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HomeMy WebLinkAbout6651RESOLUTION NO. 6651 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, APPROVING A REVISED SIXTH AMENDMENT TO AGREEMENT AND LEASE BY AND BETWEEN THE CITY OF ARCADIA AND METHODIST HOSPITAL OF SOUTHERN CALIFORNIA WHEREAS, on April 1, 2008, the City Council adopted Resolution No. 6621 approving a Sixth Amendment to Agreement and Lease with Methodist Hospital of Southern California ("Hospital") in order to assist the Hospital in obtaining financing for purposes of updating and expanding the Hospital and related facilities on real property owned by the City of Arcadia and leased to the Hospital; and WHEREAS, following the approval of the Sixth Amendment on April 1, 2008, the U.S. Department of Housing and Urban Development ("HUD") requested a change to the Sixth Amendment pertaining to indemnification obligations of successor Lessees; and WHEREAS, on May 28, 1953, the City of Arcadia, a municipal corporation ("City"), as Lessor, and Hospital Foundation of the Methodist Church, Southern California-Arizona Conference, a nonprofit California corporation, executed an Agreement and Lease covering the real property described therein ("Premises"), which Agreement and Lease was recorded January 11, 1955 in Book 46609, Page 39 of the Official Records of Los Angeles County, California; and WHEREAS, on August 9 , 1955, the parties to said Agreement and Lease executed an amendment thereto, which amendment was recorded August 25, 1955 in Book 48769, Page 295, Official Records of Los Angeles County, California; and WHEREAS, also on August 9, 1955, Hospital Foundation of the Methodist Church, Southern California-Arizona Conference with the written consent of the City assigned its interest in said Agreement and Lease to Methodist Hospital of Southern California, a nonprofit California corporation, which corporation assumed all of the obligations of the Hospital Foundation of the Methodist Church, Southern California-Arizona Conference under said Agreement and Lease; and WHEREAS, said Agreement and Lease was further amended by a Second Amendment to Lease dated July 5 , 1956 and recorded on August 22, 1956 in Book 52099, Page 103, Official Records of Los Angeles County, California; and WHEREAS, said Agreement and Lease was further amended by a Third Amendment to Lease dated September 18, 1961 and recorded on January 27, 1966 in Book M2109, Page 272, Official Records of Los Angeles County, California; and WHEREAS, said Agreement and Lease was further amended by a Fourth Amendment to Lease dated December 23, 1963 and recorded May 11, 1964 in Book M1518, Page 761, Official Records of Los Angeles County, California; and 6651 WHEREAS, said Agreement and Lease was further amended by a Fifth Amendment to Agreement and Lease dated August 5, 1980 and recorded on June 10, 1981, as Document Number 81-578698, in the Official Records of Los Angeles County, California; and WHEREAS, in support of the Hospital's efforts to seek financing for purposes of updating and expanding the hospital and related facilities operated on the Premises, to reflect the change requested by HUD to the Sixth Amendment approved by the City Council on April 1, 2008, and to reflect certain other changes to the Agreement and Lease requested by the City, the Hospital and the City have prepared a revised Sixth Amendment to the Agreement and Lease. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Council hereby approves that certain Sixth Amendment to Agreement and Lease by and between the City of Arcadia and Methodist Hospital of Southern California, a copy of which is attached hereto as Exhibit "A" and incorporated herein by reference. SECTION 2. The Mayor is hereby authorized and directed to execute the Sixth Amendment to Agreement and Lease, together with such changes thereto as are deemed reasonable and necessary by the City Manager and City Attorney in order to accomplish the purpose of facilitating the currently proposed Hospital 6651 financing and related matters. The Mayor and the City Manager, or their designees, are further authorized and directed to execute such other documents as are reasonable and necessary to accomplish the foregoing. SECTION 3. That Resolution No. 6621 is hereby rescinded. SECTION 4. The City Clerk shall certify to the adoption of this Resolution. Passed, approved and adopted this zlsc day of October , 2o~8• Mayor of the City of Arcadia ATTEST: ity Clerk APPROVED AS TO FORM: - ~. ~~;~~ Stephen P. Deitsch City Attorney 6657 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES) SS: CITY OF ARCADIA ) I, JAMES H. BARROWS, City Clerk of the City of Arcadia, hereby certifies that the foregoing ResolutionNo. 6651 was passed and adopted by the City Council of the City of Arcadia, signed by the Mayor and attested to by the City Clerk at a regular meeting of said Council held on the 21st day of October, 2008 and that said Resolution was adopted by the following vote, to wit: AYES: Council Member Amundson, Chandler, Kovacic, Wuo and Harbicht NOES: None ABSENT: None ity Clerk o `the City of Arcadia 6651 SIXTH AMENDMENT TO AGREEMENT AND LEASE This Sixth Amendment to Agreement and Lease ("Sixth Amendment") is made and executed this _ day of , 2008, by and between the CITY OF ARCADIA, a municipal corporation (hereinafter refereed to as the "City") and METHODIST HOSPITAL OF SOUTHERN CALIFORNIA, a nonprofit California corporation (hereinafter referred to as the "Hospital"). RECITALS WHEREAS, on May 28, 1953, the City of Arcadia, a municipal corporation, as lessor, and Hospital Foundation of the Methodist Church, Southem California-Arizona Conference, a nonprofit California corporation, executed an Agreement and Lease covering the real property described therein, which Agreement and Lease was recorded Januazy 11, 1955 in Book 46609, Page 39 of the Official Records of Los Angeles County, California; WHEREAS, on August 9 , 1955, the parties to said Agreement and Lease executed an amendment thereto, which amendment was recorded August 25, 1955 in Book 48769, Page 295, Official Records of Los Angeles. County, California; and WHEREAS, also on August 9, 1955, Hospital Foundation of the Methodist Church, Southern California-Arizona Conference with the written consent of the City assigned its interest in said Agreement and Lease to Methodist Hospital of Southern California, a nonprofit Califomia corporation, which corporation assumed all of the obligations of the Hospital Foundation of the Methodist Church, Southem Califomia-Arizona Conference under said Agreement and Lease; and WHEREAS, said Agreement and Lease was further amended by a Second Amendment to Lease dated July 5 , 1956 and recorded on August 22, 1956 in Book 52099, Page 103, Official Records of Los Angeles County, California; and WHEREAS, said Agreement and Lease was further amended by a Third Amendment to Lease dated September 18, 1961 and recorded on January 27, 1966 in Book M2109, Page 272, Official Records of Los Angeles County, California; and WHEREAS, said Agreement and Lease was further amended by a Fourth Amendment to Lease dated December 23, 1963 and recorded May 11, 1964 in Book M1518, Page 761, Official Records of Los Angeles County, Califomia; and WHEREAS, said Agreement and Lease was further amended by a Fifth Amendment to Agreement and Lease dated August 5, 1980 and recorded on June 10, 1981, as Document Number 81-578698, in the Official Records of Los Angeles County, California; and WHEREAS, in support of Hospital's efforts to seek financing for purposes of updating and expanding the hospital and related facilities operated on the Premises, and to reflect certain other updates, the parties hereto desire to further amend said Agreement and Lease. 1010794.11 6651 ~,yp,~' ~.09~4e NOW, THEREFORE, the parties hereto agree that said Lease and Agreement is hereby amended as follows AGREEMENT I. Effectiveness of this Sixth Amendment. This Sixth Amendment shall be conditioned upon, and effective (without the requirement of any further action on the part of either Hospital or City) concurrent with, the initial closing of the Project Financing (as defined in new Section 9 of the Agreement and Lease), addressed below. 2. Extension of Term. Section 1 of the Agreement and Lease is hereby amended to read its entirety as follows: This Agreement and Lease shall be for a term from the 28`h day of May, 1953 and continuing through and including the 27`h day of May, 2058, which period of time is hereinafter referred to simply as the "Term;" provided, however, if the closing of the Project Financing (as defined in Section 9, below) has not occurred by May 25, 2008, then the term of the Agreement and Lease shall be extended, for a period not to exceed 12 months, so that it runs through and includes the eazlier of (i) the fiftieth (50th) anniversary of the day immediately following the closing date for the Project Finam;ing; or (ii) May 27, 2059. 3. Adiustment of Rent. The following language is added to the end of the existing Section 4 of the Agreement and Lease: Notwithstanding the preceding, if during the Term the Premises ceases to be used as a nonprofit hospital, then commencing concurrent with such changed use ("Adjustment Date"), and continuing for so long as such use other than a nonprofit hospital continues during the Term (with such period being referred to as the "Adjustment Period"), the consideration owing under this Agreement and Lease shall be adjusted to monthly installments of Fair Market Rent (as hereinafter below). For the purposes of this Section 4, "Fair Mazket Rent" shall mean the monthly fixed rent that would, as of the Adjustment Date, be paid by a willing tenant, not compelled to lease, and accepted by a willing landlord, not compelled to lease, for the undeveloped Premises (i.e. without taking into account the value of any improvements or facilities thereon or thereto) as of the pertinent date. Fair Market Rent shall be determined in accordance with the appraisal procedures set forth below or in such other manner as shall be mutually agreed upon, in writing, by the City and the Hospital. (a) If at any time it becomes necessary to determine the Fair Market Rent of the Premises for purpose of this Section 4 (the Premises being so appraised shall be referred to for the purposes of this Section as "Appraised Property"), then the Hospital shall select a person to act as an independent appraiser on its behalf in connection with determining the Fair Market Rent and shall provide the City with written notice of such determination. Within ten (10) days after such notice, the City shall by written notice to Hospital either (i) agree ioio~9a.i` Z 6651 to the appointment of the appraiser identified in such initial notice, in which case such appraiser shall be the sole appraiser for purposes of determining the Fair Market Rent during such Adjustment Period, or (ii) appoint a second person as an appraiser on its behalf. Any appraiser appointed pursuant to this Section must be a member of the American Institute of Real Estate Appraisers (or any successor organization thereto). The appraiser(s) thus appointed shall, within forty-five (45) days after the date of the notice appointing the first appraiser, proceed to appraise the Appraised Property to determine the Fair Market Rent for the Adjustment Period. In the case of two (2) appraisers, except as provided in Section below in this Section, the two appraisals shall be averaged to determine the Fair Market Rent. (b) Notwithstanding the preceding provisions, if two appraiser are appointed, and the difference between their appraisal amounts exceeds ten percent (] 0%) of the lesser of such appraisal amounts, then the two appraisers shall have twenty (20) days to appoint a third appraiser. If no such appraiser is appointed within such twenty (20) days or within ninety (90) days of the original request for a determination Fair Market Rent, whichever is earlier, either the City or the Hospital may apply to any court having jurisdiction to have such appointment made by such court. Any appraiser appointed by the original appraisers or by such court shall be instructed to determine the Fair Market Rent within forty-five (45) days after the appointment of such appraiser. The determination of the three appraisers which differs most in the terms of dollar amount from the determinations of the other two appraisers shall be excluded, and fifty percent (50%) of the sum of the remaining two determinations shall be the appraised value, which appraised value shall be final and binding upon the City and the Hospital as the Fair Market Rent of the Appraised Property during the Adjustment Period. If the lowest and highest appraised values aze equidistant in amount from the middle appraised value, then such middle appraised value shall be the Fair Mazket Rent for the Adjustment Period. (c) If the parties agree upon, and utilize, only one appraiser pursuant to this Section, then the City and the Hospital shall each pay one-half of the fees and expenses of such appraiser. If two appraisers are utilized, then the City and the Hospital each shall pay the fees and expenses of the appraiser appointed by it. If a third appraiser is utilized, then the City and the Hospital shall each pay one- half ofthe fees and expenses of the third appraiser and one-half of all other costs and expenses incurred in connection with each appraisal conducted pursuant to this Section 4. 4. Section 5-K. Section 5-K of the Agreement and Lease is hereby amended to read as follows: "5-K -HOLD HARMLESS: The Hospital shall at all times during the Term keep and save the City and its officials, officers, employees and agents (collectively, the "City Indemnitees") free and harmless from any and all liability, claims, demands, lawsuits and/or actions pertaining to injury or death to persons and/or ~o~m9a.u ~ 6651 damage to property which may in any manner arise from the use, occupancy or maintenance of the Premises and/or of any building, structure or improvement thereon, and/or from negligence, malfeasance, misconduct or inadvertence of Hospital and/or any of the Hospital's officials, officers, employees, agents and/or contractors in any way concerned with the construction, maintenance, operation and/or use of all or any portion of the Premises and/or all or any portion of any building, structure and/or improvement located thereon. Notwithstanding the preceding, however, the Hospital will not be obligated to indemnify the City Indemnitees for any liabilities, claims demands, lawsuits and/or actions pertaining to any injury or death to persons, and/or damage to property, to the extent caused by the actions or omissions by any of the City Indemnitees or their invitees including without limitation in connection with the use of the Auditorium by any of the City Indemnitees and their invitees, in accordance with Section 10 of this Agreement and Lease. The Hospital shall throughout the Term maintain in fall force and effect a policy or policies of insurance, with endorsements naming the City Indemnitees as additional insureds, which provide liability, boiler, vehicle and medical malpractice insurance, each of a type and with coverage and deductible amounts, and issued by one or more insurers, as is customary in the health care industry and determined aimually by an independent insurance consultant, reasonably acceptable to the City, to be adequate to protect the interests of City, as landlord under the Agreement and Lease. The Hospital shall annually report and certify to the City all its insurance coverages required under this Lease and Agreement. In addition, upon the City's written request, which shall me made no more frequently than annually, the Hospital shall furnish to the City complete and accurate copies of current certificates of insurance and endorsements effecting the insurance coverages required by this Agreement and Lease on forms reasonably satisfactory to the City. 5. New Section 9 (Incorporation of 207 Lease Addendum). The following new Section 9 is hereby added to the Agreement and Lease: 9 - 207 Lease Addendum. In order to support the Hospital's updating and expansion of the hospital and related facilities operated on the Premises, and receipt of financing for such projects ("Project Financing") with a loan subject to credit enhancement pursuant to the HUD/FHA Section 242 Mortgage Insurance for Hospitals program ("HUD/FHA-242 Program"), the City and the Hospital agree that the provisions contained in the 207 Lease Addendum to this Lease are, by this reference, incorporated into and made a part of this Agreement and Lease. imo~sa.n 4 6651 6. Attaclrment of 207 Lease Addendum. The "207 Lease Addendum" attached as Exhibit 1 to this Sixth Amendment to Agreement and Lease is hereby added to, incorporated into and made a part of the Agreement and Lease, as an attachment and addendum thereto. 7. New Section 10 (Use of Hospital Auditorium). The following new Section 10 is added to the Agreement and Lease: 10. -Use of Hospital Auditorium. The Hospital shall provide to the City for use by the City and its officials, officers, employees and agents for City events and meetings, use of the existing large auditorium on the Premises ("Auditorium"), or such similar facility as may subsequently replace such auditorium, except to the extent that the Hospital requires the use of the auditorium for the Hospital's purposes on the proposed date of the City's use. As a condition to such use of the Auditorium, the City shall provide to the Hospital at least twenty (20) days, but not more than thirty (30) days, advance written notice of the date and time that the City proposes to use the Auditorium ("Proposed Use Notice"); and if the Hospital fails to submit written notice to the City at least fifteen (15) days prior to the proposed date of the City's use, then the City shall be deemed to have the right to use the auditorium at the date and time set forth in the Proposed Use Notice. However, the City's use rights under this Section are subject to the following qualifications and conditions: a. The City shall be responsible for, and shall pay, any and all applicable costs that may be necessazy for, or incurred in connection with, any City events held at the Auditorium, including without limitation (i) any costs associated with efforts determined by the Hospital to be necessary to facilitate parking for City events and for coordinating the parking needs of those attending such event with the needs of hospital patients, physicians and visitors, including without limitation valet costs, and (ii) any other costs associated with a City event at the Auditorium, including without limitation catering costs. If the Hospital incurs any such costs which are the City's responsibility hereunder, the City will reimburse the Hospital within thirty (30) days of receipt of an invoice for such costs from the Hospital. b. In order to minimize parking problems caused by the City's use of the Auditorium, the City shall only schedule meetings in the Auditorium after 5:30 p.m. c. The City's use of the Auditorium shall be limited to meetings related to the City's business or meetings expressly sponsored by the City (i.e. candidates' forums). d. The City's rights to use of the Auditorium shall be permitted only to the extent the Hospital determines that such use does not (i) risk in any manner the Hospital's nonprofit and tax-exempt status (including exemption from property taxes), under current or future laws, rules or regulations, or (ii) conflict with any current or future bond or financing covenants applicable to the Hospital or requirements for such bonds to remain tax exempt. e. The rights granted to the City pursuant to this Section 10 aze personal to the City and not assignable to any other party. Accordingly, upon any assignment by the 6651 1010794.II j City of any or all of its rights under the Agreement and Lease, the rights granted to the City under this Section 10 shall automatically terminate. £ Notwithstanding the forgoing, if the Hospital determines at any time that the implementation of the provisions set forth in this Section 10 creates a hardship for the Hospital, including without limitation interfering with the Hospital's use of the Auditorium, the Hospital's ability to effectively manage Hospital operations or the maintenance, security or parking on the Hospital campus, then promptly upon the Hospital's request the Hospital and City shall modify the provisions of this Section 10 to the degree necessary to mitigate such adverse impacts in a manner reasonably acceptable to the Hospital. New Section 11 (Advance Consent to Successors' Usel 11. -Advance City Consent to Successor's Use. The City and the Hospital acknowledge that the Secretary of Housing and Urban Development (the "Secretazy") has insuued or will insure a deed of trust loan that will be used to update and expand the Hospital and related facilities operated on the Hospital's Premises (i.e, the Project Financing). The Secretary acknowledges that the use of the Premises for a hospital facility is the main consideration given by the Hospital in return for the City originally entering into the Lease and subsequently amending the Lease. Therefore, the Cii r desires to maintain the use of the Premises as a hospital so long as it is a viable use and there is a need in the community for the Hospital. Therefore, if the Secretary becomes the holder of the Note insured by the Secretary or otherwise becomes the owner of the Hospital's leasehold estate in the Premises because of foreclosure, deed in lieu of foreclosure, or any other method, the Secretary will use its best efforts to maintain the use of the Premises for hospital ptuposes, and in furtherance of such efforts by the Secretazy, the City hereby consents and agrees, pursuant to Section 5-M of the Agreement and Lease, to the Secretary selling or transferring the Hospital's leasehold estate in the Premises to a nonprofit, public or proprietary entity(ies) for: (i) use as a hospital; or (ii) any public uses, or such other uses, as may be permitted by the then current zoning restrictions. The Secretary will consult with the City to determine if the Premises are no longer viable as a hospital. If it is determined by the Secretazy that the use of the Premises as a hospital is no longer viable, the Secretary may change the use of the Premises to a public use, or other use, that complies with the then current zoning restrictions and other relevant local laws of the City and otherwise comports with the uses of adjacent properties. This provision also constitutes a modification of the use provisions set forth at Section 3 of this Agreement and Lease, to expand the permissible uses of the Premises, as and to the extent described above in this Section. 9. No Further Chanties. Except as further amended by this Sixth Amendment to Agreement and Lease, said Agreement and Lease dated May, 28, 1953 as heretofore amended remains in full force and effect. [SIGNATURES ON NEXT PAGE] ~oio~9a.n 6 6651 IN WITNESS WHEREOF, City and Hospital have executed this Sixth Amendment as of the Effective Date. City: Attest: CITY OF ARCADIA, a municipal corporation ay: By: City Clerlc Its: Hospital: METHODIST HOSPITAL OF SOUTHERN Approve as to Form: CALIFORNIA, a nonprofit California corporation By: By: City Attorney Its: ioio~sa.u ~ 6651 EXHIBIT 1 TO SIXTH AMENDMENT TO AGREEMENT AND LEASE 207 AGREEMENT AND LEASE ADDENDUM Notwithstanding any other provisions of the Agreement and Lease, if and so long as the leasehold estate created by the Agreement and Lease (the "Agreement and Leasehold Estate") is subject to a mortgage ("Mortgage") insured, reinsured, or held by the Federal Housing Commissioner (the "Cormnissioner") or given to the Commissioner in connection with a resale, or the demised Premises aze acquired and held by him because of a default under said Mortgage: 1. The Hospital is authorized to obtain a loan, the repayment of which is to be insured by the Federal Housing Commissioner and secured by a mortgage on the leasehold estate created under the Agreement and Lease. The Hospital is further authorized to execute a mortgage on this Agreement and Leasehold and otherwise to comply with the requirements of the Federal Housing Commissioner for obtaining such an insured mortgage loan. 2. If approved by the Federal Horsing Commissioner, and subject also to the City's approval rights as set forth in the Agreement and Lease, which shall not be unreasonably withheld or delayed, the Hospital may assign, transfer or sell its interest in the Premises. However, the City approves in advance the assignment, transfer or sale of the Premises to the Commissioner because of a default under the Mortgage. Upon a default under the Mortgage, the Commissioner, any mortgagee-in-possession, or any successor organization would have a right to occupy the leased Premises for hospital-related uses and any other uses permitted under the Agreement and Lease, as successor to the Hospital under the Agreement and Lease, so long as such party agrees to be bound by all of the terms and conditions of the Agreement and Lease. 3. (a) Insurance policies shall be in an amount, and in such company or companies and in such form, and against such risks and hazards, as shall be approved by such mortgagee and/or the Federal Housing Commissioner and also as approved by the City, which approval shall not be mireasonably withheld or delayed. These insurance requirements shall be in addition to, and not in lieu of, the insurance provisions for the protection of the City, as provided at Section 5-K of the Agreement and Lease. However, the City and Hospital agree that the provisions in Section 5-K of the Agreement and Lease, by which the Hospital provides indemnification, shall apply only to the extent such indemnified obligations are covered by insurance policies carried by the Hospital. (b) The City shall not take out separate insurance concurrent in form or contributing in the event of loss with that specifically required to be famished by the Hospital to the mortgagee. The City may at its own expense, however, take out sepazate insurance which is not concurrent in form or not contributing in the event of loss with that specifically required to be furnished by the Hospital- 1010794.11 u 6 6 51 4. (a) If all or any part of the demised Premises shall be taken by condemnation that portion of any award attributable to the improvements or damage to the improvements shall be paid to the mortgagee or otherwise disposed of as may be provided in the insured mortgage. Any portion of the award attributed solely to the taking of land shall be paid to the City. After the date of taking the annual ground rent shall be reduced ratably by the proportion which the condemnation award paid to the City bears to the total value of all awards, including awazds to the Hospital for loss of its leasehold interest. The parties acknowledge and agree that the City shall be entitled to that portion of any condemnation awazd relating to the value of the lost fee interest, taking into account the existence of the Agreement and Lease, and that the Hospital shall be entitled to the portion of any condemnation awad payable based on the value of the Hospital's leasehold interest under the Agreement and Lease, and that any such amounts payable to the Hospital shall be paid over to the Mortgage holder or the Commissioner, as specified by the Commissioner, so long at the Mortgage remains in place. (b) In the event of a negotiated sale of all or a portion of demised Premises in lieu of condemnation, the proceeds shall be distributed and ground rents reduced as provided in cases of condemnation, but the approval of the Commissioner and the mortgagee shall be required as to the amount and division of the payment to be received. 5. The City agrees that, within ten (10) days afrer receipt of written request from the Hospital, it will join in any and all applications for permits, licenses or oilier authorizations required by any governmental or other body, other than the City or any division or department of the City, claiming jurisdiction in connection With any work which the Hospital may do hereunder, and will also join in any grants for easements for electric, telephone, gas, water, sewer and such other public utilities and facilities as may be reasonably necessary in the operation of the demised Premises or of any improvements that may be erected thereon; and if, at the expiration of such ten (10) days' period, the City shall not have joined in any such application, or grants for easements, the Hospital shall have the right to execute such application and grants in the name of the City, and, for that purpose, the City hereby irrevocably appoints the Hospital as its Attorney-in-fact to execute such papers on behalf of the City. 6. Nothing contained in this Agreement and Lease shall require the Hospital to pay any franchise, estate, inheritance, succession, capital levy or transfer tax of the City, or any ihcome, excess profits or revenue tax, or any other tax, assessment, charge or levy upon the rent payable by the Hospital under this Agreement and Lease; provided, however, that nothing herein shall constitute a waiver of the Hospital's separate obligations to pay any taxes, assessments, levies or transfer taxes that are otherwise applicable to the Hospital under applicable law, regulations or ordinances, whether or not payable to the City. 7. Upon any default under this Agreement and Lease which authorizes the cancellation thereof by the City, the City shall give notice to the mortgagee and the Federal Housing Commissioner, and the mortgagee and the Federal Housing Commissioner, their successors and assigns, shall have the light at any time within six (6) months from the date of such notice to correct the default and reinstate the Agreement and Lease unless the City has first terminated the Agreement and Lease as provided herein. io~o7sa.ii g 6651 At any time after two (2) months from the date a notice of default is given to the mortgagee and the Commissioner, the City may elect to terminate the Agreement and Lease and acquire possession of the demised Premises. Upon acquiring possession of the demised Premises, the City shall notify the Commissioner and mortgagee. The mortgagee and Commissioner shall have six (6) months from the date of such notice of acquisition to elect to take a new Agreement and Lease on the demised Premises. Such new Agreement and Lease shall have a term equal to the unexpired portion of the term of this Agreement and Lease and shall be on the same terms and conditions as contained in this Agreement and Lease, including without limitation the Lease provisions addressing the purposes for the lease at Paragraph 3 of the Lease, but excepting that the mortgagee's and Commissioner's liability for ground rent shall not extend beyond their occupancy under such Agreement and Lease. The City shall tender such new Agreement and Lease to the mortgagee or Commissioner within thirty (30) days after a request for such Agreement and Lease and shall deliver possession of the demised Premises immediately upon execution of the new Agreement and Lease. Upon executing a new Agreement and Lease the mortgagee or Commissioner shall pay to the City any unpaid ground rentals due or that would have become due under this Agreement and Lease to the date of the execution of the new Agreement and Lease, including any taxes which were liens on demised Premises and which were paid by the City, less any net rentals or other income which the City may have received on account of this property since the date of default under this Agreement and Lease: 8. All notices, demands azid requests which are required to be given by the City, the Hospital, the mortgagee or the Commissioner shall be in writing and shall be sent by registered or certified mail, postage prepaid, and addressed to the address of the party as given in this instrmnent unless a request for a change in this address has been sent to the party giving the notice by registered or certified mail prior to the time when such notice is given. 9. This Agreement and Lease shall not be modified without the consent of the Federal Housing Commissioner. Acknowledged and Approved: City: CITY OF ARCADIA, a municipal corporation By: Its: 101 D794.11 1 Q Hospital: METHODIST HOSPITAL OF SOUTHERN CALIFORNIA, a nonprofit California corporation By: Its: 6651