THIS LEASE AND TRANSFER AGREEMENT (this "Agreement") is made as of the 28th day of July, 1994, between and among WEST VOLUSIA HOSPITAL AUTHORITY, a special taxing district, public body corporation and politic of the State of Florida (herein called "Lessor"), MEMORIAL HEALTH SYSTEMS, INC. and MEMORIAL HOSPITAL-WEST VOLUSIA, INC., each a not-for-profit corporation organized, existing and in good standing under the laws of the State of Florida (herein called "MHS" and "Lessee" respectively).
WHEREAS, Lessor owns and operates a hospital facility and other assets located in DeLand, Florida known as the West Volusia Memorial Hospital (the "Hospital", as hereinafter defined);
WHEREAS, Lessor believes that continuation of the high quality and level of health care services currently rendered at the Hospital can best be accomplished by leasing and transferring all of the operations, assets and liabilities of the Hospital to a Florida not-for-profit corporation;
WHEREAS, to accomplish this end, under the authority of §155.40, Florida Statutes, Lessor wishes to lease the assets of the Hospital, and transfer all of the operations and liabilities of the Hospital, to Lessee and Lessee wishes to assume all of the operations, assets and liabilities of the Hospital, all on the terms and conditions hereinafter set forth;
WHEREAS, Lessor desires to provide for an orderly transition of employees and members of the medical staff of the Hospital to Lessee;
WHEREAS, a substantial inducement to Lessor's willingness to execute this Agreement has been the covenants of Lessee and MHS as contained herein that upon expiration or earlier termination of this Agreement, certain assets of Lessee will be distributed, conveyed or otherwise returned to Lessor and become Lessor's property absolutely, as more specifically described in this Agreement;
NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth herein, the parties hereto agree as follows:
§1.01 "Act" means Chapter 57-2085, Laws of Florida, as amended, pertaining to the creation of West Volusia Hospital Authority, an independent special taxing district.
§1.02 "Agreement" means this Lease and Transfer Agreement as from time to time amended or supplemented pursuant hereto.
§1.03 "Assigned Contracts" shall have the meaning assigned to it in Schedule 1.03 attached hereto and incorporated herein by reference.
[ ... ]
§1.06 "Board of Commissioners" means the Board of Commissioners of the Lessor.
§1.07 "Bond Indenture" means that Trust Indenture dated as of December 1, 1982, between the Lessor and First Union National Bank of Florida, successor in interest to Florida National Bank, as Trustee, as amended and supplemented, pursuant to which the Lessor issued the Bonds and the Fish Bonds.
§1.08 "Bonds" means the West Volusia Hospital Authority Hospital Revenue Bonds, Series 1986B, dated as of September 1, 1986, originally issued in the aggregate principal amount of $9,460,000.
§1.09 "Code" means the Internal Revenue Code of 1986, as amended, and all applicable existing and proposed regulations that may from time to time be issued thereunder.
§1.10 "Commencement Date" shall mean the later of (1) the first day of the first full calendar month following receipt by Lessor of an opinion from nationally recognized bond counsel confirming that implementation of the Agreement will not adversely affect the exclusion from gross income for federal income tax purposes of the interest payable on the bonds; or (2) October 1, 1994.
§1.11 "Employees" means all of the employees of the Lessor employed in connection with Existing Facilities Operations on the Commencement Date hereof.
§1.12 "Entity" means a corporation, general or limited partnership, joint venture, association, trust, person or other legal entity.
[ ... ]
§1.19 "Fish Bonds" means the West Volusia Hospital Authority Revenue Bonds, Series 1989A, dated January 3, 1989, originally issued in the aggregate principal amount of $9,000,000.00.
§1.20 "Hospital" means the facility and institution presently known as West Volusia Memorial Hospital located in DeLand, Florida and all licenses, permits and approvals, including certificate of need approvals, necessary or desirable for the use and operation thereof.
§1.21 "Improvements" means any and all buildings, structures, improvements, furnishings, machinery, equipment and other personal property which shall be constructed, placed or installed in or upon the Real Property including those Improvements made as a substitution for or in renewal or replacement of any buildings, structures, improvements, furnishings machinery, equipment or other personal property constituting part of the Hospital, and any other additions, alterations, and improvements to the Hospital placed or installed in or upon the Real Property.
§1.22 "Independent Accountant(s)" means a firm of nationally recognized, independent certified public accountants selected by Lessee.
§1.23 "JCAHO" means the Joint Commission on Accreditation of Healthcare Organizations.
[ ... ]
§1.35 "Property Assets" are defined as the sum of depreciation funds, unexpended bond funds, restricted capital contributions, and net property, plant and equipment.
§1.36 "Real Property" means (a) the real property on which the Hospital is located (the "Hospital Real Property"), more particularly described in Schedule 1.36(a) attached hereto, and all buildings, fixtures, improvements, mechanical systems, driveways, or parking areas located thereon and all rights, easements and appurtenances thereto, and (b) certain other real property (the "Other Real Property") more particularly described in Schedule 1.36(b) attached hereto, including all buildings, fixtures, improvements, mechanical systems, driveways, or parking areas located thereon and all rights, easements and appurtenances thereto; the properties described in Schedules 1.36(a) and 1.36(b) being subject to those restrictions, encumbrances and exceptions described in said schedules.
§1.37 "Rental Payments" means any and all of the payments required to be made pursuant to Sections 2.04(a)(i) and 2.04(a)(iii) hereof.
§1.38 "State" means the State of Florida.
§1.39 "Subsidy for Hospital Operations" means the operating subsidy granted by Lessor to Lessee in the manner described in Section 6.22 hereof.
§1.40 "Taxing District" means the geographical area of Lessor as more particularly described in the Act as of the Commencement Date.
§2.01 Leasing of Existing Facilities: Quiet Enjoyment.
(a) [ ... ]
(b) [ ... ]
§2.02 Transfer of Working Capital Assets, Operating Assets and Existing Facilities Operations. Lessor, for an in consideration of the assumption by Lessee of the Assumed Liabilities pursuant to Section 2.03 hereof and the performance by Lessee and MHS of their other agreements hereunder, and effective as of the Commencement Date, assigns, transfers and conveys to Lessee all of Lessor's right, title and interest in and to the Working Capital Assets, the Operating Assets and Existing Facilities Operations. Lessee during the term hereof shall use the Working Capital Assets, the Operating Assets and Existing Facilities Operations so transferred to it in the operations of the Existing Facilities and in furtherance of Lessee's purposes as set forth in its Articles of Incorporation and as otherwise permitted by this Agreement. At the expiration or earlier termination of the term hereof, (a) Lessee shall assign, transfer and convey to Lessor Working Capital Assets less Working Capital Liabilities with a value equal or Beginning Net Working Capital in the manner set forth in Section 11.09, the Operating Assets and Existing Facilities Operations and (b) Lessor, to the extent allowed by law, shall assume in writing all the then current liabilities of Lessee and all other liabilities of Lessee incurred in the ordinary course of Existing Facilities Operations; provided, that such assumed liabilities of Lessee shall be payable only from the revenues of the Existing Facilities. In the event Lessor cannot at the expiration or earlier termination of the term hereof legally assume a liability of Lessee, Lessee shall cause such liability to be discharged. In the event Lessee is required by Lessor to satisfy a liability that Lessor cannot legally assume, Lessee may utilize the Beginning Net Working Capital to obtain sufficient funds to discharge any such liability, and Lessee shall then transfer and assign to Lessor the remaining amount of Beginning Net Working Capital net of the funds required to satisfy any such liability.
§2.03 Assumption of Liabilities. Effective as of the Commencement Date, Lessee assumes, and agrees to perform and discharged, all of the Assumed Liabilities as of the Commencement Date; provided that with respect to the Assigned Contracts (a) Lessee shall only assume obligations hereunder to the extent such obligations are enforceable against Lessor, and lessee shall be entitled to any and all defenses to performance thereunder as were available to Lessor, and (b) Lessor and Lessee each agree to use their respective best efforts to renegotiate or terminate any Assigned Contract such parties mutually agree is not in the Hospital's best interest.
§2.04 Rental Payments.
(a) In consideration of the leasing of the Existing Facilities to Lessee hereunder, effective as of the Commencement Date, Lessee agrees to make rental payments to Lessor as follows:
(ii) Lessee shall pay to Lessor directly the Operating Margin Sharing Amount. Lessee shall deliver to Lessor a certified report of the Chief Financial Officer of Lessee of the amount (if any) due under the provisions hereof and such certified report shall affirm such Operating Margin Sharing Amount is the correct amount based on the applicable audited financial statements. Such report, together with the amount due to be paid hereunder, shall be delivered within one hundred fifty (150) days after the end of each Fiscal Year of Lessee. The Operating Margin Sharing Amount shall be deposited in a board designated fund and be payable to the Lessor at such time as it equals the Operating Subsidy received by the Lessee from the Lessor but in no event prior to the original Operating Subsidy period. Lessee's obligation hereunder shall continue throughout the Term of this Agreement, but only until such time as Lessor recovers the total amount of the Subsidy of Hospital Operations paid by the Lessor to the Lessee as more specifically provided for in Section 6.22 of this Agreement.
The foregoing Rental Payments shall be in addition to Lessee's obligation to pay or discharge the Assumed Liabilities as specified in Section 2.03 hereof.
(b) [ ... ]
Lessor makes the following representations and warranties to Lessee as the basis for the undertakings on Lessee's part herein contained.
§3.01 Organization Lessor, an independent special taxing district, is a public body corporate and politic of the State of Florida, duly organized and in good standing under the laws of the State of Florida.
§3.02 Power and Authority. Lessor has full power and authority to enter into this Agreement, to carry out the transactions contemplated hereunder, and to carry out its obligations hereunder.
§3.03 Authorization. Lessor has duly authorized the execution, delivery and performance of this Agreement.
§3.04 No Violation. Except for any exceptions or restrictions noted in the exhibits hereto, in the attorneys' opinions and consultants reports and/or in the opinions required by the Bond Indenture, to Lessor's best knowledge, neither Lessor nor the Existing Facilities are subject to any claim or restriction or subject to any provision contained in Lessor's enabling legislation, charter, ordinances or bylaws or in any evidence of indebtedness, indenture, commitment, agreement or contract to which Lessor is a party or by which it is bound, or subject to any existing judgment, order or decree binding upon Lessor, which prevents Lessor from entering into this Agreement or performing any of its obligations hereunder.
§3.05 Enforceability. [ ... ]
[ ... ]
§3.16 Certain Representations with Respect to the Hospital.
(a) The hospital is licensed by the State of Florida, Agency for Health Care Administration, as an acute care general hospital authorized to operate 156 beds in its existing facilities located in DeLand, Florida.
(b) The Hospital is accredited by the JCAHO.
(c) The Hospital is qualified and certified for participation in the Medicare program.
(d) The Hospital is qualified and certified for participation in the Medicaid program.
(e) Lessor has not received notice with respect to the Hospital of any deficiencies under, or violations of the requirements for participation in, the Medicare or Medicaid programs or Blue Cross or third party provider which has not been corrected. Lessor has filed, or will file within permitted time periods or permitted extensions thereof, all Medicare or Medicaid cost reports required by such programs with respect to the period prior to the date hereof.
(f) Lessor has provided or made available to Lessee copies of the most recent survey reports, any waivers of deficiencies, plans of correction, and any other investigation reports, to the extent available, issued since January 1, 1992 with respect to the Existing Facilities and Existing Facilities Operations, the Hospital's licensure or the Hospital's operation under or pursuant to the Medicare and Medicaid programs.
§3.17 Existing Facilities and Operating Assets. The Existing Facilities, Working Capital Assets, Excluded Assets, and the Operating Assets include all assets currently being utilized by Lessor in connection with the operation of the Hospital.
§3.18 Contracts. [ ... ]
§3.22 Labor Matters. Lessor has no collective bargaining agreements with any labor union or organization representing its employees at the Hospital and is not currently negotiating with any labor union or organization representing employees at the Hospital. There is no pending or threatened petition by employees at the Hospital or unions seeking a representation election.
§3.23 Taxes. Lessor has paid in full [ ... ]
§4.01 Organization. Lessee is a not-for-profit corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida.
§4.02 Power and Authority. Lessee has full power and authority to enter into this Agreement, to carry out the transactions contemplated hereunder and to carry out its obligations hereunder.
§4.03 Authorization. Lessee is duly authorized to execute, deliver, and perform this Agreement.
§4.04 Application for Tax-Exempt Status. Lessee has applied to the Internal Revenue Service to receive a determination that the Lessee is an organization described in Section 501(c)(3) of the Code exempt from federal income tax under Section 501(a) of the Code and is not a private foundation as described in Section 509(a) of the Code.
§4.05 No Violation. Lessee is not subject to any limitation, restriction or provision of any nature whatsoever contained in Lessee's articles of incorporation or bylaws or in any evidence of indebtedness, indenture, commitment, agreement or contract to which Lessee is a party or by which it is bound, or subject to any existing judgment, order or decree binding upon lessee, which in any way limits, restricts or prevents Lessee from entering into this Agreement or performing any of its obligations hereunder.
§4.06 Enforceability. This agreement and the other documents to be executed by lessee in connection herewith constitute legal, valid and binding obligations of Lessee enforceable in accordance with their respective terms, except insofar as (i) enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application with respect to creditors, and (ii) the remedy of injunctive and other forms of equitable relief may be subject to equitable defenses (including commercial reasonableness, good faith and fair dealing), and to the discretion of the court before which any proceeding therefor may be brought.
The following covenants contained in this Article VI shall be effective from and after the Commencement Date.
§6.01 Maintenance of Existing Facilities. Lessee shall, at its sole cost and expense, at all times during the Term of this Agreement, keep and maintain the Existing Facilities and all Improvements, both inside and outside, structural and nonstructural, in a good state of repair and preservation, ordinary wear and tear and acts of God excepted, and lessee shall maintain the Existing Facilities and all Improvements (including without limitation all electrical, plumbing, HVAC systems and equipment and such equipment as shall reasonably required to meat JCAHO or comparable accreditation standards and to comply in all material respects with all applicable codes) in such state of repair. Lessee covenants that it will not permit, commit or suffer any waste of the whole or any part of the Existing Facilities and the Improvements and shall not use or permit the use of the Existing Facilities, or any part thereof, for any unlawful purpose or permit any nuisance to exist thereon. Lessee covenants and agrees that it shall provide at its own cost and expense, to the extent not financed with proceeds of the Bonds, current and modern equipment as generally used in accredited, comparable community hospitals, and shall provide all equipment, machinery, furnishings, supplies and other personal property required or necessary for the proper operation, repair and maintenance of the Hospital, consistent with standards of hospital organization and administration generally acceptable for fully accredited hospitals comparable to the Existing Facilities.
§6.02 Operation of Existing Facilities. Lessee will faithfully and efficiently administer, maintain and operate the Existing Facilities as charitable facilities open to the general public, free from discrimination based upon race, color, religion, creed, national origin or sex and will use, maintain and operate the Existing Facilities on a revenue-producing basis, consistent with Lessee's obligations under this Agreement. Lessee further covenants and agrees that:
(a) it will at all times use its best efforts to maintain and operate the Existing Facilities to meet the standards and requirements and provide health care of such quality and in such manner as shall enable the Existing Facilities to participate in, and provide services in connection with, recognized medical insurance programs, and Lessee agrees that, so long as it shall remain a participating facility under such recognized programs, it will use its best efforts to comply with the standards and requirements for remaining a participating medical facility thereunder, unless Lessee shall determine, by resolution adopted by its Board of Directors, that it is not in the best interest of Lessee to comply therewith and that the financial condition of the Lessee will not be adversely and materially affected by noncompliance;
(b) it will comply with applicable federal and state laws prohibiting discrimination based on race, religion, creed, color, sex or national origin;
(c) it will use the Existing Facilities only in furtherance of the lawful purposes of Lessee;
(d) it will not use the Existing Facilities or suffer or permit the Existing Facilities to be used by any person or in any manner which would result in the loss of tax exemption of Lessee or of the interest on the Bonds otherwise afforded under the Code;
(e) it will not be ion material violation of any laws, ordinances, governmental rules or regulations to which it is subject and will not fail to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of the Existing Facilities or the conduct of its activities, which violation or failure to obtain might materially adversely affect the Hospital or the condition (financial or otherwise) of Lessee; and
(f) it will not take any action to discontinue a health care service provided by a health care facility included among the Existing Facilities, if any such discontinuation of service is a project subject to review by the State of Florida, or an agency thereof, pursuant to §408.036, Florida Statutes, as such law may be amended, transferred or superseded during the Term of this Agreement, without giving at least sixty (60) days prior written notice to Lessor of Lessee's intention to take such action.
Subject to (i) the requirements of the Act and this Agreement regarding the provision of medical care at the Hospital to medically indigent persons, and (ii) the rights of Lessor to control, hire and fire its own employees and agents, during the Term of this Agreement, so long as Lessee is not in default under the Agreement, Lessee shall have sole and exclusive charge of the operation of the Existing Facilities including, but not limited to, the selection or retention of any or all employees or personnel of Lessee.
Lessee shall have the right to place a sign or signs on or at the Existing Facilities identifying the operation of the Existing Facilities as being that of Lessee in accordance with applicable sign ordinances.
§6.03 Compliance With Applicable Law.
(a) Lessee shall not use or occupy, nor permit any use or occupancy of, the Existing Facilities or any part thereof contrary to any material applicable law, ordinance or governmental regulation now or hereinafter in force. Lessee covenants and agrees that throughout the Term of this Agreement, at its sole cost and expense, it shall promptly comply with all such material applicable laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments, and whether or not requiring structural repairs or alterations to the Existing Facilities or relating to the use or occupancy or manner of use of the Existing Facilities. Lessee shall also observe and comply in all material aspects with the requirements respecting the Existing Facilities of all policies of insurance or programs of self insurance at any time in force with respect to any of the buildings, improvements, machinery or equipment constituting a part of the Existing Facilities. Lessee will not use or occupy the Existing Facilities or permit their use or occupancy in such manner as may reasonably be deemed to prejudice Lessor's title to or interest in the Existing Facilities, or any portion thereof, or as may provide a basis for claims of adverse use or possession by the public or implied dedication to public use of any part of the Existing Facilities or as may in any way impair the efficient operation, use or control of the Existing Facilities.
(b) Nothing in this Section 6.03 shall require Lessee to comply with any law, ordinance or governmental regulation so long as there is a substantial and legitimate question as to its applicability to Lessee or so long as the interpretation or validity of such law, ordinance or governmental regulation shall be contested in good faith and by appropriate legal proceedings, including securing any necessary injunctive relief which will stay enforcement of such law, ordinance or governmental regulation.
§6.04 Liens and Encumbrances. Except for Permitted Encumbrances, Lessee covenants and agrees that it shall not create or suffer to be created any lien, encumbrance or charge upon the Existing Facilities, the Working Capital Assets or the Operating Assets and that it will satisfy or cause to be discharged, or shall make adequate provision to satisfy and discharge, within sixty (60) days after the same shall be due, all lawful claims and demands for labor, materials, supplies or other items. Nothing in this Section shall require Lessee to satisfy or discharge any such charge, claim or demand so long as the validity thereof shall be contested in good faith and by appropriate legal proceedings if the Lessee shall have posted a bond or other security acceptable to Lessor, such acceptance not to be unreasonably withheld or delayed.
§6.05 Payments of Other Obligations.
(a) Lessee covenants and agrees to pay when due the Rental Payments and all assessments, levies, taxes (ordinary or extraordinary, special or general) and insurance premiums, of every kind and nature relating to the whole or any part of the Existing Facilities or this Agreement, or any interest therein and all sales, use or excise taxes, if any, levied upon the Rental Payments and other payments due under this Agreement, and all costs, expenses, liabilities and charges of every kind and nature, including charges for gas, electricity, water, sewer and other utilities, relating to the maintenance, repair, replacement and improvements, if undertaken hereunder by Lessee, of the Existing Facilities, or any part thereof, or the facilities, machinery or equipment thereon or in connection therewith which may arise or accrue during the Term of this Agreement; provided, however, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, Lessee shall be obligated to pay only such installments as are required to be paid during the Term of this Agreement.
(b) Lessee shall not be required to pay any tax, charge, assessment or imposition, nor to remove any lien required to be removed under this Agreement, so long as Lessee shall contest or there shall be contested on Lessee's behalf, in good faith and at Lessee's own cost and expense, the amount or validity thereof, in an appropriate manner or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or other realization upon the tax, assessment, levy, fee, rent, charge, lien or encumbrance so contested, and the sale, forfeiture, or loss of the Existing Facilities or any part thereof or interest therein, to satisfy the same; provided, that no such contest shall subject Lessor to the risk of any liability or loss or materially impair the obligations of Lessee under this Agreement. Each such contest shall be promptly prosecuted to final conclusion (subject to the right of Lessee to settle any such contest), and in any event Lessee will save Lessor harmless against all losses, judgments, decrees and costs (including attorneys' fees and expenses in connection therewith) and will, promptly after the final determination of such contest or settlement thereof, enter into a structured payment agreement with respect to, or pay and discharge, the amounts which shall be levied, assessed or imposed or determined to be payable therein, together with all penalties, fines, interest, costs and expenses thereon or in connection therewith. Lessee shall give Lessor prompt written notice of any such contest. If in the reasonable opinion of counsel to Lessor, by nonpayment of any of the foregoing items, the Existing Facilities, or any substantial port thereof, will be subject to imminent loss or forfeiture, then Lessor shall notify Lessee and Lessee shall promptly pay all such unpaid items and cause them to be satisfied and discharged.
§6.06 Lessor's Performance of Lessee's Obligations. In the event Lessee at any time neglects, refuses, or fails to perform any of its obligations under this Agreement (except its obligations pursuant to Section 2.04 hereof), Lessor, at its option and following at least thirty (30) days' written notice to Lessee, except where a shorter period of notice is necessary to avoid a default on the Bonds, or to prevent any loss or forfeiture thereof, or to prevent any material loss to the Existing Facilities or Existing Operations, may (but is not obligated to) perform or cause to be performed such obligation, and all expenditures incurred by Lessor thereby shall be promptly paid or reimbursed, plus interest at the rate specified in Section 2.04(b) hereof, by Lessee to Lessor.
§6.07 Improvements. The parties hereto covenant and agree that in the event Improvements shall be provided to, on, within or above the Existing Facilities, the provisions of this Agreement pertaining to the Existing Facilities shall automatically extend to such Improvements.
§6.08 Tax-Exempt Status.
(a) Lessee covenants and agrees that it will diligently pursue its application filed with the Internal Revenue Service for a determination that Lessee is an organization described in Section 501(c)(3) of the Code, and not a "private foundation" as defined in Section 5.09(a) of the code. Lessee further covenants and agrees that it shall not perform any act or enter into any agreement with shall adversely affect the federal income tax status of Lessee and shall conduct its operations and the Hospital so as to maintain Lessee's status, once so determined, as a charitable organization within the meaning of Section 501(c)(3) of the Code which is exempt from federal income taxes under Section 501(a) of the Code, or any successor provisions of federal income tax law. In the event Lessee has not received such a determination by the Internal Revenue Service within twelve (12) moths following the Commencement Date, Lessee agrees to arrange forthwith for an organization that has received its §501(c)(3) determination and is acceptable to lessor to assume Lessee's obligations under this agreement, which acceptance shall not be unreasonably withheld.
(b) To the extent permitted by Law, Lessor agrees to take such action as the laws of Florida permit to ensure that the Existing Facilities are and remain at all times during the Term of this Agreement, exempt from ad valorem and other state and local taxation to the maximum extent allowed by Law.
§6.09 Regulatory Controls. Lessee covenants and agrees that it shall take all appropriate action to obtain such consents, exceptions, exemptions or approvals of governmental authorities as may be necessary to permit it to comply fully with all of its covenants, stipulations, obligations and agreements contained in this Agreement. Lessor covenants to cooperate reasonably with Lessee in this regard.
§6.10 License and Accreditation. Lessee will procure and maintain in good standing a license from the State of Florida to operate the Hospital as a hospital. Lessee will cause the Hospital to have JCAHO accreditation throughout the term of this agreement, or such accreditation issued by a nationally recognized accrediting body that in the judgment of Lessee's Board of Directors is in the best interest of the Hospital. Such alternative accreditation shall not be deemed to be in the Hospital's best interest if it would materially impair Lessee's ability to make the Rental Payments hereunder.
§6.11 Medical Staff.
§6.12 Medicare/Medicaid Filings.
§6.13 Transfer of Employees; Benefits.
(a) All Employees employed by Lessor to work at the Hospital immediately prior to the Commencement Date shall be offered employment by Lessee effective as of the Commencement Date; subject, however, to Lessee's right as employer to determine appropriate staffing levels for the Hospital that are consistent with Sunhealth-identified peer group hospital data and comparable standards, and to vary the compensation, duties and benefits of any Employee for any reason permitted under applicable state and federal employment laws and in accordance with Lessee's personnel policies, which policies may be amended by Lessee during the term hereof. If Lessor and Lessee mutually agree and as otherwise permitted by state law, Lessor may retain a limited number of Employees, such Employees to remain with the Florida Retirement System and to be leased to Lessee for such period of time and under such other terms and conditions as Lessor and Lessee shall mutually agree. throughout the remainder of calendar year 1994, Lessee shall maintain in effect Lessor's compensation and benefit structure. Lessor's Employees who become employees of Lessee on the Commencement Date shall retain all accumulated personal leave time. Except to the extent granted by Article X of the Articles of incorporation of Lessee attached hereto as schedule 6.15, no Employee shall be a third party beneficiary of this Agreement, including this Section 6.13.
(b) During the terms of the Agreement the retirement plan available to the present Employees of Lessor who work at the Hospital shall be continued in a new retirement plan provided by Lessee that is seamless, continuing, and shall be no less than a mirror image of the Florida Retirement System ("FRS") presently available to such Employees. The new retirement plan will be made available to those individual employed by the Lessor at the time this Agreement is executed, and to whom offers of employment are made by the Lessee pursuant to this Section.
§6.14 Participating Provider Agreements. [ ... ]
§6.15 [ ... ]
§11.01 Events of Default- Class A. The following shall constitute Events of Default-Class A under this Agreement:
(a)if Lessee (i) shall fail to pay, when due and payable, any Rental Payment described in Section 2.04(a)(i) hereof, or (ii) shall fail to pay, when due and payable, any other Rental Payment payable hereunder, and such failure shall continue for a period of fifteen (15) business days after written notice of failure of payment shall have been given to Lessee by Lessor;
(b) the occurrence of an event of default under the Bond Indenture as a result of any action or inaction by Lessee, together with a declaration of default thereunder by the Trustee;
(c) if Lessee shall file a voluntary petition in bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall file any petition or other pleading seeking any reorganization, readjustment, liquidation or similar relief for itself under any present or future law or regulation;
(d) if a petition or other pleading shall be filed against Lessee seeking an adjudication of bankruptcy, reorganization, composition, readjustment, liquidation or similar relief under any present or future law or regulation and shall remain undismissed or unstayed for ninety (90) days, or if, by an order or decree of a court of competent jurisdiction, Lessee shall be adjudicated a bankrupt or insolvent or relief shall be granted under or pursuant to any such petition or other pleading, or if by order or decree of such court, there shall be appointed without the consent or acquiescence of Lessee, a trustee in bankruptcy or reorganization or a receiver or liquidator of it or of all or any substantial port of its property or of the Hospital and any such order or decree shall have continued unvacated, or unstayed on appeal or otherwise and in effect for a period of thirty (30) days, or if Lessee shall be dissolved or liquidated;
(e) the abandonment by Lessee of the Hospital, or any substantial part thereof, and such abandonment shall continue for a period of fifteen (15) days; and
(f) loss of federal tax exempt status for the Lessee or the interest on the Bonds as a result of any action or inaction by Lessee.
§11.02 Termination. Upon the occurrence of any one or more of the Events of Default-Class A specified in Section 11.01 hereof, Lessor may give to Lessee written notice that this Agreement shall terminate upon a date specified in such notice, which date shall be not less than thirty (30) days after the date of such notice. Upon any such termination of this Agreement, Lessee shall peaceably vacate and surrender possession of the Existing Facilities, Beginning Net Working Capital and the Operating Assets, including such additional or renewal or replacement facilities, furnishings or equipment a lessee may have placed on or in the Existing Facilities, and Lessor, or its designee, may reenter and take possession of any interest that Lessor may then have in the Existing Facilities, Beginning Net Working Capital and the Operating Assets, including such additional or renewal or replacement facilities, furnishings, equipment or Improvements as Lessee may have placed on or in the Existing Facilities.
§11.03 Special Right of Early Termination by Lessor or Lessee. (a) In addition to Lessor's rights of termination under Section 11.01 hereof, if, with reference to the aggregate operating results achieved by Lessee during the first five (5) Operating Years of this Agreement, the Lessee has not satisfied the performance standards set forth in attached Schedule 11.03 to this agreement, either Lessor or Lessee, upon a vote of greater than two-thirds (2/3) of the total membership of such party's governing board may, by giving to the other parties to this Agreement at least one hundred eighty (180) days' prior written notice of such party's intention, terminate this Agreement, without cause, effective as of the end of the sixth (6th) Operating Year.
In the event of termination of this Agreement
pursuant to this Section 11.03:
(i)
If permitted pursuant to Lessor's enabling
legislation and other applicable state law,
MHS shall cause Lessor to be substituted for MHS as
the sole member of Lessee;
(ii)
If terminated by the Lessor, Lessor will
refund to MHS in case on the date of termination
all amounts paid or actually committed to use
in the Existing Facilities during the term of
the Agreement
(the "Advances") compounded at an annual rate
of five (5%) percent.
In the event of early termination by Lessee
under this section 11.03,
Lessee shall be entitled to a refund of the
Advances without, however, any additional
amount attributable to compounding thereof;
and,
(iii)
Lessee shall take all actions within its
power and shall cooperate with the Lessor to accomplish
such termination and assumption by the Lessor.
If Lessee does not voluntarily cooperate in the termination
of this Agreement and the return of the Existing Facilities
and the Operating Assets to Lessor,
then Lessor may seek relief in the Circuit Court in and for
Volusia County, Florida,
including, but not limited to,
specific performance.
(c)
Neither Lessor nor Lessee may assign or otherwise
convey this special right of termination described in
this section 1.03 to any other party.
It is the intent of the parties that this special right of termination
be granted only to the Board of Commissioners of the Lessor
and to the governing board of Lessee.
In the event that such Board of Commissioner shall cease to
exist or shall be combined with any other governmental authority,
this special right of termination shall automatically expire.
In the event Lessee of MHS enters into a merger or consolidation
with another entity without the prior written consent of Lessor,
the result of which is that Lessee or MHS does not survive
as a corporate entity, or does not control the decision
whether to terminate this Agreement under this Section 11.03,
then Lessee's special right of termination hereunder
shall automatically expire.
§11.04
Effect of Early Termination.
Upon the termination of this Agreement by Lessor
as a result of an Event of Default-Class A,
or by Lessee prior to the expiration of the term hereof
pursuant to Section 11.03,
(a)
Lessee shall not provide operating, management and planning
services to any other hospital within the Taxing District
for a period of three (3) years after termination;
(b)
Lessee and its employees shall not disclose to third
parties any of the database, plans, strategies or programs
developed by Lessee for the Hospital;
(c)
Lessee shall cooperate with Lessor to
effect a prompt and smooth transfer of the
operations and control of the Hospital to lessor;
(d)
Lessee shall deliver to Lessor possession of all
originals and all copies (including partial copies)
or such database, plans, strategies and programs
whether recorded on disk, paper, tape, file, or other
medium whatsoever pertaining to the Hospital;
and
(e)
Lessor shall have the right to offer employment to
each of Lessee's employees who
during the immediately preceding twelve (12) months has
devoted sixty percent (60%) or more of his/her work time
in providing services under this Agreement.
§11.05
Damages.
Upon the termination of this Agreement
pursuant to Section 11.02 hereof
(but not upon termination
of this agreement under Section 11.03 hereof),
Lessee shall be obligated to pay,
and shall forthwith pay,
as damages to Lessor an amount sufficient to
pay and satisfy all unpaid costs and obligations
reasonably incurred by Lessor in connection with
or as a result of Lessee's default under this Agreement,
and the termination hereof.
§11.06
Events of Default-Class B.
The following shall constitute Events of Default-Class B
under this agreement:
(a)
[ ... ]:
ARTICLE XII
MISCELLANEOUS
§12.01
Captions.
The captions of the Articles
and Sections
hereof have been inserted solely for convenience
of reference and shall not constitute a part of this
Agreement,
nor shall they affect its meaning, construction, or effect.
§12.02 Covenants Considered Material. All covenants made by Lessor, Lessee or MHS contained herein shall be considered to be material to the Agreement and the relationship between and among Lessor, Lessee and MHS.
§12.03 Amendment of Agreement. This Agreement may only be amended by a written agreement duly executed by Lessee, Lessor and MHS.
§12.04 Florida Law Controlling. This Agreement shall be construed and enforced in accordance with the laws of the State of Florida.
§12.05 Consents and Approvals. Whenever the written consent or approval of Lessor or Lessee or any officer thereof, shall be required under the provisions of this Agreement, such consent or approval shall not be unreasonably withheld.
§12.06 Multiple Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be regarded for all purposes as an original constituting but one and the same instrument.
§12.07 Severability. If any one or more of the sentences, sections or other portion of this Agreement shall be determined by a court of competent jurisdiction to be invalid, the invalidity of any such sentence, section or other portion of this Agreement shall in no way affect the validity or effectiveness of the remainder of this Agreement, and this Agreement shall continue in force to the fullest extent permitted by law.
§12.08 Lessee's Remedies. In the event Lessor shall fail to perform any of its obligations under this Agreement, Lessee may institute such action against Lessor as Lessee may deem necessary to compel performance. In addition, Lessee shall have all of the rights and remedies conferred in this Agreement or now or later conferred at law or in equity, which rights and remedies are cumulative.
§12.09 Assignments. Except as otherwise provided herein, neither Lessor, Lessee nor MHS shall give, assign or pledge its rights under this Agreement without the consent of the other parties.
§12.10 Recording. The parties agree that a short form memorandum of this agreement, in customary form, but including the substance of articles II and VII, shall be recorded in such office in the State as may be at the time provided by law as the proper place for the recordation of a deed conveying the Existing Facilities.
§12.11 Notices; Demands; Requests. All notices, demands and requests to be given or made hereunder to or by Lessee, Lessor or MHS shall be in writing and shall be deemed to be properly given or made (i) when received if given in person, (ii) on the date of acknowledgment of receipt if sent by telex, facsimile or other wire transmission, (iii) one business day after being sent by overnight delivery service, or (iv) two business days after being properly deposited in the United States mail, certified or registered mail, return receipt requested, postage prepaid, addressed as follows:
(a) as to Lessor --
(b) As to Lessee --
with a copy to --
(c) As to MHS --
Any of such addresses and addresses may be changed at any time upon written notice of such changes sent by United States certified or register mail, return receipt requested, postage prepaid, to the other party by the party effecting the change. Any time periods commencing with notice by registered or certified mail prescribed by the terms of this Agreement shall commence with the date of receipt of written notice as evidenced by the return receipt.
§12.12 No Personal Liability. Notwithstanding anything to the contrary contained herein or in any other instrument or document executed by or on behalf of Lessor, Lessee or MHS in connection herewith, no stipulation, covenant, agreement or obligation contained herein or therein shall be deemed or construed to be a stipulation, covenant, agreement or obligation of any present or future member, director, trustee, affiliate, officer, employee or agent of Lessor, Lessee or MHS or of any incorporator, member, affiliate, director, trustee, officer, employee or agent of any successor to Lessor or Lessee, in any such person's individual capacity, and no such person, in his individual capacity, shall be liable personally for a breach or nonobservance of or for any failure to perform, fulfill or comply with any such stipulations, covenants agreements or obligations, nor shall any recourse be had for the payment of any of the Rental Payments due hereunder or for any claim based thereon or on any such stipulation, covenant, agreement or obligation, against any such person, in his individual capacity, either directly or through Lessor, Lessee or MHS or any successor to Lessor, Lessee or MHS, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such person, in his individual capacity, is hereby expressly waived and released.
§12.13 Payments. [ ... ]
§13.01 Deliveries to Lessor. Simultaneously with the Commencement Date of this Agreement, Lessee shall deliver the following to Lessor:
(a) Certified Resolutions of Lessee and MHS. Resolution of the Boards of Directors of Lessee and MHS, duly certified as of the date hereof by the respective secretaries of Lessee and MHS, authorizing the execution, delivery, and performance of this Agreement by Lessee and MHS.
(b) Legal Opinion. An opinion of counsel for Lessee and MHS in form and substance satisfactory to Lessor.
(c) Other Instruments. Such other instruments, certificates and other documents as may be reasonably requested by Lessor to effectuate the transactions contemplated by this Agreement.
[ ... ]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the day and year first above written.
Lessor:
Lessee:
MHS:
The following represent financial ratios which will be computed as of the end of each Fiscal Year and which shall be reported to the Lessor within 180 days of the end of the Fiscal Year by the Independent Accountants performing the audit of the lessee.
I. Financial Standards
A. Property Assets shall be no less than that amount as of the Commencement Date of the Agreement.
B. The ratio of long term debt to the combination of long term debt and equity (equity to include restricted funds but to exclude extraordinary items resulting from the extinguishment of debt) shall be an amount no less than .80.
C. The ratio of long term debt to Property Assets shall be no greater than 1 to 1.
D. The Lessee shall maintain a debt service coverage ratio no less than 1.0. For purposes of determining debt service coverage the calculation shall be in the manner consistent with those called for in the Bonds. Provided, however, that this definition shall exclude from expenditures those amounts utilized for the acquisition for property, plant and equipment. All of the amounts to be determined in accordance with Generally Accepted Accounting Standards.
II. Quality of Care
A. The Lessee agrees to maintain the Hospital in accordance with Joint Commission for Accreditation of Healthcare Organizations or other equivalent accreditation standards.
B. The Lessee agrees to operate with appropriate federal, state and licensure standards and licensure requirements as are necessary to operate the hospital.
The material above is extracted from the ``Lease'' agreement. The entire document may be reviewed at the offices of the
The material was re-keyed and adopted for web display by Tanner Andrews, one of the Taxpayers of Volusia County. Transcription errors are purely the fault of Andrews, of course.
Release of this information is done in the way of a paid political advertisement provided by Tanner Andrews, P.O. Box 1208, DeLand 32721, independent of any campaign or committee. This material is also on display at the offices of the West Volusia Hospital Authority. No candidate has approved this material.