor.  Notwithstanding anything to the contrary in this Agreement, if Buyer, through no fault of its own, is unable to obtain the Survey in the form required by this Agreement within the Due Diligence Period, then it shall have a reasonable time thereafter to obtain such Survey prior to Closing.

 

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(h)                         Within five (5) business days of the Effective Date, Seller shall deliver to Buyer the items listed on Schedule 6(h) attached hereto and incorporated by reference herein that are in Seller’s possession or control (the “Disclosure Materials”). Seller makes no representation or warranty concerning the accuracy or completeness of Disclosure Materials prepared by third parties.

 

(i)                             At Closing, Seller shall deliver to Buyer duly executed originals of the following:

 

(i)                                     A special warranty deed(s) to the Real Property, expressly warranting that the Real Property is good, indefeasible, in fee simple, subject only to the Permitted Exceptions, duly executed and acknowledged by Seller and in proper form for recording, (the “Deed”).

 

(ii)                                  Intentionally Omitted.

 

(iii)                               A Non-foreign Person Certification in the form attached hereto as Exhibit “D”, as required under Section 1445 of the Internal Revenue Code.

 

(iv)                              An assignment in form and substance mutually satisfactory to Seller and Buyer, duly executed by Seller, assigning to Buyer (to the extent capable of or permitted to be assigned) all of Seller’s right, title and interest in and to the Licenses and Permits, Records and Plans, Guarantees and Warranties and any other permits, licenses, plans, authorizations and approvals relating to ownership, operation or occupancy of the Property, subject to the Master Lease.

 

(v)                                 A certificate certifying that the representations and warranties of Seller, as set forth in this Agreement and pursuant to Section 5 above, are true and correct in all respects as of the Closing and shall survive Closing.

 

(vii)                           Notwithstanding anything to the contrary in this Agreement, Seller shall provide Buyer original and complete waivers of any and all existing rights of first refusal, rights of first offer, options to purchase, or any other similar rights (including, but not limited to, any and all consents), executed by the necessary parties, so that Seller is able to freely transfer the Property to Buyer unencumbered by such rights.

 

(viii)                        Originals of the following instruments, documents and other items (or copies as to matters described in A, D, E, F and G below), all certified (as applicable) by Seller as true and complete to the best knowledge of Seller:

 

(A)                               All certificates of occupancy (and any required governmental approvals in connection with the transfer of the Property), licenses, plans, permits, authorizations and approvals required by law and issued by all governmental authorities having jurisdiction over the Property;

 

10

 

(B)                               the Master Lease;

 

(C)                               the Estoppel Certificate and SNDA;

 

(D)                               all building records in Seller’s possession or control with respect to the Property;

 

(E)                                each bill of current real estate taxes, sewer charges and assessments, water charges and other utilities, together with proof of payment thereof (to the extent same have been paid); and

 

(F)                                 the Guarantees and Warranties.

 

(G)                               All plans, specifications, site plans, equipment manuals, technical data and other documentation relating to the building systems and any other fixtures forming part of the Property or any portion thereof in the possession of Seller or any property manager(s).

 

(H)                              Such affidavits as are required by Buyer’s title insurer, in the forms reasonably acceptable to Seller.

 

(I)                                   A Closing Statement accurately setting forth the financial terms of this transaction and a summary of the Purchase Price (the “Closing Statement”).

 

(J)                                   Such other documents as may be reasonably required to consummate this transaction in accordance with this Agreement.

 

Unless all of the foregoing conditions contained in this Section 6 are satisfied and completed within each condition’s applicable time period, or if no time period is specified, prior to or at Closing, Buyer, at its election (in its sole discretion), may at its sole remedies, either:  (i) extend the date for Closing until such conditions are satisfied not to extend beyond April 30, 2014; or (ii) terminate this Agreement and have the Deposit refunded together with accrued interest (provided, however, that termination and refund of the Deposit shall not be Buyer’s exclusive remedy); or (iii) waive in writing the satisfaction of any such condition or conditions, in which event this Agreement shall be read as if such condition or conditions no longer existed.

 

(ix)                              Possession of the Property shall be given to Buyer at Closing unoccupied and free of any leases except the Master Lease and any subleases permitted hereby (and subject only to any tenants’ rights under the Master Lease and any subleases permitted hereby).

 

7.                                      Buyer’s Closing Obligations.  At Closing, Buyer shall deliver to Seller the Purchase Price in immediately available funds and an executed counterpart of the assignment described in Section 6(i)(iv).  Buyer shall secure an owner’s policy of title insurance using the

 

11

 

most current ALTA or TLTA Policy Form or a binding, unconditioned “mark-up” of the Title Commitment, each or either showing title to the Property to be in the condition required by Section 4 hereof and execute the Closing Statement and such other documents reasonably required to consummate Closing.

 

8.                                      Prorations and Charges.

 

(a)                         Seller shall pay any and all transfer taxes associated with the conveyance of the Property, and Seller shall be responsible for all recording fees customarily paid by a seller in the localities where the Property is located.  Buyer shall be responsible for the payment of title fees and premiums associated with the Title Policy (and a mortgagee policy, if any), the cost of the Survey, all recording fees customarily paid by a purchaser in the States and localities where the Property is located.  All other closing expenses shall be allocated between the parties in the customary manner for sales of real property in the localities where the Property is located. Each party is responsible for paying its own respective attorneys’ fees incurred in negotiating, preparing and closing the transaction contemplated by this Agreement.

 

(b)                         All expenses and costs relating to the assignment and transfer of the Contract Rights, Records and Plans, Guarantees and Warranties and Licenses and Permits shall be paid by Seller at Closing.

 

9.                                      Condemnation; Rezoning, Historic Designation.  Seller represents and warrants that Seller has not heretofore received any notice of any eminent domain or condemnation proceeding in connection with the Property.  If prior to Closing any such eminent domain or condemnation proceeding is commenced or any change is made, or proposed to be made to: (i) any portion or all of the Property; (ii) the current means of ingress and egress to the Property or to the roads or driveways adjoining the Property which adversely affects access thereto, Seller agrees immediately to notify Buyer in writing thereof.  Buyer then shall have the right, at Buyer’s option, to terminate this Agreement by giving written notice to Seller prior to Closing.  If Buyer elects to terminate this Agreement pursuant to the terms set forth in this Section 9, then the Deposit shall be immediately returned to Buyer together with all accrued interest, Buyer and Seller shall be released from any further liability hereunder and this Agreement shall be null and void.  If Buyer does not so terminate this Agreement, Buyer shall proceed to Closing hereunder as if no such proceeding had commenced and will pay Seller the full Purchase Price in accordance with this Agreement, and Seller shall assign to Buyer all of its right, title and interest in and to any compensation for such condemnation.  Seller shall not negotiate or settle any claims for compensation prior to Closing, and Buyer shall have the sole right (in the name of Buyer or Seller or both) to negotiate for, to agree to, and to contest all offers and awards.

 

If, prior to Closing, there is a designation of the Real Property (and/or any improvement located thereon) or any portion thereof as a historic structure or other historic designation, or is threatened, commenced or finalized, or there is a threatened, commenced or finalized rezoning of the Real Property, Seller shall promptly notify Buyer, and Buyer may elect to terminate this Agreement prior to Closing, in which event the Deposit and all accrued interest thereon shall be

 

12

 

returned forthwith to Buyer, Buyer and Seller shall be released from any further liability hereunder and this Agreement shall be null and void. If Buyer does not elect to terminate this Agreement, this Agreement shall remain in full force and effect and at Closing Seller shall assign to Buyer all Seller’s right, title and interest in and to any dollars paid by the governmental authority (if any) in connection with the rezoning of the Real Property or historic designation.

 

10.                               Default by Buyer.  If Buyer, without the right to do so and in default of its obligations hereunder, fails to complete Closing as to the Property, the Deposit and all accrued interest shall be paid to Seller.  Such payment of the Deposit and all accrued interest to Seller shall be deemed to be liquidated damages for Buyer’s default and the receipt of same shall be Seller’s exclusive and sole remedy; and Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer.  The parties agree that it would be impracticable and extremely difficult to ascertain the actual damages suffered by Seller as a result of Buyer’s failure to complete the purchase of the Property pursuant to this Agreement, and that under the circumstances existing as of the date of this Agreement, the liquidated damages provided for in this Section represent a reasonable estimate of the damages which Seller will incur as a result of such failure.  The parties acknowledge that the payment of such liquidated damages is not intended as a forfeiture or penalty under any legal or equitable theory, but is intended to constitute liquidated damages to Seller.  Buyer shall have no right to cure any default.  If this Agreement is terminated, Buyer shall return to Seller (or delete as to electronically stored material) all material in its possession or control relating to the Property; provided, however, Buyer may retain copies of any materials that may be required to be maintained by law.

 

11.                               Default by Seller.  If Seller defaults in the performance of any obligation contained in this Agreement or, without the right to do so and in default of its obligations hereunder, fails to complete Closing, Buyer may either (as its sole remedies under this Agreement, at law or in equity) (i) receive the Deposit and all accrued interest to Buyer, and Seller shall reimburse Buyer for all of Buyer’s reasonable third party costs incurred in connection with the transaction contemplated by this Agreement not to exceed Seventy-Five Thousand and 00/100 Dollars ($75,000.00) or (ii) Buyer within sixty (60) days following the Closing institute an action for specific performance.  Seller waives the right to assert the defense of lack of mutuality in any action for specific performance instituted by Buyer.  Seller shall have no right to cure any default.

 

12.                               Risk of Loss.  Seller shall bear the risk of all loss or damage to the Property from all causes until Closing.  Seller represents that it has, and will maintain pending Closing, a policy of fire and extended coverage insurance in at least the full amount of the replacement cost of all buildings and improvements located on the Property.  Seller will cause the insurer to add Buyer’s name to the policy as an additional insured, as its interest may appear.  Seller will deliver to Buyer within five (5) days after the Effective Date a certificate issued by such insurer evidencing that such policy is in effect, that it will not be canceled without at least thirty (30) days prior notice to Buyer and that Buyer has been named as an additional named insured thereunder.  If at any time prior to Closing any material portion of the Property is destroyed or damaged as a result

 

13

 

of fire or any other casualty whatsoever, Seller shall promptly give written notice thereof to Buyer and Buyer shall have the right:  (i) to terminate this Agreement by written notice to Seller, whereupon Escrow Agent shall return the Deposit (with any accrued interest) to Buyer, and thereafter this Agreement shall be void and neither party shall have any further rights or obligations hereunder; or (ii) whether such casualty affects a material portion of the Property or not, to proceed with this Agreement and to notify Seller that, at Buyer’s sole option, Seller or master tenant either shall:  (A) to the extent of any available insurance proceeds and deductible amount to restore the Property to its condition as of the Effective Date, and if there are any excess insurance proceeds after completion of such restoration, Seller shall promptly disburse the same together with any interest thereon to Buyer; or (B) in lieu of restoration, clear the site of debris and disburse all remaining insurance proceeds together with interest thereon to Buyer.  All unpaid claims and rights in connection with any such losses shall be assigned to master tenant at Closing without in any manner affecting the Purchase Price.  In the event Buyer elects to proceed under clause (ii)(A) or (ii)(B) above, Seller shall either expend the deductible amount provided for in such insurance coverage in making such restoration or clearing the Property, as the case may be, or give Buyer a credit therefore against the Purchase Price.

 

13.                               Brokerage.  Buyer represents and warrants to Seller and Seller represents and warrants to Buyer that neither party has dealt with any broker, agent, finder or other intermediary in connection with this sale and purchase. Seller agrees to pay any real estate broker or other intermediary claiming a commission in connection with this sale and purchase or the Master Lease, and Buyer shall have no liability or obligation in connection therewith.  Seller agrees to indemnify, defend and hold Buyer harmless from and against the claims of any and all intermediaries claiming a commission in connection with this sale or the Master Lease.  Buyer agrees to indemnify, defend and hold Seller harmless from and against any broker’s claim arising from any breach by Buyer of Buyer’s representation and warranty in this Section 13.

 

14.                               Operation of the Property Prior to Closing.  Prior to Closing:

 

(a)                         Seller shall operate, manage and maintain the Property in a reasonable, professional and prudent manner, and keep the same in good condition at all times.  Without expense to Buyer, Seller shall make all repairs and replacements (structural and non-structural, ordinary and extraordinary) so that the Property is maintained in its present condition, reasonable wear and tear excepted.

 

(b)                         Upon reasonable notice, Buyer, its accountants, architects, attorneys, engineers, contractors and other representatives shall be afforded access to:  (i)  the Property to inspect, measure, appraise, test and make surveys of the Property, including, but not limited to, all activities necessary to satisfy the contingencies set forth in Section 6 and elsewhere in this Agreement; and (ii) all books, records and files relating to the Property.  Buyer shall have the right, at Buyer’s expense, to make copies of all such books and records, including, without limitation, all books and records relating to increases in real estate taxes, building and operations maintenance costs; provided, however, that Buyer shall return all copies of such books and records and results of its inspections and investigations if Closing does not occur under this

 

14

 

Agreement, except that Buyer may retain copies of any such materials as may be required by law.  Buyer shall not interfere unreasonably with the operation of the Property, shall restore any area on the Property disturbed in the course of Buyer’s testing to the conditions existing prior to any tests conducted by Buyer and shall indemnify Seller for any loss, cost or expense (including legal costs and expenses) in connection with all access, investigation and inspection permitted by this Agreement.

 

(c)                          Seller shall comply with all of the obligations of landlord under the Contracts and all other agreements and contractual arrangements affecting the Property by which Seller is bound.

 

(d)                         Seller shall promptly notify Buyer of Seller’s receipt of any notice from any party alleging that Seller is in default of its obligations under any of the Contracts or any permit or agreement affecting the Property, or any portion or portions thereof.

 

(e)                          No contract for or on behalf of or affecting the Property shall be negotiated or entered into which cannot be terminated by Seller prior to Closing without charge, cost, penalty or premium.

 

(f)                           Except with the prior written consent of Buyer, Seller shall not enter into any new leases for any portion of the Property other than subleases permitted by the terms of this Agreement (“new leases”).  Any new lease shall be on a form of lease supplied to Seller by Buyer.  In the event Buyer approves any new leases, Seller shall deliver to Buyer an Estoppel Certificate from the tenant(s) and guarantor(s) thereunder as required hereunder for the new leases and otherwise shall comply, as to such new leases and new guarantees, with the terms of this Agreement relating to Contracts and the Guarantees.

 

(g)                          From the Effective Date until Closing, Seller shall maintain the Contract Rights, Records and Plans, Guarantees and Warranties, and Licenses and Permits in full force and effect as applicable and shall not terminate, modify or waive any provision thereof except as permitted by this Agreement. Seller shall not enter into any new contracts or agreements relating to the Property without Buyer’s prior written consent except as permitted by this Agreement.

 

15.                               Notice.  All notices, requests and other communications under this Agreement shall be in writing and shall be delivered: (i) in person; or (ii) by registered or certified mail, return receipt requested; or (iii) by recognized overnight delivery service providing positive tracking of items (for example, Federal Express); or (iv) by facsimile or electronic transmission (so long as one of methods (i), (ii) or (iii) are simultaneously utilized) addressed as follows or at such other address of which Seller or Buyer shall have given notice as herein provided:

 

	
 
    	
If   intended for Seller:
    
	
 
    	
 
    
	
 
    	
Lifecare   Management Services
    
	
 
    	
5430   Legacy Drive, Suite 150
    
	
 
    	
Plano,   Texas 75024
    

 

15

 

	
 
    	
Attention:   Erik Pahl
    
	
 
    	
Fax:   469-241-2158
    
	
 
    	
Email:   erik.pahl@lifecare-hospitals.com
    
	
 
    	
 
    
	
 
    	
with   a copy to:
    
	
 
    	
 
    
	
 
    	
Jackson   Walker L.L.P.
    
	
 
    	
901   Main Street, Suite 6000
    
	
 
    	
Dallas,   Texas 75202
    
	
 
    	
Attention:   Bryan C. Birkeland
    
	
 
    	
Fax:   214-661-6604
    
	
 
    	
Email:   bbirkeland@jw.com
    
	
 
    	
 
    
	
 
    	
If   intended for Buyer:
    
	
 
    	
 
    
	
 
    	
Physicians   Realty L.P.
    
	
 
    	
735   North Water Street, Suite 1000
    
	
 
    	
Milwaukee,   WI 53202
    
	
 
    	
Attention:   John W. Sweet, Chief Investment Officer
    
	
 
    	
Fax:   414-978-6550
    
	
 
    	
Email:   jws@docreit.com
    
	
 
    	
 
    
	
 
    	
with   a copy to:
    
	
 
    	
 
    
	
 
    	
Davis &   Kuelthau, s.c.
    
	
 
    	
111   East Kilbourn Avenue, Suite 1400
    
	
 
    	
Milwaukee,   Wisconsin 53202
    
	
 
    	
Attention:   Bradley D. Page, Esq.
    
	
 
    	
Fax:   (414) 278-3624
    
	
 
    	
Email:   bpage@dkattorneys.com
    

 

All such notices, requests and other communications shall be deemed to have been sufficiently given for all purposes hereof only upon receipt by the party to whom such notice is sent. Notices by the parties may be given on their behalf by their respective attorneys.

 

16.                               Intentionally Omitted.

 

17.                               Further Assurances.  After Closing, at Buyer’s sole cost and expense, Seller shall execute, acknowledge and deliver, for no further consideration, all assignments, transfers, deeds and other documents as Buyer may reasonably request to vest in Buyer and perfect Buyer’s right, title and interest in and to the Property.

 

18.                               Like Kind Exchanges.  Buyer or Seller may elect to exchange the Property for other real estate of a like kind in accordance with Section 1031 of the Internal Revenue Code of 1986 as amended (the “Code”).  To the extent possible, the provisions of this Section shall be

 

16

 

interpreted consistently with this intent.  To exercise any rights under this Section, the party electing to exchange the Property shall provide the other with a written statement stating its intent to enter into an exchange at least five days prior to Closing.  Either party’s election to exchange, rather than sell or buy, the Property for other real estate of a like kind shall be at no cost or liability to the other.

 

19.                               Miscellaneous.

 

(a)                         All of the representations and warranties contained in this Agreement, all covenants, agreements and indemnities made herein, and all obligations to be performed under the provisions of this Agreement shall survive Closing for a period of twelve (12) months.

 

(b)                         This Agreement shall be void and of no force or effect if not executed by Seller and delivered to Buyer or Buyer’s attorney within seven (7) business days after execution by Buyer and delivery to Seller.

 

(c)                          The “captions” or “headings” in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof.

 

(d)                         Buyer shall have the right to assign this Agreement, and upon notice from Buyer, Seller agrees to convey the Property directly to Buyer’s assignee provided that Buyer and/or assignee have fulfilled Buyer’s obligations under this Agreement and Buyer shall be responsible for any realty transfer tax occasioned thereby.  Seller shall not assign this Agreement without the prior written consent of Buyer.  Any assignment of this Agreement by Seller without Buyer’s prior written consent shall be null and void, and of no force or effect.

 

(e)                          This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

 

(f)                           This Agreement, including the exhibits attached hereto, contains the entire agreement as to the Property between Seller and Buyer; and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise, of any kind whatsoever concerning this sale and purchase.  This Agreement shall not be altered, amended, changed or modified except in writing executed by the parties hereto.

 

(g)                          Except as may be required by the laws of the state in which the Real Property is located, this Agreement shall be construed in accordance with the internal laws of the State of Wisconsin, without giving effect to its conflicts of laws provisions.

 

(h)                         All parties to this Agreement having participated fully and equally in the negotiation and preparation hereof, this Agreement shall not be more strictly construed, or any ambiguities within this Agreement resolved, against either party hereto.  It is the intent of Buyer and Seller that this Agreement be binding on both parties and not illusory. Thus, wherever this

 

17

 

Agreement grants Buyer or Seller discretion, which might otherwise make this Agreement illusory, the party exercising its discretion must act reasonably according to commercial standards.

 

(i)                             Subject to the Permitted Exceptions, Seller shall deliver occupancy of the Property to Buyer at Closing.

 

(j)                            Time is of the essence of this Agreement and Buyer and Seller hereby agree that the times provided for in this Agreement are reasonable times for each party to complete its respective obligations.

 

(k)                         This Agreement may be executed or amended in counterparts, all of which taken together shall constitute one and the same instrument.  Electronically transmitted signatures shall be considered originals.

 

(l)                             If any of the terms or conditions contained herein shall be declared to be invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions and conditions of this Agreement, or the application of such to persons or circumstances other than those to which it is declared invalid or unenforceable, shall not be affected thereby and shall remain in full force and effect and shall be valid and enforceable to the full extent permitted by law.

 

(m)                     After the Closing, at the request of Buyer and at Buyer’s expense, Seller shall make available to Buyer the historical financial information in Seller’s possession regarding the operation of the Property to the extent required by Buyer in order to prepare stand-alone audited financial statements for such operations in accordance with generally accepted accounting principles, as of the end of fiscal year 2012, and any required subsequent date or period, and to cooperate (at Buyer’s expense) with Buyer and any auditor engaged by Buyer for such purpose.

 

20.                               Disclosure.  Buyer may make public disclosure with respect to this transaction prior to or after Closing for any reason without Seller’s consent.  Prior to Closing, Seller shall not make public disclosure with respect to this transaction (without restriction upon Seller following Closing) except:

 

(a)                         as may be required by law, including without limitation disclosure required under securities laws, or by the Securities and Exchange Commission, or by the rules of any stock exchange; and

 

(b)                         to such title insurance companies, lenders, attorneys, accountants, partners, directors, officers, employees and representatives of any party or of such party’s advisors who need to know such information for the purpose of evaluating and consummating the transaction, including the financing of the transaction.

 

21.                               SEWAGE FACILITY. The Pennsylvania Sewage Facilities Act of January 24,

 

18

 

1966, No. 537 P.L. 1535, 35 P.S. § 750.1 et seq., as amended, requires that there be a statement regarding the availability of a community sewage system. The Real Property is serviced by a community sewage system.

 

22.                               COAL NOTICE.  THIS AGREEMENT MAY NOT SELL, CONVEY, TRANSFER, INCLUDE OR INSURE THE TITLE TO THE COAL AND RIGHT OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO HEREIN, AND THE OWNER OR OWNERS OF SUCH COAL MAY HAVE THE COMPLETE LEGAL RIGHT TO REMOVE ALL OF SUCH COAL AND IN THAT CONNECTION, DAMAGE MAY RESULT TO THE SURFACE OF THE PROPERTY AND ANY HOUSE, BUILDING OR OTHER STRUCTURE ON OR IN SUCH PROPERTY.  THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR MODIFY ANY LEGAL RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED, EXCEPTED OR RESERVED BY THIS INSTRUMENT.  (This notice is set forth in the manner provided in Section 1 of the Act of July 17, 1957, P.L. 984, as amended, and is not intended as notice of unrecorded instruments, if any.)

 

(Signatures contained on following pages.)

 

19

 

IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Agreement to be duly executed, under seal.

 

	
SELLER:
    	
 
    	
BUYER:
    
	
 
    	
 
    	
 
    
	
NEW   LIFECARE HOSPITALS OF PITTSBURGH, LLC
    	
 
    	
DOC-LIFECARE FT. WORTH LTACH, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Physicians   Realty L.P., Its Manager
    
	
By:
    	
/s/ Phillip B. Douglas
    	
3/28/14
    	
 
    	
 
    
	
 
    	
Date
    	
 
    	
By:
    	
Physicians Realty Trust, Its General Partner
    
	
Name:
    	
Phillip B. Douglas
    	
 
    	
 
    
	
 
    	
(Print)
    	
 
    	
By:
    	
/s/ John T. Thomas
    	
3/28/14
    
	
Title:
    	
Chief Executive Officer
    	
 
    	
 
    	
Date
    
	
 
    	
(Print)
    	
 
    	
Name:
    	
John T. Thomas
    
	
 
    	
 
    	
 
    	
(Print)
    
	
NEW   LIFECARE HOSPITALS OF NORTH TEXAS, LLC
    	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    	
 
    	
(Print)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Phillip B. Douglas
    	
3/28/14
    	
 
    	
DOC-LIFECARE PITTSBURGH   LTACH, LLC
    
	
 
    	
Date
    	
 
    	
 
    
	
Name:
    	
Phillip B. Douglas
    	
 
    	
By:
    	
Physicians Realty L.P., Its Manager
    
	
 
    	
(Print)
    	
 
    	
 
    	
 
    
	
Title:
    	
Chief Executive Officer
    	
 
    	
By:
    	
Physicians Realty Trust, Its General Partner
    
	
 
    	
(Print)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ John T. Thomas
    	
3/28/14
    
	
 
    	
 
    	
 
    	
 
    	
Date
    
	
 
    	
 
    	
 
    	
Name:
    	
John T. Thomas
    
	
 
    	
 
    	
 
    	
 
    	
(Print)
    
	
 
    	
 
    	
 
    	
Title:
    	
President and Chief Executive Officer
    
	
 
    	
 
    	
 
    	
 
    	
(Print)
    
									

 

20Exhibit 10.1

 

15901 OLDEN STREET, SYLMAR AND 11171 CHERRY AVENUE, FONTANA PROPERTIES LEASE

 

This Lease (“Lease”) is made and effective, June 1, 2014, by and between Ronald N. Tutor, (“Lessor”) and Tutor Perini Corporation (“Lessee”), (collectively the “Parties,” or individually a “Party”).

 

Lessor is the owner of land and improvements commonly known and numbered as Assessor’s parcel number 2604-002-019, located at 15901 Olden Street, Sylmar California 91342 (“Property A”), and Assessor’s parcel number 0236-191-25-0-000, located at 11171 Cherry Avenue, Fontana, California 92337 (“Property B”), (collectively the “Premises”).

 

Lessor is currently leasing the Premises to Lessee under a lease dated June 10, 1987 as last amended August 1, 2008 (“Prior Lease”).

 

Lessor desires to terminate the Prior Lease and lease the Premises to Lessee, and Lessee desires to terminate the Prior Lease and lease the Premises from the Lessor for the term. At the rental and upon the covenants, conditions and provisions herein set forth.

 

THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, it is agreed:

 

1.              Prior Lease. The Prior Lease is hereby terminated effective May 31, 2014.

 

2.              Term. Term. The term of this Lease shall commence on June 1, 2014 and end on July 31, 2026, unless sooner terminated pursuant to any provision hereof.

 

3.              Rent. Lessee shall pay to Lessor the monthly lease rate of One Hundred Thousand Three Hundred Ninety-One Dollars ($100,391) for Property A and Forty-Three Thousand Twenty-Five Dollars ($43,025) for Property B for the period June 1, 2014 through May 31, 2015 and shall increase annually thereafter at the rate of the greater of 3% or the Consumer Price Index (“CPI”) for the Los Angeles metropolitan area. Each installment payment shall be due in advance on the first day of each calendar month during the lease term to Lessor at 15901 Olden Street, Sylmar, California 91342 or at such other place designated by written notice from Lessor to Lessee. Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment.

 

4.              Security Deposit. Lessor acknowledges deposit by Lessee of $96,250 as security for Lessee’s faithful performance of Lessee’s obligations hereunder. If Lessee fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this lease, Lessor may use, apply or retain all or any portion or said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Lessor may become obligated by reason of Lessee’s default, or to compensate Lessor for any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies all or any portion of said deposit, Lessee shall within ten (10) days after written demand therefor deposit cash with Lessor in an amount sufficient to restore said deposit to the full amount herein above stated and Lessee’s failure to do so shall be a material breach or this Lease. If the monthly rent shall, from time to time, increase during the term or this Lease, Lessee shall thereupon deposit with Lessor additional security deposit so that the amount of security deposit held by Lessor shall at all times bear the same proportion to current rent as the original security deposit bears to the original monthly rent set forth in paragraph 4 hereof. Lessor shall not be required to keep said deposit separate from its general accounts. If Lessee performs all of Lessee’s obligations hereunder, said deposit, or so much thereof as has not theretofore been applied by Lessor, shall be returned, without payment of interest or other increment for its use, to Lessee (or, at Lessor’s option, to the last assignee, if any, or Lessee’s interest hereunder) at the expiration of the term hereof, and after Lessee has vacated the Premises. No trust relationship is created herein between Lessor and Lessee with respect to said Security Deposit.

 

 

5.              Use. The Premises shall be used and occupied only for offices and equipment storage or any other use which is reasonably comparable and for no other purpose.

 

6.              Compliance with Law.

 

(a)                                 Lessor warrants to Lessee that the Premises, in its state existing on the date that the lease term commences, but without regard to the use for which Lessee will use the Premises, does not violate any covenants or restrictions of record, or any applicable building code, regulation or ordinance in effect on such Lease term commencement date. In the event it is determined that this warranty has been violated, then it shall be the obligation of the Lessor after written notice from Lessee, to promptly, at Lessor’s sole cost and expense, rectify any such violation. In the event Lessee does not give to Lessor written notice or the violation of this warranty within six months from the date that the Lease term commences, the correction of same shall be the obligation of the Lessee at Lessee’s sole cost. The warranty contained in this paragraph 6(a) shall be of no force or effect if prior to the date of this Lease, Lessee was the owner or occupant of the Premises, and, in such event, Lessee shall correct any such violation at Lessee’s sole cost.

 

(b)                                 Except as provided in paragraph (a), Lessee shall, at Lessee’s expense, comply promptly with all applicable statues, ordinances, rules regulations, orders, covenants and restrictions of record, and requirements in effect during the term or any part of the term hereof, regulating the use by Lessee of the Premises. Lessee shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one tenant in the building containing the Premises, shall tend to disturb such other tenants.

 

7.              Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations.

 

(a)                                 Lessee’s Obligations. Lessee shall keep in good order, condition and repair the Premises and every part thereof, structural and nonstructural, (whether or not such portion of the Premises requiring repair, or the means of repairing the same are reasonable readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises) including, without limiting the generality of the foregoing, all plumbing, heating, air conditioning, (Lessee shall procure and maintain, at Lessee’s expense, an air conditioning system maintenance contract) ventilating, electrical, lighting facilities and equipment within the Premises, fixtures, walls (interior and exterior), foundations, ceilings, roofs (interior and exterior), floors, windows, doors, plate glass and skylights located within the Premises, and all landscaping, driveways, parking lots, fences and signs located on the Premises and sidewalks and parkways adjacent to the Premises.

 

 

(b)                                 Surrender. On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the Premises to Lessor in the same condition as when received, ordinary wear and tear excepted, clean and free of debris. Lessee shall repair any damage to the Premises occasioned by the installation or removal of Lessee’s fixtures, furnishings and equipment. Notwithstanding anything to the contrary otherwise stated in this Lease, Lessee shall leave the air-lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing on the premises in good operating condition.

 

(c)                                  Lessor’s Rights. If Lessee fails to perform Lessee’s obligations under this paragraph 7, or under any other paragraph of this Lease, Lessor may at its option (but shall not be required to) enter upon the Premises after ten (10) days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee’s behalf and put the same in good order, condition and repair, and the cost thereof together with interest thereon at the maximum rate then allowable by law shall become due and payable as additional rental to Lessor together with Lessee’s next rental installment.

 

(d)                                 Lessor’s Obligations. Except for the obligations of Lessor under paragraph 6(b) and 6(c) (relating to Lessor’s warranty), paragraph 9 (relating to destruction of the Premises) and under paragraph 14 (relating to condemnation of the Premises), it is intended by the parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises nor the building located thereon nor the equipment therein, whether structural or non-structural, all of which obligations are intended to be that of the Lessee under paragraph 9(a) hereof. Lessee expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Lessee the right to make repairs at Lessor’s expense or to terminate this Lease because of Lessor’s failure to keep the premises in good order, condition and repair.

 

(e)                                  Alterations and Additions.

 

(i)             Lessee shall not, without Lessor’s prior written consent make any alterations, improvements, additions, or Utility Installations in, on or about the Premises, except for nonstructural alterations not exceeding $100,000 in cumulative costs during the term of this Lease. In any event, whether or not in excess of $100,000 in cumulative cost, Lessee shall make no change or alteration to the exterior of the Premises or to the exterior of the building(s) on the Premises without Lessor’s prior written consent, which shall not be unreasonably withheld. As used in this paragraph 7(e)(i) the term “Utility Installation” shall mean carpeting, window coverings, air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing, and fencing. Lessor may require that Lessee remove any or all of said alterations, improvements, additions or Utility Installations at the expiration of the term, and restore the Premises to their prior condition. Lessor may require Lessee to provide Lessor, at Lessee’s sole cost and expense, a lien and completion bond in an amount equal to one and one-half times the estimated cost of such improvements, to insure Lessor against any liability for mechanic’s and materialmen’s liens and to insure completion of the work. Should Lessee make any alterations, improvements, additions, or Utility Installations without the prior approval of Lessor, Lessor may require that the Lessee remove any or all of the same.

 

 

(ii)          Any alterations, improvements, additions or Utility Installations in, or about the Premises that Lessee shall desire to make and which requires the consent of the Lessor shall be presented to Lessor in written form, with proposed detailed plans. If Lessor shall give its consent, the consent shall be deemed conditioned upon Lessee acquiring a permit to do so from appropriate governmental agencies, the furnishing of a copy thereof to Lessor prior to the commencement of the work and the compliance by Lessee of all conditions of said permit in a prompt and expeditious manner.

 

(iii)       Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use in the Premises, which claims are or may be secured by any mechanics’ or materialmen’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of any work in the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend itself and Lessor against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises, upon the condition that if Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to such contested lien claim or demand indemnifying Lessor against liability for the same and holding the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor’s attorney’s fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.

 

(iv)      Unless Lessor requires their removal, as set forth in paragraph 7(e), all alterations, improvements, additions and Utility Installations (whether or not such Utility Installations constitutes trade fixtures of Lessee), which may be made on the Premises, shall become the property of Lessor and remain upon and be surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this paragraph 7(e)(i), Lessee’s machinery and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Lessee and may be removed by Lessee subject to the provisions of paragraph 7.2.

 

8.              Insurance Indemnity.

 

(a)                                 Insuring Party. As used in this paragraph 8, the term “Insuring party” shall mean the party who has the obligation to obtain the Property Insurance required hereunder. The insuring party shall be designated in paragraph 46 hereof.

 

(b)                                 Liability Insurance. Lessee shall, at Lessee’s expense obtain and keep in force during the term of this Lease a policy of Combined Single Limit, Bodily Injury and Property Damage insurance insuring Lessor and Lessee against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be combined single limit policy in an amount not less than $10,000,000 per occurrence. The policy shall insure performance by Lessee of the indemnity provisions of this paragraph 8. The limits of said insurance shall not, however, limit the liability of Lessee hereunder.

 

 

(c)                                  Property Insurance.

 

(i)             The insuring party shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, as the same may exist from time to time, which replacement value is now $15,000,000, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood, and special extended perils (“all risk” as such term is used in the insurance industry). Said insurance shall provide for payment of loss thereunder to Lessor or to the holders of mortgages or deeds of trust on the Premises. The insuring party shall, in addition, obtain and keep in force during the term of this Lease a policy of rental value insurance covering a period of one year, with loss payable to Lessor, which insurance shall also cover all real estate taxes and insurance costs for said period. A stipulated value or agreed amount endorsement deleting the coinsurance provision of the policy shall be procured with said insurance as well as an automatic increase in insurance endorsement causing the increase in annual property insurance coverage by 2% per quarter. If the insuring party shall fail to procure and maintain said insurance the other party may, but shall not be required to, procure and maintain the same, but at the expense of Lessee. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $10,000 per occurrence, and Lessee shall be liable for such deductible amount.

 

(ii)          If the Premises are part of a larger building, or if the Premises are part of a group of buildings owned by Lessor which are adjacent to the Premises, then Lessee shall pay for any increase in the property insurance of such other building or buildings if said increase is cause by Lessee’s acts, omissions, use or occupancy of the Premises.

 

(iii)       If the Lessor is the insuring party the Lessor will not insure Lessee’s fixtures, equipment or tenant improvements unless the tenant improvements have become a part of the Premises under paragraph 7, hereof. But if Lessee is the insuring party the Lessee shall insure its fixtures, equipment and tenant improvements.

 

(d)                                 Insurance Policies. Insurance required hereunder shall be in companies duly licensed to transact business in the state where the Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at least B plus, or such other rating as may be required by a lender having a lien on the Premises, as set forth in the most current issue of “Best’s Insurance Guide”. The insuring party shall deliver to the other party copies of policies or such insurance or certificates evidencing the existence and amounts of such insurance with loss payable clauses as required by this paragraph 8. No such policy shall be cancellable or subject to reduction of coverage or other modification except after thirty (30) days’ prior written notice to Lessor. If Lessee is the insuring party Lessee shall, at least thirty (30) days prior to the expiration of such

 

 

policies, furnish Lessor with renewals or “binders” thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee upon demand. Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in paragraph 8(c). If Lessee does or permits to be done anything which shall increase the cost of the insurance policies referred to in paragraph 8(c), then Lessee shall forthwith upon Lessor’s demand reimburse Lessor for any additional premiums attributable to any act or omission or operation of Lessee causing such increase in the cost of the insurance. If Lessor is the insuring party, and if the insurance policies maintained hereunder cover other improvements in addition the Premises, Lessor shall deliver to Lessee a written statement setting forth the amount of any such insurance cost increase and showing in reasonable detail the manner in which it has been computed.

 

(e)                                  Waiver of Subrogation. Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recovery against other for loss or damage arising out of or incident to the perils insured against under paragraph 8(c), which perils occur in, on or about the Premises, whether due to negligence of Lessor Lessee or their agents, employees, contractors and/or invitees. Lessee and Lessor shall, upon obtaining the policies of insurance required hereunder, give notice to the insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease.

 

(f)                                   Indemnity. Lessee shall indemnify and hold harmless Lessor from and against any and all claims arising from Lessee’s use of the Premises, or from the conduct of Lessee’ business or from any activity, work or things done, permitted or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless Lessor from and against any and all claims arising from any breach or default in the performance of any obligation on Lessee’s part to be performed under the terms of this Lease, or arising from any negligence of the Lessee, or any of Lessee’s agents, contractors, or employees, and from and against all costs, attorney’s fees, expenses and liabilities incurred in the defense of such claim or any action or proceeding brought thereon; and in any case any action or proceeding be brought against Lessor by reason of any such claim. Lessee upon notice from Lessor shall defend the same at Lessee’s expense by counsel satisfactory to Lessor. Lessee, as a material party of the consideration to Lessor, hereby assumes all risk of damage to property or injury to persons, in, upon or about the Premises arising from any cause and Lessee hereby waives all claims in respect thereof against Lessor.

 

(g)                                  Exemption of Lessor from Liability. Lessee hereby agrees that Lessor shall not be liable for injury to Lessee’s business or any loss of income therefrom or for damage to the goods, wares, merchandise or other property of Lessee, Lessee’s employees, invitees, customers, or any other person in or about the Premises, nor shall Lessor be liable for injury to the person of Lessee, Lessee’s employees, agents, or contractors whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other sources or places and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessibility and Lessor shall not be liable for any damages arising from any act or neglect of any other tenant, if any, of the building in which the Premises are located.

 

 

9.                                     Damage or Destruction.

 

(a)                                 Definitions.

 

(i)            “Premises Partial Damage” shall herein mean damage or destruction the Premises to the extent that the cost of repair is less than 50% of the then replacement cost of the Premises. “Premises Building Partial Damage” shall herein mean damage or destruction the building of which the Premises are a part to the extent that the cost of repair is less than 50% of the then replacement cost of such building as a whole.

 

(ii)         “Premises Total Destruction” shall herein mean damage or destruction to the Premises to the extent that the cost of repair is 50% or more of the then replacement cost of the Premises. “Premises Building Total Destruction” shall herein mean damage or destruction to the building of which the Premises are a part to the extent that the cost of repair is 50% or more of the then replacement cost of such building as a whole.

 

(iii)      “Insured Loss” shall herein mean damage or destruction which was caused by an event required to be covered by the insurance described in paragraph 8.

 

(b)                                 Partial Damage — Insured Loss. Subject to the provisions of paragraphs 9(d), 9(e) and 9(f), if at any time during the term of this Lease there is damage which is an Insured Loss and which falls into the classification of Premises Partial Damage or Premises Building Partial Damage, then Lessor shall, at Lessor’s expense, repair such damage, but not Lessee’s fixtures, equipment or tenant improvements unless the same have become a part of the Premises pursuant to paragraph 7(e) thereof as soon as reasonable possible and this Lease shall continue in full force and effect. Notwithstanding the above, if the Lessee is the insuring party, and if the insurance proceeds received by Lessor are not sufficient to effect such repair, Lessor shall give notice to Lessee of the amount required in addition to the insurance proceeds to effect such repair. Lessee shall contribute the required amount to Lessor within ten days after Lessee has received notice from Lessor of the shortage in the insurance. When Lessee shall contribute such amount to Lessor, Lessor shall make such repairs as soon as reasonably possible and this Lease shall continue in full force and effect. Lessee shall in no event have any right to reimbursement for any such amounts so contributed.

 

(c)                                  Partial Damage — Uninsured Loss. Subject to the provisions of paragraphs 9(d), 9(e) and 9(f), if at any time during the term of this Lease there is damage which is not an insured Loss and which falls within the classification of Premises Partial Damage or Premises Building Partial Damage, unless caused by negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may at Lessor’s option either (i) repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30 days after the date of the occurrence of such damage of Lessor’s intention to cancel and terminate this Lease, as of the date of the occurrence of such damage. In the event Lessor elects to give such notice of Lessor’s intention to cancel and terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee’s intention to repair such damage at Lessee’s expense, without reimbursement from Lessor, in which event this Lease shall continue in full force and effect, and Lessee shall proceed to make such repairs as soon as reasonably possible. If Lessee does not give such notice within such 10-day period this Lease shall be cancelled and terminated as of the date of the occurrence of such damage.

 

 

(d)                                 Total Destruction. If at any time during the term of this Lease there is damage, whether or not an Insured Loss, (including destruction require by an authorized public authority), which falls in to the classification of Premises Total Destruction of Premises Building Total Destruction, this Lease shall automatically terminate as of the date of such total destruction.

 

(e)                                  Damage near end of Term.

 

(i)            If at any time during the last six months of the term of this Lease there is damage, whether or not an Insured Loss, which falls within the classification of Premises Partial Damage, Lessor may at Lessor’s option cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Lessee of Lessor’s election to do so within 30 days after the date of occurrence of such damage.

 

(ii)         Notwithstanding paragraph 9(e)(i), in the event that Lessee has an option to extend or renew this Lease, and the time within which said option may be exercised has not yet expired, Lessee shall exercise such option, if it is to be exercised at all, not later than 20 days after the occurrence of an Insured Loss falling within the classification of Premises Partial Damage during the last six months of the term of this Lease. If Lessee duly exercises such option during said 20 day period, Lessor shall, at Lessor’s expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option during said 20 day period, then Lessor may at Lessor’s option terminate and cancel this Lease as of the expiration of said 20 day period by giving written notice to Lessee of Lessor’s election to do so within 10 days after the expiration of said 20 day period, notwithstanding any term or provision in the grant of option to the contrary.

 

(f)                                   Abatement of Rent; Lessee’s remedies.

 

(i)            In the event of damage described in paragraphs 9(b) or 9(c), and Lessor or Lessee repairs or restores the Premises pursuant to the provisions of this paragraph 7, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired. Except for abatement of rent, if any, Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair or restoration.

 

(ii)         If Lessor shall be obligated to repair or restore the Premises under the provisions of this paragraph 9 and shall not commence such repair or restoration within 90 days after such obligations shall occur, Lessee may at Lessee’s option cancel and terminate this Lease by giving Lessor written notice of Lessee’s election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice.

 

 

(g)                                  Termination — Advance Payments. Upon termination of this Lease pursuant to this paragraph 9, an equitable adjustment shall be made concerning advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s security deposit as has not theretofore been applied by Lessor.

 

(h)                                 Waiver. Lessor and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.

 

10.       Real Property Taxes.

 

(a)                                 Payment of Taxes. Lessee shall pay the real property tax, as defined in paragraph 10(b), applicable to the Premises during the term of this Lease. All such payments shall be made at least ten (10) days prior to the delinquency date of such payment. Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes have been paid. If any such taxes paid by Lessee shall cover any period of time prior to or after the expiration of the term hereof, Lessee’s share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to pay any such taxes, Lessor shall have the right to pay the same, in which case Lessee shall repay such amount to Lessor with Lessee’s next rent installment together with interest at the maximum rate then allowable by law.

 

(b)                                 Definition of “Real Property Tax”.  As used herein, the term “real property tax” shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax, (other than inheritance, personal income or estate taxes) imposed on the Premises by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school , agricultural, sanitary, fire, street, drainage or  other improvement district thereof, as against any legal or equitable interest of Lessor in the Premises or in the real property of which the Premises are a part, as against Lessor’s right to rent or other income therefrom, and as against Lessor’s business of leasing the Premises.  The term “real property tax” shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy assessment or charge hereinabove included within the definition of “real property tax,” or (ii) the nature of which was hereinbefore included within the definitions of “real property tax,” or (iii) which is imposed for a service or right not charged prior to June 1, 1978, or, if previously charged, has been increased since June 1, 1978, or (iv) which is imposed as a result of a transfer, either partial or total, of Lessor’s interest in the Premises or which is added to a tax or charge hereinbefore included within the definitions of real property tax by reason of such transfer, or (v) which is imposed by reason of this transaction, any modifications or changes hereto, or any transfer hereof.

 

(c)                                  Joint Assessment. If the premises are not separately assessed, Lessee’s liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such other information as may be reasonable available. Lessor’s reasonable determination thereof, in good faith, shall be conclusive.

 

 

(d)                                 Personal Property Taxes.

 

(i)            Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor.

 

(ii)         If any of Lessee’s said personal properties shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s property.

 

11.       Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of all charges jointly metered with other premises.

 

12.       Assignment and Subletting.

 

(a)                                 Lessor’s Consent Required. Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee’s interest in the Lease or in the Premises, without Lessor’s prior written consent, which Lessor shall not unreasonably withhold. Lessor shall respond to Lessee’s request for consent hereunder in a timely manner and any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a breach of this Lease.

 

(b)                                 Lessee Affiliate. Notwithstanding the provisions of paragraph 12(c) hereof, Lessee may assign or sublet the Premises, or any portion thereof, without Lessor’s consent, to any corporation which controls, is controlled by or is under common control with Lessee, or to any corporation resulting from the merger or consolidation with Lessee, or to any person or entity which acquires all the assets of Lessee as a going concern of the business that is being conducted on the Premises, provided that said assignee assumes, in full, the obligations of Lessee under this Lease. Any such assignment shall not, in any way, affect or limit the liability of Lessee under the terms of this Lease even if after such assignment or subletting the terms of this Lease are materially changed or altered without the consent of Lessee, the consent of whom shall not be necessary.

 

(c)                                  No Release of Lessee. Regardless of Lessor’s consent, no subletting or assignment shall release Lessee of Lessee’s obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of rent by Lessor from any other person shall not be deemed to be a waiver by Lessor of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any assignee of Lessee or any successor of Lessee, in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of

 

 

exhausting remedies against said assignee. Lessor may consent to subsequent assignments or subletting of this Lease or amendments or modifications to this Lease with assignees of Lessee, without notifying Lessee, or any predecessor of Lessee, and without obtaining Lessee’s consent thereto and such action shall not relieve Lessee of liability under this Lease.

 

(d)                                 Attorney’s Fees. In the event Lessee shall assign or sublet the Premises or request the consent of Lessor to any assignment or subletting or if Lessee shall request the consent of Lessor for any act Lessee proposes to do then Lessee shall pay Lessor’s reasonable attorney’s fees incurred in connection therewith, such attorney’s fees not to exceed $350.00 for each such request.

 

13.       Defaults; Remedies.

 

(a)                                 Defaults. The occurrence of any of or more of the following events shall constitute a material default and breach of this Lease by Lessee:

 

(i)                                     The vacating or abandonment of the Premises by Lessee.

 

(ii)                                  The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of three days after written notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also constitute the notice required by the subparagraph.

 

(iii)                               The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee, other than described in paragraph (ii) above, where such failure shall continue for a period of 30 days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said 30-day period and thereafter diligently prosecutes such cure to completion.

 

(iv)                              (1) The making by Lessee of any general arrangement or assignment for the benefit of creditors; (2) Lessee becomes a “debtor” as defined in 11 U.S.C. SS101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (3) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within 30 days; or (4) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 30 days. Provided, however, in the event that any provision of this paragraph 13(d)(iv) is contrary to any applicable law, such provision shall be of no force or effect.

 

(v)                                 The discovery by Lessor that any financial statement given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in interest of Lessee or any guarantor of Lessee’s obligation hereunder, and any of them, was materially false.

 

(b)                                 Remedies. In the event of any such material default or breach by Lessee, Lessor may at any time thereafter, with or without notice or demand and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such default or breach:

 

 

(i)            Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitles to recover from Lessee all damages incurred by Lessor by reason of Lessee’s default including, but not limited to, the cost of recovering possession of the Premises; expenses of re-letting, including necessary renovation and alteration of the Premises, reasonable attorney’s fees, and any real estate commission actually paid; the worth at the time exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided; that portion of the leasing commission paid by Lessor pursuant to paragraph 15 applicable to the unexpired term of this Lease.

 

(ii)         Maintain Lessee’s right to possession in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event Lessor shall be entitled to enforce all of Lessor’s rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder.

 

(iii)      Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. Unpaid installments of rent and other unpaid monetary obligations of Lessee under the terms of this Lease shall bear interest from the date due at the maximum rate then allowable by law.

 

(c)                                  Default by Lessor. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Lessee in writing, specifying wherein Lessor has failed to perform such obligation; provided, however, that if the nature of Lessor’s obligation is such that more than thirty (30) days are required for performance then Lessor shall not be in default if Lessor commences performance within such 30-day period and thereafter diligently prosecutes the same to completion.

 

(d)                                 Late Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Lessor by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Lessee shall not be received by Lessor or Lessor’s designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to 6% of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, or three (3) consecutive installments of rent, then rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding paragraph 3 or any other provision of this Lease to the contrary.

 

 

(e)                                  Impounds. In the event that a late charge is payable hereunder, whether or not collected, for three (3) installments of rent or any other monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to Lessor, if Lessor shall so request. In addition to any other payments required under this Lease, a monthly advance installment, payable at the same time as the monthly rent, as estimated by Lessor, for real property tax and insurance expenses on the Premises which are payable by Lessee under the terms of this Lease. Such fund shall be established to insure payment when due, before delinquency, of any or all such real property taxes and insurance premiums. If the amounts paid to Lessor by Lessee under the provisions of this paragraph are insufficient to discharge the obligations of Lessee to pay such real property taxes and insurance premiums as the same become due, Lessee shall pay to Lessor, upon Lessor’s demand, such additional sums necessary to pay such obligations. All moneys paid to Lessor under this paragraph may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a default in the obligations of Lessee to perform under this Lease, then any balance remaining from funds paid to Lessor under the provisions of this paragraph may, at the option of Lessor, be applied to the payment of any monetary default of Lessee in lieu of being applied to the payment of real property tax and insurance premiums.

 

14.       Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called “condemnation”), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of the building on the Premises, or more than 25% of the land area of the Premises which is not occupied by any building, is taken by condemnation, Lessee may, at Lessee’s option, to be exercised in writing only within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent shall be reduced in the proportion that the floor area of the building taken bears to the total floor area of the building situated on the Premises. No reduction of rent shall occur if the only area taken is that which does not have a building located thereon. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such and shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any award for loss of or damage to Lessee’s trade fixtures and removable personal property. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of severance damages received by Lessor in connection with such condemnation, repair any damage to the Premises cause by such condemnation except to the extent that Lessee has been reimbursed therefor by the condemning authority, Lessee shall pay any amount in excess of such severance damages required to complete such repair.

 

 

15.       Broker’s Fee. Tenant represents that Tenant was not shown the Premises by any real estate broker or agent and that Tenant has not otherwise engaged in any activity which could form the basis for a claim for real estate commission, brokerage fee, finder’s fee or other similar charge, in collection with this lease.

 

16.       Estoppel Certificate.

 

(a)                                 Lessee shall at any time upon not less than ten (10) day’s prior written notice from Lessor execute, acknowledge and deliver to Lessor a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the rent and other charges are paid in advance, if any, and ii) acknowledging that there are not, to Lessee’s knowledge, any uncured defaults on the part of Lessor hereunder, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises.

 

(b)                                 At Lessor’s option Lessee’s failure to deliver such statement within such time shall be a material breach of this Lease or shall be conclusive upon Lessee (i) that this Lease is in full force and effect, without modification except as may be represent by Lessor, (ii) that there are no uncured defaults in Lessor’s performance, and (iii) that not more than one month’s rent has been paid in advance or such failure may be considered by Lessor as a default by Lessee under this Lease.

 

(c)                                  If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser designated by Lessor such financial statements of Lessee as may be reasonably required by such lender or purchaser. Such statements shall include the past three years’ financial statements of Lessee. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

 

17.       Lessor’s Liability. The term “Lessor” as used herein shall mean only the owner or owners at the time in question of the fee title or a lessee’s Interest in a ground lease of the Premises, and except as expressly provided in paragraph 15, in the event of any transfer of such title or Interest, lessor herein named (and In case of any subsequent transfers then the granter) shall be relieved from and after the date of such transfer of all liability as respects Lessor’s obligations thereafter to be performed, provided that any funds in the hands of Lessor or the then grantor at the lime of such transfer, in which Lessee has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Lessor shall, subject as aforesaid, be binding on Lessor’s successors and assigns, only during their respective periods of ownership.

 

18.       Severability. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

 

19.       Interest on Past-due Obligations. Except as expressly herein provided, any amount due to Lessor not paid when due shall bear interest at the maximum rate then allowable by law from the date due. Payment of such interest shall not excuse or cure any default by Lessee under this Lease, provided, however, that interest shall not be payable on late charges incurred by Lessee nor on any amounts upon which late charges are paid by Lessee.

 

 

20.       Time of Essence. Time is of the essence.

 

21.       Additional Rent. Any monetary obligations of Lessee to Lessor under the terms of this Lease shall be deemed to be rent.

 

22.       Incorporation of Prior Agreements; Amendments. This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Lessee hereby acknowledges that the Lessor or any employees or agents of Lessor has made no oral or written warranties or representations to Lessee relative to the condition or use by Lessee or said Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety Health Act, the legal use and adaptability of the Premises and the compliance hereof with all applicable laws and regulations in effect during the term of this Lease except as otherwise specifically stated in this Lease.

 

23.       Notices. Any notice required or permitted to be given hereunder shall be in writing and may be given or personal delivery or by certified mail, and if given personally or by mall, shall be deemed sufficiently given if addressed to Lessee or to Lessor at the address noted below the signature of the respective parties, as the case may be. Either party may by notice to the other specify a different address for notice purposes except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for notice purposes. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by notice to Lessee.

 

24.       Waivers. No waiver by Lessor or any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Lessee of the same or any other provision. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to or approval of any subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance of such rent.

 

25.       Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a “short form” memorandum of this Lease for recording purposes.

 

26.       Holding Over. If Lessee, with Lessor’s consent, remains in possession of the Premises or any part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month to month upon all the provisions of this Lease pertaining to the obligations of lessee, but all options and rights of first refusal, if any, granted under the terms of this Lease shall be deemed terminated and be of no further effect during said month to month tenancy.

 

 

27.       Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

 

28.       Covenants and Conditions. Each provision of this Lease performable by Lessee shall be deemed both a covenant and a condition.

 

29.       Binding Effect; Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Lessee and subject to the provisions of paragraph 17, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the State wherein the Premises are located.

 

30.       Subordination.

 

(a)                                 This Lease, at lessor’s option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Lessee’s right to quiet possession of the Premises shall not be disturbed if Lessee is not in default and so long as Lessee shalt pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee or ground lessor shall elect to have this Lease prior to the lien of its mortgage. deed of trust or ground lease, and shall give written notice thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof.

 

(b)                                 Lessee agrees to execute any documents required to effectuate an attornment, a subordination, or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Lessee’s failure to execute such documents within 10 days alter written demand shall constitute a material default by Lessee hereunder, or at Lessor’s option, Lessor shall execute such documents on behalf of Lessee as Lessee’s attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint Lessor as Lessee’s attorney-in-fact and in Lessee’s name, place and stead, to execute such documents in accordance with this paragraph 30(b).

 

31.       Attorney’s Fees. If either party brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney’s fees to be paid by the losing party as fixed by the court.

 

32.       Lessor’s Access. Lessor and Lessor’s agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part as Lessor may deem necessary or desirable. Lessor may at any time place on or about the Premises any ordinary “For Sale” signs and Lessor may at any time during the last 120 days of the term hereof place on or about the Premises any ordinary “For Lease” signs, all without rebate of rent or liability to Lessee.

 

 

33.       Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor’s prior written consent. Notwithstanding anything to the contrary in this lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.

 

34.       Signs. Lessee shall not place any sign upon the Premises without Lessor’s prior written consent except that Lessee shall have the right, without the prior permission of Lessor to place ordinary and usual for rent or sublet signs thereon.

 

35.       Merger. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing sub-tenancies or may, at the option of lessor operate as an assignment to Lessor of any or all of such sub-tenancies.

 

36.       Consents. Except for paragraph 33 hereof, wherever in this Lease the consent of one party is required to an act of the other party such consent shall not be unreasonably withheld.

 

37.       Guarantor. In the event that there is a guarantor of this lease, said guarantor shall have the same obligations as Lessee under this Lease.

 

38.       Quiet Possession. Upon Lessee paying the rent for the Premises and observing and performing all of the covenants, conditions and provisions on Lessee’s part to be observed and performed hereunder, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease. The individuals executing this Lease on behalf of Lessor represent and warrant to Lessee that they are fully authorized and legally capable of executing this Lease on behalf of Lessor and that such execution is binding upon all parties holding an ownership Interest in the Premises.

 

39.       Options.

 

(a)                                 Landlord’s Option to Require Tenant to Purchase Property A. On June 1, 2021, and on any date after July 1, 2025 but prior to the end of the Initial Term, the Landlord shall have the right to require the Tenant to acquire Property A at a price determined to be fair market value. In the event that Landlord and Tenant cannot mutually agree upon the fair market value of Property A, fair market value shall be determined by a consensus of independent qualified appraisers, one appointed by Landlord, one appointed by Tenant, and a third appointed by the appraisers appointed by Landlord and Tenant. The exercise of this option shall be in writing, and terms of the acquisition shall include payment all in cash and a closing no later than 90 days after the date the option was exercised.

 

 

(b)                                 Landlord’s Option to Require Tenant to Purchase Property B. On June 1, 2021, and on any date after July 1, 2025 but prior to the end of the Initial Term, the Landlord shall have the right to require the Tenant to acquire Property B at a price determined to be fair market value. In the event that Landlord and Tenant cannot mutually agree upon the fair market value of Property B, fair market value shall be determined by a consensus of independent qualified appraisers, one appointed by Landlord, one appointed by Tenant, and a third appointed by the appraisers appointed by Landlord and Tenant. The exercise of this option shall be in writing, and terms of the acquisition shall include payment all in cash and a closing no later than 90 days after the date the option was exercised.

 

(c)                                  Tenant’s Option to Require Landlord to Sell Property A to Tenant. On any date after July 1, 2025, but prior to the end of the Initial Term, the Tenant shall have the option to require the Landlord to sell Property A to the Tenant at a price to be determined to be fair market value. In the event that Landlord and Tenant cannot mutually agree upon the fair market value, the fair market value shall be determined by a consensus of independent qualified appraisers, one appointed by Tenant, one appointed by Landlord, and a third appointed by the appraisers appointed by Tenant and Landlord. The exercise of this option shall be in writing, and the terms of the acquisition shall include payment all in cash and a closing no later than 90 days after the date the option was exercised.

 

(d)                                 Tenant’s Option to Require Landlord to Sell Property B to Tenant. On any date after July 1, 2025, but prior to the end of the Initial Term, the Tenant shall have the option to require the Landlord to sell Property B to the Tenant at a price to be determined to be fair market value. In the event that Landlord and Tenant cannot mutually agree upon the fair market value, the fair market value shall be determined by a consensus of independent qualified appraisers, one appointed by Tenant, one appointed by Landlord, and a third appointed by the appraisers appointed by Tenant and Landlord. The exercise of this option shall be in writing, and the terms of the acquisition shall include payment all in cash and a closing no later than 90 days after the date the option was exercised.

 

40.       Multiple Tenant Building. In the event that the Premises are part of a larger building or group of buildings then Lessee agrees that it will abide by, keep and observe all reasonable rules and regulations which Lessor may make from time to time for the management, safety, care, and cleanliness of the building and grounds, the parking of vehicles and the preservation of good order therein as well as for the convenience of other occupants and tenants of the building. The violations of any such rules and regulations shall be deemed a material breach of this Lease by Lessee.

 

41.       Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of Lessee, its agents and invitees from acts of third parties.

 

42.       Easements. Lessor reserves to itself the right, from time to time to grant such easements, rights and dedications that Lessor deems necessary or desirable, and to cause the recordation of Parcel Maps and restrictions, so long as such easements, rights, dedications, Maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee shall sign any of the aforementioned documents upon request of Lessor and failure to do so shall constitute a material breach of this Lease.

 

 

43.       Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money Is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.

 

44.       Authority. If Lessee is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said entity. If Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30) days after execution of this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.

 

45.       Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

 

46.       Insuring Party. The Insuring party under this lease shall be the Lessee.

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

 

IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

 

The parties hereto have executed this Lease at the place on the dates specified immediately adjacent to their respective signatures.

 

	
Executed   at:
    	
 
    	
15901   Olden Street 
    	
 
    	
 
    	
“LESSOR”   
    
	
 
    	
 
    	
Sylmar,   CA 91342
    	
 
    	
 
    	
Ronald   N. Tutor
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
on
    	
 
    	
April 18,   2014
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
/s/Ronald N. Tutor
    
	
Address:
    	
 
    	
37   Beverly Park Circle Beverly 
    	
 
    	
By:
    	
Ronald   N. Tutor
    
	
 
    	
 
    	
Hills,   CA 90210
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Executed   at:
    	
 
    	
15901   Olden Street 
    	
 
    	
 
    	
“LESSEE”   (Corporate seal) 
    
	
 
    	
 
    	
Sylmar,   CA 91342
    	
 
    	
 
    	
Tutor   Perini Corporation
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
on
    	
 
    	
April 18,   2014
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
/s/Michael J. Kershaw
    
	
Address:
    	
 
    	
15901   Olden Street
    	
 
    	
By:
    	
Michael   J. Kershaw
    
	
 
    	
 
    	
Sylmar,   CA 91342
    	
 
    	
 
    	
Executive   Vice President & CFO

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