Exhibit 10.4(a)
MHS 2/00
(MOB Development
Expense Stop)
MEDICAL OFFICE BUILDING LEASE
THIS LEASE is made and entered into
this 12 day of Nov, 2003 by and between Methodist Healthcare System
of San Antonio, 3LTD., d/b/a Physician’s Plaza I or its
assigns (“Landlord”), and, San Antonio Specialty
Hospital, LTD, d/b/a Life Care Hospitals of San Antonio
(“Tenant”).
Landlord, in consideration of the
rents to be paid and the covenants and agreements to be performed
by Tenant as hereinafter set forth, hereby leases to Tenant and
Tenant hereby leases from Landlord Suite Nos. 460 consisting of
1,070 usable square feet of space (the “Premises”), on
the fourth floor of the Physician’s Plaza 1
(“Building”) located at 8038 Wurzbach Road, San
Antonio, Texas, 78229, for the term and upon the conditions and
agreements hereinafter set forth (“Lease”) The Building
is located upon (and more particularly described in Exhibit A-1
attached hereto and incorporated herein. This floor plan of the
Premises is more particularly shown on Exhibit A-2 attached hereto
and incorporated herein. This Lease shall constitute a binding
agreement between the parties effective as of the date set forth
above (“Effective Date”).
ARTICLE I. TERM
The term of this Lease shall be for
approximately one year beginning on the “Commencement Date:
(as defined hereinafter) and shall expire at 12:00 midnight of the
last day of the month in which the first year anniversary of the
Commencement Date occurs. The term “Commencement Date”
shall mean ten (10) days after Landlord notifies Tenant that
Landlord has received a certificate of substantial completion from
Landlord’s architect with respect to the Premises and a
certificate of occupancy (or the local equivalent) for the Premises
from the governmental authority with authority to issue such
certificate in the jurisdiction in which the Premises are located.
Landlord estimates that the Commencement Date will occur on or
about November 1, 2003. “ Lease Year ” shall be
defined as each twelve consecutive month period throughout the
Term, beginning on the Commencement Date and each anniversary
thereof.
ARTICLE II. RENT
During the Term, Tenant shall pay to
Landlord “Annual Base Rent” as determined pursuant to
Schedule A or Schedule B below, whichever is applicable, multiplied
by the number of rentable square feet of the Premises (such sum is
hereafter referred to as “Base Rent”), together with
“Tenant’s Proportionate Share” of “Excess
Operating Costs” and “Additional Rent” (as those
terms are hereinafter defined). Base Rent shall be payable in
monthly installments in advance without notice, demand, setoff or
deduction and all such installments shall be paid to Landlord in
U.S. Dollars in cash or by check or wire transfer to an account
designated by Landlord or its managing agent. No other form of
payment will be accepted. The first installment for Base Rent shall
be due on the Commencement Date and, thereafter, such monthly
installments shall be due on the first day of each calendar month.
If the Premises are occupied for a fraction of a month at the
beginning or the end of the Term. Tenant shall pay a proportionate
part of the applicable monthly installment.
Tenant shall pay and be liable for
all rental, sales and use taxes or other similar taxes, if any,
levied or imposed on Base Rent or Additional Rent payments by any
city, county, state or other governmental body having authority.
Such payments shall be in addition to all other payments required
to be paid to Landlord by Tenant under the terms of this Lease. Any
such payment shall be paid to Landlord concurrently with the
payment of the Base Rent or Additional Rent upon which such tax is
based.
Schedule B shall apply to this Lease.
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SCHEDULE A
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SCHEDULE B
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Lease
Year
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Annual Base
Rent Rate
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Annual Base
Rent
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Monthly Rent
Installment
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Annual Base Rent
Rate
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Annual Base
Rent (1)
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Monthly Rent
Installment (1)
(First Year Only)
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$
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$
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$
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$
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16.68 u.s.f.
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$
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17,847.60
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$
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1,487.30
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1)
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The Base Rent
set forth in Schedule B is subject to increases as a result of
increases in the cost of living during the term. On each
anniversary of the Commencement Date (each an “Adjustment
Date”), Base Rent shall be adjusted to reflect the increase,
if any, in the cost of living over the preceding anniversary year
Base Rent due as a result of an increase in the cost of living
shall be calculated in accordance with the terms set forth below.
The basis for computing the cost of living shall be the unadjusted
Consumer Price Index for all Urban Consumers. All items (1982-84 __
100) published by the Bureau of Labor Statistics of the United
States Department of Labor (the “index”). The index for
the month immediately preceding the Commencement Date shall be the
“Base Index Number”. The index for the month
immediately preceding the Adjustment Date shall be the
“Current Index Number”. The Base Rent for the
anniversary year commencing on such Adjustment Date shall be the
product obtained from multiplying the Initial Base Rent
(annualized) by the fraction whose numerator is equal to the
Current Index Number and whose denominator is equal to the Base
Index Number, provided that in no event will Base Rent for such
anniversary year be less than the greater of the amount set forth
in Schedule B or Base Rent for the anniversary year immediately
preceding the Adjustment Date. If the Index is not in existence at
the time the determination is to be made, the parties shall use
such equivalent price index as is published by a successor
government agency in lieu of the Index, or, if no such price index
is published, then the parties shall use a mutually acceptable
equivalent price index as is published by a non-governmental
agency.
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ARTICLE III. ADDITIONAL RENT
In addition to the Base Rent as set
forth in Article II herein, Tenant shall pay Landlord
“Additional Rent” , which term shall be defined
to include the following:
(1) any sum owed for separately
metered utilities, including, without limitation, electricity, or
as a “Surcharge” (as defined in Article
V);
(2) any other sums owed by Tenant
pursuant to the terms of this Lease or otherwise arising in
connection with Tenant’s occupancy of the Premise;
and
(3) any sum owed for costs incurred
by Landlord which are in excess of the sum of any tenant
improvement allowance upon which Landlord and Tenant have
agreed;
(4) “Tenant’s Proportionate Share” of
“Excess Operating Costs”.
Medical Office Building
Lease
For purposes of this Lease, Base
Rent and Additional Rent shall hereinafter be collectively referred
to as “Rent”
1
MHS 2/00
(MOB Development
Expense Stop)
For purposes of this Lease, Base
Rent and Additional Rent shall hereinafter be collectively referred
to as “Rent”.
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1
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Operating
Costs Defined .
Intentionally Omitted
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2
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Excess
Operating Costs Defined .
Intentionally Omitted
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3
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Proportionate Share . Intentionally Omitted
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4
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Payment of
Excess Operating Costs .
Intentionally Omitted
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5
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Security
Deposit . Intentionally
Omitted
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ARTICLE IV. USE OF PREMISES
The Premises shall continuously and
at all times during the Term be used and occupied by Tenant only as
medical offices for licensed physicians (“Physicians
”) to engage in the private
practice of medicine and other related activities incidental
thereto, and for no other purpose. Ancillary medical care services,
including but not limited in clinical/pathological laboratory
services and imaging services, provided to patients of physicians
occupying the premises shall be permitted if: (a) such
patients were not referred to such Physicians for the purpose of
obtaining such services or procedures; (b) such services are
incidental to and a necessary part of the examination or diagnosis
rendered to Tenant’s patients ( i.e., no provision of
services to third parties), so long as such clinical/pathological
laboratory and radiological services are merely ancillary and
incidental to such Tenant’s primary medical practice and
neither constitute Tenant’s primary medical practice or
specialty, or constitute the predominant services rendered by
Tenant to Tenant’s patients; and (c) prior to providing
such services, Tenant shall have submitted to Landlord a detailed
description of the laboratory or x-ray services Tenant desires to
provide or perform and Landlord shall have consented in writing to
the provision or performance of such services, which consent may be
denied in Landlord’s sole and absolute discretion (the
provision of such services and procedures shall be strictly limited
to those services and procedures to which Landlord has expressly
consented in writing and the terms of this paragraph shall be
strictly construed to prohibit any expansion or addition to such
services or procedures without Landlord’s written consent).
Tenant shall not dispense any drugs or medicines to persons other
than Tenant’s own patients. Prior to the installation of any
diagnostic, laboratory or radiology equipment for services
permitted hereunder, Tenant shall provide Landlord with a list of
such equipment; a list of any hazardous substances, wastes or
materials, as hereinafter defined, which will be used or generated
in connection with the use of such diagnostic, laboratory or
radiology equipment; and Tenant’s proposed procedures for the
use, storage and disposal of any hazardous substances, wastes or
materials, including but not limited to the procedure for silver
recover for any radiology equipment.
All Physicians who conduct a medical
practice and related activities upon the Premises (a
“Practice” ) must be and remain active members
and associates in good standing on the active medical staff of
Southwest Texas Methodist Hospital (the “ Hospital
”). Nothing in this Article IV or elsewhere in this Lease
requires or shall require any Physician or any person associated
with a Physician to refer any patient to or order or purchase any
item of service from Hospital, Landlord or any of their
affiliates.
Each Practice conducted upon the
Premises shall at all times be conducted under the supervision and
authority of a Physician and, except with Landlord’s prior
written consent, which may be withheld in Landlord’s sole and
absolute discretion, no such Physician shall (1) allow any
other person or entity to purchase, manage or operate its Practice
or (2) conduct the Practice while serving as an agent or
employee of any other person or entity.
Tenant shall act in accordance with
and not violate any restrictions or covenants of record affecting
the Premises or the Building. Tenant shall not use or occupy the
Premises in violation of law or of the Certificate of Use of
Occupancy issued for the Building of which the Premises are a part,
and shall immediately discontinue any use of the Premises which is
declared by either any governmental authority having jurisdiction
or the Landlord to be a violation of any law, code, regulation or a
violation of said Certificate of Use or Occupancy. Tenant shall
comply with any direction of any governmental authority having
jurisdiction which shall, by reason of the nature of Tenant’s
use or occupancy of the Premises, impose any duty upon Tenant or
Landlord with respect to the Premises or with respect to the use or
occupancy thereof.
Tenant shall not do nor permit to be
done anything which will invalidate or increase the cost of any
casualty and extended coverage insurance policy covering the
Building and/or property located therein, and shall comply with all
rules, orders, regulations and requirements of the appropriate Fire
Rating Bureau or any other organization performing a similar
function. Tenant shall promptly upon demand reimburse Landlord for
any additional premium charged for such policy by reason of
Tenant’s failure to comply with the provisions of this
paragraph. Tenant shall not do nor permit anything to be done in,
on or about the Premises which would in any way obstruct or
interfere with the rights of other tenants or occupants of the
Building, or use or allow the Premises to be used for any immoral,
unlawful or objectionable purpose, nor shall Tenant maintain or
permit any nuisance or commit or suffer to be committed any waste
in, on or about the Premises.
Tenant shall not cause or permit the
release or disposal of any hazardous substances, wastes or
materials, or any medical, special or infectious wastes, on or
about the premise or the Building of which they are a part and
Tenant shall be solely responsible for and shall promptly pay the
cost of removing all such hazardous substances, wastes and
materials and any such medical, special and infectious waste from
the Premises, which removal shall be in accordance with all
applicable governmental requirements. Hazardous substances, wastes
or materials shall include those which are defined in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 USC Section 6901 et seq; the
Resource Conservation and Recovery Act, as amended, 42 USC Section
9601 et seq; the Toxic Substances Control Act, as amended 15 USC
Section 2601 et seq; and medical, special or infectious wastes
shall include those which are defined pursuant to the medical waste
regulations which have been promulgated by the Federal Government
or the state in which the Premises are located, and as further set
forth in any state or local laws and ordinances, and their
corresponding regulations. Tenant shall comply with all rules and
policies set by Landlord, and with all federal, state and local
laws, regulations and ordinances which govern the use, storage
handling and disposal of hazardous substances, wastes or materials
and medical, special or infectious wastes. Tenant shall indemnify,
defend and hold Landlord harmless from and against any claims or
liability arising out of or connected with Tenant’s failure
to comply with the terms of this Article IV, which terms shall
survive the expiration or earlier termination of this
Lease.
Landlord, may at its option,
terminate this Lease in the event Tenant engages in a prohibited
use or otherwise violates the terms of this Article IV and fails to
cure such violation within thirty (30) days following
Tenant’s receipt of written notice thereof from
Landlord.
ARTICLE V. BUILDING SERVICES AND
MAINTENANCE
All utilities for the Premises which
are not separately metered as well as all utilities for the common
areas of the Building will be paid for by Landlord (subject to
reimbursement as an Operating Cost). Heat and air-conditioning
required to be furnished by Landlord will be furnished for
Tenant’s comfortable use and occupancy of the Premises during
reasonable business hours. The term “reasonable business
hours” shall mean the hours of 7:00 a.m. to 7:00 p.m. Monday
through Friday and 7:00 a.m. to 1:00 p.m. on Saturday, excluding
legal holidays. If Tenant requires or utilizes more water or
electric power than is considered reasonable or normal by Landlord,
Landlord may reasonably determine and require Tenant to pay as
Additional Rent, the cost incurred as a result of such additional
usage ( “Surcharge” ). Tenant agrees to pay all
separately metered utilities required and used by Tenant in the
Premises Landlord reserves the privilege of stopping any or all
utility services in case of accident or breakdown, or for the
purpose of making alterations, repairs or improvements, and shall
not be liable for the failure to furnish or delay in furnishing any
or all of such services when same is caused by or is the result of
strikes, labor disputes, labor, fuel or material scarcity, or
governmental or other lawful regulations or requirements, or the
failure of any corporation, firm or person with whom the Landlord
may contract for any such service, or for any service incident
thereto, to furnish some, or is due to any cause other than the
gross negligence of the Landlord; and the failure to furnish any of
such service in such event shall not be deemed or construed as an
eviction or relieve Tenant from the performance of any of the
obligations imposed upon Tenant by this Lease. Landlord shall not
be responsible to the Tenant for loss of property in or from the
Premises, or for any damage done to furniture, furnishings or
effects therein, however occurring, except where such damages occur
through the gross negligence of Landlord, nor shall Landlord be
responsible should any equipment or machinery break down or for any
cause
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MHS 2/00
(MOB Development
Expense Stop)
cease to function properly on account of any
such interruption of service. Tenant shall be solely responsible
for and shall promptly pay all charges for telephone and other
communication services.
Landlord will provide general
janitorial services in and about the common areas of this Building
as necessary or desirable in Landlord’s reasonable judgement
Landlord shall also be responsible for providing daily general
janitorial and cleaning services for the Premises Tenant, at
Tenant’s sole cost and expense, shall be responsible for
medical, special and infectious waste removal for the Premises in
accordance with all applicable laws, regulations and orders, and
shall not permit undue accumulations of garbage, trash, rubbish or
other refuse within the Premises and shall keep all refuse in
proper containers until disposal of such refuse. Tenant shall not
permit the mixing or disposal of any hazardous substances, wastes
or materials or any medical, special or infectious waste (as such
terms are defined in Article IV) with the general office refuse and
Landlord shall have no duty or obligation to remove any hazardous
substances, wastes or materials or any medical, special or
infectious waste from the Premises.
Landlord shall maintain in good
repair the Building and the Premises in good repair and condition
and shall make all repairs and replacements and perform all
maintenance necessary to keep the Building and Premises in such
condition, including all mechanical, plumbing and electrical
systems.
Tenant shall promptly repair, in
good and workmanlike manner, any damage to the Premises or other
part of the Building caused by any breach of this agreement to
maintain the Premises or by any willful or negligent act or
omission of Tenant, or of any employee, agent or invitee of Tenant.
If Tenant fails to do so, Landlord shall have the right to repair
any such damage and Tenant shall pay Landlord for the cost of all
such repairs, plus interest at the Interest Rate (as defined in
paragraph viii of Article XXI).
ARTICLE VI. ALTERATIONS
Tenant may not make my changes,
additions, alterations, improvements or additions to the Premises
or attach or affix any articles thereto without Landlord’s
prior written consent. All alterations, additions, or improvements
which may be made upon the Premises by Landlord or Tenant (except
unattached trade fixtures and office furniture and equipment owned
by Tenant) shall not be removed by Tenant, but shall become and
remain the property of Landlord. All alterations, improvements, and
additions to the Premises (as permitted by Landlord) shall be done
only by Landlord or contractors or mechanics approved by Landlord,
and shall be at Tenant’s sole expense and at such times and
in such manner as Landlord may approve. If Tenant shall make any
alterations, improvements or additions to the Premises, Landlord
may require Tenant, at the expiration of this Lease, to restore the
Premises to substantially the some condition as existed at the
commencement of the Term. Any mechanics or materialmen’s lien
for which Landlord has received a notice of intent to file or which
has been filed against the Premises or the Building arising out of
work done for, or materials furnished to or on behalf of Tenant,
its contractors or subcontractors shall be discharged, bonded over,
or otherwise satisfied by Tenant within ten (10) days
following the earlier of the date Landlord receives (1) notice
of intern to file a lien or (2) notice that the lien has been
filed. If Tenant fails to discharge, bond over, or otherwise
satisfy any such lien, Landlord may do so at Tenant’s
expense, and the amount expended by Landlord, including reasonable
attorneys’ fees, shall be paid by Tenant within ten
(10) days following Tenant’s receipt of a bill from
Landlord.
ARTICLE VII. DAMAGE TO PROPERTY - INJURY TO
PERSONS; INSURANCE
Tenant shall and hereby does
indemnify and hold Landlord harmless from and against any and all
claims arising form: 1) Tenant’s use of the Premises or the
conduct of Tenant’s business or profession; 2) any activity,
work or thing done, permitted or suffered by the Tenant in or about
the Premises, the Building or the common areas; 3) any breach or
default in the performance of any obligation on Tenant’s part
to be performed under the terms of this Lease; or 4) any negligent
acts or omissions of Tenant, or of Tenant’s agents,
employees, contractors or invitees. Tenant shall and hereby does
further indemnify, defend and hold Landlord harmless from and
against all costs, attorneys’ fees expenses and liabilities
incurred in connection with any such claim or any action or
proceeding brought thereon. In case any action or proceeding is
brought against Landlord by reason of any such claim, Tenant upon
notice from Landlord, shall defend same at Tenant’s expense
by counsel reasonably satisfactory to Landlord Tenant, as a
material part of the consideration to Landlord, hereby assumes all
risk of damage to property or injury to persons in, upon or about
the Premises from any cause other than Landlord’s gross
negligence, and Tenant hereby waives all claims in respect thereof
against Landlord.
Tenant shall, throughout the Term at
its sole cost and expense, provide and keep in force, with
responsible insurance companies reasonably acceptable to Landlord.
Insurance in respect to this Lease and the Premises in the
following amounts for any one accident or occurrence:
(a) comprehensive general public liability insurance with
limits for property damage claims of not less than $100,000 and
limits for personal injury or death not less than $1,000,000 per
person and $1,000,000 per occurrence; and (b) casualty
insurance insuring Tenant against loss or damage to its equipment
and other personal property in the Premises by fire and all other
casualties usually covered under an “all risk” policy
of casualty insurance. The policies described herein shall name
both Tenant and Landlord as insureds. Tenant shall furnish the
Landlord with proof of all such insurance at least annually and
upon demand of the Landlord.
Neither Landlord nor its agents
shall be liable for any damage to property entrusted to employees
of the Building, nor for loss of or damage to any property by theft
or otherwise, nor for any injury or damage to persons or properly
resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the
Building or from the pipes, appliances or plumbing works therein or
from the roof, street or subsurface, or from any other place or
resulting from dampness or any other cause whatsoever, unless
caused by or due to the gross negligence of Landlord, its agents,
servants or employees. Tenant shall give prompt notice to landlord
in case of fire or accidents in the Premises or in the Building or
of defects therein or in the fixtures or equipment. Tenant hereby
acknowledges that Landlord shall not be liable for any interruption
to Tenant’s business for any cause whatsoever, and that
Tenant shall obtain Business interruption insurance coverage should
Tenant desire to provide coverage for such risk.
ARTICLE VIII. DAMAGE OR
DESTRUCTION
If the Premises are damaged by fire
or other casualty (collectively “ Casualty ”),
the damage shall be repaired by and at the expense of Landlord,
provided such repairs can, in Landlord’s opinion, be made
within sixty (60) days after the occurrence of such Casualty
without the payment of overtime or other premiums. If such repairs
cannot, in Landlord’s opinion, be made within sixty (60)
days, Landlord may, at its option, make them within a reasonable
time, and in such event this Lease shall continue in effect.
Landlord’s election to make such repairs must be evidenced by
written notice to Tenant within thirty (30) days after the
occurrence of the damage. If Landlord does not elect to make such
repairs which cannot be made within sixty (60) days, then
either party may, by written notice to the other, cancel this lease
as of the date of the Casualty. A total destruction of the Building
in which the Premises are located shall automatically terminate
this Lease. In the event Landlord make such repairs, then until
such repairs are completed, the Rent shall be abated in proportion
to the part of the Premises which is unusable by Tenant in the
conduct of Tenant’s practice of medicine. However, there
shall be no abatement of Rent if the Casualty is due to the
negligent acts or omissions of Tenant or Tenant’s employees
or contractors.
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Expense Stop)
ARTICLE IX. EMINENT DOMAIN
If the Building, the Premises or a
material part of either shall be taken by any authorized entity by
eminent domain or by negotiated purchase under threat thereof, so
that the Premises shall become totally untenantable, this lease
shall terminate as of the earlier of the date when title or
possession thereof is acquired or taken by the condemning authority
and all rights of Tenant in this Lease shall immediately cease and
terminate If a part of the Building or a portion of the Premises
shall be taken such that the Premises becomes only partially
untenantable. Base Rent shall be proportionately abated. All
compensation awarded for any taking (or the proceeds of negotiated
sale under threat thereof) whether for the whole or a part of the
Building or the Premises, shall be the property of Landlord,
whether such proceeds or award is compensation for loss or damage
to Landlord’s or Tenant’s property or their respective
interests in the Premises, the Tenant hereby assigns all of its
interest in any such award to Landlord. However, nothing contained
herein shall be deemed to give Landlord any interest in or require
Tenant to assign to Landlord any separate award expressly made to
tenant for. 1.) the taking of personal property and fixtures
belonging to Tenant; 2.) the interruption of or damage to
Tenant’s business or profession; 3.) the cost relocation
expenses incurred by Tenant; and 4.) Tenant’s unamortized
cost of leasehold improvements; provided that the making of any
such award to Tenant shall not reduce or diminish Landlord’s
award relating to such condemnation. Landlord may without an
obligation or liability to Tenant stipulate with any
condemning authority for a judgment of condemnation without the
necessity of a formal suit or judgment of condemnation, and the
date of taking under this clause shall then be deemed the date
agreed to under the terms of said agreement or
stipulation.
ARTICLE X ASSIGNMENT AND
SUBLETTING
Tenant shall not, either voluntarily
or by operation of law, directly or indirectly, sell, assign or
transfer this Lease, in whole or in part, or sublet the Premises or
any part thereof, or permit the Premises or any part thereof to be
occupied by any persons, corporation, partnership, or other entity
except Tenant or Tenant’s employees, without the prior
written