THE FOLLOWING DOCUMENT IS SUBSTANTIALLY THE SAME
FOR THE DEVELOPMENT PROPERTIES MIDDLEBURG HEIGHTS
AND NEWARK WITH THE EXCEPTION OF THE AMOUNT THE
LESSOR SHALL FUND THE PROJECT.
Middleburg Heights $8,360,340
Newark $8,001,689
NEWARK, DELAWARE
LEASEHOLD IMPROVEMENT AGREEMENT
AMONG
MEDITRUST ACQUISITION CORPORATION I
AND
EMERITUS PROPERTIES I, INC.
LEASEHOLD IMPROVEMENT AGREEMENT
THIS LEASEHOLD IMPROVEMENT AGREEMENT is made
as of September 10, 1997 by and among EMERITUS
PROPERTIES I, INC., a Washington corporation (the
"Lessee"), and MEDITRUST ACQUISITION CORPORATION
I, a Massachusetts corporation (the "Lessor").
l. BACKGROUND
1.1 Lessee.
Lessee is a corporation which is a wholly-
owned Subsidiary of 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 the City of Newark, New Castle
County, Delaware 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 Newcastle County, Delaware real estate
records.
1.4 Project.
Lessee proposes to construct a 100 unit 104
bed 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".
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 Eight Million One Thousand Six Hundred
Eighty-Nine Dollars ($8,001,689.00) 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 by
Architects' Xxxxxxx Xxxxxxxxx Associates (the
"Architect") pursuant to the contract dated March
18,1997 by and between Lessee and the Architect
(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 Wohlson
Construction Company, dated August __, 1997 (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 (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 has submitted, or 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 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 therefor, 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.
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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. INTENTIONALLY OMITTED.
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. a Fifth Amended and Restated Agreement
Regarding Related Transactions (Development) of
even date by and among Lessee, Lessor, ESC I,
L.P., 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");
E. a Security Agreement of even date by and
between lessee and Lessor (the "Security
Agreement") and related UCC Financing Statements;
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. a Guaranty of Lease Obligations of even date
executed 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 and Lessor (the "Deposit
Pledge Agreement");
I. a Deposit Pledge Agreement of even date by
and between Lessee and Lessor (the "Deposit Pledge
Agreement");
J. a Group Two Negative Pledge Agreement
(Development) dated April 15, 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");
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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 Less 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 top 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;
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".
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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 have been validly executed by, and are
binding upon Lessee and are in full force and
effect in accordance with the terms thereof as of
the date hereof. All of the parties to the
Architect's Contract Construction Contract have
faithfully performed all of their respective
obligations thereunder to the extent accrued as of
the date hereof, and none of the parties to the
foregoing instruments has asserted any claim of
default thereunder and Lessee has no reason to
believe that such agreements have not been validly
executed by and binding upon the other parties
thereto;
5.2 Project Plans.
The two (2) copies of the Project Plans
delivered to Lessor by Lessee (a) are true and
correct and satisfactory to Lessee and (b) have
been 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 are the plans and
specifications which have been approved in writing
by Lessor, any construction heretofore performed
on the Project has been performed in accordance
with the Project Plans 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
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 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
5
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 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 to 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
6
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, or declaration or filing with, 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 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
7
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 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 event 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 Representations 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 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
8
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 Consultant.
Lessee agrees to pay the costs and expenses
reasonably incurred by Lessor to retain the
Consultants to perform various services to Lessor
in connection with the construction of the Project
and the advances of Project Funds contemplated
hereunder, including, without limitation, the
following:
X.xx review and analyze the Project Plans
and advise Lessor whether the same are
satisfactory for the intended purposes
thereof;
X.xx 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 this
Agreement;
X.xx 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;
X.xx review and analyze any proposed changes
to the Project Plans and advise Lessor
regarding the same;
9
X.xx review and analyze the Project Budget
and advise Lessor as to the sufficiency
thereof; and
X.xx 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 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.
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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 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
Facility 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 Facility 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
Facility 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
11
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 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;
X.Xxxxxxxxx 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;
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;
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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;
X.X 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");
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;
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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.
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 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 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
15
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 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);
16
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, (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 Xxxxx Xxxxxxxx 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
17
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.
C.All requisitions for the first fifty
percent (50%) of the Project Funds shall
be subject to a ten percent ( 10%)
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.
X.Xx 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 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
18
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.
X.Xx is contemplated that all advances of
the Project Funds made by Lessor to Lessee
will be pursuant to this Agreement.
X.Xx 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.
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
19
under the circumstances), unless 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 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 thereafter, 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 all or any portion of the Leased
Property (a "Condemnation"), Lessee shall give
immediate written notice thereof to Lessor and
20
comply with the provisions of the Facility Lease
governing Casualties and Condemnations.
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
completed (in accordance with the
Project Plans and the terms and
conditions of this Agreement) on or
before the Completion Date; and
21
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
of 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 of 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 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.
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12. GENERAL
The provisions set forth in Articles 22, 23
and Sections 2.2,16.8 through 16.10, 24.2 through
24.6, and 24.8 through 24.12 of the Facility 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
Facility Lease, the provisions of the Facility
Lease are paramount.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK)
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IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day and year first
above written.
ATTEST: LESSEE:
EMERITUS PROPERTIES I, INC.,
a Washington corporation
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxx
---------------- ---------------------
Name: Xxxxx Xxxxxxx Name: Xxxxx X.Xxxxx
Title: Vice President of Finance
ATTEST: LESSOR:
MEDITRUST ACQUISITION
CORPORATION I, a
Massachusetts corporation
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------- ------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer
24
