Exhibit 10.12
LEASE AGREEMENT
THIS LEASE AGREEMENT, made as of the 15th day of February, 2000, by and between
THE CITY OF ENNIS, TEXAS, a political subdivision of the State of Texas
("Lessor"), whose address is 115 West Brown, Ennis, Texas and PRHC-ENNIS, LP, a
Texas limited partnership ("Lessee"), the partners of which are wholly-owned
subsidiaries of PROVINCE HEALTHCARE COMPANY, a Delaware corporation ("PHC"), and
whose address is 105 Westwood Place, Suite 400, Brentwood, Tennessee 37027.
WITNESSETH:
1. Lease of Premises and Equipment. In consideration of the rents and
covenants herein stipulated to be paid and performed by Lessee and upon the
terms and conditions herein specified, Lessor hereby leases to Lessee, and
Lessee hereby leases from Lessor, the property commonly known as City of Ennis
Hospital (the "Hospital") consisting of: (i) the parcel(s) of land located at
803 W. Lampasas, Ennis, Ellis County, Texas, as described on Schedule A, Part I
attached hereto and made a part hereof for all purposes (the "Land"); (ii) all
buildings, structures, "Fixtures" (as hereinafter defined) and other
improvements of every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and
off-site), parking areas and roadways appurtenant to such buildings and
structures presently situated upon the Land (collectively, the "Improvements");
(iii) all easements, rights and appurtenances relating to the Land and the
Improvements (collectively, the "Appurtenant Rights"); (iv) all equipment,
machinery, fixtures, and other items of property, including all components
thereof, now and hereafter permanently affixed to or incorporated into the
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, all of which to the greatest extent permitted by law, are
hereby deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto, (collectively
the "Fixtures"); and (v) all equipment, furnishings, furniture, trade fixtures
and other personal property used in connection with medical-surgical hospital,
urgent care and medical office building operations and businesses on the
Premises (collectively the "Equipment"). The Land, the Improvements, the
Appurtenant Rights and the Fixtures are hereinafter referred to collectively as
the "Premises."
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2. Term. The Premises and the Equipment are leased for a primary term
(the "Primary Term") and, at Lessee's option, three (3) additional extended
terms (the "Extended Terms"), unless and until the term of this Lease shall be
terminated as hereinafter provided. The Primary Term shall be for thirty (30)
years commencing on February 15, 2000 (the "Commencement Date") and ending on
February 14, 2030. Following the Primary Term, Lessee shall have an option to
extend the term of this Lease for three (3) additional terms of ten (10) years
each. Such Extended Terms shall be on and subject to all of the same terms,
covenants and conditions as herein contained. The option for any Extended Term
shall be exercised only by written notice from Lessee to Lessor given no less
than six (6) months prior to the expiration of the Primary Term or the then
current Extended Term, as the case may be. Unless specifically otherwise
provided, the terms and phrases "term," "term hereof" and "term of this Lease"
shall include the Primary Term and any Extended Term if exercised and in effect.
"Lease Year" shall mean the period beginning on the first day of the Primary
Term and ending at 12:00 midnight of the day prior to the first anniversary of
the commencement date of the Primary Term and each subsequent twelve (12) month
period within the term of this Lease.
3. Amount and Manner of Payment of Rent. As of the date hereof, Lessee
had paid to Lessor in lawful money of the United States, as partial prepayment
of rent for the Primary Term, the amount of Two Million Dollars ($2,000,000.00),
by wire transfer to an account designated by Lessor. As additional rent for the
Primary Term, Lessee shall pay to Lessor (a) the annual amount of Ten Thousand
Dollars ($10,000.00) within ten (10) business days after the end of each Lease
Year, and (b) a single payment of Seven Hundred Thousand Dollars ($700,000.00)
within ten (10) business days after the expiration of the Primary Term;
provided, however, such final payment shall be equitably prorated in the event
this lease expires prior to February 14, 2030. The rent payable during any
Extended Term hereof shall be One Million Dollars ($1,000,000.00) per each such
additional term.
4. Covenants of Lessee and Lessor
4.1 Payment of Rent. Lessee has paid and Lessor hereby acknowledges
receipt of all prepaid rent due hereunder in the manner provided in Section 3.
4.2 Maintenance and Repair.
(a) Lessee, at its own expense, will maintain all parts of the
Improvements in at least as good condition as they now are, except for
ordinary wear, tear, depreciation and obsolescence and damage by fire or
other casualty.
(b) All of the Equipment shall be maintained by Lessee in such
repair and condition as similar equipment is maintained in other
hospitals similar to and similarly located to the Premises in the State
of Texas, but Lessee shall not be required to maintain any of the
Equipment in any better
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condition than it now is. In the event that Lessee decides for any
reason that any item or items of Equipment are no longer required for
its use, Lessee may dispose of the same in accordance with the
provisions of Section 7.2. If Lessee elects to replace any damaged or
deteriorated Equipment instead of repairing the same, such replacement
items of equipment shall become the property of Lessee, provided that
the acquisition of any such replacement items of equipment shall be
subject to the provisions of Section 7. Upon the expiration or earlier
termination of this Lease, Lessee shall return to Lessor all items of
Equipment not previously returned to Lessor in such condition they are
required to be maintained hereunder, ordinary wear and tear, damage and
deterioration, and any loss or damage ordinarily covered by a policy of
fire and extended coverages excepted. As used throughout this Section
4.2(b), "ordinary wear and tear" shall mean the wear, tear, damage and
deterioration that would typically and ordinarily occur if used for a
period of time equivalent to the term of this Lease in a
medical-surgical hospital facility similar to the Premises.
4.3 Taxes and Utilities. Lessee shall pay, prior to delinquency: all
taxes, assessments, levies, fees, water and sewer rents and charges, and all
other governmental charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, which during the Primary Term or any Extended Term
hereof, (i) are imposed or levied upon or assessed against the Premises and the
Equipment, or (ii) arise out of the operation, possession or use of the
Premises. Lessee shall not be required to pay any franchise, estate,
inheritance, transfer, income or similar tax of Lessor unless such tax is
imposed, levied or assessed in substitution for any other tax, assessment,
charge or levy which Lessee is required to pay pursuant to this Section 4.3.
Lessee will furnish to Lessor, promptly after demand therefor, proof of payment
of all items referred to above which are payable by Lessee. If any such
assessment may legally be paid in installments, Lessee may pay such assessment
in installments; in such event, Lessee shall be liable only for installments
which become due and payable during the term hereof.
4.4 Compliance With Laws. Lessee shall cause the Premises to be
substantially in conformity with all laws, ordinances and regulations, and other
governmental rules, orders and determinations now or hereafter enacted, made or
issued, whether or not presently contemplated (collectively "Legal
Requirements"), applicable to the Premises or the use thereof. In the event that
the Premises are not now substantially in conformity with all Legal
Requirements, Lessor shall be responsible for promptly causing the Premises to
become substantially in conformity with all Legal Requirements, at its sole cost
and expense.
4.5 Insurance.
(a) At its sole expense, Lessee will maintain insurance on the
Premises of the following character:
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(i) Insurance against loss by fire, flood, lightning,
vandalism, malicious mischief and other risks which at the time
are included under "extended coverage" endorsements with respect
to the Premises, in an amount not less than 100% of the actual
replacement value of the Improvements, exclusive of foundations,
excavations, parking areas, drives, underground utilities and
all other land improvements.
(ii) Comprehensive public liability insurance against
claims for bodily injury, death or property damage occurring on,
in or about the Premises and adjoining streets and sidewalks, in
the amounts of $3,000,000 for bodily injury or death in any one
occurrence and $1,000,000 for property damage.
(iii) Worker's compensation insurance (including
employers' liability insurance, if requested by Lessor) to the
extent required by the law of the state in which the Premises
are located and to the extent necessary to protect Lessor and
the Premises against worker's compensation claims.
(iv) Professional liability insurance providing such
coverage and in such amounts as is regularly obtained for
similar hospitals owned or operated by affiliates of Lessee.
Such insurance shall be written by companies legally qualified to issue such
insurance, and, with the exception of the insurance described in (iv) above,
shall name Lessor and Lessee as insured parties as their interests may appear.
4.6 Surrender of Premises. Upon the expiration or termination of the
Primary Term, or if exercised, the last day of any Extended Term, Lessee shall
surrender the Premises to Lessor in the condition in which the Premises were
upon the commencement of the Primary Term, except as repaired, rebuilt,
restored, altered, added to, as permitted or required hereby; except for
ordinary wear and tear, normal deterioration and obsolescence, and damage due to
causes reasonably beyond Lessee's control and, if this Lease shall be terminated
by Lessee pursuant to Section 11.1, except any damage resulting from any fire or
other casualty. Lessee shall use its reasonable best efforts to maintain all
licenses, accreditations and Medicare-Medicaid qualifications of the Hospital
(as hereinafter defined) until such time as the Premises are surrendered to
Lessor.
4.7 Use of Premises. Lessee shall use and occupy the Premises for
operation of a 45-bed acute care, medical-surgical hospital (the "Hospital") and
the provision of such ancillary services and related, incidental uses as are
appropriate or desirable in conjunction with the operation of such health care
facility.
4.8 Waiver of Subrogation. Lessor and Lessee on behalf of themselves
and all others claiming under them, including any insurer, waive all
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claims against each other, including all rights of subrogation, for loss or
damage to their respective property (including, but not limited to, the
Premises) arising from fire, smoke damage, windstorm, hail, vandalism, theft,
malicious mischief and any of the other perils normally insured against in an
"all risk" of physical loss policy, regardless of whether insurance against
those perils is in effect with respect to such party's property and regardless
of the negligence of either party. If either party so requests, the other party
shall obtain from its insurer a written waiver of all rights of subrogation that
it may have against the other party.
5. Title and Condition of Premises.
5.1 Title to Premises. Lessor covenants, represents and warrants that
Lessor has full right and lawful authority to enter into this Lease for the term
hereof, is lawfully seized of the Premises and has good and marketable title
thereto, free and clear of all liens and encumbrances except those listed on
Schedule A, Part II (the "Permitted Encumbrances").
5.2 Condition of the Premises. The Premises and the Equipment are in
good operating condition and repair and are structurally sound and, except as
set forth in Schedule B, there are no material deferred maintenance items and
none of the Equipment nor any of the buildings, structures, fixtures or
improvements which are part of the Premises are in need of any maintenance,
repair or replacement, except for ordinary routine periodic maintenance of the
kind usually required from time to time at similar facilities.
5.3 Quiet Enjoyment. So long as no Event of Default has occurred and
is continuing, Lessee shall peaceably and quietly have, hold, occupy and enjoy
the Premises and the Equipment and all the appurtenances thereto, without
hindrance or molestation from Lessor or any other persons and other entities
whatsoever.
6. Indemnification. Lessee shall indemnify and hold Lessor harmless
against any and all claims, liabilities, damages or losses resulting from injury
or death of any person or damage to any property occurring on or about the
Premises or in any manner in conjunction with the use or occupancy of the
Premises in whole or in part, unless the death, injury or damage was sustained
as a result of any tortious or negligent act of Lessor, or Lessor's agents or
employees.
7. Alterations, Additions and Removal.
7.1 Alterations, Additions and Removal. Lessee may, at its expense,
make additions to and alterations of the Improvements, and construct additional
Improvements, provided that (i) the market value of the Premises shall not be
materially lessened thereby; (ii) such work shall be completed in a good and
workmanlike manner and in compliance with all applicable Legal Requirements and
the requirements of all insurance policies required to be maintained by Lessee
hereunder; (iii) no material part of the Improvements shall be demolished unless
(A)
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the same are replaced by other improvements which are required by Lessee in
connection with its intended use of the Premises, or (B) Lessor's prior written
consent shall have been obtained, which consent shall not be unreasonably
withheld. All such additions and alterations shall be and remain part of the
realty and become the property of Lessor at the expiration or earlier
termination of this Lease. Lessee may place upon the Premises any trade
fixtures, machinery, equipment, materials, inventory, furniture and/or other
personal property belonging to Lessee or third parties (collectively, "Lessee's
Personal Property"), whether or not the same shall be affixed to the Premises,
which are used in connection with any of Lessee's business operations on the
Premises. Any fixtures, furnishings, machinery or equipment furnished by Lessee
to the operations of the Premises during the term hereof, located on the
Premises at the conclusion of the term hereof and necessary for the continued
operations of the Hospital shall be come a part of the Premises and revert to
Lessor at the conclusion of this Lease. Lessee may remove any of Lessee's
Personal Property, except such fixtures, furnishings, machinery and equipment,
at any time during the Primary Term and any Extended Term. Lessee shall repair
any damage to the Premises caused by such removal.
7.2 Disposal of Equipment. If Lessee shall determine at any time and
from time to time that any item or items of Equipment are obsolete or no longer
suitable for Lessee's use in connection with Lessee's business or operations at
the Premises, Lessee may sell, transfer, exchange, or otherwise dispose of such
item(s) in such manner as Lessee may deem appropriate. If requested by Lessee,
Lessor shall deliver to Lessee or to Lessee's designee a bill of sale, in form
and substance reasonably satisfactory to Lessee, duly executed and acknowledged
by Lessor, which shall be sufficient to convey and transfer to Lessee or its
designee all of Lessor's right, title and interest in and to the item(s), free
and clear of all liens and encumbrances whatsoever. Lessee may retain as its
sole and absolute property the proceeds, whether in cash or in exchange property
or otherwise, of any sale, transfer, exchange or other disposition of any such
items; provided, however, Lessee shall use any proceeds received from any such
disposal to acquire replacement equipment or other equipment which shall be
located and used at the Hospital.
8. Lessee's Right to Mortgage Its Leasehold Interest.
8.1 Lessee's Right to Encumber and Mortgage this Leasehold. At any
time during the term of this Lease, Lessee may mortgage, hypothecate or
otherwise encumber Lessee's leasehold estate under this Lease in respect to both
the Premises and Equipment to secure indebtedness of Lessee under one or more
leasehold mortgages and may assign this Lease as security for such mortgage or
mortgages.
8.2 Amendments Required By Leasehold Mortgages. Lessor and Lessee
shall cooperate in including in this Lease by suitable amendment from time to
time any provision which may reasonably be requested by any leasehold mortgagee
for the purpose of allowing such leasehold mortgagee reasonable means to protect
or
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preserve its lien upon Lessee's leasehold interest under this Lease on the
occurrence of a default under the terms of this Lease. Lessor and Lessee each
agree to execute and deliver (and to acknowledge, if necessary, for recording
purposes) any agreement necessary to effect any such amendment; provided,
however, that any such amendment shall not in any way affect Sections 2, 3 or
4.7 of this Lease, or without the prior written approval of Lessor, which will
not be unreasonably withheld, modify any other provision of this Lease in a
manner which materially adversely affects Lessor.
9. Assignments and Subleases; Merger and Sale of Assets. Lessee and its
assigns shall have the right to assign this Lease, in whole or in part, and to
sublet the Premises, or any part thereof, from time to time, subject to the
prior written consent of Lessor, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing no such assignment or subletting shall
serve to relieve Lessee of any of its obligations hereunder.
10. Permitted Contests. Notwithstanding any provision of this Lease to
the contrary, Lessee shall not be required, nor shall Lessor have the right, to
pay, discharge or remove any tax, assessment, levy, fee, rent (except additional
rent and any other sums due hereunder payable to or for the benefit of Lessor),
charge, lien or encumbrance, or to comply substantially with any Legal
Requirement applicable to the Premises or the use thereof, as long as Lessee
shall contest the existence, amount or validity thereof by appropriate
proceedings which shall prevent the collection of or other realization upon the
tax, assessment, levy, fee, rent, charge, lien or encumbrance so contested, and
which also shall prevent the sale, forfeiture or loss of the Premises, or to
satisfy substantially the same or Legal Requirements, provided that such contest
shall not subject Lessor to the risk of any criminal liability or any material
civil liability. Lessee shall give such reasonable security as may be demanded
by Lessor, or any mortgagee to insure ultimate payment of such tax, assessment,
levy, fee, rent, charge, lien, or encumbrance and such compliance with Legal
Requirements and to prevent any sale or forfeiture of the Premises, any
additional rent or any other sum required to be paid by Lessee hereunder.
11. Casualty and Condemnation.
11.1 Casualty.
(a) Except as hereinafter provided, if any of the Improvements
shall be damaged or destroyed by fire or any other casualty covered by a
standard policy of fire and extended coverage insurance, as required
pursuant to Section 4.5 hereof, Lessee shall thereafter commence and
diligently prosecute to completion, at Lessee's sole expense, the repair
or rebuilding of the Improvements or portion thereof which was damaged,
in a good and workmanlike manner, in accordance with plans and
specifications satisfactory to Lessee and Lessor, which Lessor shall not
unreasonably disapprove, provided that the Improvements upon completion
of such repair or rebuilding shall have
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a value which is not substantially less than the value of the
Improvements immediately prior to the damage or destruction. All
proceeds remaining after payment of the costs of collection and
recovery, if any ("Net Proceeds") shall be paid over to Lessee to fund
the costs of repair and rebuilding.
(b) In the event that either (i) the damage or destruction with
respect to any building ("Building") which is a part of the Improvements
is so extensive that it cannot be rebuilt, restored or repaired as
required in Section 11.1(a) within one hundred twenty (120) days after
such occurrence, as determined by Lessee in its reasonable judgment or
(ii) any such damage or destruction occurs during the last two years of
the Primary Term, or the last two years of any Extended Term, then
Lessee shall have the right to terminate this Lease with respect to the
damaged or destroyed Building, but no other part of the Premises, by
giving written notice thereof to Lessor within sixty (60) days after the
occurrence of such damage or destruction and such termination will be
effective retroactively as of the date of such damage or destruction;
provided that, if the Building which suffered such damage or destruction
is the main hospital building located on Tract 1 of the Premises, then
Lessee shall have the right to terminate this Lease by giving written
notice thereof to Lessor within sixty (60) days after the occurrence of
such damage or destruction and such termination will be effective
retroactively as of the date of such damage or destruction. In addition,
if any Building is materially damaged or destroyed by any casualty not
covered by the standard policy of fire and extended coverage insurance,
then Lessee may terminate this Lease effective as of the date of such
damage or destruction by giving the other party written notice thereof
within sixty (60) days after the occurrence of such damage or
destruction. If Lessee exercises its option to terminate this Lease in
part on account of damage or destruction to a Building, the parties
shall promptly thereafter execute an amendment to this lease which shall
provide that such Building will be excised from the Premises, and that
rent payable or paid hereunder will be proportionately and equitably
abated or rebated, but only to the extent Lessee has not previously
received payments from the Reimbursement Account (as defined in Annex A
hereto) in an amount equal to the amount which would otherwise be
payable to Lessee pursuant to this provision. In the event of a
termination of this Lease, either in whole or in part, pursuant to
Section 11.1(b), the Net Proceeds of insurance shall be paid over to
Lessor, except that Lessee shall be entitled to receive such portion of
such proceeds which represents the amount allocable to the value of
Lessee's Personal Property.
11.2 Condemnation.
(a) If (i) the Premises are taken by an entity with the power of
eminent domain ("Condemning Authority") or if the Premises are conveyed
to a Condemning Authority by a negotiated sale, or if part of the
Premises is so taken or conveyed such that any of the Improvements
cannot be rebuilt so that upon completion Lessee may again use the
Premises without substantial
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interference, or (ii) due to any such taking or conveyances, access to
the Premises or any part thereof by motor vehicles and trucks as
operated by Lessee, its contractors, employees, patients and invitees in
the course of Lessee's business as theretofore conducted, is
substantially impaired or terminated; then in any such event, Lessee may
terminate this Lease by giving Lessor written notice any time after the
occurrence of any of the foregoing and such termination shall be
effective sixty (60) days from the date possession is taken by the
Condemning Authority.
(b) If part of the Premises or any Building or a substantial
part thereof is so taken or conveyed without substantially interfering
with the use of the Premises as a whole, but only one or more of the
Buildings thereon, this Lease shall not terminate, except to the extent
hereinafter provided. In such event, however, (i) Lessee shall have the
option to terminate this Lease in respect to any Building which is
subject to such taking or conveyance by notifying within sixty (60) days
after the title is transferred to the Condemning Authority, and Lessor
shall be entitled to all awards and payments made or to be made by the
Condemning Authority, and (ii) if Lessee exercises such termination
option, Lessor shall apply such portions of any award or payment made to
Lessor for such taking or conveyance as is necessary to pay the cost of
restoring the Building and/or the Premises to a complete architectural
unit suitable for Lessee's use and business on the Premises. If Lessee
exercises its option to terminate this Lease in part on account of a
taking or conveyance of a Building or any substantial part thereof as
provided in clause (i) above, the parties shall promptly thereafter
execute an amendment to this Lease which shall provide that the Building
will be excised from the Premises, and that rent payable or paid
hereunder will be proportionately and equitably abated or rebated, but
only to the extent Lessee has not previously received payments from the
Reimbursement Account in an amount equal to the amount which would
otherwise be payable to Lessee pursuant to this provision.
(c) Except as provided below and in Paragraph (b) of this
Section 11.2(b), all payments made for any such taking or conveyance
shall be the property of Lessor; provided, however, Lessor shall have no
interest in any award or payment or any portion of any such award or
payment which is attributable to the taking or conveyance of any trade
fixtures, equipment and other personal property that have been placed on
or within the Premises by Lessee since the Commencement Date or any
leasehold improvements made by Lessee since the Commencement Date, all
of which shall be paid to Lessee.
(d) If this Lease is terminated pursuant to this Section 11,
Lessor and Lessee shall be released and discharged from all liabilities
arising or accruing under this Lease subsequent to the effective date of
termination.
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12. Right of Entry.
Upon not less than forty-eight (48) hours prior written notice to
Lessee, Lessor and its agents and designees may enter upon and examine the
Premises at reasonable times for the purpose of determining the condition of the
Premises, and may show the Premises to prospective purchasers, mortgagees or
lessees as long as such examination or showing shall not unreasonably interfere
with the business operations of Lessee on the Premises.
13. Default.
13.1 Default; Notice and Cure; Remedies. In the event Lessee shall
default in the payment of any sums payable by Lessee hereunder, and such default
shall continue for a period of fifteen (15) days after Lessee receives written
notice thereof from Lessor; or, if Lessee shall default in the performance of
any other covenants or agreements hereunder and such default shall continue for
thirty (30) days after written notice thereof, or, if the default is of such a
nature that it could not reasonably be cured within such thirty (30) day period
and Lessee does not, within said thirty (30) day period commence to cure it and
thereafter proceed, with due diligence, to cure it; or, if Lessee shall fail to
cause the Premises to be substantially in conformity with the Legal Requirements
and all other contracts, agreements, covenants, conditions and restrictions
applicable to the ownership, occupancy or use of the Premises, as set forth in
Section 4.4 hereof, and such failure shall continue for thirty (30) days after
written notice thereof, or if the failure is of such a nature that it could not
reasonably be cured within such thirty (30) day period and Lessee does not,
within such thirty (30) day period commence to cure it and thereafter proceed,
with due diligence, to cure it; then, and in addition to any and all other legal
remedies and rights, Lessor may perform such covenant or agreement and to the
extent sums are expended in connection therewith, and add such sums to the rent
payable by Lessee to Lessor or, at the election of Lessor, may terminate this
Lease and retake possession of the Premises by eviction, reentry or otherwise.
Such re-entry shall not bar the right or recovery of such additional rent or
damages for breach of covenants, nor shall the receipt of rent after conditions
broken be deemed a waiver of Lessor's remedies.
13.2 Abandonment of Premises; Liquidated Damages. Notwithstanding
any other provision hereof to the contrary, Lessee shall have the right to
abandon the Premises and thereby terminate this Lease by giving Lessor one
hundred eighty (180) days prior written notice of its intent so to do. In the
event, however, Lessee abandons the Premises without having given Lessor such
notice, Lessor shall suffer significant damage in an amount which shall be
extremely difficult to ascertain. Accordingly, the parties agree that in such
event liquidated damages would be an appropriate remedy to be recovered by
Lessor from Lessee and that Five Thousand Five Hundred Fifty-five Dollars
($5,555.00) for each day Lessee fails to provide the full one hundred eighty
(180) days' notice of abandonment is the appropriate amount of such liquidated
damages. (Hence, for example: in the event Lessee abandoned the Premises having
given Lessor only ninety (90) days' notice
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thereof, the amount of liquidated damages provided for hereunder would be Four
Hundred Ninety-nine Thousand Nine Hundred Fifty Dollars ($499,950.00).)
13.3 Costs and Expenses. If Lessee should fail to make any payment
or cure any default hereunder within the time herein permitted, Lessor, without
being under any obligation to do so and without thereby waiving such default,
may make such payment and/or remedy such other default for the account of
Lessee, and thereupon Lessee shall be obligated to, and hereby agrees, to pay
Lessor, upon demand, all costs, expenses and disbursements (including reasonable
attorneys' fees) incurred by Lessor in taking such remedial action.
14. Environmental Matters.
14.1 Warranty of Lessor. Except as set forth in Schedule C, Lessor
represents and warrants to Lessee that as of the date hereof no "Hazardous
Substances" (as hereafter defined) or any other toxic material or medical waste
are present on or in the Improvements or Land, except for Hazardous Substances
or other toxic materials or medical waste brought, kept or used in the Premises
in commercial quantities similar to those quantities usually kept on similar
premises by others in the same business or profession or who operate medical
facilities similar to those located in and on the Premises, and which are used
and kept in compliance with applicable public health, safety and environmental
laws; and Lessor shall indemnify Lessee against any and all claims, demands,
liabilities, losses and expenses, including consultant fees, court costs and
reasonable attorneys' fees, arising out of any breach of the foregoing warranty.
14.2 Covenant of Lessee. Except for Hazardous Substances or other
toxic materials or medical waste brought, kept or used in the Premises in
commercial quantities similar to those quantities usually kept on similar
premises by others in the same business or profession or who operate medical
facilities similar to those located in and on the Premises, medical specialty,
and which are used and kept in compliance with applicable public health, safety
and environmental laws, Lessee shall not allow any Hazardous Substance, or other
toxic material or medical waste to be located in, on or under the Premises or
allow the Premises to be used for the disposal of any Hazardous Substance or
other toxic material.
14.3 Compliance with Laws. Lessee shall at all times and in all
respects substantially comply with all federal, state or local laws, ordinances,
regulations and orders applicable to the Premises or the use thereof relating to
industrial hygiene, the handling, storage and disposal of medical waste,
environmental protection, or the use, analysis, generation, manufacture,
storage, disposal or transportation of any Hazardous Substance, toxic material
or medical waste.
14.4 Remediation. If Lessee becomes aware of the presence of any
Hazardous Substance in or on the Premises (except for those Hazardous
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Substances or other toxic material or medical waste brought, kept or used in the
Premises by Lessee in commercial quantities similar to those quantities usually
kept on similar premises by others in the same business, profession or medical
specialty and which are used and kept in compliance with applicable public
health, safety and environmental laws) or if Lessee, or the Premises become
subject to any order of any federal, state or local agency to repair, close,
detoxify, decontaminate or otherwise cleanup the Premises, Lessee shall, at its
own cost and expense, carry out and complete any repair, closure,
detoxification, decontamination or other cleanup of the Premises; provided that
Lessee shall not be responsible for any of the foregoing relating to any
Hazardous Substance, or other toxic materials or medical waste located on, in or
under the Premises on the date of this Lease, all of which shall be the
responsibility of Lessor pursuant to Section 14.1 and Lessor shall promptly
execute and complete any required repair, closure, detoxification,
decontamination or other clean-up of the Premises. If either party fails to
implement and diligently pursue any such repair, closure, detoxification,
decontamination other cleanup of the Premises which it is required to do
hereunder, the other party shall have the right, but not the obligation, to
carry out such action and to recover all of the costs and expenses from the
other.
14.5 Definition. "Hazardous Substances" as such term is used in this
Lease means any hazardous or toxic substance, material or waste, regulated or
listed pursuant to any federal, state or local environmental law, including
without limitation, the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conversation and Recovery Act, the Federal Insecticide,
Fungicide, Rodenticide Act, the Safe Drinking Water Act and the Occupational
Safety and Health Act.
15. Notices, Demands and Other Instruments. All notices, offers,
consents and other instruments given pursuant to this Lease shall be in writing
and shall be validly given when actually delivered or sent by a courier or
express service guaranteeing overnight delivery, (i) if to Lessor, addressed to
it at its address set forth above, (ii) if to Lessee, addressed to Lessee at its
address set forth above. Lessor and Lessee each may from time to time specify,
by giving fifteen (15) days notice to each other party, (i) any other address in
the United States as its address for purposes of this Lease and (ii) any other
person or entity that is to receive copies of notices, offers, consents and
other instruments hereunder.
16. Separability; Binding Effect. Each provision hereof shall be
separate and independent and, the breach of any such provision by Lessor shall
not discharge or relieve Lessee from its obligations to perform each and every
covenant to be performed by Lessee hereunder. If any provision hereof or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforceable to
A-I-12
the extent permitted by law. All provisions contained in this Lease shall be
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and assigns of Lessor and Lessee to the same extent as if each such
successor and assign were named as a party hereto. This Lease may not be
changed, modified or discharged except by a writing signed by Lessor and Lessee.
Any such change, modification or discharge made otherwise than as expressly
permitted by this paragraph shall be void. This Lease shall be governed by and
interpreted in accordance with the laws of the State of Texas.
17. Headings and Table of Contents. The table of contents and the
headings of the various Sections and Schedules of this Lease have been inserted
for reference only and shall not to any extent have the effect of modifying,
amending or changing the expressed terms and provisions of this Lease.
18. Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
19. Memorandum of Lease. Upon request of either party hereto, the
parties shall execute and deliver to each other duplicate originals of a
Memorandum of this Lease, in recordable form, containing the information
required by law for recording the same.
20. Assignment of Existing Leases. Lessor hereby confirms its assignment
to Lessee all of its right, title and interest as lessor under those certain
leases affecting the Premises which are existing and in effect as of the date of
execution of this Lease listed on Schedule 1.1(b) of Annex A attached hereto and
made a part hereof (hereinafter the "Existing Leases"), and Lessee hereby agrees
to assume all Lessor's obligations, covenants and agreements as lessor under the
Existing Leases. Lessee shall be entitled to collect and receive all such rents
and other sums from the lessees under the Existing Leases accruing on and after
the Commencement Date, and Lessee and Lessor agree that the Existing Leases
shall upon this assignment become subleases subject and subordinate to this
Lease. Lessee shall notify each of the lessees under the Existing Leases of this
assignment.
21. No Partnership. The parties hereto intend the relationship created
by this Lease to be that of lessor and lessee and do not intend for the
arrangement between them to be a partnership.
22. Purchase of Equipment, Leasehold Improvements and Net Working
Capital at End of Term. Upon expiration or earlier termination of this Lease
(other than in accordance with Section 23 hereof), and subject to the provisions
of Section 7.1 hereof, Lessor, at its option, may purchase: (i) all of Lessee's
personal property used in the operations of the Premises; and (ii) the net
working capital of Lessee relating to the operation of the Premises as of the
last day of the Term. The purchase price paid by Lessor for such personal
property and working capital items
A-I-13
shall be the then net book value of such personal property and working capital
items at the time of expiration or earlier termination of this Lease, based on
Lessee's books and records. Lessee shall transfer and convey the same by bill of
sale, free of all liens and Lessor shall pay the purchase price in cash with
delivery of the bill of sale.
23. No Alienation of Premises. During the term hereof, Lessor shall not
sell, convey, transfer or otherwise alienate the Premises or any interest
therein to any person or entity except Lessee.
24. Board of Trustees. During the term hereof, the Hospital will have a
Board of Trustees comprised of no less than seven (7) members who will be
selected by Lessee, provided that such Board shall be comprised in part of no
less than two physicians practicing in the community and no less than four
members of the community and the chief executive officer of the Hospital. The
Board of Trustees will be responsible for reviewing quality and utilization
management programs, recommending capital and operating budgets, seeking
community input for new services and technology, developing and recommending
community health status projects, monitoring JCAHO activities and all the
specific aspects of a hospital board's role as defined by the JCAHO.
25. Department of Health and Human Services Regulation. Until the
expiration of four years after the expiration or earlier termination of the Term
of this Lease, Lessor will make available to the Secretary, U.S. Department of
Health and Human Services, and the U.S. Comptroller General, and their
representatives, this Lease and all books, documents, and records necessary to
certify the nature and extent of Lessor's costs with respect to this Lease and
the Premises. If Lessor carries out any of its duties under this Lease through a
subcontract worth $10,000 or more over a 12-month period with a related
organization, the subcontract will also contain an access clause to permit
access by the Secretary, Comptroller General, and their representatives to the
related organization's books and records.
26. Annex and Schedules. Annex A and Schedules A, B, and C, referred to
in this Lease are hereby incorporated by reference herein.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date and year first written above.
LESSOR:
Attest
THE CITY OF ENNIS, TEXAS
/s/ Renie Mitchell
- --------------------------
Secretary By: /s/ Steve Howerton
------------------------------
/s/ Josh Mask Name: Steve Howerton
- --------------------------- ----------------------------
Witness Title: City Manager
---------------------------
STATE OF TEXAS )
COUNTY OF ELLIS )
This instrument was acknowledged before me on the 14th day of February, 2000, by
Steve Howerton, as City Manager of The City of Ennis, Texas, a political
subdivision of the State of Texas, on behalf of said City.
/s/ Sharon D. Thomas
----------------------------------
Notary Public, State of Texas
Printed Name: Sharon D. Thomas
--------------------
My Commission Expires: 07-13-2002
A-I-1
LESSEE:
THE CITY OF ENNIS, TEXAS
/s/ Christine Craft
- -----------------------------
Witness By: /s/ James Thomas Anderson
---------------------------
Name: James Thomas Anderson
---------------------------
Title: Senior Vice President
--------------------------
/s/ George W. Bishop III
- -----------------------------
Witness
STATE OF TEXAS )
COUNTY OF ELLIS )
This instrument was acknowledged before me on the 14th day of February, 2000, by
James Anderson, as Vice President of PRHC-Ennis GP, Inc., general partner of
PRHC-Ennis, LP, on behalf of said limited partnership.
/s/ Sharon D. Thomas
----------------------------------
Notary Public, State of Texas
Printed Name: Sharon D. Thomas
--------------------
My Commission Expires 07-13-2002
A-I-2
SCHEDULE A
(PART I)
Legal Description
A-I-3
SCHEDULE A
(PART II)
Permitted Encumbrances
Those matters shown on Schedule C to that certain Commitment for Title
Insurance, dated February 14, 2000, and issued by First American Title Insurance
Company of Texas.
A-II
SCHEDULE B
Deferred Maintenance Items
None.
B-1
SCHEDULE C
Environmental Matters
Those matters specifically described in that certain Phase I Environmental Site
Assessment and Limited Facility Audit prepared for Lessee by Veritech
Environmental Services, reflecting the findings of its review of the Hospital on
February 3, 2000.
ANNEX A TO LEASE AGREEMENT
THIS ANNEX A TO LEASE AGREEMENT ("Annex A"), dated as of February 14,
2000, between THE CITY OF ENNIS, TEXAS ("Lessor"), a political subdivision of
the State of Texas, and PRHC-ENNIS, LP ("Lessee"), a Texas limited partnership,
the partners of which are wholly-owned subsidiaries of Province Healthcare
Company ("PHC").
WITNESSETH:
WHEREAS, Lessor is engaged in the provision of health care services in
Ennis, Texas, through the lease of City of Ennis Hospital, a 45-bed general
acute care hospital (the "Hospital", and the business previously conducted
through the Hospital, the "Business"); and
WHEREAS, the prior conveyance of the Hospital shall terminate on
February 15, 2000, and the Hospital has ceased operation; and
WHEREAS, Lessee is willing to lease from Lessor the real property and
improvements comprising the Hospital, reopen the Hospital and thereafter operate
the Hospital during the term of the Lease to which this Annex A is attached (the
"Lease"); and
WHEREAS, the parties willingness to enter into the Lease is conditioned
upon the representations, warranties and covenants of the parties set forth in
this Annex A; and
WHEREAS, the City Commission of Lessor after due consideration are of
the opinion that the lease of the Hospital and the sale of certain of the other
assets used in the operation of the Hospital to Lessee is in the community's
best interest in light of significant changes in the health care industry; and
WHEREAS, this Annex A provides for the sale by Lessor of certain of the
assets, tangible and intangible, used in the operation of the Business, as
scheduled herein.
NOW, THEREFORE, for and in consideration of the foregoing premises and
the agreements, covenants, representations and warranties hereinafter set forth
and other good and valuable consideration, the receipt and adequacy of all of
which are acknowledged and agreed, the parties hereto agree as follows:
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1. Sale of Assets and Certain Related Matters.
1.1 Sale of Assets. At the Closing (as defined in Section 2.1),
Lessor shall sell, transfer, convey, assign and deliver to the Lessee (or its
designee), and Lessee shall purchase from Lessor, the following assets:
(a) all rights, if any, and to the extent assignable or
transferable, to all licenses, certificates of need, certificates of
exemption, franchises, accreditations and registrations and other
licenses or permits issued in connection with the Business (the
"Licenses"), including, without limitation, the Licenses described in
Schedule 1.1(a);
(b) all of Lessor's interest, if any, and to the extent
assignable or transferable by it, in and to those property leases
relating to the Business described in Schedule 1.1(b)(i), in respect of
capitalized leases and Schedule 1.1(b)(ii), in respect of operating
leases (all of such leases being referred to collectively as the
"Leases");
(c) all of Lessor's interest, if any, and to the extent
assignable or transferable by it, in and to those contracts and
agreements relating to the Business set forth in Schedule 1.1(c) (the
"Contracts");
(d) all documents, records, operating manuals and files, and
computer software owned by Lessor or its affiliates, pertaining to or
previously used in connection with the Business, including, without
limitation, all patient records, medical records, financial records,
equipment records, construction plans and specifications, and medical
and administrative libraries;
(e) the right to use, during the term of the Lease, the name
"City of Ennis Hospital" and variations thereof; and
(f) subject to the provisions of Section 11 or the Lease, all
insurance proceeds arising in connection with damage to the Premises (as
defined in the Lease), the Equipment (as defined in the Lease) or the
Assets (as hereinafter defined):
The foregoing are hereafter referred to, collectively, as the "Assets".
1.2 Assets Free and Clear; Assignment and Undertaking.
(a) Notwithstanding any other provision hereof to the contrary,
the Assets shall be sold free and clear of all liabilities, liens and
encumbrances, except for the liens, liabilities and encumbrances
expressly agreed to be assumed by Lessee pursuant to the Assignment and
Undertaking Agreement (the "Assignment and Undertaking") in the form
attached hereto as Appendix 1.2. Except as provided in the Assignment
and Undertaking, Lessee is not
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assuming and shall not be deemed to have assumed any other liability or
obligation of Lessor or any of its affiliates, fixed or contingent,
disclosed or undisclosed, or otherwise, including, without limitation,
any liability in respect of prior cost reports filed in respect of the
Hospital's operations or any other liability relating to reimbursements
or payments from third-party payors.
(b) To effect assumptions and assignments of Contracts and
Leases contemplated hereby, Lessee and Lessor shall execute the
Assignment and Undertaking. Except for those Contracts and Leases of
Lessor expressly assumed by Lessee in the Assignment and Undertaking,
Lessee is not undertaking and shall not be deemed to be responsible for
any other of Lessor's leases, agreements or contracts or for any
indebtedness incurred or arising with respect to any period on or prior
to the Closing Date in connection with the Assets or their operation,
whether fixed or contingent, disclosed or undisclosed, or otherwise.
(c) If, in the Assignment and Undertaking, Lessee assumes any
liabilities of Lessor and if there are, or are alleged to be, any
liabilities of Lessor related to those so assumed by Lessee as of the
date immediately preceding the Closing Date in excess of the amount of
such liabilities so assumed, Lessee shall not be required hereunder to
assume or pay such items, but instead shall promptly deliver such items
to Lessor for payment, contest, compromise or settlement as Lessor may
determine.
(d) With respect to any indebtedness secured by a lien on the
Assets which is not expressly assumed by Lessee in the Assignment or
Undertaking, Lessor shall discharge any such lien prior to or at the
Closing.
1.3 Purchase Price; Value of Certain Assets.
(a) The purchase price of the Assets (the "Purchase Price")
shall be One Dollar ($1.00).
(b) As of the Closing, Lessee and Lessor shall prorate, if
possible, property lease payments, as well as all other income and
expenses with respect to the Business which are normally prorated upon
the sale of assets of a going concern. Lessor shall, to the extent
practicable, order final readings of all power and other utility charges
to be made as of the Closing Date and shall pay when due all charges in
respect thereof.
2. Closing.
2.1 Closing The consummation of the sale and purchase of the Assets
(the "Closing") shall take place in Ennis, Texas, at the offices of McCarty,
Wilson & Mash, P.C., or other agreed upon location, at 10:00 A.M. local time on
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February 15, 2000, unless the parties hereto agree otherwise in writing (the
"Closing Date").
2.2 Action of Lessor at Closing At the Closing, Lessor shall deliver
to Lessee the following:
(i) the Assignment and Undertaking;
(ii) a general bill of sale and assignment in the form attached
hereto as Appendix 2.2(ii) (the "Bill of Sale") conveying and assigning
to Lessee all of the Assets;
(iii) copies of duly certified minutes of actions taken by
Lessor authorizing and approving Lessor's performance of the
transactions contemplated hereby and the execution and delivery of the
documents described herein; and
(iv) all of Lessor's Contracts, Leases, commitments, books,
records and other data relating to the Business.
2.3 Action of Lessee at Closing At the Closing, Lessee shall deliver
to Lessor the following:
(i) payment of the cash portion of the Purchase Price in cash or
immediately available funds;
(ii) the Assignment and Undertaking;
(iii) copies of resolutions duly adopted by Lessee authorizing
and approving Lessee's performance of the transactions contemplated
hereby and the execution and delivery of the documents described herein,
certified as true and of full force as of Closing by appropriate
officers of the general partner of the Lessee;
(iv) a certificate, dated as of the Closing Date, of an officer
of the general partner of the Lessee certifying that, to the best of
such officer's knowledge and belief, as of the Closing all of the
representations and warranties by or on behalf of Lessee contained in
this Annex A are true and correct and the covenants and agreements of
Lessee to be performed prior to or as of Closing pursuant to this Annex
A have been performed; and
(v) a certificate of incumbency, dated as of the Closing Date,
for the officers of the general partner of the Lessee making
certifications for Closing or executing the Assignment and Undertaking
or this Annex A.
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3. Representations and Warranties of Lessor.
As of the date hereof, Lessor represents and warrants to Lessee that:
3.1 Corporate Capacity Lessor is a validly existing political
subdivision of the State of Texas with all requisite power and authority to own,
operate and lease its properties and to carry on its businesses as now being
conducted.
3.2 Powers; Absence of Conflicts With Other Agreements, etc
(a) The execution, delivery and performance by Lessor of the
Lease and this Annex A and the other agreements and transactions
contemplated hereby:
(i) are within the power of Lessor, are not in
contravention of the terms of the any resolution or act or
governing instrument or any amendments thereto of Lessor or of
the State of Texas and have been duly authorized by the City
Commission of Lessor, as and to the extent required; and
(ii) on the Closing Date, (A) will not result in any
breach of any indenture, agreement, lease or instrument to which
Lessor is a party or by which Lessor is bound, (B) will not
constitute a violation of any judgment, decree, or order of any
court of competent jurisdiction applicable to Lessor, (C) will
not violate any law, rule or regulation of any governmental
authority applicable to Lessor or any of the Assets and (d) will
not require any consent, approval or authorization of, or notice
to, or declaration, filing or registration with, any
governmental or regulatory authority.
(b) As of the Closing, this Annex A and the other agreements and
instruments contemplated hereby have been duly and validly executed and
delivered by Lessor. This Annex A and the other agreements and
instruments contemplated hereby constitute the valid, legal and binding
obligations of Lessor enforceable against it in accordance with their.
3.3 Licenses Lessor has all licenses and permits relating to the
ownership of the Assets and operation of the Business as are necessary and
required for such ownership and operation. Schedule 3.3 hereto contains a
complete description of all material licenses, permits, franchises, certificates
of need, certificate of need applications, and PRO memos, if any, and their
respective dates of termination or renewal, owned or held by Lessor relating to
the ownership, development or operation of the Assets or the Business, together
with any formal and specific notices or directives received from the agency
responsible for such Schedule 3.3 item, for which noncompliance with such notice
or directive would likely
E-7
cause the revocation, suspension or material diminution in term for such item.
All items listed on Schedule 3.3 are, to the best of Lessor's knowledge and
belief, in good standing.
3.4 Certain Contracts Schedule 3.4 lists all contracts to which
Lessor is a party involving obligations of Lessor in respect of the Business
(the "Scheduled Contracts"). Lessor has delivered to Lessee true and correct
copies of all Scheduled Contracts. All of such Contracts which Lessee has agreed
to assume pursuant to the Assignment and Undertaking are valid and binding
obligations of Lessor, are in full force and effect, and are enforceable against
Lessor in accordance with their terms. Except as expressly noted in Schedule
3.4, all Contracts which Lessee has agreed to assume pursuant to the Assignment
and Undertaking are terminable at the option of Lessor on no more than 90 days
notice without liability to Lessor. Lessor has not received any notice that the
other parties to the Contracts which Lessee has agreed to assume pursuant to the
Assignment and Undertaking are (i) in default under such Contracts or (ii)
consider Lessor to be in default thereunder. Except as expressly noted in
Schedule 3.4, to the best knowledge of Lessor, no party to any of the Contracts
which Lessee has agreed to assume pursuant to the Assignment and Undertaking
intends to terminate or materially adversely modify its agreement(s) with
respect thereto, or materially adversely change the volume of business done
thereunder.
3.5 Certain Leases Schedule 3.5 lists all leases to which Lessor is a
party in respect of the Business ("Scheduled Leases"). Lessor has delivered to
Lessee true and correct copies of all Scheduled Leases and all related
amendments, supplements, modifications and related documents (the "Scheduled
Lease Documents"). The Scheduled Lease Documents are unmodified and in full
force and effect, and there are no other agreements, written or oral, between
Lessor and any third parties claiming an interest in Lessor's interest in the
Scheduled Leases or otherwise relating to Lessor's use and occupancy of any
leased property. All such Leases which Lessee has agreed to assume pursuant to
the Assumption Agreements are valid and binding obligations of Lessor, are in
full force and effect, and are enforceable against Lessor in accordance with
their terms; and no event has occurred including, but not limited to, the
execution, delivery and performance of this Annex A and the consummation of the
transactions contemplated hereby which (whether with or without notice, lapse of
time or both) would constitute a default thereunder. Lessor has not received any
notice that the other parties to the Leases which Lessee has agreed to assume
pursuant to the Assumption Agreements are (i) in default under such Leases or
(ii) consider Lessor to be in default thereunder. No property leased under any
Lease which Lessee has agreed to assume pursuant to the Assumption Agreements is
subject to any lien, encumbrance, easement, right of way, building or use
restriction, exception, variance, reservation or limitation as might in any
respect interfere with or impair the present and continued use thereof in the
usual and normal conduct of the Business.
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3.6 Title to Assets and Related Matters On the Closing Date, Lessor
will hold of record good, marketable and insurable title to all of the Assets
free and clear of all title defects, liens, pledges, claims, charges, rights of
first refusal, security interests or other encumbrances and not subject to any
rights of way, building or use restrictions, exceptions, variances, reservations
or limitations of any nature whatsoever, except with respect to all such
properties, matters set forth in Schedule 3.6 ("Permitted Encumbrances").
3.7 Employee Benefit Plans Lessor has no employees who are primarily
employed in connection with the Business and, by entering into and performing
under the Lease and this Annex A, Lessee will not incur any liability whatsoever
to any person who has previously been employed by Lessor or anyone else in
connection with the Business.
3.8 Litigation or Proceedings Schedule 3.8 contains a list of each
lawsuit or legal proceeding to which Lessor is a party or which arose out of or
in connection with the Business or which has been threatened against Lessor in
connection with the Business. Since January 1, 1998, Lessor has not been subject
to any formal or informal (of which Lessor has received notice) investigations
or proceedings of the Texas Department of Health, the United States General
Accounting Office, the Health Care Financing Administration or other similar
governmental agencies (except for any investigations being conducted in the
ordinary course of business and applicable to all hospitals) with respect to the
Hospital. There are no such claims, actions, proceedings or investigations of
which Lessor has received notice pending or threatened challenging the validity
or propriety of the transactions contemplated by this Annex A. Lessor is not
now, and has not been, a party to any injunction, order, or decree restricting
the method of the conduct of its business or the marketing of any of its
services, nor has any governmental agency investigated or requested (other than
on a routine basis) information with respect to such methods of business or
marketing of services; Lessor has not received any claim that Lessor currently
violates any federal, state, or local law, ordinance, rule or regulation, which
could have a material adverse effect on the Business and no such claim is or has
been threatened; and there have been no developments materially adverse to
Lessor with respect to any pending or threatened claim, action or proceeding of
an administrative or judicial nature in connection with the Business, including
but not limited to those referred to in Schedule 3.8, and including without
limitation any such pending or threatened claim, action or proceeding arising
from or relating to (i) the assertion by any governmental authority of any
retroactive adjustment of the sums which Lessor was entitled to receive pursuant
to government or third party reimbursement programs such as (but not limited to)
Medicare and Medicaid, or (ii) any allegation by any governmental authority of
fraud or abuse in connection with the making of any application for
reimbursement pursuant to the government or third party reimbursement programs
referred to in the preceding clause (i).
E-9
3.9 Certain Representations With Respect to the Business
(a) The Hospital is duly accredited as a general hospital by the
Joint Commission on Accreditation of Healthcare Organizations ("JCAHO").
(b) The Hospital is qualified for participation in the Medicare
program. Complete and accurate copies of Lessor's existing Medicare
contracts for the Hospital have been furnished to Lessee. The Hospital
is presently in compliance with all of the terms, conditions and
provisions of such contracts.
(c) The Hospital is qualified for participation in the Medicaid
program. Complete and accurate copies of Lessor's existing Medicaid
contracts for the Hospital have been furnished to Lessee. The Hospital
is presently in compliance with all of the terms, conditions and
provisions of such contracts.
(d) The Hospital participates in the CHAMPUS program. The
Hospital is presently in compliance in all material respects with all of
the terms and conditions of such participation.
(e) The Hospital is not in violation in any material respect of
any fire code.
(f) To Lessor's knowledge, Lessor has received no written
notification that the Hospital is in violation of local building codes,
ordinances or zoning laws. The building or buildings in which the
Hospital is located comply in all material respects with all local
building codes, ordinances and zoning laws and are in a state of good
condition and repair, normal wear and tear excepted.
(g) Lessor has furnished to Lessee is a copy of the licensure
survey report of the Hospital's skilled nursing facility by the Texas
Department of Health for 1999.
(h) The Hospital is licensed by the Texas Department of Health
as a general acute care hospital authorized to operate a 45-bed general
acute care hospital in its existing facilities located in Ennis, Texas.
To Lessor's knowledge, the Hospital is presently in compliance in all
material respects with all the terms, conditions and provisions of such
licenses. The facilities, equipment, staffing and operations of the
Hospital satisfy, without material exception, the applicable hospital
licensing requirements of the State of Texas.
3.10 Hill-Burton Funds To the extent funds have been received on
behalf of Lessor or any predecessor of Lessor to construct, improve or acquire
any of the assets comprising the Hospital under the "Hill-Burton" Act, the
financial obligation in respect of such funds has been fully satisfied, and
Lessee shall not be
E-10
required to pay, or otherwise satisfy, any amounts as a "recovery" or otherwise
as a result of the consummation of the transactions contemplated by this Annex
A.
3.11 Payments. Neither Lessor nor any affiliate or representative
thereof has, directly or indirectly, paid, delivered or agreed to pay or deliver
any fee, commission or other sum of money or item of property, however
characterized, to any person, government official or other party with respect to
the Hospital or the Business that has or is illegal under any federal, state or
local law.
3.12 No Misleading Statements. No representation or warranty by
Lessor contained in the Lease or this Annex A, and no statement contained in any
Schedule (including any supplement or amendment thereto) and the documents to be
delivered at the Closing by or on behalf of Lessor to Lessee or any of its
representatives in connection with the transactions contemplated hereby (the
Schedules, including any supplement or amendment thereto, and such other
documents are herein referred to, collectively, as the "Additional Documents"),
and no written statement made or delivered by Lessor in connection with this
Annex A or the transactions contemplated hereby, contains or will contain any
untrue statement of a material fact, or, to the best of their knowledge after
due inquiry, omits or will omit to state any material fact necessary, in light
of the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading. Copies of all documents described
on any Schedule hereto shall be true, correct and complete, and all descriptions
of such documents shall be true and complete.
4. Representations and Warranties. As of the date hereof Lessee
represents and warrants to Lessor the following:
4.1 Lessee Capacity Lessee is a limited partnership validly existing
under the laws of the State of Texas with all requisite power and authority to
own, operate and lease its properties.
4.2 Corporate Authorization/Contract Binding The execution, delivery
and performance by Lessee of the Lease and this Annex A and the other agreements
and transactions contemplated hereby are within Lessee's power, are not in
contravention of the terms of Lessee's Limited Partnership Agreement or any
amendments thereto. No provisions exist in any document or instrument to which
Lessee is a party or by which Lessee is bound which would be violated by the
execution of, or the performance by Lessee, and the consummation by Lessee of
the transactions contemplated by, this Annex A. This Annex A will, upon
execution, constitute the valid, legal and binding obligation of Lessee,
enforceable against Lessee in accordance with its terms except as such may be
limited by bankruptcy and other laws of general applicability affecting sellers'
and creditors' rights and general equitable principles.
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5. Covenants of Lessor. Lessor covenants and agrees as follows:
5.1 Information Between the date of this Annex A and the Closing
Date, Lessor shall afford to the officers and authorized representatives of
Lessee access to the Hospital and to Lessor's books and records and will furnish
to Lessee such additional financial data and other information relating to the
Hospital or the Business as Lessee may from time to time reasonably request.
Lessor agrees to cooperate reasonably with Lessee in Lessee's efforts (i) to
make any required filings and to obtain any governmental approvals necessary in
order to consummate the transactions contemplated hereby, (ii) to respond to any
governmental investigation of such transactions, and (iii) to defend any legal
or administrative proceedings challenging such transactions. Lessor will, upon
reasonable request, cooperate with Lessee, Lessee's representatives and counsel
in the preparation of any document or other material which may be required by
any governmental agency as a predicate to or result of the transaction herein
contemplated. With respect to Confidential Information provided by Lessor in
connection with and relative to the transactions contemplated by this Annex A,
Lessee agrees to use reasonable efforts to cause its officers, employees,
representatives and agents to hold all such Confidential Information in strict
confidence, unless compelled to disclose by judicial or administrative process
or, in the opinion of Lessee's counsel, by other requirements of law, and, if
requested, to return all originals and copies of any such written Confidential
Information to Lessor in the event for any reason the sale of the Assets is not
consummated. Subject to Lessee's disclosure obligations under federal securities
laws, any release to the public of information with respect to the sale by
Lessor and purchase by Lessee of the Assets will be made only in the form and
manner approved by the parties and their respective representatives. Lessee
agrees that it will not use, and will not knowingly permit others to use, any
Confidential Information in a manner detrimental to the Business or Lessor or to
their competitive disadvantage. For the purposes hereof, "Confidential
Information" shall mean all information of any kind concerning Lessor, obtained,
directly or indirectly, from Lessor in connection with the transactions
contemplated by this Annex A except information (i) ascertainable or obtained
from public or published information, (ii) received from a third party not known
by Lessee to be under an obligation to Lessor to keep such information
confidential, (iii) which is or becomes known to the public (other than through
a breach of this Annex A), or (iv) which was in Lessee's possession prior to
disclosure thereof to Lessee in connection herewith.
5.2 Operations Between the date of this Annex A and the Closing Date,
with respect to the ownership of the Assets and the Hospital, Lessor will:
(a) perform in all respects Lessor's obligations under
agreements, if any, relating to or affecting the Business; and
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(b) keep in full force and effect present insurance policies or
other comparable insurance coverage, if any.
5.3 Certain Changes Between the date of this Annex A and the Closing
Date, Lessor will not, without the prior written consent of Lessee:
(a) sell or agree to sell the Hospital or any portion thereof;
or
(b) engage in any transaction out of the ordinary course of
business, including any sale, transfer, lease, encumbrance or granting
of a security interest in the Hospital or any portion thereof.
Lessor agrees to consult with Lessee with respect to entering into,
renewing or terminating any contract or lease relating to the Business and will
not enter into, renew or terminate any such contract or lease without the prior
written consent of Lessee.
5.4 Casualty If any material part of the Hospital is damaged so as to
be rendered unusable or destroyed prior to Closing, Lessee may elect to
terminate the Lease and this Annex A and all obligations of the parties
hereunder.
5.5 Best Efforts to Close Lessor shall use its best efforts to
proceed toward the Closing and to cause the conditions to Closing to be met as
soon as practicable and consistent with other terms contained herein. Lessor
shall notify Lessee as soon as practicable of any event or matter which comes to
Lessor's attention which may reasonably be expected to prevent the conditions to
Lessor's obligations being met.
5.6 Consents. Lessor will use its reasonable best efforts to obtain
all permits, approvals, authorizations and consents of all third parties
necessary in the reasonable opinion of Lessee, desirable for the purpose of (i)
consummating the transactions contemplated hereby, or (ii) enabling the Lessee
to operate the Business after the Closing.
5.7 Notice; Efforts to Remedy. Lessor shall promptly give written
notice to Lessee upon becoming aware of the impending occurrence of any event
which would cause or constitute a breach of any of the representations,
warranties or covenants of Lessor contained or referred to in this Annex A and
shall use its reasonable best efforts to prevent or promptly remedy the same.
5.8 Supplements to Schedules. From time to time prior to the Closing,
Lessor will promptly supplement or amend the Schedules prepared pursuant to
Section 3 hereof with respect to any matter hereafter arising which, if existing
or occurring at the date of this Annex A, would have been required to be set
forth or described in the Schedules or which is necessary to correct any
information in the Schedules which has been rendered inaccurate thereby;
provided, however, that upon
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delivery of any such supplement or amendment to the Schedules, Lessee shall have
the right to terminate this Annex A by notifying Lessor of its election to so
terminate.
5.9 Non-Competition. During the term of the Lease, neither Lessor nor
any of its subsidiaries or affiliates shall, directly or indirectly, (i) engage
in the construction or operation of any hospital or of any other health care
facility which provides services similar to the services provided by the
Hospital or (ii) acquire, lease or own, serve as a member or be a shareholder of
or otherwise exercise management control over a hospital or of any other health
care facility which provides services similar to the services provided by the
Hospital, which, in respect of (i) and (ii) above, is located within Ellis
County, Texas.
6. Covenants of Lessee. Lessee covenants and agrees as follows:
6.1 Best Efforts to Close. Lessee shall use its best efforts to
proceed toward the Closing and to cause the conditions to Closing to be met as
soon as practicable and consistent with other terms contained herein. Lessee
shall notify Lessor as soon as practicable of any event or matter which comes to
Lessee's attention which may reasonably be expected to prevent the conditions to
Lessee's obligations being met.
6.2 Consents. Lessee will use its reasonable best efforts to obtain
all permits, approvals, authorizations and consents of all third parties
necessary in the reasonable opinion of Lessee, desirable for the purpose of (i)
consummating the transactions contemplated hereby, or (ii) enabling the Lessee
to operate the Business in the ordinary course after the Closing.
6.3 Notice; Efforts to Remedy. Lessee shall promptly give written
notice to Lessor upon becoming aware of the impending occurrence of any event
which would cause or constitute a breach of any of the representations,
warranties or covenants of Lessee contained or referred to in this Annex A and
shall use its reasonable best efforts to prevent or promptly remedy the same.
7. Covenants of Lessor and Lessee. Lessor and Lessee covenant as
follows:
7.1 Capital Commitments. During the two years immediately following
the Closing Date, Lessee shall expend no less than an aggregate of One Million
Four Hundred Thousand Dollars ($1,400,000.00) for capital expenditures and
physician recruitment activities in connection with the Hospital and the
Business. From and after the second anniversary of the Closing Date and
continuing throughout the term of the Lease, Lessee shall expend no less than an
aggregate of Five Hundred Thousand Dollars ($500,000.00) per year on such
matters.
7.2 Refund of Property Taxes. In order to facilitate the making of
capital improvements to and the maintenance of the Hospital, Lessor shall,
during
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the term of the Lease, refund to Lessee any ad valorem or other similar
tax or assessment levied by Lessor against the Hospital or any other tangible
assets owned or leased by Lessee in connection with the Business. Lessee shall
use any amounts so refunded to it by Lessor for capital improvements to or
maintenance of the Hospital and, upon request from Lessor, Lessee shall provide
reasonably satisfactory evidence of such use of such amounts as contemplated
hereby.
8. Indemnification.
8.1 Indemnity by Lessee. From and after Closing, Lessee shall
indemnify, defend and hold harmless Lessor and its respective officers,
commissioners, employees and agents (collectively, "Lessee Indemnified Parties")
from and against any and all liabilities, losses, damages, demands, claims,
suits, actions, judgments, causes of action, assessments, costs and expenses,
including, without limitation, interest, penalties, attorneys' fees, any and all
expenses incurred in investigating, preparing and defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation (collectively, "Damages"),
asserted against, resulting to, imposed upon, or incurred or suffered by any of
them, directly or indirectly, as a result or arising from the following:
(i) any inaccuracy in or breach or non-fulfillment of any of the
representations, warranties, covenants or agreements made by Lessee in
this Annex A or the other agreements contemplated hereby;
(ii) any liability imposed on Lessor to the extent such
liability has been expressly assumed by Lessee pursuant to this Annex A
or the Assignment and Undertaking; and
(iii) any misrepresentation in or any omission from any
certificate or other document (collectively, the "Additional Documents")
furnished or to be furnished by or on behalf of Lessee under this Annex
A.
To be entitled to such indemnification, Lessee Indemnified Party
shall give Lessee prompt written notice of any breach or of the assertion by a
third party of any claim with respect to which Lessee Indemnified Party may
bring a claim for indemnification hereunder, and in all events must have
supplied such notice to Lessee within the period for the defense of such claims
by Lessee. Lessee shall have the right, at its own expense, to defend and
litigate any such third party claim, and such Lessee Indemnified Party shall
cooperate in good faith with Lessee to permit Lessee to do so. Should such
Lessee Indemnified Party settle or compromise any claim or matter for which an
indemnity would be payable by a Lessee hereunder
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without the prior written consent of such Lessee, Lessee shall be relieved of
any liability hereunder to such Lessee with respect to such claim or matter.
8.2 Indemnity by Lessor. From and after the Closing, Lessor (the
"Lessor Indemnifying Party") shall indemnify, defend and hold harmless Lessee
and its respective officers, directors, employees, partners, and agents
(collectively, the "Lessor Indemnified Parties") from and against any and all
Damages asserted against, resulting to, imposed upon, or incurred or suffered by
any of them, directly or indirectly, as a result or arising out from the
following:
(i) any inaccuracy in or breach or non-fulfillment of any of the
representations, warranties, covenants or agreements made by Lessor in
this Annex A or the other agreements contemplated hereby;
(ii) any liability of Lessor or liability, including without
limitation professional malpractice or general liability claims and
claims of liability under either the Medicare or Medicaid programs,
arising out of the operation of the Business prior to the Closing which
is imposed on Lessee, except to the extent such liability has been
expressly assumed by Lessee pursuant to this Annex A or the Assignment
and Undertaking; and
(iii) any misrepresentation in any certificate or other document
(collectively, the "Additional Documents") furnished or to be furnished
by or on behalf of Lessor under this Annex A.
To be entitled to such indemnification, a Lessor Indemnified Party
shall give Lessor Indemnifying Party prompt written notice of any breach or the
assertion by a third party of any claim with respect to which a Lessor
Indemnified Party may bring a claim for indemnification hereunder, and in all
events must have supplied such notice to Lessor Indemnifying Party within the
applicable period for defense of such claims by Lessor Indemnifying Party. At
the request of Lessor Indemnifying Party, Lessor Indemnified Party shall contest
in good faith by appropriate proceedings any claim or matter for which an
indemnity may be payable by Lessor Indemnifying Party hereunder. In the
alternative, Lessor Indemnifying Party shall also have the right, at its own
expense, and at its option, to contest any such third party claim, and such
Lessor Indemnified Party shall cooperate in good faith with Lessor Indemnifying
Party to permit Lessor Indemnifying Party to do so. Should such Lessor
Indemnified Party settle or compromise any claim or matter for which an
indemnity may be payable by Lessor Indemnifying Party hereunder without the
prior written consent of Lessor Indemnifying Party, Lessor Indemnifying Party
shall be relieved of any liability hereunder with respect to such claim or
matter.
In addition to the foregoing, if any third party payor deducts any
amount from payments due Lessor Indemnified Party in respect of claims against
or
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amounts owed by Lessor Indemnifying Party, Lessor Indemnifying Party will
promptly reimburse Lessor Indemnified Party for the amounts so deducted within
ten (10) days after written demand therefor by Lessor Indemnified Party. Lessor
Indemnified Party agrees to give prompt notice to Lessor Indemnifying Party of
the assertion of any claim, formal or informal, by any third party payor for
which, if deducted by such third party payor, Lessor Indemnified Party would be
entitled to reimbursement by Lessor Indemnifying Party hereunder and will
cooperate in good faith, at no out-of-pocket cost to Lessor Indemnified Party,
with Lessor Indemnifying Party to permit Lessor Indemnifying Party to mitigate
the amount of any such claim by any such third party payor.
9. Conditions Precedent to Obligations of Lessee. The obligations of
Lessee hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions unless waived in writing by Lessee:
9.1 Representations/Warranties. The representations and warranties of
Lessor contained in this Annex A shall be true and correct as of the Closing
Date; and the covenants and conditions of this Annex A to be complied with or
performed by Lessor on or before the Closing Date pursuant to the terms hereof
shall have been duly complied with and performed.
9.2 Opinion of Lessor's Counsel. Lessee shall have received an
opinion from McCarty, Wilson & Mash, P.C., counsel to Lessor, dated as of the
Closing Date and addressed to Lessee, to the effect that: (i) Lessor is a
validly existing political subdivision of the State of Texas; (ii) Lessor has
full power and authority to make, execute, deliver and perform the Lease and
this Annex A, and all proceedings required to be taken by Lessor to authorize
the execution and performance of the Lease and this Annex A, and to sell,
convey, assign, transfer and deliver the Assets as herein contemplated have all
been duly taken and in accordance with any applicable Sunshine Law; (iii) the
Lease and this Annex A and all, assignments and other instruments of conveyance
and transfer delivered hereunder constitute the valid and binding obligations of
Lessor, enforceable in accordance with their terms, subject to bankruptcy and
other similar laws affecting creditors' rights and debtors' relief generally and
subject to general principles of equity; (iv) neither the execution and delivery
of the Lease and this Annex A nor the consummation of the asset sale transaction
herein contemplated conflicts with, or results in a breach of, any resolution or
act or governing instrument of Lessor or any material agreement or instrument
known to Lessor's counsel to which Lessor is a party or by which Lessor or the
Assets are bound; and (v) such other matters as may be reasonably requested by
Lessee.
9.3 Pre-Closing Confirmations. Lessee shall have obtained
documentation or other evidence confirming the following:
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(a) confirmation and effective transfer or re-issuance of the
appropriate licensure of the Hospital if and to the extent required by
the State of Texas for its operation after Closing; and
(b) confirmation of Medicare and Medicaid certification of the
Hospital if and to the extent required for its continued operation after
Closing.
9.4 Action or Proceeding. No action, proceeding, investigation or
administrative hearing before a court or any other governmental agency or body
shall have been instituted or threatened against Lessor or Lessee which seeks
injunctive relief in anticipation of the Lease or the sale of the Assets and may
reasonably be expected to prohibit the Lease or the sale of the Assets or seeks
damages in a material amount by reason of the consummation of such Lease or
sale.
9.5 Schedules. Lessee shall have been furnished with those Schedules
enumerated on the Table of Schedules updated to the most recent practicable date
prior to Closing to the extent of any changes therein to which Lessor has
knowledge and Lessee shall not have expressed reasonable objection to Lessor in
writing with respect thereto.
9.6 Consents; Licenses. All notices to, and consents, authorizations,
approvals and waivers from, third parties required for Lessor to consummate the
transactions contemplated hereby or required in connection with Lessor's
assignment and Lessee's assumption of any Contract or Lease shall have been made
and obtained. Lessee shall have reason to believe that the Texas Department of
Health shall issue to Lessee promptly after the Closing a license to operate the
Hospital.
9.7 Proceedings and Documents Satisfactory. Lessee shall have
received such certificates, opinions and other documents as it or its counsel
may reasonably require in order to consummate the transactions contemplated
hereby, all of which shall be in form and substance reasonably satisfactory to
it and its counsel. All proceedings in connection with the purchase of the
Assets set forth herein and all certificates and documents delivered to Lessee
pursuant to this Annex A shall be reasonably satisfactory in form and substance
to Lessee and its counsel acting reasonably and in good faith.
9.8 Delivery of Certain Documents. At the Closing, Lessor shall have
delivered to Lessee all documents, agreements and instruments contemplated by
Section 2.2.
9.9 Environmental Survey. Lessee shall have obtained, at its sole
expense, environmental assessments, satisfactory in form and substance, with
respect to the real property.
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9.10. Indigent Care. Lessee shall have received satisfactory evidence
that, from and after the Closing, the Hospital will benefit at an appropriate
level from the existing Ellis County program for the funding of indigent care.
10. Conditions Precedent to Obligations of Lessor. The obligations of
Lessor hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions unless waived in writing by Lessor:
10.1 Representations/Warranties. The representations and warranties
of Lessee contained in this Annex A shall be true and correct as of the Closing
Date; and the covenants and conditions of this Annex A to be complied with or
performed by Lessee on or before the Closing Date pursuant to the terms hereof
shall have been duly complied with and performed.
10.2 Opinion of Lessee's Counsel. Lessor shall have received from
Waller Lansden Dortch & Davis, A Professional Limited Liability Company, counsel
to Lessee, an opinion dated as of the Closing Date and addressed to Lessor, in
form and substance satisfactory to Lessor to the effect that: (i) Lessee is a
limited partnership validly existing under the laws of the State of Texas; (ii)
the execution, delivery and performance of the Lease and this Annex A has been
duly authorized by all requisite action; (iii) Lessee has full power and
authority to make, execute, deliver and perform the Lease and this Annex A, and
all proceedings required to be taken by Lessee to authorize the execution and
performance of the Lease and this Annex A as herein contemplated have all been
duly and properly taken; (iv) the Lease and this Annex A constitute valid and
binding obligations of Lessee, enforceable in accordance with their terms,
subject to bankruptcy and other similar laws affecting creditors' rights or
debtors' relief generally and subject to general principles of equity; and (v)
neither the execution and delivery of the Lease and this Annex A, nor the
consummation of the transactions therein or herein contemplated, nor the
compliance and fulfillment of the terms and conditions thereof or hereof will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under the Certificate of Limited Partnership or Limited
Partnership Agreement of Lessee or any agreement or instrument known to Lessee's
counsel to which Lessee is a party or by which Lessee is bound or affected.
Lessee's counsel's opinion may state that such counsel is not admitted to
practice in any state other than the State of Tennessee and may be limited to
the Texas Revised Uniform Limited Partnership Act, the laws of the State of
Tennessee and the federal laws of the United States. To the extent any other law
governs any of the matters described above, Lessee's counsel may assume that
such governing law is identical to that of the State of Tennessee.
10.3 Action or Proceeding. No action, proceeding, investigation or
administrative hearing before a court or any other governmental agency or body
shall have been instituted or threatened against Lessee or Lessor which seeks
injunctive relief in anticipation of the sale of the Assets and may reasonably
be
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expected to prohibit the sale of the Assets to Lessee or seeks damages in a
material amount by reason of the consummation of such sale.
10.4 Proceedings and Documents Satisfactory. Lessor shall have
received such certificates, opinions and other documents as it or its counsel
may reasonably require in order to consummate the transactions contemplated
hereby, all of which shall be in form and substance reasonably satisfactory to
it and its counsel. All proceedings in connection with the purchase of the
Assets set forth herein and all certificates and documents delivered to Lessor
pursuant to this Annex A shall be reasonably satisfactory in form and substance
to Lessor and its counsel acting reasonably and in good faith.
10.5 Delivery of Certain Documents. At the Closing, the Lessee shall
have delivered to Lessor all documents, agreements and instruments contemplated
by Section 2.3.
10.6 Guaranty. Lessor shall have received a guaranty agreement from
PHC, in form and substance reasonably satisfactory to Lessor, pursuant to which
PHC shall guarantee the monetary obligations of Lessee under the Lease and this
Annex A.
11. General
11.1 Appendices, Schedules and Other Instruments. Each Appendix,
Schedule and Certificate, if any, to this Annex A shall be considered a part
hereof as if set forth herein in full.
11.2 Pre-Closing Access. In addition to Lessor's covenants in
Section 5.1, Lessor shall give Lessee, its accountants, its counsel, and other
representatives reasonable access to the premises, books and records, and
offices of the Hospital, and make such information in respect thereof as Lessee
may reasonably request available to Lessee, as may be necessary for Lessee to
examine the Assets being acquired. No such inspection by Lessee shall interfere
with Lessor's conduct of business in the ordinary course.
11.3 Additional Assurances. The provisions of this Annex A shall be
self-operative and shall not require further agreement by the parties except as
may be herein specifically provided to the contrary; provided, however, at the
request of either party, the other party shall execute such additional
instruments and take such additional acts as are reasonably necessary to
effectuate this Annex A.
11.4 Consents, Approvals and Discretion. Whenever this Annex A
requires any consent or approval to be given by either party or either party
must or may exercise discretion, the parties agree that such consent or approval
shall not be unreasonably withheld or delayed and such discretion shall be
reasonably exercised.
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11.5 Choice of Law. THE PARTIES AGREE THAT THIS ANNEX A SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
TEXAS.
11.6 Benefit; Assignment. Subject to the provisions herein to the
contrary, this Annex A shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, successors and
assigns; provided, however, that no party may assign this Annex A without the
prior written consent of the other party.
11.7 Brokerage. Lessor on one hand and Lessee on the other hand
agree to indemnify the other parties from and against all loss, cost, damage or
expense arising out of claims for fees or commissions of brokers employed or
alleged to have been employed by such indemnifying party.
11.8 Cost of Transaction. Whether or not the transactions
contemplated hereby shall be consummated, the parties agree as follows: (i)
Lessor will pay the fees, expenses, and disbursements of Lessor and its agents,
representatives, accountants, and counsel incurred in connection with the
subject matter hereof and any amendments hereto; and (ii) Lessee shall pay the
fees, expenses and disbursements of Lessee and its agents, representatives,
accountants and counsel incurred in connection with the subject matter hereof
and any amendments hereto. Lessor shall pay any transfer taxes and recording
fees resulting from the consummation of the transactions contemplated hereby.
11.9 Waiver. The waiver by either party of a breach or violation of
any term or provision of this Annex A shall not operate as, or be construed to
be, a waiver of any subsequent breach of the same provision by any party or of
the breach of any other term or provision of this Annex A. The delay or a
failure of a party to transmit any written notice hereunder shall not constitute
a waiver by such party of any default hereunder or of any other or further
default under this Annex A except as may expressly be provided for by the terms
of this Annex A.
11.10 Interpretation. Each of the parties has agreed to the use of
the particular language of the provisions of this Annex A including all attached
Appendices and Schedules, and any questions of doubtful interpretation shall not
be resolved by any rule or interpretation against the draftsman but rather in
accordance with the fair meaning thereof, having due regard to the benefits and
rights intended to be conferred upon the parties hereto and the limitations and
restrictions upon such rights and benefits intended to be provided.
11.11 Notice. Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be in writing and shall be
deemed effectively given when personally delivered or mailed by prepaid
certified mail, return receipt requested, addressed as follows:
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Lessor: The City of Ennis, Texas
P.O. Box 220, 115 West Brown
Ennis, Texas 75120
Attention: Mr. Steve Howerton
With a copy to: McCarty Wilson & Mash, P.C.
107 South Gaines Street
Ennis, Texas 75119
Attention: Toby L. Mash, Esq.
Lessee: PRHC-ENNIS, LP
c/o Province Healthcare Company
105 Westwood Place, Suite 400
Brentwood, Tennessee 37027
Attention: Chief Executive Officer
With a copy to: Waller Lansden Dortch & Davis
511 Union Street, Suite 2100
Nashville, Tennessee 37219
Attention: George W. Bishop III, Esq.
or to such other address, and to the attention of such other person or officer
as any party may designate, with copies thereof to the respective counsel
thereof as notified by such party.
11.12 Severability. In the event any provision of this Annex A is
held to be invalid, illegal or unenforceable for any reason and in any respect,
such invalidity, illegality, or unenforceability shall in no event affect,
prejudice or disturb the validity of the remainder of this Annex A, which shall
be in full force and effect, enforceable in accordance with its terms,
including, without limitation, those terms which contemplate or require the
further agreements of the parties. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Annex A provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and still be legal, valid or enforceable.
11.13 Gender and Number. Whenever the context of this Annex A
requires, the gender of all words herein shall include the masculine, feminine
and neuter, and the number of all words herein shall include the singular and
plural.
11.14 Divisions and Headings. The divisions of this Annex A into
sections and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall have no legal effect in
construing the provisions of this Annex A.
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11.15 Consented Assignment. Anything contained herein to the
contrary notwithstanding, this Annex A shall not constitute an agreement to
assign any claim, right, contract, license, lease, commitment, sales order or
purchase order if an attempted assignment thereof without the consent of another
party thereto would constitute a breach thereof or in any material way affect
the rights of Lessor thereunder, unless such consent is obtained. If such
consent is not obtained, or if an attempted assignment would be ineffective or
would materially affect Lessor's rights thereunder so that Lessee would not in
fact receive all such rights, Lessor shall cooperate in any reasonable
arrangement designed to provide for Lessee the benefit under any such claims,
rights, contracts, licenses, leases, commitments, sales orders or purchase
orders, including, without limitation, enforcement, at no out-of-pocket cost to
Lessor, of any and all rights of Lessor against the other party or parties
thereto arising out of the breach or cancellation by such other party or
otherwise.
11.16 Survival. All statements made by the parties hereto herein or
in the Schedules or in any other document, instrument, certificate, exhibit or
list delivered to each other hereunder by or on behalf of parties hereto shall
be deemed representations and warranties of the parties hereto regardless of any
investigation made by or on behalf of Lessee. Furthermore, the representations,
warranties, covenants and agreements made by the parties herein shall survive
the Closing.
11.17 Entire Agreement; Amendment. This Annex A supersedes all
prior contracts, understandings and agreements, whether written or oral, and
constitutes the entire agreement of the parties respecting the within subject
matter and no party shall be entitled to benefits other than those specified
herein. As between or among the parties, no oral statements or prior written
material not specifically included herein shall be of any force and effect; the
parties specifically acknowledge that in entering into and executing this Annex
A, the parties rely solely upon the representations and agreements contained in
this Annex A and no others. No terms, conditions, warranties, or
representations, other than those contained herein and no amendments or
modifications hereto, shall be binding unless made in writing and signed by the
party to be charged.
11.18 Counterparts. This Annex A may be executed in multiple
originals or counterparts, each and all of which shall be deemed an original and
all of which together shall constitute but one and the same instrument.
11.19 No Third Party Beneficiary. The terms and provisions of the
Lease and this Annex A are intended solely for the benefit of the Lessor and
Lessee and their respective successors and permitted assigns, and are not
intended to confer third-party beneficiary rights upon any other person or
entity.
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IN WITNESS WHEREOF, the parties hereto have caused this Annex A to be
executed in multiple originals by their duly authorized officers, all as of the
day and year first above written.
LESSOR:
THE CITY OF ENNIS, TEXAS
By: /s/ Steve Howerton
------------------------------
Name: Steve Howerton
----------------------------
Title: City Manager
---------------------------
LESSEE:
PRHC-ENNIS, LP
BY: PRHC-ENNIS GP, INC.
Its General Partner
By: /s/ James Thomas Anderson
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Name: James Thomas Anderson
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Title: Senior Vice President
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