TRIPLE NET HOSPITAL AND MEDICAL OFFICE BUILDING LEASE

Triple Net Lease Agreement

You are currently viewing:

This Triple Net Lease Agreement involves

Integrated Healthcare Hol

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: TRIPLE NET HOSPITAL AND MEDICAL OFFICE BUILDING LEASE
Governing Law: California Date: 3/14/2005

TRIPLE NET HOSPITAL AND MEDICAL

OFFICE BUILDING LEASE

between

PACIFIC COAST HOLDINGS INVESTMENT, LLC

(Landlord)

and

INTEGRATED HEALTHCARE HOLDINGS, INC.

(Tenant)

----------------------------------------

<PAGE>

TRIPLE NET HOSPITAL AND MEDICAL OFFICE BUILDING

LEASE

THIS TRIPLE NET HOSPITAL AND MEDICAL OFFICE BUILDING LEASE (the "Lease")

is made as of the 7th day of March 2005 by and between Pacific Coast Holdings

Investment, LLC, a California limited liability company ("Landlord") and

Integrated Healthcare Holdings, Inc. a Nevada corporation ("Tenant"), with

reference to the following facts:

RECITALS

A. Tenant is acquiring from Tenet Healthcare System the Property described

below pursuant to a certain Asset Sale Agreement incorporated by reference

herein ("Tenet Transaction"). Concurrent with the closing of the Tenet

Transaction, Tenant is transferring the Property to Landlord whereupon Landlord

shall lease back the Property to Tenant on the terms and conditions set forth

herein.

B. Upon the closing of the Tenet Transaction, Landlord shall be the owner

of the Property consisting of hospital properties ("Hospital Properties") and

medical office buildings and a long term acute care facility (collectively "MOB

Properties") more particularly described in Exhibit "A" attached hereto together

with the buildings, improvements and fixtures (hereinafter collectively referred

to as the "Property").

C. Tenant is willing to lease the Property from Landlord and Landlord is

willing to lease the Property to Tenant on the terms and conditions set forth in

this Lease.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

TERMS

1.1 Hospital Properties Lease Term. The term of this Lease for the

Hospital Properties shall be for approximately twenty-five (25) years,

commencing March 8, 2005 (the "Commencement Date") and which shall terminate on

February 28, 2030.

1.2 Option To Renew Hospital Properties Lease Term. Landlord hereby grants

to Tenant the option to extend the term of this Lease for the Hospital

Properties (the "Option") for one (1) additional term of twenty-five (25) years

commencing when the initial term expires (the "Option Period") upon each and all

of the following terms and conditions:

(a) This lease shall automatically renew for the Option Period

unless Tenant gives to Landlord, and Landlord actually receives, on a date which

is at least six (6) and not more than nine (9) months prior to the date that

such Option Period would commence (if exercised), a written notice that Tenant

has declined to exercise of the Option to extend this Lease. If said

notification of the exercise of the Option is not so given and received, the

Option shall automatically renew as herein provided.

<PAGE>

(b) Tenant shall not be in breach of this Lease at the time of

exercise of each of the Options.

specifically modified by this Option shall apply.

1.3 MOB Properties Lease Term. The term of this Lease for the MOB

Properties shall be for approximately one (1) year, commencing March 8, 2005

(the "Commencement Date") and which shall terminate on February 28, 2006.

ARTICLE II

RENT

2.1 Joint Financing. Landlord and Tenant are both sophisticated entities.

Tenant has requested and Landlord has agreed to permit Tenant to use the

Property as collateral for the purposes of joint financing of the Property and

Tenant's business operation for an initial period of time and, subject to the

terms herein, the operations of Tenant and the Property. Tenant's obligation for

base rent ("Base Rent") payments shall be set in relationship to said financing.

2.2 Initial Financing. Tenant has arranged for an initial financing

("Initial Financing") in the form of a loan with interest at the rate of

Fourteen percent (14%) per annum in the amount of Eighty Million Dollars

($80,000,000) of which Thirty Million Dollars ($30,000,000) will be in the form

of an operating loan ("Operating Loan") and Fifty Million Dollars ($50,000,000)

will be in the form of a real estate loan ("Real Estate Loan"). In addition

Tenant may borrow additional funds against accounts receivable ("A/R

Financing"). The Operating Loan, the Real Estate Loan and the A/R Financing will

be secured by both the Property and Tenant's operations.

2.3 Refinancing. Tenant and Landlord agree that the Initial Financing

should be replaced as soon as practical but in any event within two (2) years of

the Commencement Date of the lease term Tenant and Landlord covenant and agree

to work cooperatively to secure said refinancing meeting the following criteria:

(a) The refinancing shall be provided by an institutional

lender in an arms length transaction.

(b) The refinancing shall not exceed One Hundred Million

Dollars ($100,000,000) of which not more than Fifty

Million Dollars ($50,000,000) will be a Real Estate

Loan.

<PAGE>

financial viability of either Tenant or Landlord.

(d) Neither Landlord, nor any of Landlord's members shall

be required to assume any personal liability or

obligation for said refinancing. The sole recourse of

the lender shall be to the Property and the Tenant's

assets.

(e) The loan shall be at commercially reasonable rates

and upon commercially reasonable terms including

reasonable amortization of principal.

(f) The loan will not include any contingent interest

provisions or any payments other than interest upon a

principal sum.

(g) The loan shall not limit the sale or transfer of all

or portions of the Property or of interests in

Landlord for a period greater than five (5) years.

2.4 Cross Payment Duties. So long as the Real Estate Loan, Operating Loan

and/or A/R Financing are cross collateralized, Tenant shall have an obligation

and duty to Landlord to pay when due all sums coming due under the Operating

Loan and A/R Financing and to otherwise fully comply with all terms and

conditions of the Operating Loan and A/R Financing and Landlord shall have an

obligation and duty to Tenant to pay when due all sums coming due under the Real

Estate Loan and to otherwise fully comply with all terms and conditions of the

Real Estate Loan.

2.5 Information and Notices. Tenant shall provide copies to Landlord of

all notices, reports, information and communications received from or provided

to any lender.

2.6 Time Limit on Cross Collateralization. Five (5) years after the

Commencement Date, Landlord shall have the right to terminate the cross

collateralization of Operating Loan and A/R Financing with the Real Estate Loan

and to refinance the Real Estate Loan as provided in Section 2.13.

2.8 Base Rent Definitions. The following definitions shall apply to the

determination of Base Rent:

(a) Principal Sum. The "Principal Sum" is Fifty Million

Dollars ($50,000,000).

(b) Cost of Landlord's Principal Sum. The "Cost of

Landlord's Principal Sum" is the average annual

interest rate charged on loan secured by the first

lien Deed of Trust (or Mortgage) on the Property for

the preceding month, as the same may vary from time

to time.

<PAGE>

first one (1) year of the lease term is the

difference between Twelve percent (12%) per annum and

the annual interest rate (which may vary monthly) of

the Real Estate Loan but in no event more than Two

and One-Half percent (2 1/2 %) per annum, thereafter

"Landlord's Spread" is Two and One-Half percent (2

1/2%) over the Cost of Landlord's Principal Sum.

(d) Amortization Expense. Commencing on the earlier of

(i) the refinancing contemplated by Section 2.3

hereof or (ii) two (2) years following the

Commencement Date, the "Amortization Expense" shall

be the annual sum of Two Million Five Hundred

Thousand Dollars ($2,500,000) until such time as a

total Amortization Expense of Fifty Million Dollars

($50,000,000) has been paid.

(e) Consumer Price Index. "Consumer Price Index" or "CPI"

shall refer to the "Consumer Price Index, Los

Angeles-Long Beach-Anaheim Average, All Items

(1982-1984=100)" as published by the United States

Department of Labor, Bureau of Labor Statistics

("Bureau"). In the event that the Bureau shall cease

to publish said Consumer Price Index, then the

national index shall apply and if the national index

is no longer published, then the successor or most

nearly comparable index thereto shall be used as

determined by Landlord.

2.9 Hospital Properties Base Rent Calculation. The monthly Hospital

Properties Base Rent shall equal the Principal Sum multiplied by the sum of the

Cost of the Landlord's Principal Sum plus the Landlord's Spread the product of

which shall be added to the Landlord's Amortization Expense, then divided by

twelve (12). Set forth as a formula this calculation is as follows:

<TABLE>

<S> <C>

Monthly Base Rent =

[Principal Sum x (Cost of Landlord's Principal Sum +Landlord's Spread)] + Amortization Expense

</TABLE>

2.10 Hospital Properties Base Rent Market Adjustment. On each five (5)

year anniversary of the Commencement Date the Hospital Base Rent shall be

increased (but not decreased) to an amount equal to the then current fair market

rental rate, but in no event increased by more than Five percent (5%) over the

preceding month's Hospital Base Rent (provided however that such time as the

Amortization Payment is no longer being made the Five percent (5%) limitation

shall cease to apply). Commencing not less than ninety (90) days prior to each

fifth (5th) anniversary of the Commencement Date, Landlord and Tenant shall

attempt to agree on the fair market rental rate for the Hospital Properties. If

<PAGE>

Landlord and Tenant are not able to agree to the fair market rental rate within

thirty (30) days, Landlord and Tenant shall each choose an independent, licensed

real estate broker, with not less than five (5) years experience in leasing

healthcare related facilities including hospitals. The two real estate brokers

so appointed shall appoint a third real estate broker, similarly qualified. Each

broker shall independently determine the fair market rental rate. The three

rates so determined will be averaged. The rate determined by the brokers which

varies the most from the average shall be discarded and the two remaining values

and the average value shall be averaged and said second average shall constitute

the fair market rental rate. Each party shall bear the costs of the real estate

broker appointed by that party and the parties shall equally divide the costs of

the third real estate broker. Notwithstanding the provisions of this Section

2.10, if at any time the monthly Hospital Base Rent determined in accordance

with Section 2.9 hereof would exceed the monthly Hospital Base Rent determined

in accordance with this Section 2.10, then this Section 2.10 shall be discarded

and the monthly Hospital Base Rent shall be determined in accordance with

Section 2.9.

2.11 MOB Properties Base Rent Calculation. The monthly MOB Properties Base

Rent shall equal the rent received from tenants of the MOB Properties, less the

actual monthly costs to operate said MOB Properties, and also less a monthly

charge for insurance and real property taxes equal to one-twelfth (12th) the

estimated annual cost thereof. In the event the estimated monthly charge for

insurance and real property taxes is in error at the end of the lease term, then

Landlord and Tenant shall make an appropriate adjustment so that the sum

deducted in order to calculate the MOB Properties Base Rent is correct.

2.12 Invoicing for Base Rent. Landlord shall invoice Tenant for the

monthly Base Rent due. Base Rent shall be due on or before tenth (10th) day of

the month. Any partial month shall be prorated on a daily basis at the rate of

1/30th of the monthly rent per day.

2.13 Landlord's Rights Regarding Financing. Upon termination of the cross

collateralization obligations as set forth above, Landlord shall have the right

in Landlord's commercially reasonable discretion to from time to time alter,

replace or revise the loan secured by the first lien Deed of Trust (or Mortgage)

on the Property and thereby change the Cost of Landlord's Principal Sum, but

such refinancing shall not increase Tenant's then prevailing rent over that of

the then prevailing fair market value rental rent for the Property. Any dispute

under this provision shall be referred to binding arbitration under the

provisions of Section 20.22. Tenant shall cooperate in all respects with

executing such documents as may be requested by Landlord's lender.

2.14 Hedging. Either Landlord or Tenant may at their individual options

elect to hedge interest rate exposure; however, such hedging shall be undertaken

at the sole risk of the party so electing to hedge. Hedging by Tenant shall in

no way restrict Landlord's right to alter, replace or revise the loan secured by

the first lien Deed of Trust (or Mortgage) on the Property.

<PAGE>

2.15 CPI Adjustment. On January 1st (or as soon thereafter as available)

of each year, the Consumer Price Index figure for the preceding year shall be

determined, and the portion of the Base Rent attributable to the Landlord's

Spread shall be increased (but not decreased) by the same percentage as the

percentage, if any, by which the Consumer Price Index for the January of the

preceding year shall have increased as compared with the Consumer Price Index

for the January of the current year. Landlord shall provide written notice of

the CPI adjustment to Tenant. In the event that the adjustment has not been

determined in time for any invoicing sent, then upon determination of the

adjustment, Landlord shall send out adjustment invoices.

2.16 Other Charges. Except as otherwise expressly provided herein, this

Lease is what is commonly called a net-net-net lease, it being understood that

Landlord shall receive the Base Rent free and clear of any and all impositions

of real and personal Property taxes, or other taxes (excepting Landlord's income

tax), insurance costs, costs of repair and maintenance, liens and all other

charges, costs, expenses and liabilities in connection with the ownership and

operation of the Property and the businesses conducted thereon.

2.17 Delinquent Rent. Tenant acknowledges that late payment of Base Rent

or any additional rent by Tenant to Landlord will cause Landlord to incur costs

not contemplated by this Lease, and the exact amount of such costs being

extremely difficult and impracticable to fix. Therefore, if any installment of

Base Rent or any additional rent is not received within ten (10) days of when

due, Tenant shall pay Landlord the additional sum of Five Thousand Dollars

($5,000) per late payment] as a late charge. The parties agree that this late

charge represents a fair and reasonable estimate of the costs that Landlord will

incur by reason of late payments. Additionally, any payments of Base Rent and

any other sums payable by Tenant pursuant to the terms of this Lease shall bear

interest at the maximum legal rate.

2.18 Minimum Base Rent. Notwithstanding anything elsewhere provided, at

all times the minimum monthly Base Rent shall be equal to Landlord's payment

obligations under the Real Estate Loan.

2.19 MOB Rent Deferral. In the event Tenant is financially unable to pay

the monthly MOB Properties Base Rent as provided in Section 2.11 or any

additional rent on the MOB Properties as provided elsewhere in this Lease, it is

agreed that the unpaid amount shall be amortized together with interest at the

rate of four percent (4%) per annum and paid over the subsequent thirty-six (36)

months as additional rent.

ARTICLE III

AFTER ACQUIRED PROPERTY

3.1 999 Tustin Avenue Condominium Units. Originally, Landlord had intended

to acquire from Tenant and lease back to Tenant those condominium units located

at 999 North Tustin Ave. Santa Ana, CA 92705 as more specifically set forth on

Exhibit A hereof. Said condominium units are subject to a right of first refusal

and so cannot immediately be acquired by Tenant and transferred to Landlord.

Therefore the parties have by separate agreement arranged for the acquisition of

<PAGE>

said condominium units by Tenant and the transfer thereof to Landlord (or so

many of said condominium units as are not taken by others through the exercise

of the right of first refusal, hereinafter the "Transferred Condominium Units").

Upon transfer said Transferred Condominium Units shall be added to the MOB

Properties and leased to Tenant by Landlord pursuant to the terms of this

Agreement. Landlord and Tenant agree to execute an addendum to this Agreement

reflecting the addition of said Transferred Condominium Units to the lease and

the commencement date of the lease thereof.

ARTICLE IV

TAXES

4.1 Real Property Taxes. Tenant shall pay, as additional rent, when and as

the same become due, and prior to delinquency, all taxes, both general and

special, and other charges, including transient occupancy taxes and rental

taxes, if any, lawfully imposed or assessed against the Property, including but

not limited to any and all licenses, fees or charges, improvement bonds,

ordinary and extraordinary, general and special, foreseen and unforeseen, which

may be lawfully levied, assessed or imposed during the term of this Lease upon

or against Tenant or the Property, and/or the businesses conducted thereon, and

including any future tax adopted in lieu of a Property tax, any and all general

and special taxes, including any increase in such taxes resulting from a "change

in ownership" of Landlord or Tenant (as defined in California Revenue and

Taxation Code Section 60, et seq.).

Where any assessment may, at the option of the taxpayer, be payable in

installments, Tenant shall have the right to exercise the option, and Tenant's

liability for the payment of the assessment shall be limited to the payment of

the installments which become due during the term of this Lease.

If separate bills are not sent directly to Tenant, Landlord shall furnish

Tenant, upon receipt by Landlord, with true copies of each bill to be paid by

Tenant in whole or in part.

4.2 Tax Contest. Upon written application, Tenant shall furnish to

Landlord for inspection, and for such use as may be proper for the protection of

Landlord's interest in the Property, written evidence duly certified that any

and all taxes, assessments or charges required to be paid by Tenant hereunder

have been paid, satisfied or otherwise discharged. Tenant, at its sole cost and

expense, shall have the right to employ and exhaust all available remedies to

protest and contest the amount of any liability for any taxes, assessments,

licenses, fees or charges imposed or assessed against the Property, or otherwise

to seek reduction or refund. Tenant shall post a bond (or, in lieu thereof,

equivalent cash collateral) to prevent enforcement of any lien resulting from

the foregoing.

<PAGE>

4.3 Personal Property Taxes. Tenant shall pay, before delinquency, all

taxes and assessments levied against any personal Property that is located on

the Property.

ARTICLE V

UTILITIES

5.1 Utilities. In addition to the rents, taxes, and other charges herein

provided, Tenant shall pay, or cause to be paid, as additional rent, all charges

for public or private utility services, including, but not limited to, those for

water, sewage, electricity, gas, telephone and other utility services, including

trash collection supplied to and used on the Property.

ARTICLE VI

USE OF THE PROPERTY

6.1 Use of the Property. Tenant shall use the Property for the purpose of

operation of an acute care hospital and delivery of health care services, and

any other uses reasonably related thereto (the "Permitted Uses"). Tenant shall

not use or permit the Property to be used for any other purpose without the

prior written consent of Landlord, which consent may be granted or withheld in

the sole and absolute discretion of the Landlord.

ARTICLE VII

MAINTENANCE, ALTERATIONS IMPROVEMENTS

7.1 Maintenance and Repair. Tenant shall, at Tenant's sole cost and

expense, keep and maintain the Property in good and sanitary order, condition

and repair, including, without limitation, interior and exterior walls, roof,

foundation, and equipment. Tenant hereby accepts the Property in its as-is

condition existing as of the Commencement Date, subject to all applicable

zoning, municipal, county and state laws, ordinances and regulations governing

and regulating the use of the Property,

7.2 Alterations and Improvements.

(a) Tenant shall be responsible for making any alterations or

improvements to the Property required in order to enable Tenant to use the

Property for the Permitted Uses, including without limitation any and all

repairs, alterations, improvements of any nature or anything else which may be

<PAGE>

required for compliance with SB 1953, including without limitation any

structural or non-structural alterations. All alterations, improvements,

additions and installations (whether or not such installations constitute trade

fixtures of Tenant), which may be made to the Property by Tenant, including but

not limited to, floor coverings, paneling, doors, drapes, built-ins, moldings,

sound attenuation, lighting and telephone or communication systems, conduit,

wiring and outlets shall be made and done in a good and workmanlike manner and

of good and sufficient quality and materials and shall be the Property of

Landlord and remain upon and be surrendered with the Property at the expiration

of the Lease.

(b) Tenant shall promptly pay and discharge all claims for work or

labor done, supplies furnished or services rendered and shall keep the Property

free and clear of all mechanic and materialman liens in connection therewith.

Landlord shall have the right to post or keep posted on the Property, or in the

immediate vicinity thereof, any notices of non-responsibility for any

construction, alteration, or repair of the Property by Tenant. If any such lien

is filed, Landlord may, but shall not be required to take such action or pay

such amount as may be necessary to remove such lien; and Tenant shall pay to

Landlord as additional rent any such amounts expended by Landlord within five

(5) days after notice is received by Tenant of the amount expended by Landlord.

ARTICLE VIII

COMPLIANCE WITH LAWS

8.1 Generally. Tenant, as additional rent, at its sole cost and expense,

shall make any and all additions to, repairs and alterations in, the buildings,

structures, landscaping and parking areas (hereinafter collectively the

"Improvements"), the Property which may be required by law or governmental

authority, and shall otherwise observe and comply with any and all public laws,

ordinances, regulations, agreements, and covenants, conditions and/or

restrictions of public record applicable to the Property. Tenant shall be

obligated to obtain, at its sole effort, cost and expense, all permits, approval

and licenses required for the operation, alteration, addition to or repair of

the Improvements.

8.2 Hazardous Substances - Reportable Uses; Required Consent. The terms

"Hazardous Substance" and "Hazardous Substances" shall mean any hazardous or

toxic materials, pollutants, effluents, contaminants, radioactive materials,

flammable explosives, chemicals known to cause cancer or reproductive toxicity,

emissions or wastes and any other chemical, material or substance, the handling,

storage, release, transportation, or disposal of which is or becomes prohibited,

limited or regulated by any federal, state, county, regional or local authority

or which, even if not so regulated, is or becomes known to pose a hazard to the

health and safety of the occupants of the Property, including, without

limitation, (i) petroleum and petroleum by-products, (ii) urea formaldehyde foam

insulation, (iii) polychlorinate biphenyls, (iv) all substances now or hereafter

designated as "hazardous substances, "hazardous materials" or "toxic substances"

pursuant to the Comprehensive Environmental Response, Compensation and Liability

Act of 1980 (CERCLA), 42 U.S.C. Section 9601 et seq., as amended by the

Superfund Amendments and Reauthorization Act of 1986 (SARA), the Federal Water

Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42

U.S.C. Section 7401 et seq., the Hazardous Materials Transportation Act, 49

U.S.C. Section 1801 et seq., or the Resource, Conservation and Recovery Act, 42

U.S.C. Section 6901 et seq., or (vi) all substances now or hereafter designated

as hazardous substances, hazardous materials, or toxic substances under any

other federal, state or local laws or in any regulations adopted and

publications promulgated pursuant to said laws.

8.3 Reportable Use. Tenant shall not engage in any activity in, on or

about the Property that constitutes a Reportable Use (as hereinafter defined) of

Hazardous Substances without the express prior written consent of Landlord and

compliance in a timely manner, at Tenant's sole cost and expense, with all

<PAGE>

Applicable Law (as defined hereinafter). Reportable Use shall mean (i) the

installation or use of any above or below ground storage tank (ii) the

generation, possession, storage, use, transportation, or disposal of a Hazardous

Substance that requires a permit from, or with respect to which a report and

notice, registration or business plan is required to be filed with any

governmental authority. Reportable Use shall also include Tenant's being

responsible for the presence in, on or about the Property of a Hazardous

Substance with respect to which any Applicable Law requires that a notice be

given to persons entering or occupying the Property or neighboring properties.

Notwithstanding the foregoing, Tenant may, without Landlord's prior consent, but

in full compliance with all Applicable Law, use, generate and store any ordinary

and customary materials reasonably required to be used by Tenant in the normal

course of Tenant's business permitted on the Property by the terms of this

Lease, so long as such use does not expose the Property or neighboring

properties to any risk of contamination or damage or expose Landlord to any

liability therefore. In addition Landlord may (but without any obligation to do

so) condition its consent to the use or presence of any Hazardous Substance,

activity or storage tank by Tenant upon Tenant's giving Landlord such additional

assurances as Landlord, in its sole discretion, deems necessary to protect

itself, the public, the Property, the Improvements and the environment against

damage, contamination or injury and/or liability therefrom or therefore,

including, but not limited to, the installation (and removal on or before the

expiration of the term of the Lease or earlier termination) of reasonably

necessary protective modifications to the Property and the Improvements and/or

the disposal and/or the deposit of a security deposit or increase thereof.

8.4 Duty to Inform Landlord. If Tenant's officers, directors or general

manager know, or have reasonable cause to believe, that a Hazardous Substance or

a condition involving or resulting from same, has come to be located on, in or

under the Property, the Improvements or adjoining properties, other than as

previously consented to by Landlord, Tenant shall immediately give written

notice of such fact to Landlord. Tenant shall also immediately give Landlord a

copy of any statement, report, notice, registration, application, permit,

business plan, license, claim, action or proceeding given to, or received from,

any governmental authority or private party, any persons entering or occupying

the Property concerning the presence, spill, release, discharge of, or exposure

to any hazardous substance or contamination in, on or about the Property,

including, but not limited to, all such documents as may be involved in any

reportable uses involving the Property.

8.5 Indemnification. Tenant shall indemnify, protect, defend and hold

Landlord, its agents, employees, members and lenders, if any, and the Property

harmless from and against any and all loss of rents and/or damages, liabilities,

judgments, costs, claims, liens, expenses, penalties, permits and attorneys fees

and consultants fees arising out of or involving the presence, storage, use or

transport of any Hazardous Substance or storage tank, whenever arising, or out

of or as a result of Landlord's indemnification of Medical Provider Financial

Corporation II, Inc. pursuant to an Environmental Indemnity Agreement dated as

<PAGE>

of March 3, 2005 or any successor environmental indemnity which Landlord may

extend in connection with a financing secured by the real property leased to

Tenant hereby. Tenant's obligations under this Section shall include, but not be

limited to, the effects of any contamination or injury to person, Property or

the environment created or suffered by Landlord and for Tenant, and their

respective agents, employees, guests, invitees and other persons on the

Property, and the cost of investigation (including consultant's and attorney's

fees and testing), removal, remediation, restoration, and/or abatement thereof,

or of any contamination therein involved, and shall survive the expiration or

earlier termination of this Lease. No termination, cancellation or release

agreement entered into by Landlord and Tenant shall release Tenant from its

obligations under this Lease with respect to the Hazardous Substances or storage

tanks, unless specifically so agreed by Landlord in writing at the time of such

release.

8.6 Tenant's Compliance With Applicable Laws. Tenant shall, at Tenant's

sole cost and expense, fully, diligently and in a timely manner comply with all

Applicable Law, which term is used in this Lease to include all laws, rules,

regulations, ordinances, directives, covenants, easements, and restrictions of

record, permits, the requirements of any applicable federal, state or municipal

governmental authority, applicable fire insurance, underwriter or rating bureau

and the recommendations of Landlord's engineers and/or consultants, relating, in

any manner, to the Property including, but not limited to, matters pertaining to

(i) industrial hygiene (ii) environmental conditions on, in, under, or about the

Property, including soil and ground water contamination, (iii) the use,

generation, manufacture, production, installation, maintenance, removal,

transportation, signage, spill or release of any Hazardous Substances or storage

tank), (iv) the American with Disabilities Act of 1990, as amended, (v) OSHA,

(vi) the California Building Code, and (vii) Title 24 now in effect which may

hereinafter come into effect, and whether or not reflecting a change in policy

from any previous existing policy. Tenant shall, within five (5) days after

receipt of Landlord's written request, provide Landlord with copies of all

documents and information, including, but not limited to, permits,

registrations, notices, applications, reports and certificates, evidencing

Tenant's compliance with any Applicable Law specified by Landlord and shall

immediately upon receipt notify Landlord, in writing (with copies of any

documents involved), of any threatened or actual claim, notice, citation,

warning, complaint or report pertaining to or involving failure by Tenant or the

Property to comply with any Applicable Law. In the event that as a result of any

alteration, addition or change to the Property, or any portion thereof or any

improvement constructed thereon, by Tenant which results in the violation of an

Applicable Law, then Tenant shall be responsible for compliance with such

Applicable Law, including any asbestos abatement or containment required as a

result of or in connection with such alteration, addition or change.

ARTICLE IX

INTENTIONALLY OMITTED

<PAGE>

ARTICLE X

EXCULPATION AND INDEMNITY

10.1 Waiver of Landlord Liability. Landlord shall not be liable for any

loss, damage or injury of any kind or character to any person or Property (a)

arising from any use and/or condition and extent of the Property, or any part

thereof including, without limitation, environmental contamination, (b) caused

by any defect in the equipment or other facility located therein, (c) caused by

or arising from any act or omission of Tenant, or any of its agents, employees,

licensees or invitees, (d) arising from or in connection with the conduct of any

business, occupation, transaction, event or other activity occurring on the

Property, (e) arising from any accident on the Property or any fire or casualty

thereon, (f) occasioned by the failure of Tenant to maintain the Property in a

safe condition, or (g) arising from any other cause whatsoever, except as

occasioned by the act or gross negligence of any duty by Landlord or its agents

or employees occurring after the Commencement Date. Tenant, as a material part

of the consideration of this Lease, hereby waives, on its behalf, all claims and

damages against Landlord for any such loss, damage or injury to Tenant.

10.2 Tenant Indemnification. Tenant, for itself and its successors and

assigns, hereby agrees to indemnify Landlord, and Landlord's members, managers,

agents, representatives, employees and attorneys, free and harmless from and

against any and all claims, actions, damages, liabilities and expenses,

including attorneys fees and costs, in connection with or arising out of (i) any

loss of life, personal injury and/or damage to Property arising from or out of

any occurrence in, upon or at the Property, (ii) the occupancy or use by Tenant

of the Property, or any part thereof, (iii) arising from or out of Tenant's

failure to comply with any provision of this Lease, and (iv) with respect to the

violation of any of the provisions of this Lease including but not limited to

Article VIII hereof, in the event Landlord shall, without fault on its part, be

made a party to any litigation, arbitration or other proceeding commenced by or

against Tenant, then Tenant shall protect and hold Landlord harmless, and shall

pay all costs, expenses and attorneys fees incurred or paid by Landlord in

connection with such litigation, arbitration or other proceeding. Landlord may,

at its option, require Tenant to assume Landlord's defense in any action covered

by this paragraph through counsel satisfactory to Landlord.

10.3 Survival of Indemnity Obligation. The obligations of Tenant under

this Article X shall survive the expiration of the term, or the termination, of

this Lease.

ARTICLE XI

INSURANCE

11.1 Liability. Tenant agrees to maintain, at its sole cost and expense,

as additional rent, during the term of this Lease comprehensive public liability

insurance insuring against liabilities related to the condition of or use of the

Property and the Improvements, bodily injury, employment related liability,

<PAGE>

liquor liability, blanket contractual liability, garage liability, garage

keepers legal liability, non-owned auto liability and advertising injury, in

such amount as may be required by any beneficiary of any deed of trust

encumbering the Property, but in no event less than Ten Million Dollars

($10,000,000), combined single limit coverage, specifically insuring performance

by Tenant of the indemnity set forth in Article X above, and containing the

following provisions:

(a) Providing that the coverage is primary and that any

coverage Landlord may maintain shall be in excess thereto;

(b) Naming Landlord and any beneficiary under any deed of

trust encumbering the Property as additional insureds;

without thirty (30) days prior written notice to Landlord and any beneficiary of

a deed of trust encumbering the Property;

(d) Providing for a cross liability or a severability of

interest endorsement or equivalent thereof;

(e) With respect to improvements, alterations, demolitions,

and changes required or permitted to be made by Tenant pursuant to the terms of

this Lease, contingent liability and builders- risk insurance;

(f) Workers' compensation coverage as required by law,

together with employer's liability coverage;

(g) A waiver by Tenant's insurers of any right to subrogation

against Landlord, its agents, members, managers, employees and representatives

which arises or might arise by reason of any payment under such policy or by

reason of any act or admission of Landlord, its agents, members, managers,

employees or representatives; and

11.2 Adjustments. The foregoing limits of coverage and the coverages may

be adjusted reasonably by Landlord and Tenant, with the consent of any

beneficiary of any deed of trust encumbering the Property, from time to time,

but not more often than once during any three (3) year period, during the term

of this Lease based upon changes in the amounts of judgments for personal injury

and Property damage, industry standards, inflation, and other relevant factors

in order to maintain insurance protection at least equivalent to the protection

afforded on the Commencement Date. In the event that the Landlord and Tenant are

unable to agree upon an adjustment then Landlord and Tenant, the issue shall be

resolved by arbitration in accordance with the binding arbitration provisions of

Section 20.22. The cost of such arbitration shall be born by the party whose

insurance proposal is closest to the insurance proposal decided upon by the

arbitration process.

11.3 Property. Tenant agrees to maintain, at its sole cost and expense, as

additional rent, during the term of this Lease (a) standard form fire, extended

coverage, vandalism, malicious mischief, boiler and machinery coverage, and

building ordinance and law coverage endorsements, and special extended

insurance, including all risk insurance, and other Property insurance coverage

(except earthquake coverage which shall not be required) as may be required by

any beneficiary of any deed of trust encumbering the Property, with respect to

the Improvements and the personal property located upon and used in connection

with the Property (hereinafter referred to as the "Assets") in amounts at least

equal to the greater of full replacement costs thereof or the amount required by

<PAGE>

any beneficiary of a deed of trust encumbering the Property, (b) with respect to

the construction, demolition, additions, alterations and the like required or

permitted to be constructed by Tenant hereunder, builders all-risk insurance

insuring the full replacement value of all construction in process on the

Property, and (c) business interruption insurance, in an amount satisfactory to

Landlord. Tenant shall also maintain, at Tenant's expense, earthquake insurance,

including sprinkler leakage coverage, building, contents and loss of income,

with a limit no less than the probable maximum loss limit as valued either

through Landlord or any beneficiary under a deed of trust encumbering the

Property. Each policy shall specifically (i) name the beneficiary under any deed

of trust encumbering the Property and then Landlord as additional insureds, (ii)

provide that all payments shall be made as provided in Article XII above, and

that the beneficiary of a deed of trust encumbering the Property shall have

first priority and claim to any payments as provided in its deed of trust, and

(iii) provide that it cannot be canceled or modified by the insurer without

thirty (30) day

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates