49-15 City, LHA, Cleveland Clinic Master Agreement

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(c) Delayed Wind -Down of Hospital Operations. The commitments made by the parties in this Master Agreement, including the significant risk assumed by the Clinic with respect to LHA's Net Asset Value as described in Section 3.3(b), presume the cessation of inpatient Hospital operations in a timely fashion. If LHA is unable to cease inpatient operations on or before March 1, 2016 (the "Outside Irpatient Hospital Operations Cessation Date ") as a result of action taken by a judicial or quasi-judicial body or a governmental body or agency (other than a governmental body or agency whose primary function is oversight of health care providers) and the operations of LHA generate an EBIDA loss, the $24,400,000 payment obligations described in Section 6.1(a) will be reduced by the aggregate amount of such EBIDA losses beginning as of the Outside Inpatient Hospital Operations Cessation Date through the cessation of the Hospital's inpatient operations. For purpose of this Section 63(c), the operation of the emergency department at the Hospital will not be deemed to be inpatient Hospital operations. For the purpose of this Section 6.1(c), the term "EBIDA" means earnings before interest, depreciation, and amortization expenses. In accordance with LHA current financial reporting practices (e.g. Financial Reporting Practices applied for 2014 Audited Statements), the term "earnings" in the preceding sentences means LHA's operating income or loss. For clarity regarding the meaning of EBIDA, the parties agree that LHA's EBIDA was as follows: (i) $3,690,000 for the ten -month period ended October 31, 2014; (ii) $5,944,000 for the year ended December 31, 2014; and (iii) negative $4,931,000 for the ten -month period ended October 31, 2015. The parties further agree that the date the Hospital ceases inpatient operations shall be deemed to be the first date the Hospital declines to accept new inpatients. To the extent the payment obligations described in Section 6.1(a) need to be reduced pursuant to this Section 6.1(c), the amount of such reduction shall be applied proportionately throughout the payment schedule contemplated by Section 6.1(a). 6.2 Funding of Demolition or Redevelopment Costs. The City will be paid Seven Million Dollars ($7,000,000) for the demolition and/or redevelopment of the Hospital building and other structures on the Current Hospital Site as contemplated by Section 33(c), which may be utilized as determined by the City in its sole discretion. This amount will be transferred to the City by the Clinic and/or LHA (using LHA funds to the extent available as contemplated in Section 3.3(b)) as follows: (i) Five Hundred Thousand Dollars ($500,000) on the date that the FHC Site is transferred to the Clinic under the FHC Site Sale Agreement, and (ii) Six Million Five Hundred Thousand Dollars ($6,500,000) on the FHC Commencement Date. ARTICLE VII REPRESENTATIONS AND WARRANTIES 7.1 Mutual Representations and Warranties. Each party represents and warrants to the other parties that the statements contained in this Section 7.1 are true and correct as of the Effective Date. (a) Authorization: Enforceability. Each party represents and warrants that it has all requisite power, authority and capacity to execute and deliver this Master Agreement and any other agreements to be entered into by it in connection with the Transition as contemplated hereby and to perform its obligations under this Master Agreement and any such other agreements, and to consummate all transactions contemplated hereby. The execution and 12 11938585.11