SECOND AMENDED AND RESTATED
REAL ESTATE AND EQUIPMENT MASTER TRANSFER AGREEMENT
This Second Amended and Restated Real Estate and Equipment Master
Transfer Agreement ("AGREEMENT"), dated February _____, 1997 for reference
purposes and effective as of January 1, 1996 (the "EFFECTIVE DATE"), is made
among FHP, Inc., a California corporation, FHP of Utah, Inc., a Utah
corporation, FHP of New Mexico, a New Mexico corporation (collectively, "FHP",
or each an "FHP COMPANY"), and Talbert Medical Management Corporation, a
Delaware corporation ("TMMC"), who hereby amend and entirely restate the Real
Estate and Equipment Master Transfer Agreement among the same parties dated as
of January 1, 1996, as the same was amended and restated by the Amended and
restated Real Estate and Equipment Master Transfer Agreement among the same
parties dated December 6, 1996 for reference purposes, with reference to the
following facts:
A. Each FHP Company is the owner or lessee of one or more medical
and/or administrative facilities described below and the furniture, fixtures and
equipment ("FF&E") located therein. The FF&E shall consist of the following
categories of personal property only: (i) furniture, (ii) data processing
equipment, (iii) medical equipment, (iv) minor equipment, (v) PBX equipment,
(vi) art, (vii) soft costs and (viii) leasehold improvements installed by or at
the expense of FHP in certain of the Leased Facilities and HMO Funding
Facilities, and shall be more particularly provided for and described in the
Master FF&E Lease Agreement provided for in Section 4 hereof.
B. Each medical and administrative facility that is owned by an FHP
Company and intended to be the subject of this Agreement is described on
attached Exhibit A (collectively, the "OWNED FACILITIES", and individually, an
"OWNED FACILITY").
C. Each medical and administrative facility that is leased by an FHP
Company and intended to be the subject of this Agreement is described on
attached Exhibit B (collectively, the "LEASED FACILITIES", and, individually, a
"LEASED FACILITY").
D. Each medical and administrative facility leased by FHP, Inc.
pursuant to the Lease Agreement, dated August 2, 1990 between HMO Funding, Inc.
and FHP, Inc., as amended (collectively, the "HMO FUNDING LEASE"), is listed on
attached Exhibit C (collectively, the "HMO FUNDING FACILITIES", and,
individually, an "HMO FUNDING FACILITY").
E. Subject to the terms and conditions of this Agreement, FHP
intends to transfer the Owned Facilities, the Leased Facilities, the HMO Funding
Facilities and the FF&E to TMMC, and TMMC intends to accept such transfers and
assume the obligations arising therefrom.
Therefore, in consideration of the above facts and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
1. LEASE OF THE OWNED FACILITIES. TMMC shall lease each Owned Facility
from the FHP Company listed on attached Exhibit A as owning each such Owned
Facility, and each such FHP Company shall lease each Owned Facility to TMMC
pursuant to a separate lease agreement, which shall be in substantially the form
and contain substantially the terms and conditions of the Second Amended and
Restated Lease Agreement attached as Exhibit D.
2. ASSIGNMENT AND ASSUMPTION OF LEASED FACILITIES AND LEASE OF FF&E.
Each FHP Company listed in attached Exhibit B as a lessee and/or sublessee of a
Leased Facility hereby assigns its leasehold and subleasehold interests in each
such lease and sublease to TMMC, and TMMC hereby accepts each such assignment of
leases and subleases on the terms and conditions of the Amended and Restated
Master Assignment of Leases attached as Exhibit E. The foregoing assignment and
acceptance of such assignment shall survive the expiration of this Agreement.
TMMC shall provide such reasonable cooperation and assistance as may be required
by FHP or any successor in connection with its efforts to secure the agreement
of any or all lessors or sublessors of the Leased Facilities that FHP and any
such successor shall be forever released and discharged from any and all
liabilities under each lease or sublease of a Leased Facility assigned by FHP to
TMMC pursuant to this Section 2.
3. SUBLEASE OF HMO FUNDING FACILITIES. TMMC shall sublease or sub-ground
lease, as the case may be, each HMO Funding Facility, from the appropriate FHP
Company, and such FHP Company shall sublease or sub-ground lease each HMO
Funding Facility to TMMC, pursuant to separate sublease agreements, which shall
be in substantially the form and contain substantially the terms and conditions
of the Second Amended and Restated Sublease Agreement attached as Exhibit F.
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4. LEASE OF FF&E. TMMC shall lease from each FHP Company the FF&E
situated in the Owned Facilities, Leased Facilities and HMO Funding Facilities
and each such FHP Company shall lease such FF&E to TMMC on the terms and
conditions of the Master FF&E Lease Agreement attached as Exhibit G.
5. TERM. The term of this Agreement shall commence on January 1, 1996
and expire ___________ ( ) days after the date on which all of the agreements
provided for herein have expired.
6. MISCELLANEOUS.
6.1 NOTICES AND ADDRESSES. The addresses for the parties for
delivery of any notices shall be as follows:
If to any FHP Company:
FHP International Corporation
3120 Lake Center Drive
Santa Ana, CA 92704
Attention: Secretary
If to TMMC:
Talbert Medical Management Corporation
3540 Howard Way
Costa Mesa, CA 92626
Attention: President
All notices and documents shall be delivered either by (i)
messenger or courier service, (ii) by nationally recognized overnight courier
service (such as Federal Express), or (iii) by registered or certified U.S.
Mail, postage prepaid, return receipt requested. Delivery shall be effective
only upon actual receipt. Any party to this Agreement may change any of the
information set forth in this Section 6.1 in connection with such party by
notice given in accordance with the foregoing provisions.
6.2 FURTHER ASSURANCES. Each party hereto shall execute,
acknowledge and deliver to each other all documents, and shall take all actions,
reasonably required by such other party from time to time to confirm or effect
the matters set forth herein, or otherwise to carry out the purposes of this
Agreement.
6.3 ATTORNEYS' FEES. In the event that any litigation is
commenced concerning or arising out of this Agreement, or any of the leases,
subleases or assignments contemplated hereby, the party or parties prevailing in
such litigation shall be entitled to recover, in addition to such other relief
as may be granted, its/their reasonable costs and expenses, including without
limitation reasonable attorneys' fees and court costs, whether or not taxable,
as awarded by a court of competent jurisdiction.
6.4 MODIFICATIONS. This Agreement may not be modified orally or
in any other manner except by an agreement in writing signed by the parties
hereto or their respective successors-in-interest.
6.5 ASSIGNMENT. This Agreement is personal to the parties
hereto, and the rights and obligations hereunder are accordingly not assignable
either in whole or in part.
6.6 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of California.
6.7 EXHIBITS. All exhibits attached to this Agreement are
incorporated herein by reference, it being agreed by FHP and TMMC that, except
as hereinafter otherwise provided, mutually agreed upon revised versions of any
or all of Exhibits A, B, C, D and G may be substituted for such exhibits from
time to time to reflect the addition or deletion of Owned Facilities, Leased
Facilities, HMO Funding Facilities or FF&E to or from said exhibits; provided
that such revised exhibits shall only be effective after they have been mutually
agreed upon and duly executed on behalf of each FHP Company and TMMC.
Notwithstanding the foregoing, it is understood and agreed that neither mutual
agreement nor execution on behalf of TMMC shall be necessary to effectuate the
deletion from Exhibit A or Exhibit G of any facility or FF&E which has been sold
or otherwise transferred to a new owner or the deletion from Exhibit C, and the
addition to Exhibit A, if
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appropriate, of any facility which has been acquired from HMO Funding, Inc. by
FHP or any successor.
6.8 SUPERSEDING EFFECT. To the extent any of the Owned
Facilities and/or the Leased Facilities were previously transferred to TMMC,
this Agreement shall supersede such transfers, and any agreements or other
documentation evidencing such prior transfers are hereby amended and restated in
their entirety by this Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in
counterparts with the same force and effect as if the parties had executed one
instrument, and each such counterpart shall constitute an original hereof.
FHP, Inc., a California corporation
By: /s/ Westcott W. Price III
-----------------------------------------
Westcott W. Price III, President and Chief
Executive Officer
FHP of Utah, Inc., a Utah corporation
By: /s/ Westcott W. Price III
-----------------------------------------
Westcott W. Price III
Chief Executive Officer
FHP of New Mexico, Inc., a New Mexico corporation
By: /s/ Westcott W. Price III
-----------------------------------------
Westcott W. Price III, President and Chief
Executive Officer
Talbert Medical Management Corporation, a Delaware
corporation
By: /s/ Jack D. Massimino
-----------------------------------------
Jack D. Massimino, President and Chief
Executive Officer
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MASTER TRANSFER AGREEMENT
LIST OF EXHIBITS
Exhibit A List of Owned Facilities
Exhibit B List of Leased Facilities
Exhibit C List of HMO Funding Facilities
Exhibit D Second Amended and Restated Lease Agreement
Exhibit E Amended and Restated Master Lease Assignment
Exhibit F Second Amended and Restated Sublease Agreement
Exhibit G Master FF&E Lease Agreement
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SECOND AMENDED AND RESTATED LEASE AGREEMENT
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Second Amended and Restated Lease Agreement ("LEASE"),
dated February __, 1997 for reference purposes and made effective as of January
1, 1996 (the "EFFECTIVE DATE), is made by and between the lessor identified on
the signature page of this Lease ("LESSOR") and Talbert Medical Management
Corporation, a Delaware corporation ("LESSEE") (collectively the "PARTIES", or
individually a "PARTY") to amend and entirely restate that certain Amended and
Restated Lease Agreement dated December 6, 1996 for reference purposes and made
effective as of the Effective Date between the Parties as to the Premises
provided for in Paragraph 1.2 below.
1.2 PREMISES: That certain building which is located at the address set
forth in Exhibit I hereto and contains the square footage set forth on Exhibit
I, together with the land on which it is situated (the "PREMISES"), said
Premises, together with the FF&E situated therein, having the projected net book
value as of the Effective Date shown on Exhibit II hereto.
1.3 FF&E: As used in this Lease, the term "FF&E" shall mean the
furniture, fixtures and equipment located on the Premises and consisting of the
following categories of personal property only: (a) furniture, (b) data
processing equipment, (c) medical equipment, (d) minor equipment, (e) PBX
equipment, (f) art and (g) soft costs, said FF&E being the subject of a separate
Master FF&E Lease Agreement between the Parties.
1.4 TERM AND EXTENSIONS: Five (5) years (the "INITIAL TERM") commencing
on January 1, 1996 ("COMMENCEMENT DATE") and ending on December 31, 2000
("EXPIRATION DATE"); provided that (except as otherwise provided in Paragraph
(iv) of that certain letter agreement dated December 11, 1996, between FHP,
Inc., FHP of Utah, Inc. and FHP of New Mexico, Inc., on the one hand, and
Lessee, on the other, said letter agreement being attached hereto as Exhibit
III), at the end of the Initial Term, the term of this Lease shall be
automatically extended for an additional five (5) year period to December 31,
2005 (the "FIRST EXTENSION TERM"). In addition, and provided the term of this
Lease has been extended for the First Extension Term and Lessee is not then in
DEFAULT OR BREACH (as defined in Paragraph 11.1), Lessee shall have two (2)
further extension options which may be exercised by written notice from Lessee
to Lessor at least one (1) year prior to the end of the First Extension Term or
the "SECOND EXTENSION TERM" (as hereinafter defined), as the case may be, to
extend the term of this Lease for an additional five years each (the first such
five year period, commencing on January 1, 2006, being the "SECOND EXTENSION
TERM", and the second such five year period, commencing on January 1, 2011,
being the "THIRD EXTENSION TERM"). Any of the First Extension Term, Second
Extension Term or Third Extension Term shall be referred to herein as an
"EXTENSION TERM".
1.5 BASE RENT: During the term of this Lease, Lessee shall pay Base Rent
("BASE RENT") in the following amounts:
(a) During the first year of the Initial Term, Lessee shall pay as
Base Rent a monthly amount equal to the sum of (A) 0.6667% (eight percent (8%)
per annum) of the net book value as of the Effective Date, set forth in Exhibit
II hereto for the Premises (including the FF&E therein) as of the Commencement
Date plus (B) an amount equal to the monthly depreciation expense for the
Premises (using Lessor's depreciation schedules in effect as of the Commencement
Date) calculated as of the end of each calendar month.
EXHIBIT D TO MASTER TRANSFER AGREEMENT
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(b) From January 1, 1997 through December 31, 2000, Lessee shall pay
as Base Rent the monthly amount set forth on Exhibit I, said amount being
derived by multiplying the square footage shown on Exhibit I by the monthly rent
per square foot shown on Exhibit I.
(c) As of the commencement of an Extension Term of this Lease, the
Base Rent for such Extension Term shall be adjusted to reflect prevailing market
rent (including the addition of a provision requiring an annual Consumer Price
Index adjustment, or similar cost of living adjustment, if such adjustments are
at such time customary market terms for similar properties in the relevant
market) for similar space (excluding FF&E) in comparable facilities in the
general vicinity in which the Premises are located ("FAIR MARKET RENT"). If
Lessor and Lessee are unable to agree upon Fair Market Rent within one hundred
fifty (150) days prior to the commencement of the relevant Extension Term,
Lessor and Lessee each shall, no later than 140 days prior to the commencement
of the relevant extension term, appoint, at its own expense, one appraiser with
expertise in commercial real estate leasing transactions to determine the Fair
Market Rent, such determination to be made and presented in writing within 20
calendar days after his or her appointment. Fair Market Rent shall be the mean
of the fair market rents determined by the appraisers if the determination of
the appraiser appointed by Lessor is no more than five (5) percentage points
greater than the other appraiser's determination. If the determination of the
appraiser appointed by Lessor is more than five percentage points greater than
the other appraiser's determination, the appraisers jointly shall, no later than
110 days prior to the commencement of the relevant Extension Term, appoint a
third appraiser (who shall be a real estate appraiser who has not provided
services to Lessor or Lessee during the immediately preceding three (3) years
and who has at least five (5) years of full-time commercial appraisal experience
in the geographic area in which the Premises are located) and, after the third
appraiser's determination, such determination to be made and presented in
writing within 20 calendar days after his or her appointment. Fair Market Rent
shall be the mean of (a) the third appraiser's determination and (b) the
determination of the one of the other appraisers whose determination is nearer
in amount to the determination of the third appraiser. The fees and expenses of
the third appraiser shall be divided equally between Lessor and Lessee.
1.6 PERMITTED USE: Any lawful purposes.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises for the Initial Term and any Extension Terms, at the
rental, and upon all of the terms, covenants and conditions set forth in this
Lease. The parties recognize that this Lease is what is generally considered to
be a "triple net" lease whereby all risks and liabilities of ownership are
assumed by the Lessee.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee on an "as is"
basis without any representations or warranties, express or implied, to the full
extent permitted under Applicable Law (as defined in Paragraph 4.3, below). All
repairs and modifications to the Premises (whether structural or non-structural,
capital or non-capital), including, without limitation, those required to
conform the Premises or any parts thereof to the requirements of any Applicable
Law now in effect or enacted in the future, shall be performed at the sole cost
and expense of Lessee. Notwithstanding any factors judicially developed as a
means of allocating the obligation to make alterations to leased premises to
comply with present or future Applicable Law, it is the intention of the Parties
that such obligations are those of Lessee and are accordingly reflected in rent
payments and other consideration under this Lease.
3. RENT.
Lessee shall cause payment of Base Rent and other rent or charges to be
received by Lessor (collectively "RENT") in lawful money of the United States,
without offset, deduction or prior demand, in arrears on or before the fifteenth
(15th) day of each month immediately following each month of the Initial Term
and any Extension Term, with final payment due on the fifteenth (15th) day of
the month following the end of such term.
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4. USE.
4.1 USE. Lessee shall use the Premises in accordance with all Applicable
Law. Lessee shall not use or permit the use of the Premises in a manner that
creates waste or a nuisance, or that disturbs owners and/or occupants of, or
causes damage to, neighboring premises or properties.
4.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for liability of Lessor to any governmental agency
or third party under any applicable statute or common law theory. Hazardous
Substance shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by-products or fractions thereof. Lessee
shall not engage in any activity in, on or about the Premises which constitutes
a Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Law. "REPORTABLE USE" shall
mean (i) the installation or use of any above or below ground storage tank,
(ii) the generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority. Reportable Use shall also include Lessee's being
responsible for the presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires that a notice be
given to persons entering or occupying any of the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may, without Lessor's prior
consent, but in compliance with all Applicable Law, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of Lessee's business permitted on the Premises, so long as such use is
not a Reportable Use and does not expose the Premises or neighboring properties
to any meaningful risk of contamination or damage or expose Lessor to any
liability therefor.
(b) INDEMNIFICATION. Lessee shall indemnify, protect, defend and
hold Lessor, and its agents, employees, and ground lessors, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control.
4.3 LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner, comply with all "APPLICABLE LAW," which term is used in this
Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
all governmental authorities of competent jurisdiction and any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene,
(ii) environmental conditions on, in, under or about the Premises, including
soil and ground water conditions, (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage, spill
or release of any Hazardous Substance or storage tank), now in effect or which
may hereafter come into effect, and (iv) compliance with the terms and
conditions of the Americans with Disabilities Act. Whether or not reflecting a
change in policy from any previously existing policy Lessee shall, within five
(5) days after receipt of Lessor's written request, provide Lessor with copies
of all documents and information, including, but not limited to, permits,
registrations, manifests, applications, reports and certificates, evidencing
Lessee's compliance with any Applicable Law specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning,
complaint or report pertaining to or involving failure by Lessee or the Premises
to comply with any Applicable Law.
4.4 INSPECTION; COMPLIANCE. Lessor shall have the right to enter the
Premises at any time, in the case of an emergency, and otherwise at reasonable
times, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease and all Applicable Law and to
employ experts and/or consultants in connection therewith and/or
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to advise Lessor with respect to Lessee's activities, including but not limited
to the installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In any such case, Lessee shall upon request reimburse the
Lessor for the costs and expenses of such inspections.
5. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
5.1 LESSEE'S OBLIGATIONS. Lessee shall, at Lessee's sole cost and expense
and at all times, keep the Premises and all parts thereof in good order,
condition and repair, structural and non-structural (whether or not such portion
of the Premises requiring repair, or the means of repairing the same, are
reasonably or 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, and whether or not any required repairs
considered are capital or non-capital), including, without limiting the
generality of the foregoing, landscaping and all equipment or facilities serving
the Premises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities, and life-safety systems. Without limiting the
generality of the foregoing provision, Lessee shall maintain the Premises in a
manner and in a condition which is at least consistent with comparable buildings
in the immediate area in which the Premises is located.
5.2 LESSOR'S OBLIGATIONS. It is intended by the Parties that Lessor have
no obligation, in any manner whatsoever, to repair or maintain the Premises, or
the improvements located thereon, whether structural or non-structural, all of
which obligations are intended to be those of the Lessee under Paragraph 5.1
hereof. It is the intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to maintenance and repair of the
Premises. Lessee and Lessor expressly waive the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this
Lease with respect to, or which affords Lessee the right to make repairs at the
expense of Lessor or to terminate this Lease by reason of, any needed repairs.
5.3 ALTERATIONS AND INDEMNIFICATION.
(a) ALTERATIONS. Lessee may make any interior alterations or
modifications to the Premises (collectively, "ALTERATIONS") that are not
Structural Alterations (as defined below) without Lessor's prior consent,
provided (i) on the expiration or earlier termination of this Lease, Lessee
shall, at Lessor's election and at Lessee's sole cost, restore all or any
portion of the Premises to the condition existing prior to the installation or
construction of the Alteration(s), (ii) no such Alteration shall affect the
exterior or the structural integrity of the Premises (which shall include the
foundation, bearing walls and structural roof), any telephone closets,
stairwells, elevators, plumbing systems, sprinkler systems (connected to the
building core), life safety systems, HVAC systems (including primary and
secondary loops connected to the building core), and other mechanical or
electrical systems (collectively, "STRUCTURAL ALTERATIONS"), (iii) for any
Alterations where the estimated cost exceeds $50,000, Lessee shall provide
Lessor with at least ten (10) business days prior written notice of the
commencement of construction to permit Lessor the opportunity to post a notice
of non-responsibility pursuant to Applicable Law, and (iv) Lessee shall (A)
obtain, at Lessee's sole cost, all required governmental permits and licenses
required for any proposed Alteration, (B) if required by Lessor, provide Lessor
with copies of all such permits and licenses, and -C- comply with all conditions
imposed on Lessee by such permits and/or licenses. Any Alterations by Lessee
during the Term shall be done in a good and workmanlike manner, with good and
sufficient materials, and in compliance with all Applicable Law. Lessee shall
promptly upon completion thereof furnish Lessor with as-built plans and
specifications, if any, therefor. Any request for a consent to any Structural
Alteration may be withheld in Lessor's sole and absolute discretion.
(b) INDEMNIFICATION. 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 on the Premises, which claims are or may be secured by any
mechanics' or material man's lien against the Premises or any interest therein.
If any such lien attaches or Lessee receives notice of any such lien, Lessee
shall cause the lien to be released and removed of record within ten (10) days
after Lessor's demand. Despite any other provision of this Lease, if the lien
is not released and removed within ten (10) days after Lessor delivers notice of
the lien to Lessee, Lessor may immediately take all action necessary to release
and remove the lien, without any duty to investigate the validity of such lien,
unless lessee has commenced legal action to contest, dispute, or defend the
claims of the lienholder and the validity of such lien and continues to
prosecute such action to a successful judgment releasing the lienholder's lien
against Lessee or Lessor's
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interest in the Premises. All expenses (including reasonable attorney's fees)
incurred by Lessor in connection with release of the lien shall be considered
rent under this Lease and be immediately due and payable by Lessee. If Lessee
shall, in good faith, contest the validity of any such lien, claim or demand,
then Lessee shall, at its sole expense defend and protect itself, Lessor and the
Premises 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.
5.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their removal or
become the owner thereof as provided herein, all Alterations made to the
Premises by Lessee shall be the property of and owned by Lessee, but considered
a part of the Premises. Lessor may, at any time and at its option, elect in
writing to Lessee to be the owner of all or any specified part of the
Alterations. Unless otherwise instructed per subparagraphs 5.3(a) and 5.4(b)
hereof, all Alterations shall, at the expiration or earlier termination of this
Lease, become the property of Lessor and remain upon and be surrendered by
Lessee with the Premises.
(b) REMOVAL. Lessor may require that any or all Alterations be
removed by the expiration or earlier termination of this Lease. Lessor may
require the removal or restoration at any time of all or any part of any
Alterations made without the required consent of Lessor.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the end of the last day of the Term or any earlier termination date, with all of
the improvements, parts and surfaces thereof clean and free of debris and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "ORDINARY WEAR AND TEAR" shall not include any damage or
deterioration that would have been prevented by good maintenance practice or by
Lessee performing all of its obligations under this Lease.
6. INSURANCE; INDEMNITY.
6.1 PAYMENT FOR INSURANCE. Lessee shall carry and pay for all insurance
required under this Paragraph 6.
6.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the Term a Commercial General Liability policy of insurance protecting Lessee
and Lessor (as an additional insured) against claims for bodily injury, personal
injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis for the
Premises providing single limit coverage in an amount not less than $5,000,000
per occurrence. The limits of said insurance required by this Lease or as
carried by Lessee shall not, however, limit the liability of Lessee nor relieve
Lessee of any obligation hereunder. All insurance to be carried by Lessee shall
be primary and not contributory with any similar insurance that may be carried
by Lessor, whose insurance shall be considered excess insurance only.
(b) CARRIED BY LESSOR. Lessor shall have no obligation to carry any
insurance under this Lease.
6.3 PROPERTY INSURANCE. Lessee shall obtain and keep in force during the
term of this Lease a policy or policies, naming Lessor as additional insured,
with loss payable to Lessee insuring the Premises for loss or damage caused by
the usual all-risk perils. The amount of such insurance shall be equal to the
full replacement cost of the Premises, as the same shall exist from time to
time. In the event of a damage or destruction of the Premises, Lessor may elect
that such insurance proceeds be paid to and disbursed through a third-party
escrow or construction disbursement account selected by Lessor.
6.4 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 A- 14 as set forth in the most current issue of "Best's Insurance
Guide." Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in this Paragraph 6. Lessee shall
cause to be delivered to Lessor certified copies of policies of such insurance
or certificates evidencing the existence and amounts of such insurance with the
insureds and loss payable clauses as required by this Lease. No such policy
shall be cancelable or subject to modification except after thirty (30) days
prior written notice to Lessor. Lessee shall prior to the expiration of such
policies, furnish
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Lessor with evidence of renewals or "insurance binders" evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee to Lessor upon demand. If
Lessee shall fail to procure and maintain the insurance required to be carried
by Lessee under this Paragraph 6, Lessor may, but shall not be required to,
procure and maintain the same, but at Lessee's expense.
6.5 WAIVER OF SUBROGATION. Without affecting any other rights or remedies
and without imposing on Lessor an obligation to procure property insurance,
Lessee and Lessor ("WAIVING PARTY") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or incident to the perils required to be insured against under this
Paragraph 6. The effect of such releases and waivers of the right to recover
damages shall not be limited by the amount of insurance carried or required, or
by any deductibles applicable thereto.
6.6 INDEMNITY. Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, employees, and contractors, from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, permits, attorney's and consultant's fees, expenses and/or
liabilities (collectively, "CLAIMS") arising out of, involving, or dealing with,
the occupancy of the Premises by Lessee, the conduct of Lessee's business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease, and any active or passive negligence of Lessor whether any such Claims
are caused in whole or in part by such active and/or passive negligence of
Lessor. In case any action or proceeding is brought against Lessor by reason of
any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid
any such Claim in order to be so indemnified.
6.7 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, 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 defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause (including, without limitation, the active or passive negligence of
Lessor), whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Notwithstanding Lessor's active or passive negligence or breach of this Lease,
Lessor shall under no circumstances be liable for injury to Lessee's business or
for any loss of income or profit therefrom.
7. DAMAGE OR DESTRUCTION.
7.1 LESSEE'S OBLIGATIONS. If all or any part of the Premises are
destroyed, whether or not by a loss that is caused by a risk required to be
insured under this Lease, this Lease shall continue in full force and effect
without interruption, reduction, or abatement of rent or other expenses
hereunder. Upon occurrence of such damage or destruction, Lessee shall, at
Lessee's sole cost and expense, forthwith repair or restore the Premises to the
condition existing before the occurrence of such damage and destruction. In the
event this Lease expires prior to the completion of such repair, Lessee shall,
at Lessor's election, either (i) continue with full repair and restoration of
the Premises, or (ii) deliver to Lessor an amount determined by Lessor's
construction consultant to be necessary to complete such repair or restoration.
Lessor shall have no obligation to Lessee whatsoever in the event of any damage
or destruction to the Premises or any parts thereof.
7.2 WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
8. REAL PROPERTY TAXES.
8.1 PAYMENT OBLIGATION. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 8.2, applicable to the Premises during the Term. All such
payments shall be made at least ten (10) days prior to the delinquency date of
the applicable installment. Lessee shall promptly furnish Lessor with
satisfactory evidence that such Real Property Taxes have been paid. If Lessee
shall fail to pay any Real Property Taxes required by this Lease to be paid by
Lessee,
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Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor
therefor upon demand.
8.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "REAL
PROPERTY TAXES" 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 imposed upon 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, levied against any legal
or equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, Lessor's right to rent or other income therefrom,
and/or Lessor's business of leasing the Premises. The term "REAL PROPERTY
TAXES" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring, or changes in
applicable law taking effect, during the Term, including but not limited to a
change in the ownership of the Premises or in the improvements thereon, the
execution of this Lease, or any modification, amendment or transfer thereof, and
whether or not contemplated by the Parties.
8.3 PERSONAL PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon the Alterations located within the
Premises.
9. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon.
10. ASSIGNMENT AND SUBLETTING.
10.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage or otherwise transfer or encumber or
sublet (collectively, "ASSIGN" or "ASSIGNMENT") all or any part of Lessee's
interest in this Lease or in any of the Premises without Lessor's prior written
consent, which consent shall not be unreasonably withheld subject to the terms
and conditions set forth below, which the Parties agree are reasonable:
a. Any assignment shall not: (i) be effective without the express
written assumption by such assignee or sublessee (either, a "TRANSFEREE") of the
obligations of Lessee under this Lease, or (ii) release Lessee of any of its
direct and primary obligations hereunder to Lessor.
b. Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
c. The consent of Lessor to any assignment shall not constitute a
consent to any subsequent assignment by Lessee or to any subsequent or
successive assignment by the assignee sublessee. However, Lessor may consent to
subsequent assignments or any amendments or modifications thereto without
notifying Lessee or anyone else liable on the Lease or sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or sublease.
d. In the event of any Default or Breach of Lessee's obligations
under this Lease, Lessor may proceed directly against Lessee, any one else
responsible for the performance of the Lessee's obligations under this Lease,
including any sublessee, without first exhausting Lessor's remedies against any
other person or entity responsible therefor to Lessor, or any security held by
Lessor or Lessee.
e. Each request for consent to an assignment shall be in writing,
accompanied by information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any. Lessee agrees to provide Lessor
with such other or additional information and/or documentation as may be
reasonably requested by Lessor.
f. Upon receiving Lessee's notice requesting consent to an
assignment, together with all information required pursuant to Paragraph
10.1(e), above, then, without limiting the foregoing, Lessor may refuse to
consent on any commercially reasonable grounds, and refusal to
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so consent shall be deemed reasonable if the proposed assignment or subletting
does not meet the following conditions:
i. The assignment or subletting shall be on the same terms and
conditions set forth in Lessee's notice given to Lessor;
ii. No assignment or subletting shall be valid, and no Transferee
shall take possession of any of the Premises until an original of the duly
executed counterpart of the assignment documentation has been delivered to
Lessor;
iii. No Transferee shall have been negotiating with Lessor in the
last six (6) months for space in a building owned by Lessor;
iv. The proposed use of the Premises by the Transferee shall be
permitted by the use provisions of this Lease and in accordance with all
Applicable Laws;
v. The Transferee has the financial capability to fulfill the
obligations imposed by the assignment or subletting;
vi. The Transferee has a reputation in the community for financial
reliability and the bank or other financial references support in full the
financial statements delivered to Lessor on behalf of the Transferee;
vii. The Transferee demonstrates, in Lessor's business judgment, that
it is able to perform the obligations on Transferee's part to be performed under
this Lease;
viii. The Transferee shall not have been involved in any civil,
criminal or administrative litigation or proceedings which is unsatisfactory in
the reasonable opinion of Lessor; and
ix. The Transferee intends to use the Premises for the provision of
medical services or as medical office space.
10.2 ASSIGNMENT TO AN AFFILIATE. Notwithstanding the foregoing provisions
of Paragraph 10.1, above, Lessee may assign this Lease to an Affiliate of Lessee
without the prior consent of Lessor, provided Lessor receives notice of such
intent to assign at least ten (10) days prior to the effective date of the
assignment. An "AFFILIATE" for purposes of this Paragraph 10.2 shall mean any
entity which directly controls, is under common control with, or is directly or
indirectly controlled by Lessee or FHP International Corporation, a Delaware
corporation. Notwithstanding such permitted assignment, Lessee shall remain
directly and primarily liable to Lessor for all obligations and liabilities of
"Lessee" under this Lease.
10.3 TALBERT MEDICAL GROUP. Notwithstanding the foregoing provisions of
Paragraphs 10.1 and 10.2, above, Lessee may allow employees, agents,
contractors, representatives, invitees, guests, visitors and customers of
Talbert Medical Group, including any physicians or physician groups having a
management agreement or management agreements with Lessee, to use all or any
portion of the Premises at any time and from time to time (collectively, the
"TMG USE"). TMG Use shall not include a subletting or an assignment of Lessee's
interest under this Lease. However, TMG Use shall not require notice to Lessor
or Lessor's consent. Lessee shall remain directly responsible to Lessor for any
such TMG Use as if the TMG Use were directly by Lessee.
11. DEFAULT; BREACH; REMEDIES.
11.1 DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the Lessee to
observe, comply with or perform any of the terms, covenants, conditions or rules
applicable to Lessee under this Lease. A "BREACH" is defined as the occurrence
of any one or more of the following Defaults, and, where a grace period for cure
after notice is specified herein, the failure by Lessee to cure such Default
prior to the expiration of the applicable grace period, and shall entitle Lessor
to pursue the remedies set forth in Paragraph 11.2:
(a) NONPAYMENT OF RENT. Failure to pay any installment of Base
Rent or other rent due and payable hereunder, upon the date when
payment is due, such failure continuing for a period of ten (10)
business days after written notice of such failure, it being
understood and agreed that Lessor shall not be required to comply with
the foregoing grace period and notice provisions more often than twice
in any twelve (12) month period; or
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(b) OTHER OBLIGATIONS. Failure to perform any obligation,
agreement or covenant under this Lease, other than Lessee's obligation
to pay Base Rent, such failure continuing for thirty (30) calendar
days after written notice of such failure or such longer period as is
reasonably necessary to remedy such failure, provided that Lessee
shall continuously and diligently pursue such remedy until such
failure is cured.
11.2 REMEDIES. In the event of a Default of this Lease by Lessee, within
thirty (30) days after written notice to Lessee (or in case of an emergency,
without notice), Lessor may at its option (but without obligation to do so),
perform such duty or obligation on Lessee's behalf, including but not limited to
the obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals. The costs and expenses of any such performance
by Lessor shall be due and payable by Lessee to Lessor upon invoice therefor.
In the event of a Breach of this Lease by Lessee, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of all or any of the
Premises by any lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall
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immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee: (i) the worth at the time of
the award of the unpaid rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided, (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom. The worth at the time of award of the amount referred to in
provision (iii) of the prior sentence shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent. Efforts by Lessor to mitigate damages caused by
Lessee's Default or Breach of this Lease shall not waive Lessor's right to
recover damages under this Paragraph.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
abandonment and recover the rent as it becomes due, and, for such purposes,
Lessee acknowledges that the restrictions on assignment set forth in Paragraph
10, above, are reasonable limitations.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.
The expiration or termination of this Lease and/or the termination of
Lessee's right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during
the term hereof or by reason of Lessee's occupancy of the Premises.
Provided, however, in the event of a Breach occurring to Premises located
in the State of Utah, Lessor shall have the following remedies rather than the
remedies set forth in the preceding provisions of this Paragraph 11.2:
(x) Terminate the Lessee's rights under this Lease by written notice,
or reenter and take possession of the Premises by lawful means with or without
terminating this Lease; and
(y) Lessee shall pay to Lessor the cost of recovering possession of
the Premises, all costs of reletting, including reasonable renovation,
remodeling and alteration of the Premises, the amount of any commissions paid by
Lessor in connection with such reletting, and all other costs and damages
arising out of Lessee's default, including attorney's fees and costs.
Notwithstanding any termination or reentry, the liability of Lessee for the rent
payable under this Lease shall not be extinguished for the balance of the Term,
and Lessee agrees to compensate on demand for any deficiency arising from
reletting the Premises.
11.3 BREACH BY LESSOR. In the event of any actual or alleged breach by
Lessor of any obligation to be performed by Lessor under this Lease, Lessee
shall have the sole remedy of damages or injunctive relief; under no
circumstances shall Lessee have the right to terminate this Lease.
12. CONDEMNATION. If any of 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 ten percent (10%) of
the floor area of any of the Premises, or more than twenty-five percent (25%) of
the land area not occupied by any building, is taken by condemnation, Lessee
may, at Lessee's option, to be exercised in writing 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 Base Rent shall be reduced in
the same proportion as the rentable floor area of the Premises taken bears to
the total rentable floor area of the building located on the Premises. No
reduction of Base Rent shall occur if the only portion of the Premises taken is
land on which there is no building. 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 award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance
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damages; provided, however, that Lessee shall be entitled to any compensation,
separately awarded to Lessee for Lessee's relocation expenses and/or loss of
Lessee's Trade Fixtures. In the event that this Lease is not terminated by
reason of such condemnation, Lessor may, to the extent of its net severance
damages received, over and above the legal and other expenses incurred by Lessor
in the condemnation matter, repair any damage to the Premises caused by such
condemnation, except to the extent that Lessee has been reimbursed therefor by
the condemning authority. Lessee shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such repair.
In the alternative, Lessor shall have the right to assign all such severance
damages to Lessee, in which case Lessee shall forthwith undertake the full
repair or restoration of the Premises at Lessee's sole cost and expense.
13. TENANCY STATEMENT.
13.1 Each Party (as "RESPONDING PARTY") shall within ten (10) days after
written notice from the other Party (the "REQUESTING PARTY") execute,
acknowledge and deliver to the Requesting Party an estoppel certificate stating
whether the Responding Party is aware of any default of the Requesting Party,
the remaining Lease term, any unexercised options, the Base Rent payable, the
extent of any Base Rent paid in advance, and such other information as may be
reasonably requested by the Requesting Party.
13.2 If Lessor desires to finance, refinance, or sell any of the Premises,
any part thereof, or the building of which such Premises are a part, Lessee
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee as may be reasonably required by such lender or
purchaser, including but not limited to Lessee's most recent financial
statements.
14. LESSOR'S LIABILITY. In the event of a transfer of Lessor's title or
interest in any of the Premises or in this Lease, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor.
15. 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.
16. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
17. RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
18. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
19. NOTICES. All notices required or permitted by this Lease shall be in
writing and shall be delivered to Lessor or Lessee at the following addresses,
or at such other address(es) as either party may, from time to time, by like
notice designate:
If to Lessor: 3120 Lake Center Drive
Santa Ana, CA 92704
Attention: Secretary
If to Lessee: 3540 Howard Way
Costa Mesa, CA 92626
Attention: President
All notices and documents shall be delivered either by (i) messenger or courier
services, (ii) by nationally recognized overnight courier service (such as
Federal Express), or (iii) by registered or certified U.S. Mail, postage
prepaid, return receipt requested. Delivery shall be effective only upon actual
receipt. Either party to this Lease may change any of the information set forth
in this Section 19 by written notice given to the other in accordance with the
foregoing provisions.
20. WAIVER. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition
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hereof, or of any subsequent Default or Breach by Lessee of the same or of any
other term, covenant or condition hereof. 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 or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of
this Lease requiring such consent.
21. RECORDING. Neither this Lease nor a memorandum thereof shall be recorded.
22. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of any of
the Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
23. 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.
24. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
25. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and, except as
otherwise expressly provided herein, be governed by the laws of the State in
which the Premises are located. Any litigation, arbitration or other method of
dispute resolution between the Parties concerning this Lease shall be initiated
and determined in the County of Orange, California.
26. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
26.1 SUBORDINATION. This Lease shall be subject and subordinate to any
ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, "SECURITY DEVICE"), now or hereafter placed by Lessor upon any of
the Premises, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the entity holding any such Security Device (a "LENDER")
shall have no duty, liability or obligation to perform any of the obligations of
Lessor under this Lease, but that in the event of Lessor's default with respect
to any such obligation, Lessee will give any such Lender whose name and address
have been furnished Lessee in writing for such purpose notice of Lessor's
default and allow such Lender thirty (30) days following receipt of such notice
for the cure of said default before invoking any remedies Lessee may have by
reason thereof. If any Lender shall elect to have this Lease superior to the
lien of its Security Device and shall give written notice thereof to Lessee,
this Lease shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
26.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
26.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.
26.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "NON-DISTURBANCE AGREEMENT") from the
Lender that Lessee's possession and this Lease will not be disturbed so long as
Lessee is not in Breach hereof and attorns to the record owner of the Premises.
26.4 SELF-EXECUTING. The agreements contained in this Paragraph 26 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of any of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attornment and/or non-disturbance
agreement as is provided for herein.
27. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part, as Lessor may reasonably deem necessary.
28. QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to
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be observed and performed under this Lease, Lessee shall have quiet possession
of the Premises for the entire term hereof subject to all of the provisions of
this Lease.
29. 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 the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
The Parties hereto have executed this Lease as of the date first above written.
Lessor: Lessee:
_________________________________, Talbert Medical Management Corporation
a __________ corporation
By: _____________________________ By: _____________________________
Westcott W. Price III Jack D. Massimino
Its: ___________________ Its: President and Chief
Executive Officer
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EXHIBIT I TO
SECOND AMENDED AND RESTATED LEASE AGREEMENT
A. Premises Address: ______________________________________________
______________________________________________
______________________________________________
B. Square Footage: ______________________________________________
C. Base Rent (January 1, 1997
through December 31, 2000): $_______________________
D. Monthly Rent Per Square Foot
(January 1, 1997 through
December 31, 2000): $_______________________
[NOTE: SEE ATTACHED SCHEDULE I FOR INFORMATION REGARDING EACH LEASED FACILITY]
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EXHIBIT II TO
SECOND AMENDED AND RESTATED LEASE AGREEMENT
The projected net book value as of January 1, 1996 of the Premises
(including the FF&E therein) located at _____________________, ______________,
_______________ is $________________.
NOTE: THE INFORMATION FOR THIS EXHIBIT APPEARS IN EXHIBIT A TO MASTER TRANSFER
AGREEMENT.]
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EXHIBIT III TO
SECOND AMENDED AND RESTATED LEASE AGREEMENT
SEE ATTACHED LETTER DATED DECEMBER 11, 1996 AND THE ATTACHMENTS THERETO.
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AMENDED AND RESTATED MASTER ASSIGNMENT OF LEASES
All initially capitalized terms not otherwise defined in this Amended
and Restated Master Assignment of Leases ("ASSIGNMENT") shall have the same
meaning as ascribed to them in the Second Amended and Restated Real Estate and
Equipment Master Transfer Agreement of even date to which this Amended and
Restated Master Assignment of Leases is attached and into which it is
incorporated by reference (the "MASTER TRANSFER AGREEMENT"). This Assignment,
dated February __, 1997 for reference purposes and effective on the Effective
Date, is made in Orange County, California between each FHP Company listed on
attached Exhibit B to the Master Transfer Agreement (each, an "ASSIGNOR" or
collectively, "ASSIGNORS"), and Talbert Medical Management Corporation, a
Delaware corporation ("ASSIGNEE"), to amend and entirely restate that certain
Master Assignment of Leases dated as of the Effective Date between Assignors and
Assignee, with reference to the following facts:
A. Each Assignor is the lessee or sublessee of one or more Leased
Facilities under those certain leases and subleases described more particularly
on Exhibit B attached to the Master Transfer Agreement (collectively, the
"LEASES").
B. Pursuant to the Master Transfer Agreement, Assignors desire to
assign all of their respective right, title and interest as lessees and
sublessees in the Leases to Assignee.
Therefore, based on the above facts and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. Each Assignor hereby respectively assigns to Assignee all of such
Assignor's right, title and interest as lessee and/or sublessee in those Leases
in which such Assignor has an interest as lessee or sublessee (including,
without limitation, any and all options, rights of first refusal, rights of
first notice and any other preferential rights in favor of the lessee or
sublessee in the Leases to the full extent such rights are assignable), and
Assignee accepts these assignments and assumes and agrees to perform, as direct
obligations to each and every lessor or sublessor, as applicable, under such
Leases, all the obligations of Assignors as lessees and/or sublessees under the
Leases, which obligations arise on or after the Effective Date.
2. Assignee shall and does indemnify and hold harmless Assignors and
each of them against all liability, damages, judgments, claims, actions or
demands (collectively, "CLAIMS") against them or any of them arising out of or
in any way connected with the lessee's and/or sublessee's obligations under the
Leases, which obligations arise on or after the Effective Date.
3. Assignors shall and do indemnify and hold harmless Assignee
against all Claims against Assignee arising out of or in any way connected with
the lessee's and/or sublessee's obligations under the Leases, which obligations
arise before the Effective Date.
4. Assignee shall have no right to further assign or sublet any of
the Leased Facilities or the leaseholds or subleaseholds thereunder except to an
Affiliate of Assignee. For purposes of this paragraph 4, an "AFFILIATE" shall
mean any entity that directly or indirectly controls, is controlled by or is
under common control with Assignee or FHP International Corporation, a Delaware
corporation. Notwithstanding the foregoing provisions of this Section 4,
Assignee may allow employees, agents, contractors, representatives, invitees,
guests, visitors and customers of any Talbert Medical Group, including any
physicians or physician groups having a management agreement or management
agreements with Assignee, to use all or any portion of the Leased Facilities at
any time and from time to time (collectively, the "TMG USE"). TMG Use shall not
be considered a subletting or an assignment of Assignee's interest under the
Leases for which notice to Assignor or Assignor's consent shall be required.
Assignee shall remain directly responsible to Assignor for any such TMG Use as
if the TMG Use were directly by Assignee.
5. This Assignment is subject to the terms and provisions of the
Master Transfer Agreement, (which, by this reference, is incorporated herein and
made a part hereof), all subleases of the Leases and the Leased Facilities, and
the transfer of the leaseholds under this Assignment includes the benefits and
obligations arising under such subleases.
The parties hereto have executed this Assignment by their execution of
the Master Transfer Agreement to which this Assignment is attached.
EXHIBIT E TO MASTER TRANSFER AGREEMENT
SECOND AMENDED AND RESTATED SUBLEASE AGREEMENT
This Second Amended and Restated Sublease Agreement ("Sublease"), dated
February __, 1997 for reference purposes and effective as of January 1, 1996
(the "EFFECTIVE DATE"). is made in Orange County, California between the
sublessor identified on the signature page of this Sublease ("SUBLESSOR") and
Talbert Medical Management Corporation, a Delaware corporation ("SUBLESSEE"),
who hereby amend and restate that certain Amended and Restated Master Sublease
Agreement dated December __, 1996 for reference purposes and made effective as
of the Effective Date between the same parties, with reference to the following
facts:
A. Sublessor is the lessee or sub-ground lessee of a facility owned by
HMO Funding, Inc., which is located at the address set forth in Exhibit I hereto
(hereinafter the "HMO FUNDING FACILITY"), pursuant to a Lease Agreement dated
August 2, 1990 between Sublessor and HMO Funding, Inc. (the "MASTER LEASE").
B. Sublessor desires to sublease the HMO Funding Facility to Sublessee
and Sublessee desires to sublease the HMO Funding Facility from Sublessor.
Therefore, based on the above facts and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. SUBLEASE. As of the Effective Date, Sublessor hereby subleases
to Sublessee, and Sublessee subleases from Sublessor, the HMO Funding Facility
on the terms and conditions hereinafter set forth. Sublessee shall perform all
obligations of Sublessor under the Master Lease, if any, with respect to the HMO
Funding facility accruing from and after the Effective Date.
2. SUBLEASE TERM. The term of this Sublease shall commence on the
Effective Date and expire one (1) day prior to the expiration of the "Initial
Term" or the "Extended Term", as the case may be, of the Master Lease with
respect to the HMO Funding Facility provided for herein.
3. USE. The HMO Funding Facility shall be used and occupied by
Sublessee for the uses permitted under the Master Lease and for no other
purpose.
4. SUBRENTAL. From the Effective Date, Sublessee shall pay to
Sublessor a monthly subrental equal to all monthly rental, operating expenses,
fees, and other expenses due under the Master Lease for the HMO Funding
Facility, payable in arrears in twelve (12) monthly installments, each of which
shall be paid on the fifteenth (15th) day of each month immediately following
the month for which the payment was due, with final payment due on the fifteenth
(15th) of the month following expiration of the Sublease term.
5. INCORPORATION OF TERMS OF THE MASTER LEASE.
5.1 This Sublease is subject and subordinate to the Master Lease.
Subject to the modifications set forth in this Sublease, the terms of the Master
Lease are incorporated herein by reference, and shall, as between Sublessor and
Sublessee (as if they were Lessor and Lessee, respectively, under the Master
Lease) constitute the terms of this Sublease except to the extent that they are
inapplicable to, inconsistent with, or modified by, the terms of this Sublease.
In the event of any inconsistencies between the terms and provisions of the
Master Lease and the terms and provisions of this Sublease, the terms and
provisions of this Sublease shall govern. Sublessee acknowledges that it has
reviewed the Master Lease and is familiar with the terms and conditions thereof.
5.2 For the purposes of incorporation herein, the terms of the Master
Lease are subject to the following additional modifications:
(a) In all provisions of the Master Lease (under the terms
thereof and without regard to modifications thereof for purposes of
incorporation into
EXHIBIT F TO MASTER TRANSFER AGREEMENT
1
this Sublease) requiring the approval or consent of HMO Funding, Inc.,
Sublessee shall be required to obtain the approval or consent of both
Sublessor and HMO Funding, Inc.
(b) In all provisions of the Master Lease requiring Sublessor
to submit, exhibit to, supply or provide HMO Funding, Inc. with
evidence, certificates, or any other matter or thing, Sublessee shall
be required to submit, exhibit to, supply or provide, as the case may
be, the same to both HMO Funding, Inc. and Sublessor. In any such
instance, Sublessor shall first determine, in its sole discretion, if
such evidence, certificate or other matter or thing shall be required
and, to the extent provided, satisfactory.
(c) Sublessor shall have no obligation to restore or rebuild
any portion of the HMO Funding Facility after any destruction or
taking by eminent domain, and all such obligations are hereby assumed
by Sublessee during the Sublease term.
6. SUBLESSEE'S OBLIGATIONS. Sublessee covenants and agrees that all
obligations of Sublessor under the Master Lease shall be done or performed by
Sublessee with respect to the HMO Funding Facility, and Sublessee's obligations
shall run to Sublessor and HMO Funding, Inc. as Sublessor may determine in its
sole discretion to be appropriate or be required by the respective interests of
Sublessor and HMO Funding, Inc. Sublessee agrees to indemnify Sublessor, and
hold it harmless, from and against any and all claims, damages, losses, expenses
and liabilities (including reasonable attorneys' fees) incurred as a result of
the non-performance, non-observance or non-payment of any of Sublessor's
obligations under the Master Lease which, as a result of this Sublease, became
an obligation of Sublessee. If Sublessee makes any payment to Sublessor
pursuant to this indemnity, Sublessee shall be subrogated to the rights of
Sublessor concerning said payment. Sublessee shall not do, nor permit to be
done, any act or thing which is, or with notice or the passage of time would be,
a default under this Sublease or the Master Lease. Any default by HMO Funding,
Inc. under the Master Lease shall not constitute as between Sublessor and
Sublessee a default by Sublessor or an eviction, actual or constructive, of
Sublessee and no such default shall excuse Sublessee from the performance or
observance of any of its obligations to be performed or observed under this
Sublease, or entitle Sublessee to receive any reduction in or abatement of the
rent provided for in this Sublease.
7. DEFAULT BY SUBLESSEE. In the event Sublessee shall be in default
of any covenant of, or shall fail to honor any obligation under, this Sublease,
Sublessor shall have available to it against Sublessee all of the remedies
available (a) to HMO Funding, Inc. under the Master Lease in the event of a
similar default on the part of Sublessor thereunder or (b) at law.
8. QUIET ENJOYMENT. So long as Sublessee pays all of the rent and
other amounts due hereunder and performs all of Sublessee's other obligations
hereunder, Sublessor shall do nothing to affect Sublessee's right to peaceably
and quietly have, hold and enjoy the HMO Funding Facility.
9. CONDITION OF PREMISES. Sublessee acknowledges that it is
subleasing the HMO Funding Facility "as-is" and that Sublessor is not making any
representation or warranty concerning the condition of the HMO Funding Facility
and that Sublessor is not obligated to perform any work to prepare the HMO
Funding Facility for Sublessee's occupancy.
10. ASSIGNMENT AND SUBLETTING. Sublessee shall have no right to
assign or further sublet the HMO Funding Facility or any portion thereof or any
right or privilege appurtenant thereto except to an Affiliate of Sublessee. For
purposes of this paragraph 11, an "AFFILIATE" shall mean any entity that
directly or indirectly controls, is controlled by or is under common control
with Sublessee or FHP International Corporation, a Delaware corporation.
Notwithstanding the foregoing provisions of this paragraph 11, Sublessee may
allow employees, agents, contractors, representatives, invitees, guests,
visitors and customers of Talbert Medical Group, including any physicians or
physician groups having a management agreement or management agreements with
Sublessee, to use all or any portion
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of the HMO Funding Facility at any time and from time to time (collectively, the
"TMG USE"). TMG Use shall not include a subletting or an assignment of
Sublessee's interest under this Sublease. However, TMG Use shall not require
notice to Sublessor or Sublessor's consent. Sublessee shall remain directly
responsible to Sublessor for any such TMG Use as if the TMG Use were directly by
Sublessee.
11. NOTICES. All notices required or permitted by this Sublease
shall be in writing and shall be delivered to Sublessor or Sublessee at the
following addresses, or at such other address(es) as either party may, from time
to time, by like notice designate:
If to Sublessor: 3120 Lake Center Drive
Santa Ana, California 92704
Attention: Secretary
If to Sublessee: 3540 Howard Way
Costa Mesa, California 92626
Attention: President
All notices and documents shall be delivered either by (i) messenger or courier
services, (ii) by nationally recognized overnight courier service (such as
Federal Express), or (iii) by registered or certified U.S. Mail, postage
prepaid, return receipt requested. Delivery shall be effective only upon actual
receipt. Either party to this Sublease may change any of the information set
forth in this Section 11 by written notice given to the other in accordance with
the foregoing provisions.
The parties hereto have executed this Sublease as of the date first
above written.
Sublessor: Sublessee:
______________________________, Talbert Medical Management Corporation
a ________________ corporation
By:___________________________ By:_______________________________
Westcott W. Price III Jack D. Massimino
Its:__________________________ Its: President and Chief Executive Officer
3
EXHIBIT I TO
SECOND AMENDED AND RESTATED SUBLEASE AGREEMENT
HMO Funding Facility Address:
__________________________________
__________________________________
__________________________________
4
MASTER FF&E LEASE AGREEMENT
All initially capitalized terms not otherwise defined herein shall have the
same meaning as ascribed to them in the Second Amended and Restated Real Estate
and Equipment Master Transfer Agreement of even date to which this Master FF&E
Lease Agreement is attached and into which it is incorporated by reference (the
"MASTER TRANSFER AGREEMENT"). This Master FF&E Lease Agreement ("EQUIPMENT
LEASE"), dated February __, 1997 for reference purposes and made effective as of
the Effective Date, is made by and between each FHP Company listed on Exhibit A
to the Master Transfer Agreement (each a "LESSOR") and Talbert Medical
Management Corporation, a Delaware corporation ("LESSEE") (collectively the
"PARTIES", or individually a "PARTY").
1. FF&E: The FF&E (hereinafter "EQUIPMENT") provided for in this
Equipment Lease shall consist of only the following categories of personal
property which are owned by an FHP Company and located in an Owned Facility
leased to TMMC, a Leased Facility, the lease or sublease of which has been
assigned to TMMC, or an HMO Funding Facility which has been subleased to TMMC
(said Facilities being hereinafter collectively referred to as "FACILITIES", and
individually as a "FACILITY", and said leases and subleases being hereinafter
collectively referred to as the "FACILITY LEASES", and individually as a
"FACILITY LEASE"): (a) furniture, (b) data processing equipment, (c) medical
equipment, (d) minor equipment, (e) PBX equipment, (f) art, (g) soft costs and
(h) leasehold improvements installed by or at the expense of Lessor in certain
of the Leased Facilities and HMO Funding Facilities. The Equipment at each
Facility is more particularly described by reference to its net book value (at
December 31, 1996) on Exhibit I hereto.
2. LETTING; CONDITION OF THE EQUIPMENT: Lessor hereby leases to Lessee,
and Lessee hereby leases from Lessor, the Equipment for the Term, at the rental,
and upon all of the terms, covenants and conditions set forth in this Equipment
Lease. Lessee acknowledges that it is leasing the Equipment on an "AS IS" basis
without representations or warranties, express or implied.
3. TERM AND EXTENSIONS: The term ("TERM") of this Equipment Lease shall
commence on January 1, 1996 (the "Commencement Date") and shall continue until
the expiration of all Facility Leases; provided, however, that the Term of this
Equipment Lease with respect to the particular Equipment located in any given
Owned Facility shall expire on December 31, 2000, and the Term with respect to
Equipment located in any given Leased Facility or HMO Funding Facility shall
expire concurrently with the expiration of the Facility Lease relating to such
Facility (including any extension options and terms thereunder). Upon the
expiration or termination of all Facility Leases, except for the terms and
provisions hereof that expressly survive the expiration or termination of this
Equipment Lease, this Equipment Lease (and all terms and provisions hereof)
shall be of no further force or effect.
4. RENT: During the Term of this Equipment Lease, Lessee shall pay Rent
(as hereinafter defined) in the following amounts:
(a) From January 1, 1996 through December 31, 1996, Lessee shall pay
as Base Rent for the Equipment a monthly amount equal to the sum of (A) 0.6667%
(eight percent (8%) per annum) of the book value of the Equipment in each
Facility as of the Effective Date, plus (B) the monthly depreciation expense of
the Equipment in such Facility calculated at the end of each calendar month
using the FHP depreciation schedules in place as of the Effective Date.
(b) From January 1, 1997 through December 31, 2000, Lessee shall pay
as Base Rent for the Equipment in each Facility the monthly amounts set forth on
Exhibit II hereto.
EXHIBIT G TO MASTER TRANSFER AGREEMENT
1
(c) After December 31, 2000, Lessee shall pay as Base Rent for the
Equipment the monthly amounts mutually agreed upon by Lessor and Lessee no later
than December 1, 2000 and by December 1 of each year thereafter during the
remaining Term of this Equipment Lease to be the then fair rental value of the
Equipment identified in the inventory provided for in Section 24 hereof, said
monthly amounts being hereinafter referred to as the "Monthly Equipment Rent".
In the event Lessor and Lessee are unable to reach agreement regarding the
Monthly Equipment Rent for such Equipment by such December 1 date, they shall
jointly select a neutral appraiser to do so. In the event the Parties are
unable to agree upon a neutral appraiser by December 15 of that year, the matter
shall be referred immediately to the American Arbitration Association (Orange
County office), which shall select the appraiser by December 20 of that year,
and the appraiser so selected shall finally determine and advise the Parties of
the Monthly Equipment Rent for the Equipment no later than December 31 of that
year. Such determination shall be final and binding on the Parties. The costs
of the neutral appraiser and/or the American Arbitration Association shall be
shared equally by Lessor and Lessee. For purposes of this Section 4(c), the
Monthly Equipment Rent for the Equipment shall be determined as described above
and shall be effective as of the first day of the following month (i.e.,
January).
Lessee shall cause payment of Base Rent and other rent or charges, if any, to be
received by Lessor (collectively "RENT") in lawful money of the United States,
without offset, deduction or prior demand in arrears on or before the fifteenth
(15th) day of each month immediately following the month of the Term during
which the Equipment was leased to Lessee, with final payment due on the
fifteenth (15th) day of the month following the end of such Term..
5. PERMITTED USE: Lessee shall use the Equipment for the purposes for
which it is intended and shall, at Lessee's sole cost and expense, maintain the
Equipment in good condition and repair, subject to ordinary wear and tear and
general obsolescence. No Lessor shall have any obligation to maintain, repair
or replace any of the Equipment.
6. INSURANCE:
a) Lessee shall obtain and keep in force during the term of this
Equipment Lease a policy or policies, naming Lessor as additional insured, with
loss payable to Lessee insuring the Equipment for loss or damage caused by the
usual all-risk perils. The amount of such insurance shall be equal to the full
replacement cost of the Equipment, as the same shall exist from time to time.
In the event of a damage or destruction of the Equipment, Lessor may elect that
such insurance proceeds be paid to and disbursed through a third-party escrow
account selected by Lessor. Lessor shall have no obligation to carry any
insurance under this Equipment Lease.
(b) Insurance required hereunder shall be in companies duly licensed
to transact business in the state where the Equipment is located, and
maintaining during the policy term a "General Policyholders Rating" of at least
A-14 as set forth in the most current issue of "Best's Insurance Guide." Lessee
shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in this Paragraph 6. Lessee shall cause to be delivered to
Lessor certified copies of policies of such insurance or certificates evidencing
the existence and amounts of such insurance with the insureds and loss payable
clauses as required by this Equipment Lease. No such policy shall be cancelable
or subject to modification except after thirty (30) days prior written notice to
Lessor. Lessee shall, prior to the expiration of such policies, furnish Lessor
with evidence of renewals or "insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand. If Lessee shall fail
to procure and maintain the insurance required to be carried by Lessee under
this Paragraph 6, Lessor may, but shall not be required to, procure and maintain
the same, but at Lessee's expense.
2
7. INDEMNITY
(a) Lessee shall indemnify, protect, defend and hold harmless
Lessors and their respective agents, employees, and contractors, from and
against any and all claims, losses of rent and/or damages, costs, liens,
judgments, penalties, permits, attorney's and consultant's fees, expenses and/or
liabilities (collectively, "CLAIMS") arising out of, involving, or in dealing
with, the possession, use or operation of the Equipment by Lessee, any act,
omission or neglect occurring on or after the Effective Date of Lessee, its
agents, contractors, employees or invitees with respect to the Equipment, and
out of any Default or Breach by Lessee in the performance in a timely manner of
any obligation on Lessee's part to be performed under this Equipment Lease. In
case any action or proceeding is brought against any Lessor by reason of any of
the foregoing matters, Lessee upon notice from such Lessor shall defend the same
at Lessee's expense by counsel reasonably satisfactory to such Lessor and such
Lessor shall cooperate with Lessee in such defense. Such Lessor need not have
first paid any such claim in order to be so indemnified.
(b) Lessors shall indemnify, protect, defend and hold harmless Lessee
and its agents, employees and contractors from and against any and all Claims
against Lessee arising out of, involving, or in dealing with the ownership,
possession, use or operation of the Equipment by Lessors, any act, omission or
neglect occurring before the Effective Date of Lessors or any of their
respective agents, contractors, employees or invitees with respect to the
Equipment, and out of any Default or Breach by Lessors in the performance in a
timely manner of any obligation on Lessors' part to be performed under this
Equipment Lease. In case any action or proceeding is brought against Lessee by
reason of any of the foregoing matters, Lessor upon notice from Lessee shall
defend the same at Lessors' expense by counsel reasonably satisfactory to Lessee
and Lessee shall cooperate with Lessors in such defense. Lessee need not have
first paid any such claim in order to be so indemnified.
(c) The terms and provisions of this Section 7 shall survive the
expiration or any termination of this Equipment Lease (or any part hereof).
8. INSPECTION. Lessors shall have the right to enter the Facilities in
which the Equipment is located at any time, without notice to Lessee, in case of
an emergency, and otherwise at reasonable times, but only after reasonable prior
written notice to Lessee, for the purpose of inspecting the condition of the
Equipment.
9. LESSEE'S COMPLIANCE WITH LAW. Lessee shall, at Lessee's sole cost and
expense, fully diligently and in a timely manner, comply with all laws, rules,
regulations, ordinances, directives and requirements of all governmental
authorities of competent jurisdiction relating in any manner to Lessee's
possession, use or operation of the Equipment.
10. PERSONAL PROPERTY TAXES: Lessee shall pay prior to delinquency all
taxes assessed against and levied upon any Equipment that accrue during the
period that such Equipment is leased by Lessee pursuant to this Equipment Lease
11. ASSIGNMENT AND SUBLETTING:
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber or sublet (collectively,
"ASSIGN") all or any part of Lessee's interest in this Equipment Lease or in any
of the Equipment without Lessor's prior written consent, which consent shall not
be unreasonably withheld.
(b) Notwithstanding the foregoing provisions of this Paragraph 11,
Lessee may assign this Equipment Lease to an Affiliate of Lessee without the
prior consent of
3
Lessor, provided Lessor receives notice of such intent to assign at least ten
(10) days prior the effective date of the assignment. An "AFFILIATE" for
purposes of this Paragraph 11(b) shall mean any entity which directly controls,
is under common control with, or is directly or indirectly controlled by Lessee
or FHP International Corporation, a Delaware corporation. Notwithstanding such
permitted assignment, Lessee shall remain directly and primarily liable to
Lessor for all obligations and liabilities of "Lessee" under this Equipment
Lease.
(c) Notwithstanding the foregoing provisions of Paragraphs 11(a) and
11(b) above, Lessee may allow employees, agents, contractors, representatives,
invitees, guests, visitors and customers of any Talbert Medical Group, including
any physicians or physician groups having a management agreement or management
agreements with Lessee, to use all or any portion of the Equipment at any time
and from time to time (collectively, the "TMG USE"). TMG Use shall not include
a subletting or an assignment of Lessee's interest under this Lease. However,
TMG Use shall not require notice to Lessor or Lessor's consent. Lessee shall
remain directly responsible to Lessor for any such TMG Use as if the TMG Use
were directly by Lessee.
12. DAMAGE OR DESTRUCTION. If all or any part of the Equipment is
destroyed, whether or not by a loss that is caused by a risk required to be
insured under this Equipment Lease, this Equipment Lease shall continue in full
force and effect without interruption, reduction, or abatement of rent or other
expenses hereunder. Upon occurrence of such damage or destruction, Lessee
shall, at Lessee's election, either (i) at Lessee's sole cost and expense,
forthwith replace the Equipment or repair or restore the Equipment to the
condition existing before the occurrence of such damage and destruction, or (ii)
deliver to Lessor an amount reasonably determined by Lessor to be necessary to
complete such repair, restoration or replacement. In the event this Equipment
Lease expires prior to the completion of such repair, restoration or
replacement, Lessee shall, at Lessor's election, either (i) continue with full
repair, restoration or replacement of the Equipment, or (ii) deliver to Lessor
an amount reasonably determined by Lessor to be necessary to complete such
repair, restoration or replacement. Lessor shall have no obligation to Lessee
whatsoever in the event of any damage or destruction to the Equipment or any
parts thereof. The provisions of this Section 12 regarding Lessee's obligation
to repair, replace or restore the Equipment shall survive the expiration or
termination of this Equipment Lease.
13. DEFAULT; BREACH; REMEDIES:
(a) A "DEFAULT" is defined as a failure by the Lessee to observe,
comply with or perform any of the terms, covenants, conditions or rules
applicable to Lessee under this Equipment Lease. A "BREACH" is defined as the
occurrence of any one or more of the following Defaults, and, where a grace
period for cure after notice is specified herein, the failure by Lessee to cure
such Default prior to the expiration of the applicable grace period, and shall
entitle Lessor to pursue the remedies set forth in Paragraph 13(b):
(i) Failure to pay any installment of Rent due and payable
hereunder, upon the date when payment is due, such failure continuing for a
period of ten (10) business days after written notice of such failure, it being
understood and agreed that Lessor shall not be required to comply with the
foregoing grace period and notice provisions more often than twice in any twelve
(12) month period; or
(ii) Failure to perform any obligation, agreement or covenant
under this Equipment Lease, other than Lessee's obligation to pay Rent, such
failure continuing for thirty (30) calendar days after written notice of such
failure or such longer period as is reasonably necessary to remedy such failure,
provided that Lessee shall continuously and diligently pursue such remedy until
such failure is cured.
(b) In the event of a Default of this Equipment Lease by Lessee,
within
4
thirty (30) days after written notice to Lessee (or in case of an emergency,
without notice), Lessor may at its option (but without obligation to do so),
perform such duty or obligation on Lessee's behalf. The reasonable costs and
expenses of any such performance by Lessor shall be due and payable by Lessee to
Lessor upon invoice therefor. In the event of a Breach of this Equipment Lease
by Lessee, with or without further notice or demand, and without limiting Lessor
in the exercise of any right or remedy which Lessor may have by reason of such
Breach, Lessor may:
(i) Terminate Lessee's right to possession of all or any of the
Equipment by any lawful means, in which case this Equipment Lease and the Term
hereof shall terminate and Lessee shall immediately surrender possession of the
Equipment to Lessor. In such event Lessor shall be entitled to recover from
Lessee all amounts necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform its obligations under this
Equipment Lease or which in the ordinary course of things would be likely to
result therefrom; or
(ii) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Equipment
is located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the Term
hereof or by reason of Lessee's possession or use of the Equipment.
(c) In the event of any actual or alleged breach by Lessor of any
obligation to be performed by Lessor under this Equipment Lease, Lessee shall
have the sole remedy of damages or injunctive relief; under no circumstances
shall Lessee have the right to terminate this Equipment Lease.
14. RIGHT OF FIRST OFFER
a) With respect to any Equipment located in any Leased Facility or
HMO Funding Facility, Lessee shall have a right of first offer to acquire the
Equipment located in such Facility in the manner provided in this Section 14 at
any time during the period commencing on the commencement date of the Facility
Lease for such Facility and expiring one (1) year after the expiration or
earlier termination of such Facility Lease.
b) With respect to any Equipment located in any Owned Facility,
Lessee shall have a right of first offer to acquire the Equipment located in
such Facility in the manner provided in this Section 14 at any time during the
period commencing on January 1, 1996 and expiring on December 31, 2001.
c) Lessor shall notify Lessee in writing (THE "FIRST OFFER NOTICE")
when Lessor determines that any of the Equipment will become available for sale
to third parties. The First Offer Notice shall identify the Equipment to be
sold and shall set forth the proposed sale price and all economic and other
material terms upon which Lessor is willing to sell the Equipment.
d) If Lessee wishes to exercise its right of first offer with
respect to the Equipment described in the First Offer Notice, then within ten
(10) days after delivery of the First Offer Notice to Lessee, Lessee shall
deliver written notice (THE "FIRST OFFER EXERCISE NOTICE") to Lessor of Lessee's
intention to exercise its right of first offer with respect to the Equipment
identified in the First Offer Notice on the terms and conditions contained in
such First Offer Notice. If Lessee does not so notify Lessor within such ten
(10) day period, then Lessee shall be deemed to have elected not to acquire the
Equipment, and, during the six (6) month period commencing on the day after the
date that Lessee elects or is deemed to have elected not to acquire the
Equipment, Lessor shall be free to sell the Equipment described in the First
Offer Notice to anyone to whom Lessor desires on terms and conditions no less
5
favorable to Lessor than the terms and conditions set forth in the First Offer
Notice. If Lessor has not sold the Equipment to a third party as permitted
hereinabove within such six (6) month period, then Lessor shall be obligated to
re-offer the Equipment to Lessee in accordance with the terms and provisions of
this Section 14 prior to selling the same to a third party.
e) If Lessee exercises its right of first offer with respect to any
such Equipment, Lessor and Lessee shall consummate the transaction (THE
"CLOSING") within thirty (30) days after delivery to Lessee of the First Offer
Notice. At Closing, Lessor shall convey the Equipment described in the First
Offer Notice to Lessee by executing and delivering a bill of sale and such other
documentation as may be reasonably required to fully convey such Equipment to
Lessee, and Lessee shall pay and deliver to Lessor the purchase price for the
Equipment and any other amounts to be paid and delivered to Lessor pursuant to
the First Offer Notice. All closing costs shall be shared by Lessor and Lessee
in the manner that is customary for such transactions in the jurisdiction where
such Equipment is located. If the Closing fails to occur for any reason other
than the Lessor's default within such thirty (30) day period, then Lessee's
right of first offer shall terminate and Lessor shall be free to sell the
Equipment to any third party in accordance with the terms and provisions of
subsection (c) above and subject to the six (6) month time limitation set forth
therein.
15. NOTICES. All notices required or permitted by this Equipment Lease
shall be in writing and shall be delivered to Lessor or Lessee at the following
addresses, or at such other address(es) as either party may, from time to time,
by like notice designate:
If to Lessor: 3120 Lake Center Drive
Santa Ana, California 92704
Attention: Secretary
If to Lessee: Talbert Medical Management Corporation
3540 Howard Way
Costa Mesa, California 92626
Attention: President
All notices and documents shall be delivered either by (i) messenger or courier
services, (ii) by nationally recognized overnight courier service (such as
Federal Express), or (iii) by registered or certified U.S. Mail, postage
prepaid, return receipt requested. Delivery shall be effective only upon actual
receipt. Either party to this Equipment Lease may change any of the information
set forth in this Section 15 by written notice given to the other in accordance
with the foregoing provisions.
16. WAIVER. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. 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 or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Equipment Lease requiring such consent.
17. 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.
18. COVENANTS AND CONDITIONS. All provisions of this Equipment Lease to
be observed or performed by Lessee are both covenants and conditions.
19. BINDING EFFECT; CHOICE OF LAW. This Equipment Lease shall be binding
upon the parties, their personal representatives, successors and assigns and,
except as otherwise expressly provided herein, be governed by the laws of the
state in which the Equipment is
6
located. Any litigation, arbitration or other method of dispute resolution
between the Parties concerning this Equipment Lease shall be initiated and
determined in the County of Orange, California.
20. QUIET POSSESSION. Upon payment by Lessee of the Rent for the
Equipment and the observance and performance of all of the covenants, conditions
and provisions on Lessee's part to be observed and performed under this
Equipment Lease, Lessee shall have quiet possession of the Equipment for the
entire term hereof subject to all of the provisions of this Equipment Lease.
21. SURRENDER OF EQUIPMENT. Upon the expiration or earlier termination of
this Equipment Lease with respect to the Equipment in any Facility, and except
as otherwise provided in Sections 12 and 14 hereof, Lessee shall, at its sole
cost and expense, surrender such Equipment to Lessor at such Facility. Such
Equipment shall be surrendered to Lessor in good condition and repair, except
for ordinary wear and tear and general obsolescence. Lessor and Lessee
acknowledge that (i) the Facility Leases provided for in that certain Second
Amended and Restated Real Estate and Equipment Master Transfer Agreement (First
Amendment to Exhibits), dated as of February ___, 1997, and executed by and
between Lessor and Lessee collectively, the "Terminated Leases") have been
terminated and (ii) all of the Equipment located in the Facilities which are the
subject of the Terminated Leases (the "Relocated Equipment") has been relocated
to other Facilities. Notwithstanding any other provision of this Equipment
Lease to the contrary, Lessor hereby consents to such relocation of the
Relocated Equipment, and Lessor and Lessee agree that, with respect to the
Relocated Equipment, this Equipment Lease including but not limited to the rent
provisions of Section 4 hereof, shall continue in full force and effect. The
term of this Equipment Lease with respect to each item of Relocated Equipment
shall expire concurrently with the expiration of the Facility Lease of the
Facility to which such item was relocated.
22. SEVERABILITY. The invalidity of any provision of this Equipment
Lease, as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.
23. TIME OF ESSENCE. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Equipment Lease.
24. INVENTORY. For purposes of Section 4(c) hereof, and to specifically
identify the Equipment located in the Facilities, Lessor and Lessee hereby agree
that as soon as practicable, but in no event later than June 30, 1997, they will
conduct a physical inventory of the Equipment actually located in each Facility
and attach a listing of such equipment to this Equipment Lease as Exhibit III.
It is understood and agreed among the Parties that the results of the inventory
shall have no impact on the rent payable to Lessors pursuant to Sections 4(a)
and 4(b) hereof; however such results shall be used to identify the Equipment
actually held by Lessee and returnable to Lessors; to determine the Monthly
Equipment Rent to be paid pursuant to Section 4(c) hereof, and in connection
with any purchase rights or obligations of Lessee hereunder.
25. ATTORNEY'S FEES. In the event that any litigation is commenced
concerning or arising out of this Equipment Lease, the Party or Parties
prevailing in such litigation shall be entitled to recover, in addition to such
other relief as may be granted, its/their reasonable costs and expenses,
including without limitation reasonable attorney's fees and court costs, whether
or not taxable, as awarded by a court of competent jurisdiction.
The parties hereto have executed this Equipment Lease by their execution of
the Master Transfer Agreement to which this Equipment Lease is attached.
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EXHIBIT I TO
MASTER FF&E LEASE AGREEMENT
The net book values as of December 31, 1996 of the Equipment situated in
each Facility are set forth on the attached schedule.
8
EXHIBIT II TO
MASTER FF&E LEASE AGREEMENT
The monthly Base Rents to be paid from January 1, 1997 through December 31,
2000 by Lessee for the Equipment situated in each Facility are set forth on the
attached schedule.
9
EXHIBIT III TO
MASTER FF&E LEASE AGREEMENT
Listings of the Equipment actually situated in each Facility are attached
to this schedule.
10
SECOND AMENDED AND RESTATED
REAL ESTATE AND EQUIPMENT MASTER TRANSFER AGREEMENT
(FIRST AMENDMENT TO EXHIBITS)
This First Amendment to Exhibits ("FIRST AMENDMENT") to the above
referenced Agreement ("MASTER TRANSFER AGREEMENT"), dated the ___ day of
February, 1997, is made among FHP, Inc., a California corporation, FHP of Utah,
Inc., a Utah corporation, FHP of New Mexico, Inc., a New Mexico corporation
(collectively, "FHP", or each an "FHP COMPANY"), and Talbert Medical Management
Corporation, a Delaware corporation ("TMMC"), who hereby agree as follows:
1. DEFINITIONS. Except as may be otherwise defined in this First
Amendment, all initially capitalized terms in this First Amendment shall have
the same meanings as ascribed to them in the Master Transfer Agreement.
2. EXHIBIT A to the Master Transfer Agreement is hereby amended by
the deletion therefrom of the following property, said deletion to be effective
as of the date and for the reason set forth beside such listing:
Address Effective Date* Reason for Deletion
----------------------- --------------- -------------------
2490 South State Street 5/16/96 Property sold to Paracelsus
Salt Lake City, Utah 84115 on May 16, 1996
3. Exhibit B to the Master Transfer Agreement is hereby amended by the
deletion therefrom of the following properties (including the FF&E and leasehold
improvements therein), said deletions to be effective as of the dates and for
the reasons set forth beside each listing:
Address Effective Date* Reason for Deletion
-------------------- --------------- -------------------
13260 N. 94th Dr., Suite 200 12/31/96 Early termination exercised.
Peoria, AZ 85381 Lease term ended on
December 31, 1996.
1604 S. Edward 8/31/96 Lease expired on August 31,
Tempe, AZ 85281 1996. TMMC now leases the
space directly.
2569 Woodland Drive 7/01/96 TMMC vacated. Property is
Anaheim, CA 92801 now used by the Department of
Human Relations which is part
of FHP, effective July 1, 1996.
18153 Brookhurst 7/01/96 TMMC vacated. Property is
Anaheim, CA 92801 now used by the Department of
Human Relations which is part
of FHP, effective July 1, 1996.
10540 Chapman Avenue 12/31/96 Early termination exercised.
Garden Grove, CA 92640 Lease term ended on December 31,
1996.
21500-21520 S. Pioneer Blvd. 1/30/97 Lease expired on January 30, 1997.
Hawaiian Gardens, CA 90716
18800 Delaware, Suites 500 & 700 9/30/96 Center closed. Lease expired on
Huntington Beach, CA 92648 September 30, 1996.
10821 Bloomfield Road 4/03/96 Lease expired on April 30, 1996.Los Alamitos, CA 90720
6370 Magnolia 12/31/96 Lease expired on December 31, 1996.
Riverside, CA 92506 TMMC leases directly from the
landlord.
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Address Effective Date* Reason for Deletion
-------------------- --------------- ---------------------
1840 E. 17th Street, Suite 110 2/01/96 Lease expired. TMMC vacated in
Santa Ana, CA 92701 January 1996, effective February 1,
1996.
1950 E. 17th Street, Suite 300 2/01/96 Lease expired. TMMC vacated in
Santa Ana, CA 92701 January 1996, effective February 1,
1996.
3400 South West Temple 3/01/96 TMMC vacated on March 1, 1996.
Salt Lake City, Utah 84115 FHP is now the sole tenant.
* The Effective Dates are based solely on information provided by TMMC and are
subject to confirmation by the parties.
4. COUNTERPARTS. This First Amendment may be executed in counterparts
with the same force and effect as if the parties had executed one instrument,
and each such counterpart shall constitute an original hereof.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment on the date first above written.
FHP, Inc., a California corporation
By: /s/ Westcott W. Price III
----------------------------------
Westcott W. Price III, President and
Chief Executive Officer
FHP of Utah, Inc., a Utah corporation
By: /s/ Westcott W. Price III
----------------------------------
Westcott W. Price III
Chief Executive Officer
FHP of New Mexico, a New Mexico corporation
By: /s/ Westcott W. Price III
----------------------------------
Westcott W. Price III, President and
Chief Executive Officer
Talbert Medical Management Corporation, a
Delaware corporation
By: /s/ Jack D. Massimino
----------------------------------
Jack D. Massimino, President and Chief
Executive Officer
2