SARASOTA
LEASEHOLD IMPROVEMENT AGREEMENT
AMONG
MEDITRUST ACQUISITION CORPORATION I
AND
EMERITUS PROPERTIES I, INC.
AND
EMERITUS CORPORATION
LEASEHOLD IMPROVEMENT AGREEMENT
THIS LEASEHOLD IMPROVEMENT AGREEMENT is made as of
August 21, 1996 by and among EMERITUS PROPERTIES I, INC., a
Washington corporation (the "Lessee"), and MEDITRUST ACQUISITION
CORPORATION I, a Massachusetts corporation (the "Lessor").
1. BACKGROUND
1.1 Lessee.
Lessee is a corporation which is a wholly-owned Subsidiary the
Guarantor (as hereinafter defined). The Guarantor is a corporation the stock
of which is publicly traded on the American Stock Exchange.
1.2 The Land and Existing Improvements.
Lessor is the owner of a certain parcel of land located in Sarasota,
Sarasota County, Florida and more particularly described on EXHIBIT A
(the "Land").
1.3 The Facility Lease.
Lessor and Lessee have entered into that certain Facility Lease
Agreement of even date herewith, relating to the Land (the "Facility
Lease"), a Memorandum of which is to be recorded with the Sarasota
County, Florida real estate records.
1.4 Project.
Lessee is currently contemplating a proposal to construct an addition of [
] units and [ ] beds to the existing assisted living facility and other
improvements, including, without limitation, accessory parking and
landscaping on the Land (collectively, the "Improvements"). The Land and
the Improvements are collectively referred to herein as the "Project". Lessee
shall have until December 15, 1996 to notify Lessor in writing of its
decision to construct the Project, and Lessor shall have no obligation to
fund or permit the construction of the Project contemplated hereunder until
such time as Lessee has so elected in writing to proceed with the
construction of the Project. The obligations contained in this Leasehold
Improvement Agreement shall not take effect until Lessor receives such
notice from Lessee of its election to proceed with the construction of the
Project. Notwithstanding any other provision contained herein, this
Leasehold Improvement Agreement shall become null and void if such
notice is not received by Lessor by December 15, 1996.
1.5 Lessor's Agreement to Fund the Project and Lessee's
Agreement to Supervise the Project.
Lessee and Lessor have agreed that the Project will be a benefit to the
premises demised under the Facility Lease and to Lessee's and Lessor's
respective interests therein. Lessor and Lessee have further agreed that,
pursuant to, and in accordance with, the terms and conditions of this
Agreement, Lessor shall fund an amount not to exceed TWO MILLION
FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) of the cost of the
Project (the "Project Funds"). Lessee has agreed to supervise and manage
the construction of the Project and Lessor has agreed to advance the Project
Funds to pay for the cost of the construction of the Project; all pursuant to
the terms and conditions of this Agreement.
1.6 Plans; the Architect and Architect's Contract.
The Improvements are to be constructed and equipped in accordance
with the plans and specifications to be delivered as provided herein
(collectively, the "Project Plans"), prepared or be prepared by an architect
to be approved by Lessor, which approval shall not be unreasonably
withheld (the "Architect") pursuant to the contract to be entered into by and
between Lessee and the Architect and approved by Lessor (the "Architect's
Contract").
1.7 Construction Contracts.
All of the Improvements are to be constructed pursuant to a guaranteed
maximum contract (the "Construction Contract") to be delivered as
provided herein by and between Lessee and a contractor to be approved by
Lessor, which approval shall not be unreasonably withheld, and approved
by Lessor (the "General Contractor").
1.8 Schedule of Work and Completion Date; Schedule of Draws.
The work necessary to complete and fully equip the Project is to be (a)
undertaken and completed in accordance with the schedule of work and
schedule of values ("Schedules") to be delivered as provided herein and
approved by Lessor; and (b) substantially completed by the first anniversary
of the date hereof (the "Completion Date") in accordance with the terms
hereof.
1. 9 Project Budget.
Lessee shall submit in accordance with the terms hereof prior to the
making of the first advance which includes amounts to be expended on the
construction or equipping of the Improvements, to Lessor a line item budget
(the "Project Budget"), for the design and construction of the Project,
including (a) a breakdown of construction costs (itemized as to trade
category, subdivision of the work to be performed and the
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names of each contractor), (b) a breakdown of all soft costs in connection
with the construction of the Project, including, without limitation, costs for
such items as real estate taxes, legal and accounting fees, survey costs,
permits and inspection fees, insurance premiums, architect's and engineer's
fees, marketing, management, leasing and advertising expenses, and all
amounts due in connection with the Advance of Project Funds pursuant to
this Agreement, (c) a projected draw schedule and (d) a projected progress
schedule for the construction of the Project.
1.10 Use of Project Funds.
The Project Funds are to be used, to the extent sufficient therefore,
solely for the payment of Project costs set forth in the Project Budget.
1.11 Project Funds.
Subject to all of the terms, conditions and provisions of
this Agreement, and of the agreements and instruments referred to herein,
Lessor agrees to advance the Project Funds and Lessee agrees to supervise
and manage the construction of the Project and to pay the Rent (as
hereinafter defined) due under the Facility Lease (as the same may from
time to time be adjusted pursuant to the terms and conditions set forth
therein); it being understood that Lessee shall be liable for the payment of
Rent regarding such sums as shall have been advanced from time to time
under this Agreement to Lessee.
1.12 Guaranties and Indemnities.
As an inducement to Lessor to enter into this Agreement, advance the
Project Funds and enter into the Facility Lease, the Guarantor has agreed to
furnish certain guaranties as hereinafter described.
2. DEFINITIONS
In this Agreement, except as otherwise expressly provided in the text of
this Agreement or unless the context otherwise requires, all capitalized
terms shall have the meaning ascribed to them in EXHIBIT E.
3. LEASEHOLD IMPROVEMENT FEE.
Lessee shall pay the Leasehold Improvement Fee to Lessor
simultaneously with the execution of this Agreement; provided, however,
that, at Lessor's option, the Leasehold Improvement Fee shall be held in an
escrow account established with a Person designated by Lessor pursuant to
an escrow arrangement satisfactory to Lessor, with interest thereon
benefiting Lessor. If Lessor exercises its option to require that the
Leasehold Improvement Fee be held in such an escrow
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account (a) the Leasehold Improvement Fee shall be disbursed from
said escrow account only upon the joint instructions of Lessee and Lessor
which instructions from Lessee shall be immediately given upon he request
of Lessor) and in no event shall the Leasehold Improvement Fee be
disbursed therefrom, in whole or in part, unless and until so requested by
Lessor and (b) Lessor shall bear he risk of loss of or misappropriation of the
Leasehold Improvement Fee by such escrow agent.
4. LEASE DOCUMENTS; COLLATERAL SECURITY
4.1 Lease Documents.
The Project Funds shall be advanced, evidenced, administered and
governed by all of the terms, conditions and provisions of each of the
following:
A. an Agreement Regarding Related Transactions of even date
herewith by and among Lessee, Lessor and ESC G.P. I Inc., as
the same may be amended from time to time;
B. this Agreement;
C. the Facility Lease;
D. a Collateral Assignment of Permits, Approvals, Licenses, and
Contracts of even date granted by Lessee to Lessor (the
"Permits Assignment") and related UCC Financing Statements;.
E. a Security Agreement of even date by and between Lessee and
Lessor (the "Security Agreement")
F. a Completion Guaranty of even date executed by the Guarantor
for the benefit of Lessor guarantying the completion of the
Project and the satisfaction of the other Guarantied Obligations
(the "Completion Guaranty");
G. by the Guarantor for the benefit of Lessor guarantying the
payment and performance of the Lease Obligations (the
"Guaranty of Lease Obligations");
H. an Environmental Indemnity Agreement of even date by and
among Lessee, the Guarantor and Lessor (the "Environmental
Indemnity Agreement");
I. a Deposit Pledge Agreement of even date by and between
Lessee and Lessor (the "Deposit Pledge Agreement");
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J. a Group Two Negative Pledge (Acquisition) Agreement dated
May l, 1996 by and among Lessee, Lessor and Guarantor (the
"Negative Pledge Agreement");
K. an Assignment of Construction Contract granted by Lessee to
Lessor and containing the consent of the General Contractor
(the "Construction Assignment");
L. an Assignment of Architect's Contract of even date granted by
Lessee to Lessor and containing the consent of the Architect (the
"Architect's Assignment");
M. an Affiliated Party Subordination Agreement of even date by
and among Lessee, the Guarantor, various Affiliates of Lessee
and Lessor (the "Affiliated Party Subordination Agreement");
and
N. all other documents, instruments, or agreements now or hereafter
evidencing or securing the obligations under this Agreement and
the Facility Lease.
Items (A) through (N) above, as the same from time to time may be
hereinafter amended, modified or supplemented, are referred to herein as
the "Lease Documents".
4.2 Lease Obligations.
Lessee agrees to pay and perform all indebtedness, covenants, liabilities,
obligations, agreements and undertakings (other than Lessor's obligations)
under this Agreement and all of the other Lease Documents (collectively,
the "Lease Obligations").
4.3 Collateral Security.
The Lease Obligations shall be secured by the following:
A. a perfected first priority security interest in all Permits and
Contracts pursuant to the Permits Assignment;
B. a security interest in Tangible Personal Property, and certain
other Collateral and a security interest in Receivables, all
pursuant to the Security Agreement;
C. the Completion Guaranty;
D. the Guaranty of Lease Obligations;
E. the Environmental Indemnity;
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F. a perfected first priority interest in the Cash Collateral pursuant
to the Deposit Pledge Agreement;
G. all other security interests in such other property for which
provision is made in the Lease Documents or at law or in equity;
and
H. certain other Related Party Agreements.
All of the property in which security interests are granted as described in
items (A) through (H) above are referred to herein as the "Collateral".
5. REPRESENTATIONS AND WARRANTIES
In order to induce Lessor to advance the Project Funds pursuant to the
terms and conditions of this Agreement, Lessee represents and warrants to
Lessor that:
5.1 Architect's Contract and Construction Contract.
The Architect's Contract and the Construction Contract, at the time of
the execution thereof will be, validly executed by, and will upon execution
be binding upon Lessee. Lessee has no reason to believe that such
agreements will not be validly executed by and binding upon the other
parties thereto;
5.2 Project Plans.
The Project Plans which will be delivered to Lessor by Lessee in
accordance with Section 7.1 will be filed with and approved by all
appropriate Governmental Authorities. All necessary Permits relating to the
Project Plans to be issued or granted by any applicable Governmental
Authority having or claiming jurisdiction over the Leased Property which
can be obtained in the ordinary course as of the date hereof have been
obtained and all such Permits are in full force and effect, are not subject to
any unexpired appeal periods or any appeals or challenges which have not
been fully resolved in favor of Lessee, and do not contain any conditions or
terms relating to the Leased Property which have not been fully satisfied or
which will not be fully satisfied by the completion of the construction of the
Project (in accordance with the Project Plans and the terms and provisions
of this Agreement). Furthermore, the Project Plans will be the plans and
specifications which shall be approved in writing by Lessor and all future
construction on the Project shall be performed in accordance with the
Project Plans, as the same may be amended or modified from time in
accordance with section 6.3.2 hereof, and the terms and conditions of this
Agreement. There are no structural defects in the
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Project of which Lessee has been advised or of which Lessee has notice or
knowledge except as otherwise described in writing to Lessor or actually
known by Lessor. Lessee has not received any notice claiming that, and
Lessee has no knowledge that, the Project Plans violate any Legal
Requirement;
5.3 Prior Construction Work.
No Person has performed any construction work or furnished any
services in connection with any construction carried on or to be carried on
at the Leased Property who or which remains unpaid at the time of
execution of this Agreement, except as indicated in the requisition
submitted simultaneously herewith or otherwise expressly approved by
Lessor and, if applicable, the Other Permitted Uses;
5.4 Suitability of Project Plans.
The Project Plans shall provide for the construction and renovation of all
buildings and related improvements necessary, both legally and practically,
for the construction of the Project in accordance with
the terms of this Agreement and, after the completion of the construction
thereof, for the operation of the project for its Primary Intended Use;
5.5 Compliance with Legal Requirements and Applicable Agreements.
Upon the completion of construction of the Project, which
shall be constructed in accordance with the Project Plans and the terms and
provisions of this Agreement, the Project shall be in compliance with (a) all
Legal Requirements; (b) all Permits and Contracts and (c) all applicable by-
laws, codes, rules, regulations and restrictions of the Board of Fire
Underwriters or other insurance underwriters or similar bodies.
5. 6 Permits and Contracts.
All Permits and Contracts required by or entered into with any
Governmental Authority or quasi-governmental authority or agency for, or
in connection with, the construction of the Project which can be obtained in
the ordinary course as of the date hereof have been obtained or executed, as
the case may be. All such Permits and Contracts are in full force and effect,
are not subject to any unexpired appeal periods or any appeals or challenges
which have not been conclusively resolved in favor of any member of the
Leasing Group, and do not contain any conditions or terms which have not
been fully satisfied or which will not be fully satisfied by the completion of
the construction of the Project (if constructed in accordance with the Project
Plans and the terms and provisions of this Agreement). There is
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no action pending, or, to the best knowledge and belief of Lessee,
recommended by the applicable Governmental Authority having
jurisdiction thereof, either to revoke, repeal, cancel, modify, withdraw or
suspend any such Permit or Contract relating o the construction of the
Project, or any other action of any other type which would have a material
adverse effect on the Project. All other Permits and Contracts required for
the completion of the construction of the Project and the operation of the
Facility are described on SCHEDULE 5.6 annexed hereto and Lessee has
no reason to believe such Permits and Contracts shall not be obtainable as
and when needed.
5.7 First Advance.
As of the date of the first advance of Project Funds to
Lessee pursuant to this Agreement, the amount of the money expended by
Lessee on account of the construction of the Project in accordance with the
Project Plans and the items listed on Project Budget will not be less than the
amount of such first advance.
5.8 Valid and Binding.
Lessee is duly authorized to make and enter into all of the Lease
Documents to which Lessee is a party and to carry out the transactions
contemplated therein. All of the Lease Documents to which Lessee is a
party have been duly executed and delivered by Lessee, and each is a legal,
valid and binding obligation of Lessee, enforceable in accordance with its
terms.
5.9 No Violation.
The execution, delivery and performance of the Lease Documents and
the consummation of the transactions thereby contemplated shall not result
in any breach of, or constitute a default under, or result in
the acceleration of, or constitute an event which, with the giving of notice
or the passage of time, or both, would result in default or acceleration of
any obligation of any member of the Leasing Group under any of the
Permits or Contracts or any other contract, mortgage, lien, lease, agreement,
instrument, franchise, arbitration award, judgment, decree, bank loan or
credit agreement, trust indenture or other instrument to which any member
of the Leasing Group is a party or by which any member of the Leasing
Group may be bound or affected and do not violate or contravene any Legal
Requirement.
5.10 Consents and Approvals.
Except as already obtained or filed or as reasonably expected to be
obtained in the ordinary course of business prior to or upon the Completion
of the Project, as the case may be, no consent or approval or other
authorization of, or exemption by, declaration or filing with,
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any Person and no waiver of any right by any Person is required to
authorize or permit, or is otherwise required as a condition of the execution,
delivery and performance of its obligations under the Lease Documents, the
Construction Contract if and when the same is duly executed by the parties
thereto or the Architect's Agreement by any member of the Leasing Group
or as a condition to the validity (assuming the due authorization; execution
and delivery by Lessor of the Lease Documents to which it is a party) and
the priority of any Liens granted to Lessor under the Lease Documents,
except the filing of the Financing Statements.
5.11 Pending Actions, Notices and Reports.
(a) There is no action or investigation pending or, to the best knowledge
and belief of Lessee, threatened, anticipated or contemplated (nor, to the
knowledge of Lessee, is there any reasonable basis therefor) against or
affecting the Leased Property or any member of the Leasing Group (or any
Affiliate thereof) before any Governmental Authority, which could prevent
or hinder the consummation of the transactions contemplated hereby or call
into question the validity of any of the Lease Documents or any action
taken or to be taken in connection with the transactions contemplated
thereunder or which in any single case or in the aggregate might result in
any material adverse change in the business, prospects, condition, affairs or
operations of any member of the Leasing Group or the Leased Property
(including, without limitation, any action to revoke, withdraw or suspend
any Permit necessary or desirable for the construction of the Project for its
Primary Intended Use. (b) No member of the Leasing Group has received
any notice of any claim, requirement or demand of any Governmental
Authority, to take action so as to make the Project or the Leased Property
conform to or comply with any applicable Legal
Requirement.
6. COVENANTS
6.1 Collection and Enforcement Costs.
Upon demand, Lessee shall reimburse Lessor for all costs and expenses,
including, without limitation, attorneys' fees and expenses and court costs,
paid or reasonably incurred by Lessor in connection with the collection of
any sum due hereunder, or in connection with the enforcement of any of
Lessor's rights or any member of the Leasing Group's obligations under this
Agreement or any of the other Lease Documents. Any amount due and
payable to Lessor pursuant to the provisions of this Section shall be a
demand obligation and, to the extent permitted by law, shall be added to the
Lease Obligations and shall be secured by the Liens created by the Lease
Documents as fully and effectively and with the same priority as every
other obligation of
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Lessee secured thereby and, if not paid within ten (10) days after demand,
shall thereafter, to the extent permitted by applicable law, bear interest at
the Overdue Rate until the date of payment. The obligation of Lessee to pay
all costs, charges and sums due hereunder or under any of the other Lease
Documents shall continue in full force and effect and in no way shall be
impaired, until the actual payment thereof to Lessor. In the rent of (a) a
sale, conveyance, transfer or other disposition of the Leased Property, (b)
any further agreement given to secure the payment of the obligations set
forth herein or (c) any agreement or stipulation extending the time or
modifying the terms of payment set forth herein, Lessee shall nevertheless
remain obligated to pay the indebtedness evidenced by this Agreement, as
extended or modified by any such agreement or stipulation, unless Lessee is
released and discharged from such obligation by a written agreement
executed by Lessor.
6.2 Continuing Effect of Representation and Warranties.
All representations and warranties contained in this Leasehold
Improvement Agreement shall constitute continuing representations and
warranties which shall remain true, correct and complete throughout the
Term.
6.3 Construction Covenants.
6.3.1 Commencement of Construction.
If construction of the Project has not already begun, Lessee shall
commence construction of the Project within thirty (30) days from the later
of the date hereof or of issuance of a building permit for the Project. Lessee
shall diligently and continuously cause the Project to be constructed and
completed and made ready for occupancy and use in accordance with the
Project Plans all in a manner satisfactory to Lessor on or before the
Completion Date. Notwithstanding anything to the contrary contained
herein, Lessee shall be and shall remain unconditionally liable to Lessor for
(a) the complete construction of the Project in accordance with the Project
Plans on or before the Completion Date and whether or not proceeds of the
Project Funds remaining to be disbursed hereunder, if any, are sufficient to
cover all costs of construction and (b) the complete performance of all
other obligations, covenants, agreements and liabilities of Lessee hereunder.
6.3.2 Quality of Materials and Workmanship.
The materials used in the Project shall be of the quality called for by the
Project Plans, and the workmanship shall be in conformity with the
Construction Contract and this Agreement, and both the quality of such
materials and such workmanship shall be satisfactory to Lessor. Lessee
shall not make any changes in, and shall not permit the General
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Contractor or the Architect to make any changes in, the quality of such
materials, the Project Plans or the Project Budget, whether by change order
or otherwise, without the prior written consent of Lessor, in each instance
(which consent may be withheld in Lessor's reasonable discretion);
provided, however, that such consent shall not be required for any
individual change which has been approved by the Architect, which does
not materially affect the structure or exterior of the Project, and the cost of
which does not exceed TEN THOUSAND DOLLARS ($10,000) or which
changes, in the aggregate, do not exceed ONE HUNDRED THOUSAND
DOLLARS ($100,000) in cost. Notwithstanding the foregoing, prior to
making any change in Project Plans, copies of all change orders shall be
submitted by Lessee to Lessor and Lessee shall also deliver to Lessor
evidence satisfactory to Lessor, in its reasonable discretion, that all
necessary Permits and/or Contracts required by any Governmental
Authority in connection therewith have been obtained or entered into, as the
case may be.
6.3.3 Project Budget.
Upon the request of Lessor, Lessee shall furnish Lessor with revisions
for the Project Budget to reflect (a) any changes approved by Lessor to the
Project Budget, (b) the total cost of the construction of the Project
completed through any specific date and (c) the remaining cost to complete
the construction of the Project in accordance with the Project Plans and the
terms and provisions of this Agreement.
6.3.4 Architect Certificates.
Lessee agrees to cause the Architect to furnish such statements as to
progress and certificates of completion as Lessor may reasonably require
from time to time during such period as this Agreement may be in effect, all
without expense to Lessor; provided, however, that to the extent the
delivery of such certificates will require a visit to the Project, Lessee shall
have no obligation to deliver the same more frequently than with every
other advance request hereunder. Lessee agrees to cause the Architect to
make the Project Plans available to Lessor without expense to Lessor, and
to agree that, in the event that Lessor shall take over the Project by reason
of an occurrence of a Lease Default, Lessor shall be entitled to use said
Project Plans without any additional compensation to the Architect above
what is required (and was not previously paid) under the Architect's.
Contract.
6.3.5 Intentionally Deleted.
6.3.6 Lessor's Consultants.
Lessee agrees to pay the costs and expenses reasonably incurred by
Lessor
to retain the Consultants to perform various services to Lessor in
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connection with the construction of the Project and the advances of Project
Funds contemplated hereunder, including, without limitation, the following:
A. to review and analyze the Project Plans and advise Lessor
whether the same are satisfactory for the intended purposes
thereof;
B. to make periodic inspections of the Leased Property for the
purpose of assuring that construction performed in connection
with the Project prior to the date of such inspection has been
completed in accordance with the Project Plans and Agreement;
C. to review Lessee's then current requisition to determine whether
it is consistent with the obligations of Lessee under this
Agreement, and to advise Lessor of the anticipated costs of, and
the time for, the completion of the Project in accordance with
the Project Plans, and the adequacy of reserves and
contingencies related thereto;
D. to review and analyze any proposed changes to the Project Plans
and advise Lessor regarding the same;
E. to review and analyze the Project Budget and advise Lessor as to
the sufficiency thereof; and
F. to review and analyze the Architect's Contract and the
Construction Contract entered into by Lessee in connection with
the construction of the Project and advise Lessor regarding the
same. Except as otherwise expressly provided herein, Lessee
agrees promptly to make such changes or corrections in the
construction of the Project as may be required by Lessor, based
on the recommendation of any of the Consultants, unless Lessee
demonstrates to Lessor's satisfaction that such corrective work is
inconsistent with the Project Plans
6.3.7 Title To Materials and Security Interest Granted to
Lessor
Except as otherwise expressly provided herein, Lessee shall not
suffer the use in connection with any construction relating to the Project of
any materials, fixtures or equipment intended to become part of the Project
which are purchased upon lease or conditional xxxx of sale or to which
Lessee does not have absolute and unencumbered title. Lessee covenants to
cause to be paid punctually all sums becoming due for labor, materials,
fixtures or equipment used or purchased in connection with any such
construction and, in recognition of the fact that it is intended that the
Project Funds be used to pay for the costs of
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the construction of the Project on behalf of the Lessor, Lessee agrees that
title to all materials, fixtures and equipment that are incorporated into the
Project shall automatically pass to Lessor upon such incorporation without
the need for the execution or delivery of any further instrument of
conveyance. Notwithstanding the foregoing, in order to more fully secure
Lessor with reference to all advances of Project Funds made hereunder,
Lessee hereby conveys to Lessor a security interest in all of Lessee's right,
title and interest in materials on the Leased Property which are not at any
relevant time incorporated into the Project and materials, wherever located,
intended for incorporation into the Project. Lessee agrees:
A. that Lessor shall have all the rights, with reference to such
security, as a secured party is entitled to hold with
reference to any security interest under the UCC;
B. that such security interest shall cover cash and
non-cash proceeds of such materials;
C. that such materials will not be held for sale to
others or disposed of by Lessee without the prior
written consent of Lessor and, if at any time
located on the Leased Property shall be suitably
stored, secured and insured and furthermore, shall
not be removed from the Leased Property; and
D. that such security interest shall be prior to the
rights of any other Person other than the
Permitted Prior Security Interests.
The undertakings of Lessee in this Section shall also be applicable to any
personal property that is owned by Lessee and that is used (or to be used) in
connection with the Project, whether or not the purchase thereof was
financed by advances of Project Funds made by Lessor.
Lessee agrees to execute such instruments as Lessor may from time to time
request to perfect the security interest of Lessor in any and all rights under
this Agreement and the other Lease Documents, and any and all property of
Lessee which, under applicable provisions of this Agreement and/or any of
the other Lease Documents, may or shall stand as security for advances of
Project Funds under this Agreement and for the complete performance of
the Lease Obligations.
6.3.8 Compliance With Legal Requirements And
Applicable Agreements.
Lessee, the Project Plans and the Leased Property and all uses thereof
(including, without limitation, the construction of the Project) shall comply
with (a) all Legal Requirements, (b) all Permits and Contracts, (c) all
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applicable by-laws, codes, rules, regulations and restrictions of the Board of
Fire Underwriters or other insurance underwriters or similar body and (d)
the Lease Documents, except to the extent any of the matters represented in
clause (a) or (c) are being duly contested in accordance with the terms of
the Lease.
6.3.9 Liens.
The Leased Property shall at all times be free from any attachment,
encumbrance, lis pendens, mechanic's or materialmen's lien or notice
arising from the furnishing of materials or labor and, with the exception of
the Permitted Encumbrances, all other Liens of any kind except to the
extent the same is being duly contested in accordance with the terms of the
Lease or the terms hereof. Lessee shall not permit the recording of any
notice of contract or mechanic's or materialmen's lien relating to
construction of the Project or otherwise affecting the Leased Property
except to the extent the same is being duly contested in accordance with the
terms of the Lease or the terms hereof. Notwithstanding the foregoing
provisions of this. Section 6.3.09, the existence of an attachment or lis
pendens for a period not in excess of thirty (30) days shall not be deemed to
be a default hereunder provided that (a) there shall be no cessation of
construction of the Project, (b) a Lease Default has not occurred and (c)
Lessee shall proceed promptly to cause such attachment or lis pendens to be
removed, but Lessor shall not be obliged to make any further advance under
this Agreement while such attachment or lis pendens remains outstanding,
unless a bond, satisfactory to Lessor, has been posted as security for such
attachment or lis pendens.
6.3.10 Books And Records.
Lessee shall cause to be kept and maintained, and shall permit Lessor
and its representatives to inspect at all reasonable times, accurate books of
accounts in which complete entries will be made in accordance with GAAP,
if applicable, reflecting all financial transactions of Lessee relating to the
Project (showing, without limitation, all materials ordered and received and
all disbursements, accounts payable and accounts receivable in connection
with the construction of the Project and the operation of the Leased
Property). Such books and records must accurately reflect that all funds
advanced hereunder for construction of the Project have been used solely
for the payment of obligations and expenses properly incurred in
accordance with the Project Budget.
6.3.11 Inspection Of Construction.
Lessor and its representatives including, without limitation, the
Consultants, shall, at all times as long as this Agreement remains in effect,
have the right to enter the Leased Property, upon reasonable
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notice to Lessee and at reasonable times (except in the event of an
emergency) for the purpose of inspecting the Project and the progress of the
work and materials thereon, and if any such inspection reveals that Lessee
is not in compliance herewith (in its sole and absolute discretion), then
Lessor shall not be obligated to make any further advances under this
Agreement to Lessee.
6.3.12 Notice Of Delay.
Lessee shall give to Lessor prompt written notice of any fire, explosion,
accident, flood, storm, earthquake or other casualty or strike, lock out, act
of God or interruption of the construction of the Project which is reasonably
anticipated to interfere with the ability of Lessee to complete the Project by
the Completion Date.
6.3.13 Bonds.
Performance, payment and xxxx xxxxx, in form and substance and
guaranteed by sureties satisfactory to Lessor (in its sole and absolute
discretion), shall be furnished to Lessor in connection with the Construction
Contract in amounts at least equivalent to the amount of such contract,
naming Lessor as a dual obligee and shall be furnished to Lessor prior to
the commencement of any work pursuant to such contract.
6.3.14 Use of Project Funds.
Lessee shall utilize all advances by Lessor pursuant to the terms of this
Agreement only for those items for which requisitions are permitted under
this Agreement or for reimbursement of expenditures already made for
items for which requisitions are so permitted. Lessee agrees to hold all
advances by Lessor hereunder as a trust fund for the purpose of payment of
the costs and expenses permitted under this Agreement.
6.3.15 Occupancy of the Project.
Lessee shall not permit any occupancy of the
Project (other than such occupancy as is required in connection with the
construction thereto) prior to (a) the substantial completion of that portion
of the Project being occupied and (b) the issuance by the appropriate
Governmental Authorities of a Certificate of Occupancy (or its equivalent)
permitting the occupancy of the Project for its Primary Intended Use and, if
applicable, the Other Permitted Uses. The Project shall not be deemed to
have been completed unless and until constructed in accordance with this
Agreement and a Certificate of Occupancy (or its equivalent) permitting the
occupancy of the Project for its Primary Intended Use has been issued by
the applicable Governmental Authorities.
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7. CONSTRUCTION ADVANCES
7.1 Conditions Precedent to First Advance of Project Funds.
Prior to the first advance of Project Funds contemplated by this
Agreement, and as a condition of Lessee's right to receive any of the
proceeds of the Project Funds, there shall have been furnished to Lessor:
A. An owner's title insurance policy in form and substance
satisfactory to Lessor, in its sole and absolute discretion,
issued by a title insurance company or companies satisfactory
to Lessor (the "Title Company") with such endorsements,
reinsurance and/or co-insurance as Lessor may require,
insuring Lessor's fee title to the Leased Property free from all
Liens and without exception for (i) filed or unfiled mechanics'
liens, (ii) survey matters, (iii) rights of parties in possession,
(iv) environmental liens and (v) any other matters of any kind
or nature whatsoever other than the Permitted Encumbrances
(the "Title Policy");
B. Such evidence as Lessor may require that the use
contemplated for the Project, and all of the improvements and
construction contemplated by the Project Plans, comply with
all applicable Legal Requirements, to the extent in force and
applicable;
C. Insurance policies and/or Certificates of Insurance required
pursuant to the terms and provisions of the Facility Lease;
D. Such evidence as Lessor may require to determine that
the total cost of completion of the Project in all
respects, including all related direct and indirect
costs as previously approved by Lessor, will not exceed
the amount set forth in the Project Budget;
E. Such evidence as Lessor may require that Lessee's
representations and warranties contained herein and in
all of the other Lease Documents are true and correct
in every material respect;
F. Such evidence as Lessor may require as to the
satisfaction of such of the terms and conditions of
this Agreement and of the other Lease Documents as may
by their nature be satisfied prior to the making of
such advance;
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G. Such evidence as Lessor may require that all
outstanding Impositions which are due and payable as of
the date of the First Advance pertaining to the Leased
Property have been paid in full in accordance with the
terms of the Facility Lease;
H. A current instrument survey, satisfactory in form and
content to Lessor, prepared in accordance with the
requirements set forth in EXHIBIT G (the "Survey") and
a certificate substantially in the form of EXHIBIT H
(the "Surveyor's Certificate"), prepared and signed by
a surveyor licensed to do business in the state where
the Leased Property is located with his or her seal
affixed thereto;
I. True and correct copies of the Construction Contract and the
Architect's Contract in effect with respect to the Project,
as well as all receipted bills paid by Lessee to the General
Contractor and the Architect for goods and/or
services rendered with respect to the Project prior to the date
hereof;
J. A certificate from an engineer and/or architect, registered as
such in the state where the Leased Property is located,
substantially in the form attached hereto as EXHIBIT H,
certifying as to the (i) compliance of the Leased Property with
all , applicable Legal Requirements, (ii) the availability and
adequacy of access/egress to and from the Leased Property
and (iii) the availability and adequacy of sewer, drainage,
water, electric and other utility services to the lot line of the
Leased Property; together with such other assurances
concerning the design of the Project as Lessor may require;
X. Xxxxxx'x receipt of opinions, in forms satisfactory to
Lessor (in its sole and absolute discretion), from Lessee's
counsel and the Guarantor's counsel, regarding (i) the due
execution, authority and enforceability of the Lease
Documents; (ii) the compliance of the Leased Property and the
Project, in all material respects, with applicable zoning and
other land-use Legal Requirements (except in such instances
in which a satisfactory title insurance zoning endorsement has
been issued); (iii) the valid issuance of the Certificate of Need,
if applicable, and all other Permits required for the
construction of the Project, the continuing effectiveness of
said Certificate of Need, if applicable, and other Permits and
Lessee's and Project's compliance therewith and (iv) such
other matters as Lessor may reasonably request (collectively,
the "Opinions");
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L. Payment of the Leasehold Improvement Fee (subject,
however, to the provisions of Section 3 hereof);
M. True and correct copies of all Permits and Contracts
relating to the construction and operation of the Project
(including, without limitation, an
unconditional building permit or a building permit
which is subject only to such conditions as will be fully
satisfied by the completion of the construction of the Project
in accordance with the Project Plans and this Agreement);
N. Such evidence as Lessor may require that there has been
no material adverse change in the financial condition
and strength of Lessee and the Guarantor, and that the
Leased Property shall have sustained no impairment,
reduction, loss or damage which has not been fully
restored and repaired, and that no Condemnation
proceedings or other governmental action is or shall be
pending against or with respect thereto;
O. Such evidence as Lessor may require that the General
Contractor and the Architect maintain adequate
insurance, as determined in Lessor's reasonable.
discretion;
P. True and correct copies of all payment, performance and
completion bonds required pursuant to 6.3.13 hereof;
Q. A fully executed Construction Assignment, in form and
substance satisfactory to Lessor; and
R. A fully executed and authorized Architect's Assignment, in
form and substance satisfactory to Lessor.
S. The Project Plans, in form and substance satisfactory
to Lessor;
T. The Schedules, in form and substance satisfactory to
Lessor;
U. The Project Budget, in form and substance satisfactory
to Lessor;
V. Funding forecasts, in form and substance satisfactory
to Lessor.
7.2 Lessor's Right to Advance the Project Funds.
Without at any time waiving any of Lessor's rights hereunder, Lessor
shall have the right to make the first advance of a portion of the
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Project Funds hereunder without the satisfaction of each and every
condition precedent to Lessor's obligation to make such advance, and
Lessee agrees to accept such advance as Lessor may elect to make. The
making of any advance hereunder shall not constitute an approval or
acceptance by Lessor of any work on the Project theretofore completed.
7.3 Submission of Requests for Advances of the Project Funds.
Advances under this Agreement shall be made not more than once each
month and at least ten (10) days before the date upon which an advance is
requested, Lessee shall give notice to Lessor, specifying the total advance
which will be desired, accompanied by :
A. Itemized requisitions for advances or, at Lessee's
option, for reimbursements to Lessee for prepaid items,
signed by Lessee, the Architect and the General
Contractor on A.I.A. Forms G702, G702A or G703 or such
other form(s) as Lessor may reasonably require
(together with copies of invoices or receipted bills
relating to items covered by such requisitions when so
requested by Lessor). All such requisitions shall
include an indemnification of Lessor by the Architect,
the General Contractor and Lessee, jointly and
severally, to the extent such indemnification is
available from the General Contractor and the Architect
upon Lessee's best efforts to obtain such
indemnification, against any and all claims of any
subcontractors, laborers and suppliers;
B. A certificate executed by Lessee substantially in the
form attached hereto as EXHIBIT I;
C. A certificate executed by the General Contractor
substantially in the form attached hereto as EXHIBIT
J;
D. With respect to every other Advance requested, a
certificate executed by the Architect substantially in the
form attached hereto as EXHIBIT K.
E. At Lessor's request, certificates executed by the
Consultants in such form as Lessor may reasonably
require;
F. To the event the Advance is not clearly subject to
effective coverage, an endorsement of the Title Policy
issued by the Title Company, satisfactory in form and
substance to Lessor, redating the Title Policy to the
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date that the then current advance will be made,
increasing the coverage afforded by the Title Policy so
that the same shall constitute insurance in an amount
at, least equal to the sum of the amount of the
insurance then existing under the Title Policy plus the
amount of the then current advance of Project Funds to
be disbursed to Lessee under this Agreement and subject
to no additional exceptions other than the Permitted
Encumbrances;
G. If and when reasonably requested by Lessor,
satisfactory assurance that the construction of the
Project has been performed in accordance with the
requirements of the Construction Contract, the Project
Plans, this Agreement and all of the other Lease
Documents and has been inspected and found satisfactory
by the parties hereto;
H. If and when reasonably requested by Lessor, an updated
Surveyor's Certificate substantially in the form
attached hereto as EXHIBIT G and/or updated
Engineer's/Architect's Certificate substantially in the
form attached hereto as EXHIBIT H;
I. If and when requested by Lessor, updated Opinions from
Lessee's counsel and the Guarantor's counsel (in form
and substance satisfactory to Lessor in its sole and
absolute discretion);
J. If and when requested by Lessor, satisfactory evidence
that the funds remaining unadvanced under this
Agreement are sufficient for the payment of all related
direct and indirect costs for the completion of the
Project in accordance with the terms and provisions
hereof. If the evidence furnished shall not be
satisfactory to Lessor, in its sole and absolute
discretion, it shall be a condition to the making of
any further advance hereunder that Lessee will provide
Lessor with such financial guaranties (whether in the
form of a bond, cash deposit, letter of credit or
otherwise) as are acceptable to Lessor, in its sole and
absolute discretion, to assure the completion of the
construction of the Project in accordance with the
Project Plans and the terms and conditions of this
Agreement. In the event that Lessor requires a cash
deposit from Lessee, Lessee shall deposit with Lessor
such funds, to be held in an interest bearing account
with the interest accruing thereon to the benefit of
Lessee, which, together with such unadvanced funds of
20
the Loan, shall be sufficient to pay all of the
aforesaid costs. All funds so deposited with Lessor
along with the proceeds thereof, shall be disbursed
prior to any further advance hereunder and upon
completion of the Project any remaining funds so
deposited or any unadvanced portion of the Project
Funds, shall be remitted to Lessee;
K. A certification of work completed by the General
Contractor, together with a statement of the payment
due therefor;
L. Partial lien waivers from the General Contractor for
all work theretofore performed, and from all other
contractors and all subcontractors and suppliers for
all work, the cost of which in each instance exceeds
ONE THOUSAND DOLLARS ($1,000.00), which was the
subject of a requisition in the immediately preceding month;
M. If and when reasonably requested, Lessee shall deliver
to Lessor an updated Survey of the Leased Property,
acceptable to Lessor (in its reasonable discretion);
N. Evidence satisfactory to Lessor (in its reasonable
discretion) that all materials and other property
furnished by any contractors, subcontractors,
materialmen or other Persons, the cost of which will be
paid with the proceeds of the advance to be made by
Lessor, are free and clear of all Liens, except
(a) encumbrances, if any, (securing indebtedness due to
Persons whose names, addresses and amounts due to them
are identified to Lessor) that shall be discharged upon
the disbursement of the funds then being requested, (b)
the Liens created by the Lease Documents and (c) the
Permitted Encumbrances;
O. Such evidence as Lessor may require that there has been no
material adverse change in the financial condition and
strength of Lessee and the Guarantor, and that the Leased
Property shall have sustained no impairment,reduction, loss or
damage which has not been fully restored and repaired and that
no condemnation is or shall be pending against or with respect
thereto; and
P. Prior to the first advance which includes amounts to be
expended on the construction or equipping of the
Improvements, Lessee shall, to the extent not previously delivered
to Lessor, submit to Lessor true and
correct copies of (i) the Project Budget, (ii) the Project Plans,
21
(iii) the Schedules and (iv) the Construction Contract, each of
which shall be in form and content satisfactory to Lessor (in its
sole and absolute discretion);
Lessee hereby designates Xxxxxx Xxxxx as Lessee's construction
representative with authority to approve requisitions and to execute
certificates to be delivered pursuant to Section 13.3B on behalf of Lessee.
7.4 Advances by Wire Transfer.
All advances hereunder shall be made by wire transfer of funds into a
bank account maintained by either Lessee or an authorized agent of Lessee.
7.5 Conditions Precedent to All Advances:
A. Advances hereunder shall be made solely for the payment
of the costs and expenses incurred by Lessee directly in
connection with the construction of the Project;
consistent with the Project Budget, which are required to
be paid out-of-pocket to all other Persons or to reimburse
Lessee for out-of-pocket costs incurred by it pursuant to
the Project Budget. No funds advanced by Lessor shall be
utilized for any purpose other than as specified
herein and none of the Project Funds shall be paid over to
any officer, stockholder or employee of any member of
the Leasing Group or to any of the Persons collectively
constituting any member of the Leasing Group or those
holding a beneficial interest in any member of the Leasing
Group, or any employee thereof, except to the extent
funds are used to pay compensation to an employee for
and with respect to activity of such employee
in construction of the Project.
B. The amount of each requisition shall represent (i) the cost
of the work completed on the Project as of the date of
such requisition, which has not been paid for under prior
requisitions, (ii) the cost of all equipment, fixtures and
furnishings included within the Project Budget approved
by Lessor, which has not been paid for under prior
requisitions, but not incorporated into any contract
and which have been delivered to the Leased Property for
incorporation into the Project; provided that, in Lessor's
judgment, such materials are suitably stored, secured and
insured and that Lessee can furnish Lessor with evidence
satisfactory to Lessor of Lessee's unencumbered title
thereto and (iii) approved soft costs, which have not been
paid for under prior requisitions.
22
C. All requisitions for the first fifty percent (50%) of the
Project Funds shall be subject to a ten percent (l0%)
retainage for the completion of the Project, and no
retainage shall be required with respect to all requisitions
thereafter. It is understood that such retainage is intended
to provide a contingency fund to assure that the
construction of the Project shall be fully completed in
accordance with the Project Plans and the terms
and provisions of this Agreement. All amounts so withheld
shall be disbursed after (i) construction of the Project has
been fully completed in accordance with the Project Plans
and the terms and provisions of this Agreement, (ii) all of
the items set forth in Section 7.6 hereof have been
delivered to Lessor and (iii) the expiration of the period
during which liens may be perfected with respect to any
work performed or labor or materials supplied in
connection with the construction of the Project or the
receipt of such evidence as may be required to assure
Lessor that no claim may thereafter arise with respect to
any work performed or labor or materials supplied in
connection with the construction of the Project.
D. At the time of each advance, no event which constitutes, or
which, with notice or lapse of time, or both, would
constitute, a Lease Default shall have occurred and be
continuing.
E. Without at any time waiving any of Lessor's rights under
this Agreement, Lessor shall always have the right to
make an advance hereunder without satisfaction of each
and every condition upon Lessor's obligation to make an
advance under this Agreement, and Lessee agrees to
accept any advance which Lessor may elect to make
under this Agreement. Notwithstanding the foregoing,
Lessor shall have the right, notwithstanding a waiver
relative to the first advance or any subsequent advance
hereunder, to refuse to make any and all subsequent
advances under this Agreement until each and every
condition set forth in this Section has been satisfied. The
making of any advance hereunder shall not constitute an
approval or acceptance by Lessor of any work on the
Project theretofore completed.
F. If, while this Agreement is in effect, a claim is made that
the Project does not comply with any Legal Requirement
or an action is instituted before any Governmental
Authority with jurisdiction over the Leased Property or
Lessee in which a claim is made as to whether the Project
23
does so comply, Lessor shall have the right to defer any
advance of Project Funds which Lessor would otherwise
be obligated to make until such time as any such claim is
finally disposed of favorably to the position of Lessee,
without any obligation on the part of Lessor to make a
determination of, or judgment on, the merits of any such
claim. For the purposes of the foregoing sentence, the
term "claim" shall mean an assertion by any
Governmental Authority or Person as to which, in each
case, Lessor has made a good faith determination that the
assertion may properly be made by the party asserting the
same, that the assertion, on its face, is not without
foundation and that the interests of Lessor require that
the assertion be treated as presenting a bona fide risk of
liability or adverse effect on the Project.
If any such proceeding is not favorably resolved within
thirty (30) days after the commencement thereof, Lessor
shall also have the right, at its option, to treat the
commencement of such action as a Lease Default, for
which Lessor shall have all rights herein specified for a
Lease Default. As aforesaid, Lessor shall have no
obligation to make a determination with reference to the
merits of any such claim. No waiver of the foregoing right
shall be implied from any forbearance by Lessor in
making such election or any continuation by Lessor in
making advances under this Agreement.
In all events, Lessee agrees to notify Lessor forthwith
upon learning of the assertion of any such claim or the
commencement of any such proceedings.
G. It is contemplated that all advances of the Project Funds
made by Lessor to Lessee will be pursuant to this
Agreement.
H. No inspections or any approvals of the Project during or
after construction shall constitute a warranty or
representation by Lessor or any of the Consultants as to
the technical sufficiency, adequacy or safety of any
structure or any of its component parts, including, without
limitation, any fixtures,
equipment or furnishings, or as to the subsoil conditions
or any other physical condition or feature pertaining to
the Leased Property. All acts, including any failure to
act, relating to the Leased Property by any agent,
representative or designee of Lessor (including, without
limitation, the Consultants) are performed solely for the
benefit of Lessor to assure the payment and performance
of the Obligations and are not for the benefit of Lessee or
the benefit of any other Person.
24
7.6 Completion of the Project.
Upon the completion of the construction of the Project in accordance
with the Project Plans and the terms and provisions of this Agreement,
Lessee shall provide Lessor with (A) true, correct and complete copies of (i)
a final unconditional Certificate of Occupancy (or its equivalent) issued by
the appropriate governmental authorities, permitting the occupancy and use
of the Project for its Primary Intended Use and (ii) all Permits issued by the
appropriate Governmental Authorities which are necessary in order to
operate the Project as a fully-licensed assisted living facility, (B) a
certification from the Architect or the Consultants stating that the Project
was completed in accordance with the Project Plans, (C) an updated Survey
of the Leased Property, acceptable to Lessor (in its sole and absolute
discretion), (D) updated Opinions and (E) such other items relating to the
operation and/or construction of the Project as may be reasonably requested
by Lessor.
8. LESSOR'S RIGHT TO MAKE PAYMENTS AND TAKE
OTHER ACTION
Lessor may, after ten (10) Business Days' prior notice to Lessee of its
intention so to do (except in an emergency when such shorter notice shall
be given as is reasonable under the circumstances), under Lessee
demonstrates the same has already been paid, pay any sums due or claimed
to be due for labor or materials furnished in connection with the ownership,
construction, development, maintenance, management, repair, use or
operation of the Leased Property, and any other sums which in the
reasonable opinion of Lessor, or its attorneys, it is expedient to pay, and
may take such other and further action which in the reasonable opinion of
Lessor is reasonably necessary in order to secure (A) the completion of the
Project in accordance with the Project Plans and the terms and conditions of
this Agreement, (B) the protection and priority of the security interests
granted to Lessor pursuant to the Lease Documents and (C) the
performance of all obligations under the Lease Documents. Lessor, in its
sole and absolute discretion, may charge any such payments against any
advance that may otherwise be due hereunder to Lessee or may otherwise
collect such amounts from Lessee, and Lessee agrees to repay
to Lessor all such amounts, which may exceed the line item amount therefor
in the Project Budget. Any amount which is not so charged against
advances due hereunder and all costs and expenses reasonably incurred by
Lessor in connection therewith (including, without limitation, attorneys'
fees and expenses and court costs) shall be a demand obligation of Lessee
and, to the extent permitted by applicable law, shall be added to the Lease
Obligations and secured by the Liens created by the Lease Documents, as
fully and effectively and with the same priority as every other obligation of
Lessee thereunder and, if not paid within ten (10) days after demand, shall
thereafter, to the extent
25
permitted under applicable law, bear interest at the Overdue Rate until the
date of payment.
If Lessee fails to observe or cause to be observed any of the provisions
of this Agreement and such failure continues beyond any applicable notice
or cure period provided for under this Agreement, Lessor or a lawfully
appointed receiver of the Leased Property, at their respective options, from
time to time may perform, or cause to be performed, any and all repairs and
such other work as they deem necessary to bring the Leased Property into
compliance with the provisions of this Agreement may enter upon the
Leased Property for any of the foregoing purposes, and Lessee hereby
waives any claim against Lessor or such receiver arising out of such entry
or out of any other act carried out pursuant to this Section. All amounts so
expended or incurred by Lessor and by such receiver and all costs and
expenses reasonably incurred in connection therewith (including, without
limitation, attorneys' fees and expenses and court costs), shall be a demand
obligation of Lessee to Lessor or such receiver, and, to the extent permitted
by law, shall be added to the Obligations and shall be secured by the Liens
created by the Lease Documents as fully and effectively and with the same
priority as every other obligation of Lessee secured thereunder and, if not
paid within ten (10) days after demand, shall hereafter, to the extent
permitted by applicable law, bear interest at the Overdue Rate until the date
of payment.
9. INSURANCE; CASUALTY; TAKING
9.1 General Insurance Requirements.
Lessee shall at its sole cost and expense keep the Leased Property and
the business operations conducted thereon insured as required under the
Facility Lease.
9.2 Fire or Other Casualty or Condemnation.
In the event of any damage or destruction to the Leased Property
by reason of fire or other hazard or casualty (a "Casualty") or a taking by
power of eminent domain or conveyance in lieu thereof of xxxxx any portion
of the Leased Property (a "Condemnation"), Lessee shall give immediate
written notice hereof to Lessor and comply with the provisions of the
Facility ease governing Casualties and Condemnations.
26
10. EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default" hereunder
and shall entitle Lessor to exercise its remedies hereunder and under any of
the other Lease Documents:
A. any failure of Lessee to pay any amount due hereunder or under
any of the other Lease Documents within ten (10) days
following the date when such payment was due;
B. any failure in the observance or performance of any other
covenant, term, condition or warranty provided in this
Agreement or any of the other Lease Documents, other than the
payment of any monetary obligation and other than as
specified in subsections (C) through (F) below (referred to
herein as a "Failure to Perform"), continuing for thirty (30) days
after the giving of notice by Lessor to Lessee specifying the
nature of the Failure to Perform; except as to matters not
susceptible to cure within thirty (30) days, provided that with
respect to such matters, (i) Lessee commences the cure thereof
within thirty (30) days after the giving of such notice by Lessor
to Lessee, (ii) Lessee continuously prosecutes such cure to
completion, (iii) such cure is completed within one hundred
twenty (120) days after the giving of such notice by Lessor to
Lessee and (iv) such Failure to Perform does not impair
Lessor's rights with respect to the Leased Property or otherwise
impair the Collateral or Lessor's security interest therein;
C. the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace
periods, if any, under any of the other Lease Documents;
D. if any representation, warranty or statement contained herein or
in any of the other Lease Documents proves to be untrue in any
material respect as of the date when made or at any time during
the Term if such representation or warranty is a continuing
representation or warranty pursuant to Section 6.2;
E. except as a result of any Casualty or a partial or complete
Condemnation, if a suspension of any work in connection with
the construction of the Project occurs for a period in excess
of ten (10) Business Days, irrespective of the cause thereof,
provided that Lessee shall not be deemed to be in default under
this Subsection if such suspension is for circumstances not
reasonably within its control, but only if Lessor, in its sole and
absolute discretion, shall determine that such suspension shall
not create any risk that the construction of the Project will not be
27
completed (in accordance with the Project Plans and the terms
and conditions of this Agreement) on or before the Completion
Date; and
F. if construction of the Project shall not be completed in
accordance with the Project Plans and this Agreement (including,
without limitation, satisfaction of the conditions set forth in
Section 7.6) on or before the Completion Date.
11. REMEDIES IN EVENT OF DEFAULT
Upon the occurrence of an Event of Default, at the option of Lessor,
which may be exercised at any time after an Event of Default shall have
occurred, Lessor shall have all rights and remedies available to it, at law or
in equity, including, without limitation, all of the rights and remedies under
the Facility Lease and the other Lease Documents. Subject to the
requirements f applicable law, all materials at that time on or near the
Leased Property which are the property of Lessee and which are to be used
in connection with the completion of the Project shall be subject to the
Liens created by the Lease Documents.
In addition to, and without limitation of, the foregoing, Lessor is authorized
to charge all money expended for completion the Project against sums
hereunder which have not already been advanced (even if the aggregate
amount of such sums expended and all amounts previously advanced
hereunder exceed the amount of the Project Funds which Lessor has agreed
to advance hereunder); and Lessee agrees to pay to Lessor Rent under the
Facility Lease calculated, in part, thereunder based upon all sums advanced
hereunder, including, without limitation, all sums expended in good faith by
Lessor in connection with the completion of the project), and, in addition
thereto, Lessee agrees to pay to Lessor (as Rent under the Facility Lease),
for services in connection with said completion of the Project, such
additional sums as shall compensate Lessor for the time and effort Lessor
and its employees shall have expended in connection therewith. Lessor is
authorized, but not obligated in any event, to do all such things in
connection with the construction of the Project as Lessor, in its sole and
absolute discretion, may deem advisable, including, without limitation, the
right to make any payments with respect to any obligation of Lessee to
Lessor or to any other Person in connection with the completion of
construction of the Project and to make additions and changes in the Project
Plans, to employ contractors, subcontractors and agents and to take any and
all such action, either in Lessor's own name or in the name of Lessee, and
Lessee hereby grants Lessor an irrevocable power of attorney to act in its
name in connection with the foregoing. This power of attorney, being
coupled with an interest, shall be irrevocable until all of the Obligations are
fully paid and performed and shall not be affected by any disability or
incapacity which Lessee may suffer and shall survive the same. The power
of attorney conferred on Lessor by the provisions of this Section 11 is
28
provided solely to protect the interests of Lessor and shall not impose any
duty on Lessor to exercise any such power and neither Lessor nor such
attorney-in-fact shall be liable for any act, omission, error in judgment or
mistake of law, except as the same may result from its gross negligence or
wilful misconduct. In the event that Lessor takes possession of the Leased
Property and assumes control of the project as aforesaid, it shall not be
obligated to continue the construction of the Project and/or the operation of
the Project for any period of time longer than Lessor shall see fit (in its sole
and absolute discretion), and Lessor may thereafter, at any time, abandon its
efforts and refuse to make further payments for the account of Lessee,
whether or not the Project has been completed.
In addition, at Lessor's option and without demand, notice or protest, the
occurrence of any Event of Default shall also constitute a default under any
one or more of the Related Party Agreements.
12. GENERAL
The provisions set forth in Article 23 and Sections 2.2, 16.8 through
16.10, 24.2 through 24.6, and 24.8 through 24.12 of the Lease are hereby
incorporated by reference, mutatis, mutandis, and shall be applicable to this
Agreement as if set forth in full herein.
This Agreement, the other Lease Documents and the other Lease
Documents set forth the entire agreement of the parties with respect to the
subject matter and shall supersede in all respect the Letter of Intent.
13. LEASE PROVISIONS PARAMOUNT.
In the event of a conflict between the provisions hereof and the
provisions of the Lease, the provisions of the Lease are paramount.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal on the day and year first above written.
WITNESS: LESSEE:
EMERITUS PROPERTIES I, INC.
/s/ Xxxxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxx
----------------------------- ----------------------
Name: Xxxxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxx
Title: Secretary
WITNESS: LESSOR:
MEDITRUST ACQUISITION
CORPORATION I, a
Massachusetts corporation
/s/ Xxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx,
------------------------ --------------------------
Name: Xxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx, ESQ.
Title: Senior Vice President
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