GROUND LEASE WITNESSETH

Transcription

1 GROUND LEASE THIS GROUND LEASE, dated as of, 2015 ( Effective Date ) (the Lease ), is entered into between the City of Citrus Heights, a public body, corporate and politic (the Lessor or City ) and CH MOB, LLC, a California limited liability company (subject to change) (the Lessee ). WITNESSETH A. Lessor owns a fee simple interest in certain real property located in the City of Citrus Heights, California, consisting of approximately acres of land located at 7115 Greenback Lane near the intersection of Fountain Square Drive and Greenback Lane (the Property ). The Property is more fully described in Exhibit A, which is incorporated herein by this reference, and is depicted on the Assessor s Parcel Map attached hereto as Exhibit B, which is incorporated herein by this reference. B. Lessor enters into this Lease for the purpose of providing the Property for development as a medical building for the operation of hospital outpatient services and other medical and ancillary uses to the residents of the City and surrounding areas and cities (the Outpatient Services Building and, together with the Property, the Development ) to be owned by Lessee and operated by Dignity Health Medical Foundation, a California nonprofit public benefit corporation ( Dignity Health Foundation ) to provide outpatient services to the residents of the City and surrounding areas in accordance with a transaction more particularly described herein. C. Lessee intends to construct the Outpatient Services Building, consisting of approximately 66,500 square feet and related on and off site improvements in accordance with the preliminary site plan ( Site Plan ) attached hereto as Exhibit C, which is incorporated herein by reference, as modified during the approval process with Lessor. Plans and specifications will be developed to incorporate the Development structure, parking, landscape and related improvements, including those intended for use by Dignity Health Foundation, all as approved by the City and other governmental agencies, Lessee and Dignity Health Foundation. D. It is proposed that, pursuant to a Facility Lease dated of even date herewith (the Facility Lease ), Lessee will lease the Outpatient Services Building to Dignity Health Foundation, which will operate the Outpatient Services Building as part of the Dignity Health system. The Facility Lease will provide for rent payments for a term of 15 years at the rent amounts set forth therein and 6 months of abated rent payments. The Facility Lease will provide that on or prior to the expiration of the term of the Facility Lease, Dignity Health Foundation will have the option to purchase ( Premises Purchase Option ) the Outpatient Services Building together with any improvements on the Property (collectively, the Premises ) pursuant to an Option to Purchase Agreement and Escrow Instructions ( Premises Option Purchase Agreement ) to be executed and delivered by Lessee and Dignity Health Foundation, together with an executed and notarized Memorandum of Option in the form attached to the Premises Option Purchase Agreement ( Memorandum of Premises Purchase Option ), concurrently with the execution of the Facility Lease. Dignity Health, a California nonprofit public benefit 1 GROUND LEASE

2 corporation ( Dignity Health ) will guaranty Dignity Health Foundation s performance under the Facility Lease. E. On Delivery Date (as defined in the Facility Lease), Lessee will sell the Premises to California Foundation for Public Facilities, a California nonprofit public benefit corporation ( CFPF ) and assign Lessee s rights and obligations in this Lease and Lessee s rights and obligations in the Facility Lease to CFPF pursuant to an Agreement of Purchase and Sale dated as of, 2015 (the Purchase and Sale Agreement ), which shall include recordable forms of Assignments and Assumptions of the Lease and Facility Lease, approved by Dignity Health Foundation to be recorded at the closing of the sale. On the Delivery Date, CFPF will purchase the Premises and assume all of Lessee s rights and obligations in this Lease and Lessee s rights and obligations in the Facility Lease. In addition, on the Delivery Date, Lessee will assign all of its rights and obligations under the Premises Option Purchase Agreement to CFPF and CFPF will assume of Lessee s rights and obligations under the Premises Option Purchase Agreement pursuant to an Assignment and Assumption of the Premises Option Purchase Agreement to be executed by CFPF to be approved by Dignity Health Foundation and recorded at closing of the sale. F. CFPF intends to finance its acquisition of the Development by means of a loan of the proceeds of bonds the interest of which will be exempt under Section 103 of the Internal Revenue Code to be issued by the California Municipal Finance Authority ( CMFA ) to be issued under the terms of a bond indenture (the Bond Indenture ) to be entered into between CMFA and a corporate trustee. The Bond Indenture will provide for deposit by CFPF of all rents and other revenues received by CFPF under the Facility Lease and for payment by the trustee thereunder of interest on the Bonds, rent under this Lease and any other expenses of CFPF related to the Premises and the Development. It is the intention of the parties that CFPF shall have no net obligation hereunder, under the Facility Lease or under the Premises Purchase Option Agreement other than from amounts on deposit for such purpose held under the Bond Indenture. G. Lessor desires to lease to Lessee, and Lessee desires to lease from Lessor, the Property for the Development, subject to existing covenants, restrictions, easements and matters of record, the requirements of zoning and building laws and agencies, and the provisions set forth herein. For purposes of this Lease, Lessee agrees to lease the entirety of the parcel of land comprising the Property. NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is acknowledged, the parties agree as follows: ARTICLES ARTICLE ONE TERM OF LEASE The term ( Term ) of this Lease shall commence on the Effective Date ( Lease Commencement Date ) and terminate on a date that is one hundred and eighty six (186) 2 GROUND LEASE

3 months, after the Rent Commencement Date as defined in the Facility Lease unless extended or sooner terminated by Lessor and Lessee in writing ( Lease Expiration Date ). ARTICLE TWO RENT Within three (3) business days after the issuance of the building permit authorizing the commencement of construction of the Outpatient Services Building, Lessee shall pay to Lessor in lawful money of the United States of America the sum of One Million and No/100 Dollars ($1,000,000.00) as the initial installment of Base Rent (as defined below). Provided Lessee shall faithfully perform all of the terms and conditions of this Lease, Lessor hereby agrees to abate further payment of Base Rent until the Rent Commencement Date as defined under the Facility Lease ( Base Rent Payment Date ). Beginning on the Base Rent Payment Date, Lessee shall pay to Lessor the monthly payments set forth below (the Base Rent ) for the remainder of the Term in advance on the first (1 st ) day of each month: Year ANNUAL RENT MONTHLY RENT Year 1(Month 1 18*) $1,000, (paid in advance) $0.00 Year 2 (Months 18 24*) $ 99, $* Year 3 $ 129, Year 4 $ 169, Year 5 $ 210, Year 6 $ 252, Year 7 $ 296, Year 8 $ 340, Year 9 $ 385, Year 10 $ 431, Year 11 $ 479, Year 12 $ 528, Year 13 $ 629, Year 14 $ 681, Year 15 $ 690, *These time periods are based on estimated construction time periods and are subject to change for force majeure and other delays on getting approvals of the EIR and governmental approvals. The schedule of Base Rent may need to be adjusted based on the date the Building Permit is issued. The monthly payment are not included in this draft until we can confirm annual payments. ARTICLE THREE USE OF PROPERTY 3.1 Sole Use. Lessee shall use the Property during the Term for the Development and, thereafter, the use, operation and management of the Outpatient Services Building, and Lessee shall not use or permit the use of the Property for any other purpose without Lessor s prior written consent, which shall not be unreasonably withheld. Specifically, except with the prior written consent of the Lessor, the Outpatient Services Building shall be used only for the 3 GROUND LEASE

4 provision by a nonprofit healthcare organization of outpatient services for residents of the City of Citrus Heights and surrounding areas and cities and all necessary ancillary facilities, including but not limited to parking as required by City planning and zoning laws. 3.2 Only Lawful Uses Permitted. Lessee shall not use or permit said Property or any portion of said Property to be improved, developed, used or occupied in any manner or for any purpose that is in any way in violation of any valid law, ordinance, or regulation of any federal, state, county or local governmental agency, body or entity. Furthermore, Lessee shall not maintain, commit, or permit the maintenance or commission of any nuisance as now or hereafter defined by any statutory or decisional law applicable to said Property or any portion of said Property. 3.3 Uses Prohibited. Notwithstanding any other provision of this Lease, the Property shall not be used in any manner or for any purpose that is not permitted under Section 3.1 hereof or in any way inconsistent with Lessor s public purposes for the benefit of the Lessor s residents. ARTICLE FOUR TAXES AND UTILITIES 4.1 Lessee to Pay Taxes. In addition to the Base Rent, Lessee shall pay any and all applicable taxes, assessments, and other charges of any description or nature levied or assessed during the Term by any governmental agency or entity on or against said Property by reason of the Development, or any improvements or other property placed by the Lessee in or on said Property. 4.2 Proration of Taxes. Except as provided herein, and notwithstanding Section 4.1 of this Lease, Lessee s obligation to pay taxes as provided in Section 4.1 above shall be prorated on the basis of a 365-day year to account for any portion of a fiscal tax year (beginning on July 1 and ending on June 30) included in the Term at the beginning or end of the Term and Lessor shall be obligated to pay any taxes accrued outside the Term of this Lease. 4.3 Payment Before Delinquency. Any and all taxes and assessments and installments of taxes and assessments required to be paid by the Lessee under this Lease shall be paid at least ten (10) days before such tax, assessment, or installment of tax or assessment becomes delinquent and the official and original receipt for the payment of such tax, assessment, or installment shall immediately be given to Lessor. 4.4 Contest of Tax. Lessee shall have the right to contest, oppose, or object to the amount or validity of any tax, assessment, or other charge levied on or assessed against said Property or any part of said Property; provided, however, that the contest, opposition, or objection must be filed before the contest, opposition or objection is due and before the tax, assessment, or other charge at which it is directed becomes delinquent. Written notice of the contest, opposition or objection must be given to Lessor at least ten (10) days before the earlier of (i) the date the contest, opposition or objection is due and (ii) the date the tax, assessment, or other charge becomes delinquent. Lessor shall, on written request of Lessee, join in any such contest, opposition, or objection if Lessee determines such joinder is necessary or convenient for 4 GROUND LEASE

5 the proper prosecution of the proceedings, but Lessor shall not be liable for any costs or expenses incurred or awarded in the proceeding. 4.5 Tax Returns and Statements. During the Term, Lessee shall, as between Lessor and Lessee, have the duty of attending to, preparing, making and filing any statement, return, report or other instrument required or permitted by law in connection with the determination, equalization, reduction, or payment of any taxes, assessments, or other charges that are or may be levied on or assessed against said Property, any portion of said Property, any interest in said Property, or any improvements or other property on said Property, other than those statements, returns, reports or other instruments directly related to Lessor s interest in the Property after the Lease Expiration Date. 4.6 Tax Hold-Harmless Clause. Lessee shall indemnify and hold Lessor and the property of Lessor, including the Property and any improvements now or hereafter on the Property, free and harmless from any liability, loss or damage resulting from any taxes, assessments, or other charges required by this Article to be paid by the Lessee relating to the Property and from all interests, penalties or other sums imposed thereon and from any sales or other proceedings to enforce collection of any such taxes, assessments or other charges. 4.7 Exemptions in Lieu of Taxes. Lessee s obligation to pay or cause to be paid taxes or assessments levied or charged against the Property or improvements or against personal property shall not include the following, whatever they may be called: income, or profits taxes levied or assessed against Lessor by federal, state or other governmental agency; estate, gift, succession, inheritance, or transfer taxes of Lessor; or corporation, franchise, profits, personal property, capital levy, capital stock, or revenue taxes imposed on the corporation owner of the fee title of the Property. 4.8 Installment Payments. If any real estate tax, special tax or assessments are at any time during the Term of this Lease levied or assessed against the Property, which, upon exercise of any option permitted by the assessing authority, may be paid in installments or converted to an installment payment basis (irrespective of whether interest shall accrue on unpaid installments), Lessee may elect to pay such taxes in installments (with accrued interest thereon, if any). In the event of such election, Lessee shall be liable only for those installments of such tax or assessment which become payable during the Term of this Lease, and Lessee shall not be required to pay any such installment which becomes due and payable after the expiration of the Term or sooner termination of this Lease. Lessor shall execute whatever documents may be necessary to convert any real estate taxes to such an installment payment basis if requested to do so by Lessee. 4.9 Improvement or Special Assessment District. If at any time during the Term of this Lease any governmental subdivision shall undertake to create an improvement or special assessment district, the proposed boundaries of which shall include any portion of the Property, Lessor and Lessee shall each be entitled to appear in any proceeding relating thereto and to present their respective positions as to whether the Property should be included or excluded from the proposed improvement or assessment district and as to the degree of benefit to the Property resulting therefrom. Lessor shall promptly advise Lessee in writing of the receipt of any notice 5 GROUND LEASE

6 or other information relating to the proposed creation of any such improvement or special assessment district, the boundaries of which include any portion of the Property Utilities. Subject to Section 6.2, Lessee shall pay when due or cause to be paid when due, and hold Lessor and the property of Lessor including said Property free and harmless from, all charges for the furnishing of gas, light, water, electricity, power, telephone service, and any other public utilities to said Property during the Term of this Lease and for janitorial services for the Property and for the removal of garbage and rubbish from said Property during the Term of this Lease Payment by Lessor. Subject to the provisions of Section 4.4 for Lessee to contest taxes, should Lessee fail to pay within the time specified in this Article any taxes, assessments, utilities or other charges required by this Article to be paid by Lessee, Lessor may, without notice to or demand on Lessee, after ten (10) days written notice to Lessee pay, discharge, or adjust such tax, assessment, utilities, or other charge for the benefit of Lessee. In such event, Lessee shall promptly on written demand of Lessor reimburse Lessor for the full amount paid by Lessor in paying, discharging, or adjusting such tax, assessment or other charge together with interest thereon at the rate of ten percent (10%) per annum from the date of payment by Lessor until the date of repayment by Lessee. Where no time within which any charge required by this Article to be paid by Lessee is specified in this Article, such charge must be paid by Lessee before it becomes delinquent. ARTICLE FIVE CONSTRUCTION AND IMPROVEMENTS 5.1 New Construction. Concurrently with the execution of this Lease, Lessee is in the process of having the final design and construction documents prepared with the cooperation and approval of Dignity Health Foundation which will be consistent with the Site Plan and development approvals as have been approved by Lessor. Lessee shall pay for all costs and expenses of the Development. Title and ownership to the Development and all related improvements hereafter constructed by Lessee and any subsequent or further improvements hereafter constructed by Lessee and any subsequent or further improvements, modifications and additions on the Property (collectively, the Improvements ) shall be vested in Lessee, except as provided for herein. Lessee agrees that upon Lessee s completion of construction of the Outpatient Services Building, Lessee shall provide Lessor a courtesy copy of Lessee s as-built Plans and Specifications regarding the Outpatient Services Building. Lessee agrees that all work to be performed by Lessee shall be performed in a good and workmanlike manner, in accordance with all rules, regulations, codes and ordinances of any local, municipal, state and federal authority having jurisdiction thereof. 5.2 Possession and Permits. Lessee warrants that it will obtain from governmental authorities having jurisdiction thereof, all: (A) demolition permits, building permits, plans of Development approvals, 6 GROUND LEASE

7 (B) special exceptions, variances, curb cuts and driveway approvals, variances, licenses and permits required for all construction referred to in this Article, the permits to connect Lessee s utilities to public services, (C) zoning approvals, variances and permits required to construct and utilize the Property for Lessee s business, and (D) other governmental action necessary to permit the development and construction of the Development in accordance with this Lease. 5.3 Mechanic s Liens. At all times during the term of this Lease, Lessee shall keep the Property and all Improvements now or hereafter located on the Property free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to said Property. If any such lien shall at any time be filed against the Property, Lessee shall, within thirty (30) days after notice to Lessee of the filing thereof, cause the same to be discharged of record. Notwithstanding anything to the contrary hereinabove contained, if Lessee shall in good faith contest the amount or validity, in whole or in part of any such lien, then Lessee shall, at its sole expense, defend itself and Lessor against the same and shall pay and satisfy any adverse judgment that may be rendered thereon before the enforcement thereof against Lessor or the Property, upon the condition that if Lessor shall require by written notice delivered to Lessee, then Lessee shall procure and record a lien release bond issued by a corporation authorized to issue surety bonds in California in an amount equal to one and one-half times the amount of the claim of lien. The bond shall meet the requirements of applicable California law and shall provide for the payment of any sum that the claimant may recover on the claim (together with costs of suit, if it recovers in the action). During Lessee s initial construction of the Development and during any remodeling of the Development by Lessee during the term of the Lease, Lessor shall have the right to post and maintain notices of nonresponsibility regarding such construction. Such notices shall be located in such areas acceptable to Lessee and such notices shall not interfere with Lessee s construction of the Development. 5.4 Lessee s Rights Regarding Grading, Trees. In connection with the demolition of any existing improvements and/or the construction of the new Improvements on all or any part of the Property, Lessee shall have the right to modify or change the contour or grade, or both, of the Property, or to remove trees and/or vegetation, if any, from the Property as necessary for completion of the Development. All such work shall be accomplished at Lessee s sole cost and expense in a good and workmanlike manner, according to and in compliance with the applicable municipal building and zoning laws and all other laws, ordinances, orders, rules, regulations and requirements of federal, state and municipal governments and appropriate departments, commissions, boards and officers thereof. No work shall be undertaken until Lessee shall have procured and paid for, so far as the same may be required from time to time, all municipal and other governmental permits and any authorizations of various municipal departments and governmental subdivisions having jurisdiction, and Lessor agrees to join, at the expense of Lessee, in the application for any such permits or authorizations whenever such action is necessary. 7 GROUND LEASE

8 5.5 Lessor s Obligations to Join in Development. Lessor understands that Lessee intends to develop the Property in accordance with the laws, rules and regulations, building restrictions and ordinances of all applicable federal, state and local governmental authorities having jurisdiction over the Property; and, that in connection with development and use of the Property, it may be necessary to dedicate and/or grant certain portions of the Property for public streets, alleys and rights-of-way, including, without limitation, public utility rights-of-way and easements, and/or to obtain various governmental approvals, permits, and/or consents (collectively, Development Activities ). Lessee agrees that it will not pursue any such Development Activities without the prior written consent of Lessor, which consent will not be unreasonably withheld, conditioned or delayed. If Lessor consents to any of such Development Activities, Lessor agrees that in conjunction with such approved Development Activities, Lessor shall, within ten (10) days after receipt of a written request from Lessee, without entitlement to any consideration and at no expense to Lessor, join in applications, creation of easements, and declarations of covenants, conditions and restrictions, execute instruments and documents and attend a reasonable number of meetings with Lessee and/or jurisdictional governmental agencies. 5.6 Alterations. Lessee shall have the right at any time and from time to time during the Term of this Lease to make, at its sole cost and expense, such changes, alterations, additions, replacements, relocations and/or removals, structural or otherwise, in or to the Improvements constructed by Lessee upon the Property as Lessee shall deem necessary or desirable (herein collectively referred to as the Alterations ). The right to make Alterations shall include the right to modify or change the contour or grade, or both, of the Property. No Improvements shall, however, be demolished unless Lessee shall have first committed in writing, delivered to Lessor, that Lessee will within a reasonable period of time following the completion of demolition, reconstruct or cause to be reconstructed Improvements on the Property having at least substantially equivalent value for similar use to those being demolished. Permitted Alterations shall be made in all cases subject to the following conditions which Lessee covenants and agrees to observe and perform: (A) No Alteration shall be undertaken until Lessee shall have procured and paid for, so far as the same may be required from time to time, all municipal and governmental permits and any authorizations of the various municipal departments and governmental subdivisions having jurisdiction, and Lessor agrees to join, at the expense of Lessee, in the application for any such permits or authorizations whenever such action is necessary; (B) Each Alteration, when completed, shall be of such character as not to affect adversely the value of the Improvements and equipment on the Property immediately before such Alteration, or adversely affect the use of the Property as set forth in this Lease; (C) All work done in connection with any Alteration shall be done promptly and in good and workmanlike manner and in compliance with the applicable municipal building and zoning laws and all other laws, ordinances, orders, rules, regulations and requirements of federal, state and municipal governments and appropriate departments, commissions, boards and officers thereof. 8 GROUND LEASE

9 5.7 Ownership. (A) All Improvements constructed on the Property by Lessee as permitted by this Lease shall be owned by Lessee until the Lease Expiration Date. Lessee shall not, however, remove any Improvements on the Property, except as permitted pursuant to Section 5.6. The parties covenant for themselves and all persons claiming under them that the Improvements are real property. (B) At the expiration of the Term, or sooner termination of this Lease, Lessee, if not then in default, shall have the right to remove its trade fixtures, equipment and any personal property. (C) If Lessee elects to remove trade fixtures, equipment and personal property at the expiration of the Term hereof, or sooner termination of this Lease, Lessee, at its cost, shall promptly remedy any resultant damage to any remaining Improvements, and leave the Property safe and in good and sanitary condition. (D) All trade fixtures, equipment and Improvements on the Property thirty (30) days after the expiration of the term hereof or sooner termination of this Lease, which Lessee has not elected to remove or is not required to remove hereunder, shall then, without compensation to Lessee, become Lessor s property free and clear of all claims to or against the same by Lessee or any third person, and Lessee shall defend and indemnify Lessor against all liability and loss arising from such claims or from Lessor s exercise of rights hereunder. (E) Lessee has agreed to sell the Development and assign this Lease to CSCDA pursuant to the terms and conditions of the Purchase and Sale Agreement. ARTICLE SIX MAINTENANCE AND REPAIRS 6.1 Maintenance by Lessee. Subject to Section 6.2, at all times during the Term of this Lease, Lessee shall, at its own cost and expense, keep and maintain said Property and all Improvements and facilities hereafter constructed on said Property by Lessee. 6.2 Requirements of Governmental Agencies. At all times during the Term of this Lease, Lessee shall, at its own cost and expense: (A) Make all Alterations, additions, or repairs to said Property or the Improvements or facilities on said Property required by any valid law, ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county, local, or other governmental agency or entity. (B) Observe and comply with all valid laws, ordinances, statutes, orders and regulations now or hereafter made or issued respecting this Lease, the Property or the Improvements or facilities on the Property by any federal, state, county, local, or other governmental agency or entity. 9 GROUND LEASE

10 (C) Contest if Lessee, in its sole discretion, desires by appropriate legal proceedings brought in good faith and diligently prosecuted in the name of Lessor, as the case may be, or in the names of the Lessee and Lessor where appropriate or required, the validity or applicability to said Property of any law, ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county, local or other governmental agency or entity; provided, however, that any such contest or proceeding, though maintained in the names of the Lessee and Lessor, shall be without cost to Lessor, and Lessee shall protect said Property and Lessor from Lessee s failure to observe or comply during the contest with the contested law, ordinance, statute, order, or regulation. (D) Indemnify and hold Lessor and the property of Lessor, including said Property, free and harmless from any and all liability, loss, damages, fines, penalties, claims, and actions arising from Lessee s failure to comply with and perform the requirements of this Section. 6.3 Lessee s Duty to Restore Property. After the construction of any Improvement made by the Lessee, should, at any time during the term of this Lease, any Improvements now or thereafter on said Property be destroyed in whole or in part by fire, theft, the elements, or any other cause not the fault of Lessor, this Lease shall continue in full force and effect, except as otherwise set forth herein, and Lessee, shall at its own expense, repair and restore the damaged or destroyed Improvement or Improvements according to plans & specifications therefor as shall be approved in writing by Lessor and Dignity Health Foundation. 6.4 Application of Insurance Proceeds. Except as set forth in Section 6.3, and except as otherwise provided in an agreement with a Permitted Lender, any and all fire or other insurance proceeds that become payable at any time during the term of this Lease because of damage to or destruction of any Improvements on said Property shall be paid to Lessee, and applied by Lessee toward the cost of repairing and restoring the damaged or destroyed Improvements in the manner required by Section 6.3 of this Lease. 6.5 Lessee s Right to Terminate. If the Property sustains major damage or is completely destroyed, such that the Insurance Proceeds plus any applicable deductible are insufficient to replace, repair or reconstruct the Improvements, or the time to repair or replace the Improvements or other conditions are such that a right to terminate under the Facility Lease is exercised by Dignity Health Foundation as tenant thereunder, thereby terminating the Facility Lease, Lessee under this lease will have the right to terminate this Lease by giving Lessor written notice of the termination or the Facility Lease or that the costs to reconstruct, repair or rebuild exceed the insurance proceeds available for such. ARTICLE SEVEN INDEMNITY AND INSURANCE 7.1 Indemnity Agreement. Lessee hereby agrees to protect, defend, indemnify and save and hold Lessor harmless from all damage, liability, loss, cost and expense resulting from 10 GROUND LEASE

11 the negligent acts or omissions or willful misconduct of Lessee or its employees and agents. Lessor hereby agrees to protect, defend, indemnify and save and hold Lessee harmless from all damage, liability, loss, cost and expense resulting from the negligent acts or omissions or willful misconduct of Lessor or its employees and agents. Lessor shall not be liable for any damage to Lessee s Improvements on the Property resulting from fire, steam, electricity, gas, water or rain, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or earthquake, except if caused by Lessor s gross negligence or willful misconduct. 7.2 Environmental Indemnity. In addition to all other indemnities provided in this Agreement, Lessee agrees to defend, indemnify and hold Lessor free and harmless from any and all claims, causes of action, regulatory demands, liabilities, fines, penalties, losses, and expenses, including without limitation cleanup or other remedial costs (and including reasonable attorneys fees, costs and all other reasonable litigation expenses when incurred and whether incurred in defense of actual litigation or in reasonable anticipation of litigation), to the extent arising from any Hazardous Substance stored, released, spilled, discharged, leaked, emitted, injected, escaped or dumped in, on or about the Property after the Commencement Date (i) by Lessee or its employees, agents, invitees or sublessees or (ii) by unassociated third parties, if prevention of the release was within Lessee s control and before the Termination Date. Except as otherwise provided in this Agreement, Tenant s obligations under this Section shall survive the expiration or earlier termination of this Agreement. Notwithstanding the foregoing, in no event shall Lessee be liable for, and Lessor shall defend (with counsel reasonably acceptable to Lessee and the Lessor s insurer), indemnify and hold Lessee free and harmless from any and all claims, causes of action, regulatory demands, liabilities, fines, penalties, losses, and expenses, including without limitation investigation and cleanup, or other remedial costs (and including attorneys fees, costs and all other reasonable litigation expenses when incurred and whether incurred in defense of actual litigation or in reasonable anticipation of litigation), arising from Pre-existing Hazardous Substances or the migration of any Hazardous Substance onto the Premises from other properties owned by Lessor or otherwise caused by Lessor or its agents, consultants or employees. Lessor's obligations under this Section shall survive the expiration or earlier termination of this Agreement. Hazardous Substance shall mean any substance or material defined or designated as a hazardous waste, toxic substance, solid waste or other pollutant or contaminant under any Environmental Laws. Pre-existing Hazardous Substances shall mean and refer to any actionable levels (as such may change from time to time) of Hazardous Substances and/or underground storage tanks present on the Property on the Commencement Date, excluding any Hazardous Substances brought onto the Property by Lessee or its employees, agents or invitees. 7.3 Insurance. Lessee, or its assignee or sublessee, shall, at its expense, obtain and keep in force during the Term of this Lease such policies of insurance as are described in Exhibit D, attached hereto and incorporated herein. 7.4 Insurance Certificates. All insurance and renewal of insurance required hereunder shall be evidenced by certificates of insurance delivered by Lessee to Lessor, in advance of any use of the Property by Lessee, its assignee or sublessee. 11 GROUND LEASE

12 ARTICLE EIGHT EMINENT DOMAIN 8.1 Total Taking of Property. In the event of a Taking of all of the Property, this Lease shall terminate as of the date of the Taking and Base Rent shall be prorated as of such date. The award for the Taking shall be apportioned as provided in Section 8.4. "Taking", as used in this Article 8 shall mean a taking of or damage to all or part of the Property, or any interest therein or right accruing thereto, as the result of or in lieu of condemnation or eminent domain; a Taking shall be deemed to have occurred on the date title vests in the Taking authority or the date the damage occurs. 8.2 Partial Taking Right of Termination. In the event of a Taking of less than all of the Property or any part of the Development or access thereto, or if the Property, Development or access thereto is blocked, damaged or impaired by the Taking, which Taking renders operation of the Property for its then current use, in the reasonable opinion of Lessor and Lessee, economically infeasible, then Lessee shall have the right to terminate this Lease (provided Lessee first obtains the approval of any Leasehold Mortgagee whose approval is required by the terms of its Leasehold Mortgage), in which event, Base Rent and other charges payable by Lessee under this Lease shall be apportioned as of the date thirty (30) days after the date of the notice herein provided, and Lessee shall be discharged from any responsibility to restore the Improvements. The termination shall be by notice, given by Lessee to Lessor within ninety (90) days from the date the Taking occurs, which termination shall be effective thirty (30) days after the date of such notice. The award for the Taking shall be apportioned as provided in Section Partial Taking Continuation of Lease. In the event of a Taking of less than all of the Property pursuant to which this Lease is not terminated pursuant to Section 8.2, then the Base Rent for the portion of the Property remaining shall be reduced in the same proportion that the portion of the value of the Improvements taken bears to the value of the entire Improvements prior to such Taking. Upon demand by either Lessor or Lessee, the value of the Improvements taken and the value of the total Improvements shall be determined by arbitration conducted under the Commercial Arbitration rules of the American Arbitration Association. To the extent permitted by law, Lessee shall promptly commence and diligently complete the restoration of the Improvements as nearly as possible to their condition prior to the Taking (with such changes, alterations and modifications as may be desired by the Lessee and as will not materially impair the value or character of the Property). The award for the Taking shall be apportioned as provided in Section Apportionment of Award. Any awards received by either Lessor or Lessee in connection with any Taking of all or any portion of the Property shall be apportioned between Lessor and Lessee as hereinafter provided. If a Taking results in the termination of this Lease pursuant to either Section 8.1 or 8.2 or a continuation of this Lease pursuant to Section 8.3, the award in connection with such Taking shall be divided between Lessor and Lessee as follows: Lessee shall receive the greater of the amount then demanded by any Leasehold Mortgagee for total or partial repayment of principal of any Leasehold Mortgage or a percentage of the award equal to the percentage of years remaining in the term of this Lease, based on a sixty (60) year 12 GROUND LEASE

13 term (or such longer term if Lessor and Lessee have agreed in writing to extend the original term of this Lease), less the present value of the rent for the remaining years of the term. Lessee shall also have the right to claim and recover from the condemning authority, but not from Lessor, only such compensation as may be separately awarded or recoverable by Lessee in its own right on account of any and all cost or loss that Lessee may sustain in the removal of their fixtures, equipment and furnishings, for loss of Lessee s good will and for any moving or relocation allowance which may be payable by the Taking authority. Lessor and Lessee shall each be entitled to reimbursement for their actual out-of-pocket costs, fees and expenses, if any, incurred in connection with the adjustment of the loss resulting from the Taking. Lessor shall receive the remainder of the award. 8.5 Controversies to be Resolved by Arbitration. If there is any controversy under Section 8.2 as to whether the remainder of the Property is suitable for the purposes for which the Improvements were designed, or if there is any controversy under this Article as to whether there has been a Taking of substantially all of the Property, the controversy shall be resolved by arbitration as provided in Section Temporary Taking. If the whole or any part of the Property results in a Taking for temporary use or occupancy, this Lease shall not terminate by reason thereof and Lessee shall continue to pay, in the manner and at the times herein specified, the full amount of the Base Rent and the other charges payable by Lessee hereunder, except to the extent by which the Base Rent exceeds the amount of the award, and except only to the extent that Lessee may be prevented from so doing by the terms of the order of the Taking authority, to perform and observe all of the other terms, covenants, conditions and obligations hereof on the part of Lessee to be performed and observed, as though the Taking had not occurred. In the event of such temporary Taking, Lessee shall be entitled to receive the entire amount of the award made for the Taking, whether paid by way of damages, rent or otherwise, unless the period of temporary use or occupancy shall extend beyond the expiration of the Term, in which case the award shall be apportioned between Lessor and Lessee as of the date of expiration of the Term. 8.7 Notice of Taking. The party receiving any notice of the kinds specified below shall promptly give the other party notice of the receipt, contents, and date of the notice received: (A) Notice of an intended Taking; (B) any portion thereof; Service of any legal process relating to condemnation of the Property or (C) Notice in connection with any proceedings or negotiations with respect to such a condemnation; or (D) Notice of intent or willingness to make or negotiate a private purchase, sale, or transfer in lieu of condemnation. 8.8 Rights of Parties in Condemnation Proceeding. Lessor, Lessee and all persons and entities holding under Lessee shall each have the right to represent its respective interest in 13 GROUND LEASE

14 each proceeding or negotiation with respect to a Taking or intended Taking and to make full proof of its claims. No agreement, settlement, sale, or transfer to or with the Taking authority shall be made by either Lessor or Lessee without the consent of the other, not to be unreasonably withheld, conditioned or delayed. Lessor and Lessee each agrees to execute and deliver to the other any instruments that may be required to effectuate or facilitate the provisions of this Lease relating to a Taking. ARTICLE NINE ASSIGNMENT AND SUBLETTING; ENCUMBRANCES 9.1 Assignment and Subletting. (A) In General. Lessee shall not assign this Lease or sublet any portion of the Property (any such assignment or subletting, a Transfer ) without Lessor s prior written consent, which consent shall be in the absolute discretion of Lessor, except that Lessee may enter into subleases and operating agreements as necessary to carry out the purposes set forth herein. (B) Permitted Assignment. Notwithstanding the foregoing, Lessee may assign all of its interest in this lease to: (i) an Affiliate of Lessee, or (ii) a successor corporation, limited liability company or other entity related to Lessee by merger, consolidation or nonbankruptcy reorganization or (iii) any investor as part of the organization of Lessee or any entity owned or controlled by Carl D. Panattoni, Adon Panattoni or Tim Schaedler, or (iv) CSCDA pursuant to the Purchase Agreement, provided that all of the terms and conditions of said Purchase Agreement are fully performed and provided that CSCDA assumes in writing all of Lessee s obligations hereunder (any of the foregoing are referred to herein as Permitted Assignments ). 9.2 Encumbrance of Leasehold Estate. (A) Lessee s Right to Encumber. Provided Lessee is not in default under this Lease, Lessee may, at any time and from time to time during the Term hereof, encumber to any person or entity ( Lender or Leasehold Mortgagee ) by deed of trust or mortgage or other security instrument ( Leasehold Mortgage ), all of Lessee s interest under this Lease and the leasehold estate hereby created in Lessee or any of the Improvements or personal property of Lessee on the Property ( Personal Property ) for any purpose or purposes without the consent of Lessor; provided the conditions stated in subparagraphs (1) through (8) of this Section 9.2(A) are satisfied. The Leasehold Mortgage and all rights acquired under it, shall be subject to each and all of the provisions, covenants, conditions and restrictions stated in this Lease and to all rights and interests of Lessor except as otherwise specifically provided in this Lease. Lessee s right to enter into a Leasehold Mortgage transaction shall be at Lessee s sole cost and expense, and shall be subject to each and all of the following conditions: (1) Such Lender shall be a bank or other financial institution which is in good standing with all applicable regulatory agencies (including without limitation a commercial bank, savings bank, investment bank, trust company or insurance company), an educational institution, a private or state, municipal or similar public employees welfare, 14 GROUND LEASE

15 pension or retirement fund or system, governmental or quasi-governmental agencies, a nationally recognized issuer of commercial paper, a nationally recognized entity regularly engaged in the making of commercial real estate loans, or a public agency debt issuer, or entities controlled or managed by any of the foregoing, including, but not limited to a qualified community development entity (as defined in Section 45D(c)(1) of the Internal Revenue Code or an affiliate thereof) (each, a "Permitted Lender"). (2) A Permitted Lender shall encumber all or any portion of Lessee s or Lessor s interest in: (i) the Lease, (ii) the Property, (iii) the Improvements, (iv) the rents, issues and profits belonging to Lessee, and (or) (v) Personal Property. Lessor s fee estate shall be subject to the lien of any such Leasehold Mortgage and Lessor shall join in such Leasehold Mortgage, however, shall Lessor shall not have any personal liability whatsoever for payment of the principal sum secured by such Leasehold Mortgage, or any interest accrued thereon, or any other sum secured thereby or accruing thereunder and the Permitted Lender shall seek no damages against Lessor for any or all of the same or any deficiency should the Leasehold Mortgage be foreclosed upon. Permitted Lenders shall have all the benefits provided in this Section 9.2 or provided elsewhere in this Lease and the provisions set forth in this Lease for the benefit of the Leasehold Mortgagee may be enforced by such Leasehold Mortgagees as well as the ability to foreclose on the Property, so long as this Lease, Facility Lease, Premises Purchase Option, and Purchase Option remain in effect. (3) No such Leasehold Mortgage shall be binding upon Lessor in the enforcement of its rights and remedies herein and by law provided, unless and until a certified copy of the original thereof bearing the date and instrument number or book and page of recordation thereof and a certified copy of the original note secured by such Leasehold Mortgage has been delivered to Lessor together with written notice of the address of the Leasehold Mortgagee to which notices may be sent; and in the event of an assignment of such Leasehold Mortgage, such assignment shall not be binding upon Lessor unless or until a certified copy thereof bearing the date and instrument number or book and page of recordation together with written notice of the address of the assignee thereof to which notices may be sent, have been delivered to Lessor. (4) Any of the types of Leasehold Mortgages permitted hereunder may consist of two (2) or more separate loans from two (2) or more separate Permitted Lenders, provided such multiple loans taken together comply with the provisions applicable to the 15 GROUND LEASE

16 particular type of loan in question and in the aggregate do not exceed the total cost of the Improvements, including interest, loan fees, and costs related to the construction of the Outpatient Services Building, including without limitation, fees for architects, attorneys and other consultants. Any other secured financing for the construction of the Improvements, for alterations, for refinancing therefor, or for replacement of the Improvements (whether or not the same involves a lien on the Property or on Lessee s interest in this Lease and the Improvements) shall also require the prior written consent and approval of Lessor. (5) All Permitted Lenders shall be required to give Lessor notice of any default by Lessee under the Leasehold Mortgage. (6) Any number of loans may be outstanding at any one time, but only as consistent with the terms hereof. (7) All rights acquired by Permitted Lenders under any Leasehold Mortgage shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of Lessor thereunder, none of which covenants, conditions and restrictions is or shall be waived by Lessor by reason of the giving of such Leasehold Mortgage, but nothing herein shall limit or restrict the rights of Permitted Lenders as set forth in this Section 9.2. (8) Notwithstanding any foreclosure of any such Leasehold Mortgage, Lessee shall remain liable for the payment of the Base Rent and other sums described in this Lease and the performance of all the terms, covenants and conditions of this Lease which by the terms hereof are to be carried out and performed by Lessee. (9) The Permitted Lenders shall also enter into a Subordination And Non-Disturbance Agreement ( SNDA ) in a form satisfactory to Lessor and Lessee and the Permitted Lenders which will include an agreement to retain this Lease in effect and to keep in effect or enter into a new Facility Lease with Dignity Health Foundation on the same terms and conditions as the existing Facility Lease which will contain the Premises Purchase Option as set forth in the Facility Lease, including without limitation the agreement from the applicable Permitted Lenders, trustee, beneficiary, Lessor or security holder not to subordinate the Premises Purchase Option, the Purchase Option, Memorandum of Option or Memorandum of Premises Purchase Option. Permitted Lenders must also as a condition to the Leasehold Mortgage enter into an SNDA directly with Dignity Health Foundation in the form attached to the Facility Lease. (B) Requirement for Notice of Loan Default. Immediately after the recording of any Leasehold Mortgage executed by Lessee pursuant to Section 9.2 of this Lease and containing a power of sale as defined by California law, Lessee shall, at Lessee s own cost and expense, record in the Office of the County Recorder of Sacramento County, California, a written request executed and acknowledged by Lessee for a copy of any notice of default and a copy of any notice of sale under such deed of trust or mortgage to be mailed to Lessor at the address set forth in Section 12.2(A), or such requirement can be incorporated into the Leasehold Mortgage. 16 GROUND LEASE