SUBLEASE AGREEMENT

Exhibit 10.1

 

SUBLEASE AGREEMENT

 

THIS SUBLEASE AGREEMENT (“Sublease”) is entered into as of the 1st day of January, 2005 by and between LAKE HOSPITAL SYSTEM, INC. an Ohio non-profit corporation whose address is One Victoria Place, Painesville, Ohio 44077, Attention: President and CEO (“Sublandlord”), and HHC OHIO, INC. an Ohio corporation, whose address is 1500 Waters Ridge Drive, Lewisville, Texas 75057, Attention: President (“Subtenant”).

 

RECITALS :

 

WHEREAS, the County of Lake, Ohio (“Landlord”), as “Lessor,” and Sublandlord, as “Lessee,” entered into that certain Lease Agreement dated January 1, 2005 (the “Master Lease”) with respect to the Leased Premises (as defined therein) known as Laurelwood Hospital, a copy of which Master Lease is attached hereto and made a part hereof as Exhibit “A”; and

 

WHEREAS, the Subtenant desires to sublease from the Sublandlord, and the Sublandlord desires to sublease to the Subtenant, the Leased Premises, on the terms and conditions set forth hereinbelow; and

 

WHEREAS, Sublandlord represents that this Sublease to Subtenant complies with the requirements for a sublease for Hospital Specialty Services under Section 10.1 of the Master Lease.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual obligations, promises and covenants herein contained, and in further consideration of ten ($10.00) dollars cash in hand paid by each party hereto to the other, the receipt and adequacy of which is hereby acknowledged by each of the parties hereto, it is hereby agreed as follows:

 

1. Recitals : The foregoing recitals are true and correct and made a part hereof. Capitalized terms used but not defined in this Sublease shall have the meanings given to them in the Master Lease.

 

2. Leased Premises and Term : Sublandlord hereby leases to Subtenant and Subtenant hereby leases from Sublandlord the Leased Premises for a term (the “Original Term”) commencing as of the date of this Sublease and expiring December 31, 2019, subject to the terms of Section 6 hereinbelow. In addition to the Original Term of this Sublease, Subtenant shall have the option to extend this Sublease for one (1) additional fifteen year term (the “Extension Term”), subject to the same terms and conditions as the Original Term except that the Basic Rent (as hereinafter defined) shall be as provided in Section 3.1 (b) hereof. Subtenant shall exercise its right to extend this Sublease by giving notice thereof not less than twelve (12) months prior to the expiration of the Original Term. The phrase “Sublease Term” shall mean the Original Term and, if Subtenant

 

exercises its option to extend, it shall also include the Extension Term and the phrase “Sublease Year” shall mean each calendar year during the Sublease Term.

 

3. Rent .

 

3.1 Basic Rent .

 

(a) Original Term . On or before the first day of January, April, July and October (each a “Rental Payment Date”) during the Original Term commencing on January 1, 2005 and continuing through October 1, 2019, the Subtenant covenants and agrees to and will pay as Basic Rent hereunder an advance quarterly rent payment in the amount of Two Hundred Thousand Four Hundred Thirty-Three and 23/100 Dollars ($200,433.23). In addition, on December 31, 2007 and each December 31 thereafter to and including December 31, 2012, Subtenant shall make a payment of Forty-One Thousand Six Hundred Sixty-Six Dollars ($41,666.00) to the Lake Hospital Foundation, Inc.

 

(b) Extension Term . On or before each Rental Payment Date during the Extension Term, commencing January 1, 2020, the Subtenant covenants and agrees to and will pay as Basic Rent hereunder an advance quarterly rent payment in an amount equal to one-quarter of the annual Fair Market Rent (herein so-called) for the Leased Real Property as described below plus $1.00.

 

If Subtenant exercises its right to extend the Sublease, the parties will have until the date that is six (6) months prior to the date on which the Original Term will expire in order to agree on the Fair Market Rent for the Leased Real Property for the Extension Term (“Fair Market Rent”). If the parties agree on the Fair Market Rent for the Extension Term during that period, they shall immediately execute an amendment to this Sublease stating the dollar amount of Basic Rent for the Extension Term. If the parties are unable to agree on the Fair Market Rent for the Extension Term during that period, then the Fair Market Rent for the Extension Period will be established by appraisal.

 

Sublandlord and Subtenant shall each appoint one appraiser at least five (5) months prior to the expiration of the Original Term provided, however, that if either party fails to designate an appraiser within the time period specified, then the appraiser who is designated shall conclusively determine the Fair Market Rent. If two (2) appraisers are designated, then they shall submit within thirty (30) days after the second thereof has been designated their appraisals of the Fair Market Rent. Each appraiser shall prepare a written appraisal report that shall conform to the standard of professional practice of the American Institute of Real Estate Appraisers. Sublandlord and Subtenant intend that the “Fair Market Rent” shall be for the Leased Real Property only and shall be deemed to be the rent per square foot of unimproved real estate that is then being charged as of the date of such appraisal for similar unimproved real estate in the area of the Leased Real Property that is comparable in quality and location to the Leased Real Property.

 

Should the two appraisals arrive at different Fair Market Rent for the Extension Term, within said thirty (30) days the two appraisers shall each submit an independent written appraisal and together they shall designate one additional person as appraiser

 

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within five (5) days following the expiration of said 30-day period; provided, however, that if the difference between the two appraisals is ten percent (10%) or less of the lowest appraisal, then an additional appraiser shall not be designated and the Fair Market Rent shall equal the average of the two appraisals that are submitted. The third appraiser shall submit an independent written appraisal within thirty (30) days following his or her appointment. If the two appraisers cannot agree upon a third appraiser, then either Sublandlord or Subtenant may request that a judge of the Common Pleas Court of Lake County appoint such third appraiser. The Fair Market Rent shall be equal to the average of the two written appraisals which are closest, and the third appraisal shall be disregarded. Each party shall bear the cost of the appraiser appointed by it and the parties shall share equally in the cost of the third appraiser. No person shall be appointed or designated an appraiser unless he or she is an independent appraiser who is a currently certified member of the American Institute of Real Estate Appraisers (with MAI designation) and unless he or she has at least five (5) years experience as an appraiser in Lake County, Ohio. The third appraiser shall not have ever been employed (full-time or part-time or on a consulting basis) by Sublandlord or Subtenant. In the event that the Fair Market Rent is not established before the commencement of the Extension Term, Subtenant shall pay a fair market rental for the Subleased Real Property based on the fair market rental as determined by the appraiser designated by Subtenant. When the Fair Market Rent has been established, the Basic Rent shall be retroactively effective as of the beginning of the Extension Term and Subtenant shall pay Sublandlord any deficiency within thirty (30) days after the establishment of the Basic Rent or receive a credit on the Basic Rent next coming due during the Extension Term.

 

3.2 Additional Payments . The Subtenant covenants and agrees to make Additional Payments to Sublandlord of any amount designated in this Sublease as an Additional Payment and payment for or reimbursement of any and all reasonable costs, expenses and liabilities:

 

(a) incurred or paid by the Sublandlord in satisfaction of any obligations of the Subtenant hereunder not performed by the Subtenant in accordance with the provisions hereof; or

 

(b) incurred as a result of a request by the Subtenant for the performance or payment by Sublandlord of any item, action or matter which Sublandlord is not obligated to perform or pay in accordance with the provisions hereof.

 

All costs, expenses, liabilities, fees and charges described in this Section, together with interest thereon at the Interest Rate for Advances from the date of payment or incurrence, shall be paid by the Subtenant on demand.

 

3.3 Place of Payments . The Basic Rent and Additional Payments shall be paid to the Sublandlord at its address set forth on the first page of this Sublease or to a different address as to which notice is given in accordance with Section 15 hereof.

 

3.4 Obligations Absolute and Unconditional . The obligations of the Subtenant to pay Basic Rent, Additional Payments and any other amounts payable under

 

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this Sublease and to observe and perform its covenants, agreements and obligations provided in this Sublease are absolute and unconditional.

 

Nothing contained in this Sublease shall be construed as releasing the Sublandlord from the observance or performance of any covenant, agreement or other obligation on its part under the Master Lease or this Sublease; and in the event that the Sublandlord should fail to observe or perform any such covenant, agreement or other obligation, the Subtenant may institute any action against the Sublandlord which the Subtenant may deem necessary to compel observance and performance or to recover damages for nonobservance or nonperformance, provided, however, Subtenant shall not institute such an action if the covenant, agreement or obligation alleged by Subtenant to not have been performed by Sublandlord is an obligation of Subtenant under this Sublease.

 

The Subtenant (in its own name and on its own behalf or, to the extent lawful, in the name and on behalf of the Sublandlord) may prosecute or defend any action or proceeding or take any other action involving third persons (including, but not limited to, Landlord) which the Subtenant deems to be reasonably necessary to secure or protect its rights of possession, occupancy and use hereunder. In that event, the Sublandlord covenants and agrees (i) to cooperate fully with the Subtenant, and (ii) if the Subtenant shall so request, to take all action necessary to effect the joinder of the Subtenant or substitution of the Subtenant for the Sublandlord in that action or proceeding. If Subtenant is not permitted to so prosecute or defend as aforesaid, then Sublandlord agrees at the request of Subtenant to prosecute or defend the same for and on behalf of Subtenant.

 

3.5 Security Deposit . During the Original Term, Subtenant shall maintain a Security Deposit, herein so-called, with Sublandlord in the amount of the LOC Amount (hereinafter defined). No Security Deposit shall be required during the Extension Term. Upon the execution of this Sublease, and as the Security Deposit under this Sublease, Subtenant shall deliver to Sublandlord an executed original irrevocable standby letter of credit (“LOC”) in the LOC Amount, in favor of Sublandlord. The initial LOC shall have a term commencing no later than January 1, 2005 and expiring no earlier than December 31, 2005 (subject to the LOC extension requirement hereinafter specified). The LOC may be drawn upon and used upon each occurrence of any Event of Default (as defined in Section 14 of this Sublease) which remains uncured after applicable notice and cure periods. Sublandlord may use all or part of the LOC to pay past due Basic Rent, Additional Payments or other payments due Sublandlord under this Sublease, or to cure any other defaults of Subtenant under this Sublease without prejudice to any other remedy provided by law or herein. The LOC shall be issued in a form and by a national banking association or other financial institution acceptable to Sublandlord. With respect to any Event of Default occurring during the Original Term of the Sublease and which remains uncured following applicable notice and cure periods, Sublandlord shall have the right to proceed against the total LOC Amount at the sole discretion of Sublandlord regarding items and the amounts to be drawn upon relating to any Event of Default by Subtenant; provided, however, that any drawn amounts not properly applied by Sublandlord in accordance with this Section 3.5 shall be promptly paid by Sublandlord to Subtenant, or at Subtenant’s option deposited and maintained by Sublandlord in a separate bank account in the financial institution which issued the LOC on account of Subtenant’s Security Deposit

 

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obligations hereunder. Interest shall be paid on any portion of the LOC converted to cash pursuant to the provisions hereof. In the event of the sale of the Leased Premises, Sublandlord shall transfer the Security Deposit, both the LOC and any cash proceeds thereof, to the vendee, provided such vendee agrees in a writing delivered to Subtenant to accept and hold the same in compliance with the terms hereof. Sublandlord shall return the LOC and any amount held in cash by Sublandlord as part of the security deposit promptly upon the expiration of the Original Term; provided, Subtenant is not in default under this Sublease.

 

The “LOC Amount” shall be (i) for Sublease Years 1 through and including Sublease Year 7, an amount equal to Two Million Six Hundred Sixty-Five Thousand Nine Hundred Sixty-Six Dollars ($2,665,966.00) and (ii) for Sublease Years 8 through the expiration of the Original Term, an amount equal to One Million Three Hundred Thirty-Two Thousand Nine Hundred Eighty-Three Dollars ($1,332,983.00); provided Subtenant remains in continuous compliance with the financial covenants contained in paragraphs 1, 10 through 13 of the Compliance Certificate attached as Exhibit A to the Seventh Amendment to Second Amended and Restated Credit Agreement dated May 23, 2002 by and between Horizon Health Corporation and its subsidiaries and J.P. Morgan Chase Bank and certain other financial institutions as lenders, as the same may be amended from time to time, or any comparable financial covenants that may be contained in a credit facility that replaces such credit facility or such other financial covenants as Subtenant and Sublandlord may agree upon (“Financial Covenants”); and, in the event at any time after the commencement of Sublease Year 8 Subtenant is not in compliance with the Financial Covenants for two consecutive fiscal quarters, then the LOC Amount will be restored to the LOC Amount required pursuant to clause (i) immediately preceding until Subtenant has achieved four consecutive quarters of compliance with the Financial Covenants. Failure to so restore the LOC Amount shall constitute an Event of Default.

 

The LOC shall contain the following terms and conditions:

 

(a) The LOC shall be extended without further amendment from year to year unless, at least 30 days prior to its then current expiration date, the issuing bank notifies Sublandlord, in writing, that the issuing bank intends not to renew the LOC.

 

(i) In the event the LOC is not extended at least 30 days prior to its then stated expiration date and the Original Term of the Sublease has not expired or will not expire prior to the expiration date of the then LOC, then (unless Subtenant has, prior to drafting by Sublandlord, deposited with Sublandlord a substitute LOC in the amount of the Security Deposit) such event shall constitute an Event of Default under this Sublease and Sublandlord shall be allowed to draft upon the issuing bank to draw the full amount of the LOC, subject to the terms and provisions hereinabove set forth.

 

(ii) The LOC shall be subject to the “Uniform Customs and Practices for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500.

 

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(iii) The amount of the LOC shall be payable at sight to Sublandlord within ten (10) business days of presentation of the sight draft, in whole or partial drawings; upon presentation to the issuer of the following documents:

 

(x) Sublandlord’s written demand for payment making reference to the date and number of the LOC;

 

(y) Sublandlord’s signed certificate that the amount drawn is required to satisfy an Event of Default which has remained uncured beyond applicable notice and grace periods, as set forth in the Sublease, or that Subtenant has failed to deposit cash or a substitute LOC as required under paragraph (ii) above; and

 

(z) The original LOC for endorsement of the amount paid and if the draft is for the full amount the LOC is to be surrendered to the issuer.

 

Sublandlord shall have the right to assign and transfer its right and interests in the LOC only to a purchaser of the Leased Premises; provided such purchaser issues a written receipt therefor delivered to Subtenant.

 

3.6 Past Due Basic Rent, Additional Payments and Other Amounts . In the event that the Subtenant should fail to make any payment of Basic Rent, Additional Payments or other amounts payable under the Sublease, (i) the payment in default shall continue as an obligation of the Subtenant until the amount in default shall have been paid fully, (ii) during the default period, the amount of any amount in default shall bear interest at the Interest Rate for Advances, and (iii) that interest shall be payable on demand and shall constitute Additional Payments hereunder. In any action brought to collect those Additional Payments, the Sublandlord shall be entitled to the recovery of the Additional Payments, except as limited by law or judicial order or decision

 

4. Use . The Subtenant acknowledges and agrees that during the Term the Subtenant shall use the Leased Property to provide behavioral health services as a for profit private psychiatric hospital licensed under Ohio law and for no other purpose. In addition, Subtenant and any other individual or legal entity directly or indirectly controlling, controlled by or under common control with Subtenant, shall provide only behavioral health services in Lake County and any location within a ten (10) mile radius of the Leased Premises. For purposes of this Section, the term “control” shall mean the ownership of or the power to vote fifty percent or more of the voting stock of a corporation or the ownership of fifty percent or more of the partnership interests, beneficial interests or equity of a partnership, trust, joint venture, limited liability company or other entity or the ability to direct the activities of the management of such entity.

 

5. Water, Sewer, Gas, Electricity and Other Utilities : During the Term the Subtenant shall be responsible directly to the applicable utility supplier for payment of monthly water, sewer, gas, electricity, and other utilities bills for the Leased Premises.

 

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6. Terms of Master Lease :

 

(a) This Sublease is subject to and subordinate to the terms, covenants, conditions and limitations of the Master Lease.

 

(b) Subtenant acknowledges and agrees that during the Sublease Term, the Subtenant shall perform, in full and on time, and be obligated to comply with, all of the terms, covenants and conditions of the “Lessee” under the Master Lease, (i) other than those having to do with Sublandlord’s corporate and tax status, including, without limitation, Sublandlord’s designation as a “nonprofit hospital agency” in Section 1.6 of the Master Lease and corporate and tax status obligations in Sections 8.2 and 8.3 of the Master Lease with which Sublandlord agrees to continue to comply and (ii) other than those requiring the payment of Basic Rent under the Master Lease. It is the parties intent that all of the Sublandlord’s obligations under the Master Lease for the Leased Premises except as specifically excluded hereunder shall be paid and performed by Subtenant on a triple net basis, including, but not limited to all rent, charges, taxes and insurance obligations.

 

(c) If the Master Lease shall terminate before the expiration of the Sublease Term, Subtenant will, at Landlord’s option, attorn to Landlord and waive any right Subtenant may have to terminate this Sublease or surrender possession thereunder as a result of the termination of the Master Lease, and if Subtenant receives a written notice from Landlord stating that Sublandlord is in default under the Master Lease, Subtenant shall thereafter pay all amounts due to the Landlord under the Master Lease directly to Landlord until such default has been cured.

 

(d) Sublandlord agrees not to take any action that results in a default under the Master Lease or with the exception of Sublandlord’s purchase of Landlord’s interest in the Leased Premises causes it to be terminated or forfeited. Subtenant shall have the right to request the Sublandlord to make demand upon the Landlord to enforce any obligations of the Landlord under the Master Lease which may affect the Subtenant’s use and enjoyment of the Leased Premises during the Sublease Term. Upon such request the Sublandlord shall timely transmit such demand to the Landlord.

 

(e) As long as no Event of Default has occurred and is continuing under this Sublease, Sublandlord shall not: (i) exercise any rights under Section 5.2 of the Master Lease to remove or substitute portions of the Leased Premises, (ii) create Permitted Encumbrances on the Leased Premises, or (iii) exercise the right to terminate the Master Lease or modify the Leased Premises under Sections 6.1, 6.2, 9.1, 9.3 or 11.2 of the Master Lease, without in each case the consent of the Subtenant.

 

(f) Sublandlord represents and warrants that as of the date of this Sublease: (i) the Master Lease is in full force and effect in accordance with its terms and that Sublandlord holds the entire leasehold estate under the Master Lease, (ii) Subtenant shall peacefully have, hold and enjoy the Leased Premises, subject to the terms and conditions of this Sublease, provided that Subtenant timely and fully performs all of its covenants, duties and obligations under this Sublease, and (iii) it has no knowledge of any

 

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obligations and liabilities of the Landlord associated with or arising out of Landlord’s ownership of the Leased Premises relating to periods prior to the date of this Sublease.

 

(g) Sublandlord agrees that the obligation to provide medically necessary and emergency care as provided in Section 2.4 of the Master Lease is limited to the provision of behavioral health care services for the purposes of this Sublease.

 

(h) Sublandlord will provide Subtenant with copies of all material notices received by it under the Master Lease promptly following their receipt by Sublandlord.

 

(i) Upon termination of this Sublease, Subtenant will be permitted to remove from the Leased Premises the items of personal and movable property installed by Subtenant to the extent that such items are not essential to the administration, operation and maintenance of the Leased Premises as Hospital Facilities.

 

7. Modification of the Leased Premises . Subtenant shall be permitted to remodel, make additions, modifications and improvements to the Leased Premises and to substitute and replace personal property and fixtures on the same terms and subject to the same conditions as provided in Article V of the Master Lease. Upon vacating the Leased Premises, and subject to the provisions of Section 4.1 of the Master Lease, the Subtenant shall surrender same and shall clean and restore the Leased Premises, at its own expense, so that the Leased Premises will be in the same condition (except for ordinary wear and tear, damage due to casualty, removal of personal and movable property and modification as permitted herein) as when the Leased Premises were first occupied by the Subtenant.

 

8. Insurance . Subtenant agrees to purchase and maintain during the Sublease Term the insurance required under the Master Lease and to name Landlord and Sublandlord as additional insureds on said insurance to the same extent as Landlord is required to be so named under the Master Lease.

 

9. Damage, Destruction and Condemnation . In the event of damage, destruction or condemnation of the Leased Premises to the extent and in the manner provided in Article VI of the Master Lease, Subtenant shall have the same rights and obligations under this Sublease as Sublandlord has under the Master Lease; provided, however that within 90 days of such event Subtenant shall notify Sublandlord of whether it elects to rebuild or restore the Leased Premises or terminate this Sublease. If Subtenant elects to terminate the Sublease as a result of damage, destruction or condemnation occurring during the Original Term, then Subtenant shall pay to Sublandlord upon the effective date of the termination a termination fee in an amount equal to the Basic Rent due for the remainder of the Original Term discounted to present value at a rate of ten percent (10%) per annum, less the net amount of any insurance or condemnation proceeds received and retained by Sublandlord as a result of such damage, destruction or condemnation.

 

10. Assignments, Subleases and Other Grants . Without the consent of Sublandlord, which it may withhold in its sole discretion, Subtenant shall not (a) assign, sublease or otherwise grant to others the right to operate and control all or any portion of

 

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the Leased Premises or (b) grant or release easements, licenses, rights-of-way or other rights and privileges in the nature of easements; provided, however Subtenant may grant to others the right to operate and control a portion of the Leased Premises for the purpose of facilitating the provision of Convenience Activities (“Permitted Grant”) as long as the following conditions are satisfied: (i) No Event of Default has occurred and is continuing under this Sublease, (ii) the Permitted Grant shall expressly be made subject to the terms of this Sublease, (iii) the Permitted Grant shall not affect or reduce any obligations of Subtenant or rights of Sublandlord hereunder, and all obligations of Subtenant hereunder shall continue in full effect as the obligations of a principal and not of a guarantor or surety, as though no Permitted Grant had been made, and (iv) the Permitted Grant shall not be made to any party which is a business competitor of Sublandlord in the delivery of patient care or has a five percent (5%) or greater interest in any entity which competes with Sublandlord in the delivery of patient care.

 

11. Right of First Refusal . If Sublandlord intends to sell the Leased Premises at any time during the Sublease Term and whether or not an Event of Default has occurred and is continuing, Sublandlord agrees to give Subtenant, and Subtenant shall have, a right of first refusal to purchase the Leased Premises upon the following terms: (i) Sublandlord shall give Subtenant written notice of its intention to sell the Leased Premises; (ii) Sublandlord shall have received a bona fide letter of intent for the purchase of the Leased Premises which letter of intent must include all of the material terms of the subject transaction including but not limited to the identity of the prospective purchaser, the purchase price, terms of financing, due diligence and feasibility periods and closing date, (iii) a true, correct and complete copy of such letter of intent must be delivered by Sublandlord to Subtenant with the written notice of Sublandlord’s intention to sell, (iv) Subtenant (or one of its affiliates) shall have the right for a period of fifteen (15) business days from receipt of the foregoing to determine whether it wants to acquire the Leased Premises upon the same terms as set forth in such letter of intent (such right shall be exercised by written notice from Subtenant to Sublandlord within such fifteen (15) business day period), (v) if Subtenant does not elect to acquire the Leased Premises pursuant to such right of first refusal and the prospective purchaser identified in such letter of intent does not thereafter close the proposed purchase of the Leased Premises pursuant to the terms of such letter of intent delivered to Subtenant within one-hundred and eighty (180) days after the date thereof, then Subtenant shall once again have a right of first refusal as to the next proposed sale of the Leased Premises. No letter of intent shall be a valid letter of intent if the consideration therein is not to be paid in lawful currency of the United States of America.

 

If the provisions of this Section 11 shall be breached or violated during any time that they are in effect, Subtenant shall have the right, in addition to any other rights available at law or in equity, to obtain injunctive relief. Sublandlord agrees that it will only sell the Leased Premises in its entirety and will only sell the same for lawful currency of the United States of America.

 

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12. Access Easements, Truck Dock and Signage .

 

(a) The Leased Premises includes ingress and egress easements that cross land of Lake West Hospital leased by Sublandlord from the Landlord and depicted on survey map no. 2518 prepared by Frank M. Cirinski, P. E., Garrett & Associates, Cleveland, Ohio last updated November, 2004 (the “Survey”) as Parcel Nos. 2 and 5. (the “Access Easements”). Certain of the Lake West Hospital buildings are located on the Access Easements and Sublandlord hereby grants to Subtenant the right to use as an alternate means of ingress and egress the portions of Sublandlord’s parking lot that lies along the Southern boundary of Sublandlord’s property as a means of ingress and egress to Robin Hood Drive which intersects with Euclid Avenue, such area being the area the City of Willoughby Fire Department has designated as an alternate access from Euclid Avenue to the Leased Premises as shown on Exhibit B attached hereto and made a part hereof (the “Alternate Access”). Sublandlord and Subtenant will prepare a legal description of the Alternate Access and Sublandlord will use reasonable efforts to obtain the necessary consents to grant Subtenant an easement for the Alternate Access and terminate the Access Easements.

 

(b) The Survey shows a light pole located on a traffic island northeast of 3 parking spaces and a 24” drain on the southeast portion of the Leased Premises, which is in the vicinity of the truck dock for Lake West Hospital. Sublandlord shall have the right, at its sole cost and expense, to remove the light pole and the traffic island on which it is located to improve access to its truck dock. If Sublandlord undertakes such project it shall: (i) comply with applicable building and zoning codes and (ii) include as part of the project a suitable means to prevent the trucks using the loading dock from coming into contact with the vehicles parked in the 3 parking spaces after the traffic island has been removed.

 

(c) The current sign for Laurelwood Hospital is located on land leased to Sublandlord by Landlord. Sublandlord grants to Subtenant a license to use the area occupied by the sign to display on the current sign the name Laurelwood Hospital, the time and temperature and to indicate that the roadway adjacent to the sign is the entrance to Laurelwood Hospital. Subtenant shall make no other changes in the sign without the approval of Sublandlord.

 

13. Brokerage. The parties hereto each represent to the other that neither has dealt with any real estate broker in connection with the negotiation and/or consummation of the transactions contemplated by this Sublease. Each party agrees that it will defend, save and hold harmless against claim or loss (including reasonable attorney’s fees) which may be asserted against the other by reason of any claims or determinations in contravention of the representations contained in this Section.

 

14. Events of Default. It shall be an “Event of Default” under this Sublease, if:

 

(a) Subtenant defaults in payment of Basic Rent, Additional Payments or any other amount of money to be paid by Subtenant as provided in this Sublease, and such default shall continue uncorrected for a period of ten (10) days after written notice to the Subtenant thereof; or

 

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(b) Subtenant defaults in the prompt and full performance and observance of any of the terms and conditions of this Sublease to be performed or observed by Subtenant and not relating to the payment of money, and any such default shall continue uncorrected for a period of thirty (30) days after written notice to the Subtenant thereof, or if any such last mentioned default cannot reasonably be corrected within such thirty (30) day period, then, except upon an event of Force Majeure (as described in the Master Lease provided, however this provision shall not apply to failures by Subtenant to pay rentals or other amounts specified in this Sublease) if Subtenant shall not within such period have commenced in good faith to correct such default and thereafter continue with due diligence to cure such default; or

 

(c) Subtenant abandons the Leased Premises or ceases to provide behavioral services on the Leased Premises for a period of thirty (30) days, or has a receiver or trustee appointed of the Subtenant’s property (not set aside within thirty (30) days), or shall assign the Subtenant’s property for the benefit of creditors; or

 

(d) any execution, attachment or other order of court shall be issued upon or against the interest of Subtenant in this Sublease and shall continue for a period of thirty (30) days after notice,

 

then in any such event, in addition to any and all rights and remedies allowed by law and equity, Sublandlord may, with or without further notice, forthwith terminate this Sublease and Subtenant’s right to possession of the Leased Premises, or Sublandlord may, without terminating this Sublease, terminate Subtenant’s right to possession of the Leased Premises.

 

Upon the termination of this Sublease, or upon the termination of Subtenant’s right to possession without termination of this Sublease:

 

(a) Subtenant shall surrender possession and vacate the Leased Premises immediately, and Sublandlord may enter into and repossess said Leased Premises, with or without process of law, and remove all persons and property therefrom; and

 

(b) Sublandlord may remove from the Leased Premises any and all property found therein and handle and store the same at the risk and expense of Subtenant, and such repossession shall not release Subtenant from Subtenant’s obligation to pay the rents herein provided.

 

In the event of termination of this Sublease as provided in this Section 14, Sublandlord, in addition to any and all rights and remedies allowed by law and equity, shall upon such termination be entitled to recover damages in the amount equal to the then present value of the rent reserved in this Sublease for the entire residue of the Sublease Term less the then present worth of the fair rental value of the Leased Premises for the residue of the Sublease Term as then in effect, plus the costs incurred, including reasonable legal expenses, to terminate this Sublease and Subtenant’s possession of the Leased Premises.

 

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In the event of any repossession by Sublandlord without terminating this Sublease, Sublandlord shall use Sublandlord’s reasonable best efforts to relet and keep rented the Leased Premises or any part thereof, as agent of Subtenant, to any person, firm or corporation, and on such reasonable terms as Sublandlord may determine, provided that Sublandlord shall use reasonable efforts to mitigate damages to Subtenant arising from Subtenant’s continuing liability under this Sublease. Sublandlord may make repairs, alterations, replacements, and/or decorations in or to the Leased Premises to the extent reasonably necessary and advisable for the purpose of reletting the Leased Premises, and in the making of such repairs, alterations, additions, replacements and/or decorations shall not operate or be construed to release Subtenant from liability hereunder; and Subtenant shall upon demand pay the cost thereof, together with Sublandlord’s expense of reletting (including reasonable legal expenses and brokerage commissions). If the rents collected by Sublandlord upon any such reletting are not sufficient to pay monthly the full amount of the rent reserved herein, together with the cost of such repairs, alterations, additions, replacements, decorations and expenses, Subtenant shall pay to Sublandlord the amount of each monthly deficiency upon demand, and if the rent so collected from any such reletting is more than sufficient to pay the full amount of the rents reserved herein, together with such costs and expenses of Sublandlord, Sublandlord shall, at least every twelve (12) months after such eviction, account for any surplus to Subtenant.

 

Any and all property which may be removed from the Leased Premises by Sublandlord may be handled, removed, stored or otherwise disposed of by Sublandlord at the risk and expense of Subtenant, and Sublandlord shall in no event be responsible for the preservation or the safekeeping thereof. Subtenant shall pay to Sublandlord, upon demand, any and all expenses incurred in such removal and all storage charges against such property, so long as the same shall be in Sublandlord’s possession or under Sublandlord’s control. If any property shall remain in the Leased Premises or in the possession of Sublandlord, and shall not be retaken by Subtenant within a period of ten (10) days from and after the time when the Leased Premises are either abandoned by Subtenant or repossessed by Sublandlord under the terms of this Sublease, said property shall conclusively be deemed to have been forever abandoned by Subtenant.

 

15. Prior Understandings : All prior understandings and agreements between the parties with respect to the leasing of the Leased Premises are merged within this Sublease which fully and completely sets forth the understanding of the parties. This Sublease may not be changed or terminated orally or in any matter other than by an agreement in writing.

 

16. Notices : Any notice or demand (collectively, “Notice”) which either party may or must give to the other hereunder shall be in writing to be effective and will be effective only upon delivery (including hand delivery, any nationally recognized overnight courier service, or United States Postal Service, certified mail, return receipt requested). Any Notice refused shall be deemed delivered on the date of such refusal. All delivery of Notices hereunder shall be made at the address set forth on the first page of this Sublease for the respective party. Any party hereto may change the address for Notices hereunder by written notice to the other party. A copy of any Notice given to Subtenant shall be given to

 

12

HHC Ohio, Inc., 1500 Waters Ridge Drive, Lewisville, Texas 75057, Attention: General Counsel.

 

17. Condition of the Leased Premises . Sublandlord makes no representations with respect to this transaction or the Leased Premises. Subtenant takes the Leased Premises in its “AS-IS,” “WHERE-IS” condition as of the date of this Sublease. THE PARTIES EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, SUITABILITY, HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS SUBLEASE, AND THERE ARE NO WARRANTIES WITH RESPECT TO THE LEASED PREMISES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS SUBLEASE, IF ANY.

 

18. Amendment of Master Lease . Sublandlord shall not amend the Master Lease in any manner that adversely affects the rights of Subtenant under this Sublease without the consent of Subtenant.

 

19. Indemnity . Subtenant hereby agrees to defend, indemnify and hold Sublandlord harmless from and against any and all expense, loss, claims or liability including reasonable attorneys’ fees arising out of or in connection with any act or omission of Subtenant, its agents, contractors or employees, including, but not limited to, claims as a result of injury to or death of any person, property damage or arising out of or in connection with Subtenant’s use and possession of the Leased Premises, or its breach of this Sublease (including the terms of the Master Lease).

 

20. Captions and Section Headings . Captions and paragraph headings contained in this Sublease are for convenience and reference only and in no way define, describe, extend or limit the scope or intent of this Sublease or any provision hereof.

 

21. Governing Law . This Sublease and all transactions contemplated by this Sublease shall be governed by and construed and enforced in accordance with the laws of the State of Ohio. Venue shall be in Lake County, Ohio.

 

22. Counterparts . This Sublease may be executed simultaneously in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A facsimile copy of this Sublease and any signatures thereon shall be considered for all purposes as originals.

 

23. Time of Essence . It is understood and agreed between the parties hereto that time is of the essence of all the terms of this Sublease.

 

24. Severability of Provisions . If any term or provision of this Sublease or any application thereof shall be invalid or unenforceable, the remainder of this Sublease and any other application of such term or provision shall not be affected thereby. All words used shall be understood and construed of such gender or number as circumstances may require.

 

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25. Memorandum of Sublease . Upon the execution of this Sublease, the parties shall execute and record a memorandum of Sublease in the public records of Lake County, Ohio.

 

26. Community Advisory Board. In its operation of the Leased Premises, Subtenant shall form and utilize a community advisory board to provide advice on the delivery of mental health services. The community advisory board will include representatives of social service agencies in Lake County and a representative of Sublandlord.

 

14

IN WITNESS WHEREOF, the undersigned have executed this Sublease as of the date first above written.

 

HHC OHIO, INC.						LAKE HOSPITAL SYSTEM, INC.
By		/s/     D AVID K. M EYERCORD				By		/s/    C YNTHIA M OORE -H ARDY
Its		Secretary						Cynthia Moore-Hardy, President and CEO

 

15

 

On this 29th day and              day of December, 2004, before me, a Notary Public in and for the foregoing County and State, personally appeared and David K. Meyercord, respectively, of HHC Ohio, Inc., who acknowledged their execution of the foregoing instrument as those officers, respectively, of that corporation for and in the name and on behalf of that corporation and by authority granted pursuant to its articles of incorporation, its bylaws and by its Board of Directors; and that the execution of that instrument is their voluntary act and deed of those officers, respectively, and the voluntary and corporate act and deed of that corporation.

 

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year aforesaid.

 

[SEAL]

 

 

 

On this 27th day of December, 2004, before me, a Notary Public in and for the foregoing County and State, personally appeared Cynthia Moore-Hardy, President and CEO of Lake Hospital System, Inc., who acknowledged her execution of the foregoing instrument as such officer, respectively, of that corporation for and in the name and on behalf of that corporation and by authority granted pursuant to its articles of incorporation, its code of regulations and by its Board of Directors; and that the execution of that instrument is their voluntary act and deed as such officer, and the voluntary and corporate act and deed of that corporation.

 

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year aforesaid.

 

[SEAL]

 

 

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PARENT COMPANY GUARANTY

 

For value received, and in consideration of the willingness of Lake Hospital System, Inc. to enter into this Sublease Agreement with its subsidiary HHC Ohio, Inc., Horizon Health Corporation (“Parent”) hereby irrevocably and unconditionally guarantees to Lake Hospital System, Inc. the prompt and full performance and discharge by HHC Ohio, Inc. of all of HHC Ohio, Inc.’s covenants, agreements, obligations and liabilities under this Sublease Agreement, and the representations and warranties of HHC Ohio, Inc. under this Sublease Agreement (collectively, the “Obligations”), in accordance with the terms hereof. If HHC Ohio, Inc. shall default in the due and punctual performance of any Obligation, Parent will forthwith perform or cause to be performed such Obligation.

 

The liabilities and obligations of Parent pursuant to this guaranty are unconditional and absolute. Parent hereby waives any right, whether legal or equitable, statutory or non-statutory, to require Lake Hospital System, Inc. to proceed against or take any action against or pursue any remedy with respect to HHC Ohio, Inc. or any other party or make presentment or demand for performance or give any notice of nonperformance (except to the extent provisions for notice to HHC Ohio, Inc. are provided in this Sublease Agreement) before Lake Hospital System, Inc. may enforce its rights under this Sublease Agreement. Parent’s obligations hereunder shall remain in full force and effect until the Obligations shall have been performed in full.

 

 

17

 

EXHIBIT “A”

MASTER LEASE

 

18

 

LEASE

 

between

 

COUNTY OF LAKE, OHIO,

 

as Lessor

 

and

 

LAKE HOSPITAL SYSTEM, INC.,

 

as Lessee

 

 

Dated

 

as of

 

January 1, 2005

 

 

Lease filed for record with the Lake

County, Ohio, Recorder on

                 ,              at                     

   .m., as Instrument No.                      ,

and recorded at Vol.                     

Page                      County of Lake,

Ohio, LEASE RECORDS.

 

 

INDEX

 

(This Index is not a part of the Lease but

is for convenience of reference only.)

 

 

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-iv-

 

LEASE

 

between

 

COUNTY OF LAKE, OHIO

 

and

 

LAKE HOSPITAL SYSTEM, INC.

 

THIS LEASE, dated as of January 1, 2005 (the “Lease”), is made between the County of Lake, Ohio (the “Lessor”), a county and political subdivision in and of the State of Ohio (the “State”), and duly organized and validly existing under the laws of the State, and Lake Hospital System, Inc. (the “Lessee”), a nonprofit hospital agency, as defined in Section 140.01, Ohio Revised Code, now having its principal office in Painesville, Ohio.

 

WHEREAS, the Lessor currently is the owner of the real estate described in Exhibit A hereto (hereinafter defined as the “Leased Premises”) on which is located a hospital and related facilities for the provision of behavioral health services (hereinafter defined as the “Existing Facilities”), and

 

WHEREAS, the Lessor, by resolution duly adopted by its Board of County Commissioners, determined that the leasing of the Leased Real Property and the Existing Facilities to the Lessee will better provide for the health and welfare of the people of the State and of the Lessor by enhancing the availability, efficiency and economy of Hospital Facilities and the services rendered thereby, provide for economies in operation and more effective health services, facilitate participation in federal, state and other financial assistance in meeting the cost of Hospital Facilities and the financing thereof, provide more efficient operation of Hospital Facilities for the service of the general public without discrimination by reason of race, creed, color or national origin, and

 

WHEREAS, the Lessor and the Lessee have determined to enter into this Lease in order to lease the Leased Real Property and the Existing Facilities from the Lessor to the Lessee under the terms of this Lease:

 

WITNESSETH, THAT

 

In consideration of the premises and the mutual covenants hereinafter contained, and in order for the Lessor to carry out the public purposes hereinbefore recited, the parties hereto covenant, agree and bind themselves as follows, provided that no covenant, agreement or obligation of the Lessor under this Lease shall be a general debt on the Lessor’s part, but shall be payable solely out of the rentals, revenues and other income, charges and moneys realized from the use, lease, sale or other disposition of the Leased Premises and any insurance and condemnation awards as herein provided:

 

 

ARTICLE I

 

DEFINITIONS, DETERMINATIONS AND REPRESENTATIONS

 

Section 1.1. Use of Defined Terms .

 

In addition to the words and terms defined elsewhere in this Lease, the words and terms set forth in Section 1.2 hereof have the meanings set forth therein, unless the context or use indicates a different meaning or intent. Those definitions are applicable equally to both the singular and plural forms of any of the words and terms defined herein.

 

Section 1.2. Definitions .

 

“Accountant” means a recognized firm of independent certified public accountants of good repute licensed by, or permitted to practice in, the State, retained by the Lessee and designated by the Authorized Lessee Representative, which firm shall not have any interest, direct or indirect, in either the Lessee or the Lessor and shall not have a partner, member, director, officer or employee who is a member, director, trustee, officer or employee of either the Lessee or the Lessor.

 

“Act” means Chapter 140, Ohio Revised Code, as amended, and other applicable provisions of the laws of the State.

 

“Additional Payments” means the amounts required in Section 3.2 hereof to be paid as Additional Payments.

 

“Authorized Lessee Representative” means the person designated by the chief executive officer of the Lessee which shall be evidenced to Lessor by a certificate signed by the chief executive officer of the Lessee. Such certificate may designate an alternate or alternates who shall have the same authority, duties and powers as the Authorized Lessee Representative.

 

“Basic Rent” means the annual rent of One Dollar ($1.00).

 

“Board of Commissioners” or “Board” means the Board of County Commissioners of the Lessor.

 

“Business Day” means any day other than a Saturday or a Sunday or any day on which the Lessor is required, authorized or not prohibited by law (including executive orders) to close and is closed.

 

“Code” means the Internal Revenue Code of 1986, as amended. References to the Code and sections thereof include relevant regulations, temporary regulations and proposed regulations thereunder and under the Internal Revenue Code of 1986, as amended, and any successor provisions to those regulations, temporary regulations or proposed regulations.

 

“Consultant” means an independent firm which is a professional management consultant, selected by the Lessee as having the skill and experience necessary to render the particular report required and is not unsatisfactory to the Lessor.

 

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“Event of Default” means any one or more of the Events of Default described in Section 12.1 hereof.

 

“Executive” means the President of the Board of Commissioners or, in his absence or unavailability, any other member of the Board of Commissioners.

 

“Existing Facilities” means the Hospital Facilities located on the Leased Premises on the date of the commencement of the Lease Term, as more fully depicted on map no. 2518 prepared by Frank M.Cirinski, P.E., Garrett & Associates, Cleveland, Ohio last updated November, 2004, as the same are modified or otherwise changed in accordance with the provisions of this Lease.

 

“Fiscal Officer” means the County Auditor of the Lessor.

 

“Fiscal Year” means a period of twelve consecutive months commencing on the first day of January of any year and ending on the last day of December of the same year, both inclusive, or such other consecutive twelve-month period as may hereafter be established as the fiscal year of the Lessee for budgeting and accounting purposes and evidenced by a certificate of the Authorized Lessee Representative filed with the Lessor.

 

“Governing Board” means the Board of Directors of the Lessee as constituted at the relevant time.

 

“Governmental Restrictions” means federal and State or other applicable governmental laws or regulations affecting the Leased Premises placing restrictions and limitations on the rates, fees and charges to be fixed, charged and collected by the Lessee, provided, however, that no change in law or regulation shall be deemed applicable by reason of this definition if such change would in any way constitute an impairment of the rights of the Lessor, or the Lessee under this Lease.

 

“Hospital Facilities” means Hospital Facilities as defined in Chapter 140 of the Ohio Revised Code or other applicable laws of the State.

 

“Independent Counsel” means a person duly admitted to practice law before the highest court of the State, other than a full-time employee of the Lessor or the Lessee.

 

“Insurance Consultant” means a firm (not a self-employed individual) selected by the Lessee, designated by the Authorized Lessee Representative and not unsatisfactory to the Lessor, which is qualified to survey risks and to recommend insurance coverage for facilities of the type used by the Lessee and which has skill and experience in such surveys and recommendations, which firm may be a broker or agent with whom the Lessee transacts business but which shall not have any specific financial interest, direct or indirect, in the Lessee.

 

“Interest Rate” means a rate which is one percent per annum in excess of the interest rate identified as the Prime Rate as published in the Money Rates table of The Wall Street Journal on the date when the obligation to pay the Interest Rate for Advances first arises.

 

“Lease” means this Lease, as duly amended or supplemented from time to time in accordance with the terms hereof.

 

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“Lease Term” means the period commencing January 1, 2005 and ending on the Termination Date.

 

“Leased Premises” means the Leased Peal Property and the Existing Facilities and all replacements and substitutions therefor.

 

“Leased Real Property” means the interests in real estate described in Exhibit A hereto, together with any substitutions or additions made thereto, but less any removals made therefrom, from time to time in the manner and to the extent provided herein.

 

“Legal Officer” means the Prosecuting Attorney of the Lessor.

 

“Lessee” means Lake Hospital System, Inc., an Ohio non-profit corporation and a nonprofit hospital agency, as defined in Section 140.01, Ohio Revised Code, and its lawful successors, including without limitation, any surviving, resulting or transferee corporation or entity, as provided in Section 8.3 hereof.

 

“Lessor” means the County of Lake, Ohio, a county and political subdivision in and of the State.

 

“Net Proceeds,” when used with respect to any insurance or condemnation award, means the proceeds therefrom remaining after payment of all expenses (including attorney’s fees and any extraordinary expenses of the Lessor or Lessee) incurred in the collection thereof.

 

“Notice Address” means:

 

 

or a different address as to which notice is given pursuant to Section 13.2 hereof.

 

“Permitted Encumbrances” means, as of any particular time, (i) statutory rights of the United States of America under 42 U.S.C. §291 et. seq ., and similar rights under other federal and state statutes, (ii) any lease of the Leased Premises not requiring prior consent of the Lessor, (iii) utility, access and other easements and rights of way, restrictions, reservations and exceptions which the Lessee certifies will not materially interfere with or impair the operations being conducted in the Leased Premises, (iv) any liens for ad valorem taxes, special assessments or other governmental charges not then delinquent or if delinquent being contested as provided in Section 7.1 of this Lease, (v) any mechanic’s, laborer’s, materialman’s, supplier’s, or vendor’s

 

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lien or right to a purchase money security interest in respect thereof if payment is not yet due and payable under the contract in question, or if such lien is contested in good faith as permitted by Section 7.1 of this Lease, (vi) such minor defects, irregularities, encumbrances, utility, access and other easements and rights of way, restrictions, reservations, exceptions and clouds on title as normally exist with respect to properties similar in character to the Leased Premises and as do not in the opinion of counsel satisfactory to the Lessor, in the aggregate materially impair the property affected thereby for the purpose for which it is or will be held by the Lessor, and (vii) any mortgage on the Lessee’s leasehold interest in the Leased Premises, provided that the indebtedness secured thereby does not exceed eighty percent (80%) of the fair market value thereof.

 

“Person” means firms, associations, partnerships, joint ventures, limited liability companies, securities, estates, trusts, corporations, joint stock companies, public and governmental bodies, any other legal entities and human beings.

 

“State” means the State of Ohio.

 

“Tax-Exempt Organization” means (i) any organization described in Section 501(c)(3) of the Code and exempt from taxation under Section 501(a) of the Code, and (ii) a “governmental unit” as that term is used in Section 145 of the Code.

 

“Termination Date” means June 15, 2037, subject to earlier termination of the Lease by the Lessee pursuant to Section 11.2, by the Lessor and Lessee pursuant to Section 11.3 and by the Lessor pursuant to Section 12.2, but subject to reinstatement under Section 12.7 and subject to renewal pursuant to Section 11.1.

 

“Value” means, with respect to property (i) with respect to real and personal property, either (a) the value of the property net of accumulated depreciation and amortization as reflected in the most recent audited financial statements of the Lessee, calculated in accordance with generally accepted accounting principles, or (b) at the sole discretion of the Lessee, the aggregate fair market value of such property as reflected in the most recent written report of an appraiser and, in the case of the Leased Premises, who is a member of a nationally recognized organization that certifies real estate appraisers.

 

Section 1.3. Certain Words Used Herein, References and Headings .

 

Any reference herein to the Lessor, the Executive, the Board of Commissioners, the Fiscal Officer, any members or officers of the Lessor, or other public boards, commissions, departments, institutions, agencies, bodies or entities, or members or officers thereof, includes those succeeding to their functions, duties or responsibilities pursuant to or by operation of law or performing their function lawfully.

 

Any reference to a section or provision of the Constitution of the State, the Act, a section, provision or chapter of the Ohio Revised Code, federal or State laws, or regulations governing Medicare or Medicaid includes that section, provision or chapter, or those laws or regulations, as amended, modified, revised, supplemented or superseded from time to time, provided, however, that no amendment, modification, revision, supplementation or supersession of the Constitution or laws of the State shall be deemed to be applicable by reason of this Section, if that

 

-5-

applicability would constitute in any way an impairment of the rights or obligations of the Lessor or the Lessee under this Lease.

 

Words of any gender include the correlative words of any other gender. Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa. The terms “hereof,” “herein,” “hereby,” “hereto” and “hereunder,” and similar terms, refer to this Lease, and the term “hereafter” means after, and the term “heretofore” means before, the date of delivery of this Lease.

 

Section 1.4. Status and Authority of Lessor .

 

The Lessor represents and warrants that it has been duly organized and is validly existing under the laws of the State, that it is a “public hospital agency” as defined in Section 140.01(B), Ohio Revised Code, and that it has authority by virtue of the Act, particularly Sections 140.03 and 140.05, Ohio Revised Code, to enter into the Lease, all of which is in furtherance of the public purposes of the Lessor and the State set forth in Section 140.02, Ohio Revised Code.

 

Section 1.5. Public Purpose for Lease .

 

The Board of Commissioners has found and determined and confirms hereby that this lease of the Leased Premises to Lessee will promote the public purposes of the Lessor and the State, as stated in Section 140.02, Ohio Revised Code, and that the Lessor will be duly benefited thereby.

 

Section 1.6. Qualification of Lessee .

 

The Lessor has found and determined and confirms hereby that the Lessee is a nonprofit hospital agency, as defined in Section 140.01, Ohio Revised Code, which has authority to lease the Leased Premises and operate the Leased Premises as part of a hospital open to the public, admitting patients without regard to race, creed, color or national origin.

 

ARTICLE II

 

LEASED PREMISES, TERMS OF LEASE, PURPOSE

 

Section 2.1. Leased Premises and Possession .

 

In consideration of the rents for which provision is made herein and of the covenants, agreements and obligations, and in reliance upon the representations and warranties, of the Lessee herein, the Lessor covenants and agrees to lease, and hereby leases, the Leased Premises to the Lessee, and the Lessee hereby leases the Leased Premises from the Lessor, subject to the provisions of this Lease and the Permitted Encumbrances.

 

TO HAVE AND TO HOLD the Leased Premises unto the Lessee for the Lease Term.

 

Possession of the Leased Premises shall be delivered and accepted upon the commencement of the Lease Term.

 

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