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EXHIBIT 10.74
DEVELOPMENT AGREEMENT
by and between
AHP OF INDIANA, INC.,
an Indiana corporation ("Owner")
and
BCC DEVELOPMENT AND MANAGEMENT CO.,
a Delaware corporation ("Developer").
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January 30, 1998
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TABLE OF CONTENTS
1. DEFINITIONS................................................................2
2. THE PROJECT................................................................9
3. DEVELOPER FEES............................................................13
4. FUNDING OF CONSTRUCTION ADVANCES..........................................14
5. REPRESENTATIONS AND WARRANTIES............................................22
6. DEVELOPER'S COVENANTS.....................................................24
7. EVENTS OF DEFAULT AND REMEDIES OF OWNER...................................30
8. PERMITTED CONTESTS........................................................32
9. GUARANTY OF COMPLETION....................................................32
10. GUARANTY OF PROJECT COSTS................................................33
11. TERM.....................................................................33
12. MISCELLANEOUS............................................................34
List of Exhibits
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Exhibit A - Legal Description Of Property
Exhibit B - Initial Budget
Exhibit C - Plans And Specifications For Project
Exhibit D - Contractors Agreement
Exhibit E - Assignment Of Architect Agreement
Exhibit F - Assignment Of Contractor Agreement
Exhibit G - Assignment Of Warranties
Exhibit H - Form Of Requisition
Exhibit I - Form Of Prime Architect Certificate
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DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is made and entered into
as of _______________, 1998, by and between AHP OF INDIANA, INC., an Indiana
corporation ("Owner") and BCC DEVELOPMENT AND MANAGEMENT CO., a Delaware
corporation ("Developer").
RECITALS
WHEREAS, Balanced Care Corporation, a Delaware corporation
("GUARANTOR") and American Health Properties, Inc., a Delaware corporation
("AMERICAN HEALTH") the sole shareholder of Owner, have entered into that
certain Facility Agreement dated as of January 30, 1998 (the "FACILITY
AGREEMENT")(all capitalized terms used herein being defined as stated in the
Facility Agreement except as expressly provided herein to the contrary);
WHEREAS, concurrently herewith, at the request of Guarantor made to
American Health pursuant to and in accordance with the requirements of the
Facility Agreement, Owner is purchasing certain real estate located in
[Evansville, Indiana] (the "PROPERTY"), more particularly described on Exhibit A
attached hereto and incorporated herein by this reference, on which it plans to
construct a [____]-unit licensed assisted living facility consisting of a
[one]-story building containing approximately [35,735] square feet (which
facility together with all related improvements upon the Property is referred to
herein as the "FACILITY") for lease to ________________ (the "TENANT"), which
Facility shall be operated and managed by BCC at ______________, Inc., a
Delaware corporation, and a wholly-owned subsidiary of Guarantor, as manager
("MANAGER"); and
WHEREAS, Developer has experience and knowledge in the areas of
development, construction and operation of assisted living facilities such as
the Facility and has successfully developed and constructed such facilities for
operation and management by Manager and other wholly-owned subsidiaries of
Guarantor, and
WHEREAS, Owner wishes to develop the Facility with Developer's
assistance (which Facility, including all affixed personal property necessary
and appropriate for the use and operation of the proposed Facility is referred
to herein as the "PROJECT");
WHEREAS, Owner shall administer and fund disbursements from Owner to
Developer for payment of costs of the work of constructing the Project up to
100% of the approved, budgeted development costs set forth in the Approved
Budget on the terms and conditions hereinafter set forth, and
WHEREAS, Owner wishes to employ Developer to provide Owner with
assistance in the development of the Project and Developer wishes to accept such
employment and to develop the Project for Owner so that it can function as a
completed Facility, all on the terms and conditions set forth in this Agreement.
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WITNESSETH
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Owner and Developer,
intending to be legally and fully bound, do hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings: 1.1. "ADVANCE RATE" means the prime rate of interest as reported by
the Wall Street Journal on the date of each advance plus two percent (2%).
1.2. "AGREEMENT" means this agreement as the same may be amended or
supplemented from time to time by any written amendment thereto and all exhibits
and schedules attached hereto.
1.3. "APPROVED BUDGET" means the final detailed line-item budget for
the development of the Project approved by Owner and Developer in accordance
with Section 2.1((a)), which shall be based upon the Initial Budget attached to
this Agreement as Exhibit B.
1.4. "ARCHITECT" shall mean, collectively, the architects and
engineers engaged to design and engineer the Project. Developer has engaged
__________________________ as the primary Architect (the "PRIME ARCHITECT") for
the Project.
1.5. "ARCHITECT AGREEMENT" shall mean, collectively, all contracts,
agreements and other covenants with the Architect (and all amendments thereto)
relating to the design, engineering, construction or completion of the Work,
including without limitation, that certain Owner-Architect Agreement entered
into by and between Prime Architect and Developer on ___________, 19___.
1.6. "AUTHORIZATION" means any authorization, consent, approval,
order, license, permit, exemption or other action by or from, or any filing,
registration or qualification with any Governmental Agency or other Person.
1.7. "CHARTER DOCUMENT" means (a) in the case of a corporation, its
articles or certificate of incorporation and bylaws, (b) in the case of a
partnership, its partnership agreement and any certificate or statement of
partnership, and (c) in the case of a trust or any other entity, its formation
documents, in each case as amended from time to time.
1.8. "COMMITMENT FEE" shall mean an amount equal to one percent of
the total amount incurred by Owner with respect to the Project, including
without limitation the aggregate sum of (i) all costs incurred by Owner in
connection with the administration, operation, preparation and negotiation of
the Transaction Documents (including this Agreement) and (ii) each and every
Construction Advance, for the period beginning on the date of each such cost is
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incurred or each such Construction Advance is made (as applicable) through and
including the date of determination, and (iii) all Imputed Interest. Owner shall
not be obligated to make any cash disbursements of the Commitment Fee.,
1.9. "COMPLETION DATE" shall mean ____________, 1998; provided,
however that such date shall be extended one day (but shall not be extended by
more than 180 days in the aggregate) for each day of delay caused entirely by an
Unavoidable Delay.
1.10. "CONTRACTOR" shall mean, collectively, the contractors,
subcontractors, materialmen and suppliers and other persons supplying labor,
equipment, materials or supplies to the Work which are engaged in connection
with the Work. The Contractor shall be fully qualified to perform the Work and
shall be duly licensed to perform the Work in accordance with all applicable
Laws. Developer has engaged ______________ as the primary contractor (the "PRIME
CONTRACTOR") for the Work.
1.11. "CONTRACTOR AGREEMENT" shall mean, collectively, all contracts,
agreements and other covenants with the Contractor (and all amendments thereto)
relating to the Work, including without limitation, that certain
Owner-Contractor Agreement entered into by and between the Prime Contractor and
Developer on _____________, 19___ (the "PRIME CONTRACT").
1.12. "COST OF THE WORK" means solely those Hard Costs and Soft Costs
(including the Developer Fee and Developer Incentive Fee) necessarily incurred
in the proper performance of the Work which are paid or incurred under the
Architect Agreement, the Contractor Agreement and any other agreement relating
to the Work which is approved by Owner, which costs shall be in accordance with
the Approved Budget; provided that Developer shall endeavor to cause the amount
paid for any item or service to be at rates not higher than the standard pay in
[Vanderburgh County, Indiana] for similar projects. The Cost of the Work as
defined herein shall mean only the actual costs paid or incurred, less any and
all discounts, rebates and salvages. All of the Cost of the Work is included
within and subject to the Maximum Project Amount, whether paid or incurred
before or after the execution of this Agreement. The term "Cost of the Work"
shall specifically exclude (and AHP shall not be obligated to make Construction
Advances with respect to) (i) expenses, salaries or other compensation of the
Developer's personnel at the Developer's principal office and branch offices,
(ii) expenses, salaries and other compensation of the Contractors' personnel at
the Contractors' principal and branch offices, (iii) any portion of the
Developer's capital expenses, including interest on the Developer's capital
employed for the Work, (iv) overhead or general expenses of any kind, (v) costs
arising due to the negligence of the Developer, Contractor, Architect, any
subcontractor, or any one directly or indirectly employed by any of the
foregoing, or for whose acts any of them may be liable, including but not
limited to correction of defective or nonconforming work, disposal of materials
and equipment wrongly supplied, or making good any damage to the Property, (vi)
the cost of any line-item in excess of 105% of the amount stated in the Approved
Budget therefor (provided that Developer shall not be precluded from receiving
Construction Advances for a line-item to the extent that Developer requests a
Construction Advance therefor from the undisbursed balance of the line-item
shown on the Approved Budget for "Construction Contingency" or "Contingency-Soft
Costs") or the cost of any line-item not specifically and expressly included in
the Approved Budget, and (vii) premiums and all other costs
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of insurance which Developer or Contractor is required to purchase and maintain
to the extent not included within the definition of Soft Costs.
1.13. "DEFAULT RATE" means the Advance Rate otherwise applicable plus
four percent (4%).
1.14. "DEVELOPER FEE" means an amount equal to six percent (6%) of the
lesser of (a) the Maximum Project Amount (as determined without including the
Developer Fee or Developer Incentive Fee) and (b) the Cost of the Work
(excluding the Developer Fee or Developer Incentive Fee) actually incurred to
achieve Final Completion of the Project.
1.15. "DEVELOPER INCENTIVE FEE" means an amount equal to one percent
(1%) of the lesser of (a) the Maximum Project Amount (as determined without
including the Developer Fee or Developer Incentive Fee) and (b) the Cost of the
Work actually incurred to achieve Final Completion of the Project.
1.16. "EVENT OF DEFAULT" means any one or more of the events set forth
in Section 7.1.
1.17. "FACILITY AGREEMENT" means that certain Facility Agreement
entered into by and between American Health Properties, Inc., a Delaware
corporation and Guarantor.
1.18. "FINANCIAL STATEMENTS" means for any Fiscal Year or other
accounting period for a Person, audited statements(with the exception that
Financial Statements of Tenant shall not be required to be audited and shall be
certified as true, correct, accurate, complete and fairly presenting the
financial condition of Tenant by a representative of Tenant authorized to make
such certification) of earnings and retained earnings and of changes in
financial position for such period and for the period from the beginning of the
respective fiscal year of that Person to the end of such period and the related
balance sheet as at the end of such period together with the notes thereto, all
in reasonable detail and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding Fiscal Year of the Person,
and prepared in accordance with generally accepted accounting principles
consistently applied, except as noted.
1.19. "FISCAL YEAR" means the financial accounting year for a Person.
Developer's and Guarantor's Fiscal Year ends on June 30 of each calendar year.
1.20. "FINAL COMPLETION" or "FINALLY COMPLETED" and words of similar
effect shall mean the fulfillment of all of the following conditions:
(a) Substantial Completion of the Work in accordance with
the Plans and Specifications;
(b) expiration of all statutory periods for the filing of
any mechanics', materialmens', suppliers' or similar liens without any
such liens being filed and the receipt by Owner of an endorsement to the
title policy referred to in Section 4.1((c))((9)) in form and substance
satisfactory to Owner, issued by the Title Company insuring Owner
against
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any loss Owner may sustain by reason of any statutory liens for labor or
material arising out of any Work;
(c) an affidavit of the Architect, in form satisfactory to
Owner , that all payrolls, bills for materials, supplies, labor,
services, equipment and other indebtedness or obligation connected with
the Work for which Owner, Developer or the Property might in any way be
responsible, have been paid or otherwise satisfied;
(d) consent of the surety, if any, to final payment; and
(e) any other data which may be required by Owner to
establish the issuance of the Government Approvals (excluding a medicare
provider number from the Health Care Financing Administration of the
United States Department of Health and Human Services) and the payment
or satisfaction of all such obligations including, without limitation,
receipts, releases and waivers of liens which might arise out of the
performance of the Work and other documentation, to the extent and in
such form as may be designated by Owner.
1.21. "GOVERNMENTAL AGENCY" means, as relates to the Project, (a) any
government or municipality or political subdivision of any government or
municipality, (b) any assessment, improvement, community facilities or other
special taxing district, (c) any governmental or quasi-governmental agency,
authority, board, bureau, commission, corporation, department, instrumentality
or public body, (d) any court, administrative tribunal arbitrator, public
utility or regulatory body, or (e) any central bank or comparable authority.
1.22. "GOVERNMENT APPROVALS" shall mean all certificates, permits and
licenses required to be obtained from any Governmental Agency or other
governmental authority or instrumentality, necessary or desirable in connection
with the beneficial use and occupancy of the Project and the operation of the
Facility as a [____]-unit assisted living facility, including without
limitation, a certificate of occupancy for the Facility (or other similar
evidence of the right to legally occupy the Project), a license as a [____]-unit
assisted living facility from the appropriate Governmental Agency(ies), if
required to obtain payment for services to be rendered by or at the Facility, a
medicare provider number from the Health Care Financing Administration of the
United States Department of Health and Human Services and all other approvals
required by any applicable Laws for the operation of the Facility as a fully and
duly licensed, [___]-unit assisted living facility, including without
limitation, approvals required by state and federal environmental protection
agencies and the Federal Flood Plane Protection Act of 1973, as amended.
1.23. "HARD COSTS" means the costs incurred or paid by Developer in
connection with the Work and in accordance with the Approved Budget and this
Agreement for (a) costs of materials, supplies and equipment incorporated into
the Work (including the costs of transportation thereof), (b) payments made by
the Developer to the Contractor or to the subcontractors thereof for Work
performed pursuant to the Contractor Agreement or other construction contracts
or subcontracts entered into in accordance with this Agreement, (c) wages paid
for labor in the direct employ of the Contractor in the performance of the Work
and the costs of contributions, assessments or taxes incurred during the
performance of the Work for such items as unemployment compensation and
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social security, insofar as such cost is based on wages, salaries or other
remuneration to employees of the Contractor which are otherwise included within
the Cost of the Work and (d) other costs incurred for labor, equipment,
materials or supplies which are incurred in the performance of the Work, if and
to the extent specifically listed as a line item in the Approved Budget or
otherwise approved in advance in writing by Owner.
1.24. "HAZARDOUS SUBSTANCES" means any hazardous or toxic material or
waste which is regulated by any authority of or operating under the authority of
any local or municipal government, the State, or the United States of America or
which may require remediation at the behest of any governmental or
quasi-governmental agency or which may cause a detriment to or impair the value
or beneficial use of the Land or Improvements or cause a health, safety or
environmental hazard on, under or about any portion of the Property, including,
without limitation, any material or substance which is: (1) petroleum or a
petroleum by-product or a fraction, derivative or product of the decay or
decomposition thereof; (2) asbestos or an asbestos containing material in any
form; (3) a hydrocarbon or similar substance; (4) PCB; (5) formaldehyde; (6)
medical waste, (7) radioactive, (8) flammable or explosive; (9) leaked or
released from any underground storage tanks; (10) listed as a "toxic pollutant"
pursuant to Section 311 of the Federal Pollution Control Act (33 U.S.C. Section
1317) including any amendments thereto; (11) defined as a "hazardous waste"
pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903) including any amendments
thereto; (12) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C.
Section 9601) including any amendments thereto; (13) listed in the United States
Department of Transportation Table (49 CFR ss. 172.101) or by the U.S.
Environmental Protection Agency as a hazardous substance; (14) any material,
waste or substance which is governed, regulated, listed and/or defined under any
Laws of the State or in the regulations or judicial or administrative orders,
decisions or decrees promulgated pursuant to any of the foregoing State or
federal laws. The foregoing list of definitions and statutes is intended to be
illustrative and not exhaustive, and such list shall not be deemed to include
all definitions and laws applicable to the subject matter contained herein, all
such laws being included within the definition of Laws.
1.25. "IMPOSITIONS" means all (A) taxes (including without limitation
(i) all real property taxes imposed upon the Property, Facility or the Project
(ii) all personal property taxes imposed upon any portion of the Property,
Facility or Project, and (iii) all ad valorem, sales, use, single business,
gross receipts, transaction privilege, rent or similar taxes relating to or
imposed upon the Property, or, Tenant or its business conducted upon any portion
of the Property or from within the Facility), (B) assessments (including without
limitation all supplemental real property tax assessments or assessments for
public improvements or benefit, whether or not commenced or completed prior to
the date hereof), (C) any other covenants, conditions or restrictions of record
with respect to the Property, water, sewer or other rents and charges, excises,
tax levies, fees (including without limitation license, permit, franchise,
inspection, authorization and similar fees) and (D) all other governmental,
quasi-governmental or private charges, in each case whether general or special,
ordinary or extraordinary, foreseen or unforeseen, of every character or nature
whatsoever with respect to or connected with the Property, the Facility, the
Project or
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the business conducted thereon or therein by Tenant (including all interest and
penalties thereon due to any failure or delay in payment thereof) which at any
time may be assessed or imposed on or with respect to, or may be a lien upon (a)
Owner's interest or investment in the Property, (b) the Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein or
(c) any occupancy, operation, use or possession of, or sales from, or activity
conducted on or in connection with the Property or the leasing or use of the
Property or any part thereof by Tenant. For the purposes of this definition, the
term "real property tax" shall mean all taxes which are imposed, levied or
assessed upon or with respect to the Property, the Building, the Land, or any
portion thereof (including increases in real property taxes which are imposed as
a result of a transfer, either partial or total, of Landlord's interest in the
Property or which are added to a tax or charge hereinbefore included within the
definition of real property tax by reason of such transfer or which are imposed
by reason of this transaction, any modifications hereto, or any transfers hereof
or which are caused by reason of any new construction in or to the Property).
Notwithstanding the foregoing provisions of this definition to the contrary,
"Impositions" shall not include (1) any tax based on the net income of Landlord,
unless such tax is levied, assessed or imposed expressly in lieu of a charge,
tax or assessment which otherwise would constitute an Imposition, in which case
the substitute tax, assessment, tax levy or charge shall constitute an
Imposition even if it is measured by the net income of Landlord or (2) a real
property stamp, documentary transfer or similar tax payable with respect to the
conveyance to a Person other than Tenant, Balanced Care or the wholly-owned
subsidiary or 100% shareholder of either.
1.26. "IMPUTED INTEREST" shall mean an amount, calculated by applying
the Advance Rate (or if applicable the Default Rate) to the sum of (i) costs
incurred by Owner in connection with the administration, operation, preparation
and negotiation of the Transaction Documents (including this Agreement) and (ii)
each and every Construction Advance, for the period beginning on the date of
each such cost is incurred or each such Construction Advance is made (as
applicable) through and including the date of determination, and aggregating the
results so obtained. Owner shall not be obligated to make any cash disbursements
of imputed interest.
1.27. "INSPECTING ARCHITECT" means those employees, representatives,
architects, engineers or other agents of Owner who may, from time to time,
inspect the Project or offer other services related thereto, before, during and
after the construction of the Project and the performance of the Work
1.28. "LAWS" means all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
common law, decrees and injunctions affecting the Property, the Project or the
Facility or the maintenance, construction, use, alteration, occupancy or
operation of any of the foregoing, whether now or hereafter enacted and in force
(including any of the foregoing which may require repairs, modifications or
alterations in or to the Work or the Project), all permits, licenses,
franchises, authorizations, land use entitlements, zoning and regulations
relating thereto, and all covenants, conditions, agreements, restrictions,
obligations and encumbrances contained in any instruments, either of record or
known to Developer, Guarantor or either of their shareholders or Affiliates, at
any time in force affecting the Project or the Work, including, without
limitation, the Americans with Disabilities Act and regulations thereunder, the
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Fair Housing Act and regulations thereunder, and all Laws, ordinances and
regulations relating to zoning, building codes, set back requirements and
environmental matters..
1.29. "LEASE" means that certain Lease Agreement of even date herewith
between Owner and Tenant.
1.30. "LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, equitable or other charge or encumbrance, or the option or right to
acquire any such item, except for ad valorem real estate taxes that are timely
paid.
1.31. "MAXIMUM PROJECT AMOUNT" means the maximum project amount stated
on the Approved Budget, subject to any increases, reallocations or other
modifications as shall be made only upon Owner's prior written consent, which
consent may be given or withheld in Owner's sole discretion.
1.32. "PERSON" means any natural person or legal entity, whether an
individual, trustee, corporation, partnership, limited liability company, joint
stock company, trust, unincorporated organization, bank, business association or
firm, joint venture, Governmental Agency or otherwise.
1.33. "PLANS AND SPECIFICATIONS" means the plans and specifications
for the construction of the Project referred to and defined in Section2.1 ((d))
and Section2.2((d)) and listed on Exhibit C attached hereto.
1.34. "REMEDY" means any right, power or remedy whether available to a
Person at law, in equity or otherwise.
1.35. "SHORTFALL FUNDING AGREEMENT" means that certain Shortfall
Funding Agreement between Balanced Care and Tenant of even date herewith.
1.36. "SOFT COSTS" means costs incurred or paid in connection with the
Work, in accordance with the Approved Budget and this Agreement, for the
Commitment Fee, Developer Fee, Developer Incentive Fee, title insurance
premiums, survey charges, engineering fees, architectural fees, real estate
taxes during the period of construction, premiums for insurance during
construction to the extent required to be maintained pursuant to this Agreement,
legal fees and other expenses (other than the Hard Costs of the Work) which are,
in accordance with sound accounting practices, capital expenditures.
1.37. "SUBSTANTIAL COMPLETION" means the occurrence of both (a) the
completion of all Work required under the Plans and Specifications (excluding
minor mechanical adjustments and minor touch-ups and finishing details which
would not interfere with the occupancy and use of the Project as an assisted
living facility) in conformity with the Plans and Specifications and (b) the
issuance of all Government Approvals.
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1.38. "TAXES" means all taxes, assessments, charges, fees and levies
(including interest and penalties) and other Impositions imposed, assessed or
collected by any Governmental Agency.
1.39. "TENANT" means Assisted Living Operators at ____________, a
Delaware limited liability company.
1.40. "UNAVOIDABLE DELAY" means delays which occur in the performance
of the Work due to causes beyond Developer's control such as strikes, acts of
God, war, civil unrest, natural disaster, insurrection, unforeseeable shortages
of material or labor, or other causes similarly beyond the control of Developer
(financial inability of Developer or Guarantor excepted).
1.41. "VOTING SHARES" of any corporation means shares any class or
classes (however designated) having ordinary voting power for the election of at
least a majority of the members of the board of directors (or other governing
bodies) of such corporation, other than shares having such power only by reason
of the happening of a contingency.
1.42. "WORK" means all work required in accordance with the Plans and
Specifications to Finally Complete the Project.
2. THE PROJECT.
2.1. Development of Project. Developer shall:
(a) prepare a final, accurate, itemized breakdown of the costs of
construction of the Project on a line-item by line-item basis (the "INITIAL
BUDGET"), a true and correct copy of which is attached hereto as Exhibit B,
submit the Initial Budget for review and comment by Owner and thereafter to
revise the Initial Budget to reflect the reasonable comments and revisions
proposed by Owner until both Owner and Developer have approved the Initial
Budget as so revised (and upon such approval the approved budget shall be the
"APPROVED BUDGET" for all purposes of this Agreement); provided that in no event
shall the Cost of the Work payable with respect to the acquisition or
installation or delivery of unaffixed personal property exceed ten percent (10%)
of the total of all Hard Costs;; and
(b) prepare a detailed, itemized time schedule for the completion of
each phase of construction of the Project and an itemized breakdown of the
estimated times of commencement and completion of the Work on a trade-by-trade
basis , submit the proposed schedule to Owner for its review and comment and
thereafter revise the proposed schedule to reflect the reasonable comments and
suggestions of Owner until both Owner and Developer have approved the schedule
as so revised (and upon such approval the approved schedule shall be the
"PROJECT SCHEDULE" for all purposes of this Agreement); and
(c) develop, construct and Complete the Project for a cost to Owner
(as set forth on the Approved Budget) of less than or equal to the Maximum
Project Amount, including all Costs, Developer's Fees, Developer's Incentive
Fee, Contingency, Fees and accrued Imputed Interest on Construction Advances
made by Owner (which interest shall accrue, in the absence of
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any Event of Default, at the Advance Rate and, during the continuation of any
Event of Default, at the Default Rate, on all sums advanced or deemed to be
advanced and shall be posted on the first of each month),; and
(d) cause the construction of the Project to proceed in accordance
with the requirements of this Agreement and in accordance with the plans and
specifications reviewed and approved by Owner, as described in Exhibit C (the
"Plans and Specifications") as modified from time to time with Owner's approval
as contemplated in Section 2.2((d)); and
(e) obtain or execute a Contractor Agreement for the Project with
the Contractor, which Contractor Agreement shall state a fixed price (stipulated
sum) or guaranteed maximum amount (cost plus fee subject to guaranteed maximum
amount) for the performance of all Work required to open the Facility, such
contract to be substantially in the form set forth in Exhibit D; and
(f) satisfy any requirements set forth in the Lease (including
without limitation the fulfillment to the occurrence of the "Commencement Date"
thereunder) or sought to be imposed by Tenant relating to acceptance of
occupancy of the Property, the Project or any portion of either or commencement
of rent; and
(g) obtain all building permits and other permits and authorizations
required to commence the construction of the Project and commence construction
of the Project within [four (4)] months after the closing of the acquisition of
the Property by Owner; and
(h) cause Substantial Completion of construction and equipping of
the Project on or prior to the Completion Date, in accordance with the Plans and
Specifications, free and clear of all liens or claims therefor, in accordance
with all Laws and any licensure requirements, and so as to permit the "Primary
Intended Use" described in the Lease. Developer shall comply with and timely
satisfy each of the terms and conditions (including, but not limited to, the
conditions for obtaining Construction Advances from Owner) pursuant to this
Agreement for the Final Completion of the Project and the opening of the
Facility, all as more particularly hereinbelow set forth.
2.2. Developer's Services. Until Final Completion of the Project or
termination as provided in Sections 7.2((b)), 11.2 or 12.8 below, Developer,
acting within the parameters of the Approved Budget and the Plans and
Specifications covenants and agrees to perform, fully, timely and completely,
the following duties for the benefit of Owner:
(a) Negotiation of Contracts. Cause the preparation and negotiation
of all contracts, purchase orders, change orders and similar documents necessary
to construct the Improvements and complete them in accordance with the Plans and
Specifications;
(b) Obtaining Permits. To coordinate with all applicable federal,
state, county and city Governmental Agency the obtaining and securing of all
necessary permits, authorizations and approvals to permit the Primary Intended
Use of the Project as stated in the Lease; and
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(c) Negotiating of Utility Service. To negotiate the provision of
utilities to serve the Property and the Project as required in accordance with
the Plans and Specifications; and
(d) Plans and Specifications. To submit any revisions to the Plans
and Specifications to Owner for its approval in accordance with this Agreement,
and to execute and cause the Prime Architect to execute and deliver to Owner an
assignment of the Architect Agreement and consent thereto (the "ARCHITECT
ASSIGNMENT") in the form attached hereto as Exhibit E;
(e) Supervision; Payment and Completion of Work. (a) to cause the
Contractor to perform all of the Work required to Finally Complete the Project,
(b) to cause the preparation and negotiation of all contracts, purchase orders,
change orders and similar documents necessary to construct the Project and
Finally Complete the Project in accordance with this Agreement and the Plans and
Specifications, (c) to supervise and monitor the construction of the Project and
the compliance by the Contractor, the Architect and all other persons supplying
labor, equipment or materials to the Work with all terms and conditions of their
respective contracts and with all applicable Laws, using Developer's best skill
and attention, (d) to execute and cause the Prime Contractor to execute and
deliver to Owner an assignment of the Contractor Agreement and consent thereto
(the "CONTRACTOR ASSIGNMENT") in the form attached hereto as Exhibit F, (e) to
pay, as and when due, all of the Cost of the Work and all other costs or
expenses required to cause Substantial Completion of the Project prior to the
Completion Date and thereafter to cause the Final Completion of the Project,
from Construction Advances required to be made hereunder but to the extent such
Construction Advances are not so required, then regardless of whether the
Construction Advances hereunder are sufficient therefor and (f) to cause
Substantial Completion of the Project to be free and clear of any and all Liens
or other encumbrances, prior to the Completion Date, in strict accordance with
the Plans and Specifications (and without limitation on the foregoing, Developer
shall be responsible for assuring that all building permits and other Government
Authorizations have been obtained and the Project is commenced within four (4)
months of acquisition of the Property by Owner and is completed, licensed and
certified for occupancy as an assisted living center within the earlier of
twelve (12) months (unless extended by Owner in Owner's reasonable discretion)
from commencement of construction or the date required by any regulatory
approvals, and the Contractor's Agreement will obligate the general contractor
to Finally Complete the Project;
(f) Labor and Disputes. To make recommendations and render
assistance for the development and administration of an effective labor
resolutions program for the Work and the avoidance of labor disputes during
construction;
(g) Compliance with Laws. (a) to cause the construction of the
Project (and all of the Work) to comply with all requirements of any federal,
state or local Laws applicable to the construction, Final Completion and
operation of the Project, so that the completed Project will qualify for (i) all
Government Approvals, including without limitation, permits, certificates or
accreditations necessary for the occupancy and licensure of the Facility as a
duly licensed and medicare-approved [____]-unit assisted living facility and
(ii) approval of fire underwriters upon Substantial Completion, and (b) to
assist Tenant, as the Operator of the Facility, in obtaining all Government
Approvals, including without limitation, a license therefor from the appropriate
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Governmental Agencies and any other permits or certificates required to be
obtained by the operator of such a Facility;
(h) Co-ordination with Architect. To coordinate with the Architect
and any Inspecting Architect which Owner may retain from time to time for
periodic inspections of the Project and the Work, in order to confirm that the
materials furnished to the Work and the Work performed are in strict accordance
with the Plans and Specifications and all Laws and that the Work continues to be
performed in accordance with the Approved Budget and the Project Schedule;
(i) Applications for Payment. To review and approve, in writing, and
to obtain the Architect's (and, if required, the Inspecting Architect's)
certification of all applications for payment submitted pursuant to the
Contractor Agreement and this Agreement and prepare and submit to Owner
requisitions for Construction Advances of the Costs of the Work in accordance
with this Agreement;
(j) Correction of Work. To cause the prompt and complete correction
of any defect in the Work (including without limitation any defect in materials
or workmanship provided by any Contractor or any subcontractor thereof) and to
take appropriate steps to remedy the failure of the Contractor or any other
person supplying labor, equipment or materials to the Work to perform all of
such person's obligations under its agreement with Developer or Owner or Tenant;
(k) Contracts. To make available to Owner true and correct copies of
all contracts, subcontracts and material agreements and other agreements
relating to the Work and the Project;
(l) Assignment of Warranties. To deliver to Owner promptly upon
receipt thereof true and complete copies of (a) all Government Approvals
required in connection with the Project and the opening, use and occupancy of
the Facility, (b) all warranties and guaranties received from any Person with
respect to the Work or the Project and (c) duly executed and fully effective
assignments of all guaranties and warranties issued for any Work performed or
machinery, equipment or appliances incorporated into the Project and, in
addition, to deliver to Owner, upon Substantial Completion of the Project an
assignment of warranties in the form attached hereto as Exhibit G (the
"Assignment of Warranties");
(m) Construction Information. To furnish to Owner, within ten (10)
days after the end of each calendar month prior to Final Completion of the
Project a report in form and content satisfactory to Owner, certified as true,
accurate and complete by Prime Contractor and Owner describing the current
progress of the Work, a schedule of all Costs of the Work incurred through the
date of such report and anticipated to be incurred during the forthcoming month
(which schedule shall be itemized as to trade description and item (and itemized
as to Soft Costs and any Contractor's overhead, administrative, mobilization and
general conditions costs) and shall show the name of the Contractors providing
work, labor, equipment or materials with respect thereto and a summary of all
changes from previous reports delivered under this subparagraph; and,
(n) Performance of Agreements. (a) to perform all of the other
covenants and obligations of Developer under this Agreement and (b) to do all
other things, undertake any and
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all other actions and cause any and all third parties to undertake any and all
other actions as may be required to Finally Complete the Project in a lien-free
manner in accordance with the Plans and Specifications and the Approved Budget
on or prior to the Completion Date.
2.3. Trust Relationship. Developer accepts the relationship of trust
and confidence established between it and Owner by this Agreement. Developer
covenants with Owner to furnish its best skill and judgment and to cooperate
with the Architect and Owner (and any Inspecting Architect engaged by Owner) in
furthering the interests of Owner. Developer shall furnish efficient business
administration and superintendence and shall cause (subject to Unavoidable
Delay) the Contractor to furnish, at all times, an adequate supply of workmen
and materials, and to perform the Work in the best way and in the most
expeditious and economical matter, consistent with the interests of Owner.
Except as expressly authorized in this Agreement, Developer has no right or
authority of any kind for or on behalf of Owner.
2.4. Guarantee. All obligations of the Developer under this Agreement
are unconditionally guaranteed by Guarantor pursuant to the Completion
Guarantee. Pursuant to the Completion Guarantee, the obligations of each of
Developer and Guarantor shall be joint, several and primary and not secondary.
2.5. Owner Cooperation. Owner shall take all reasonable and necessary
steps to cooperate with Developer as necessary to enable Developer to discharge
its obligations hereunder, provided, however, that Owner shall not be required
to expend funds not provided for in the Approved Budget unless consented to by
Owner in the exercise of its sole and absolute discretion.
3. DEVELOPER FEES.
In consideration of the Services to be provided by Developer pursuant to
this Agreement, Owner shall pay to Developer the Developer Fee and, if earned,
the Developer Incentive Fee at the times provided in this Section 3.
3.1. Payment of Developer Fee.
(a) Upon the later to occur of the execution and delivery of this
Agreement or the approval by Owner and Developer of the Approved Budget, Owner
shall pay to Developer an amount equal to eighty-five percent (85%) of the
Developer Fee as determined by reference to the Approved Budget; and
(b) On the date the Final Construction Advance is paid to Developer
in accordance with Section 4.4 , Owner shall pay the balance of the unpaid
Developer Fee.
3.2. Payment of Developer Incentive Fee. If both (a) the sum of all
costs incurred by Owner in connection with the administration, operation,
preparation and negotiation of the Transaction Documents (including this
Agreement), plus all Construction Advances, plus Imputed Interest is less than
or equal to the Maximum Project Amount and (b) the Project is Finally Completed
on or prior to the Completion Date as revised by the final Project Schedule
approved by Owner, then Owner shall pay to Developer, on the date the Final
Construction
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Advance is paid to Developer in accordance with Section 4.4 an amount equal to
the Developer Incentive Fee.
3.3. Limitation on Payment of Developer Fees. Notwithstanding the
provisions of Sections 3.1 and 3.2 to the contrary, Owner shall not be obligated
to pay the Developer Fee or the Developer Incentive Fee if such payment would
increase the total amount paid or incurred by Owner under this Agreement to an
amount in excess of the Maximum Project Amount unless Developer or Balanced Care
(as guarantor under the Completion Guarantee) has funded the amounts required
under Section 4.2((b)) of this Agreement.
4. FUNDING OF CONSTRUCTION ADVANCES.
4.1. General Conditions to Owner's Obligations. Owner's obligations
under this Agreement, including its obligations to fund the first Construction
Advance and all subsequent Construction Advances to Developer, are subject to
the full and complete satisfaction of each and every one of the following
conditions precedent:
(a) Maintenance of Title and Leasehold. (1) Owner shall be entitled
to the full use and possession of the Property pursuant to its Acquisition of
the Property under the Property Acquisition Agreement and Assignment of
Acquisition Rights without claim against Owner's title thereto for any reason
and (2) Tenant shall be entitled to the full use and possession of the Property
pursuant to the Lease, free and clear of all liens and encumbrances except such
as have been approved by Owner in writing.
(b) Maintenance of Agreements. The Contractor Agreement, the
Architect Agreement and any other contracts or agreements relating to the Work
shall be in full force and effect, without claim of default or modification,
except as approved by Owner in writing. Owner shall have approved the form and
substance of the Plans and Specifications, the Contractor Agreement and the
Architect Agreement.
(c) Delivery of Documents. Tenant and Developer, as appropriate,
shall execute and deliver to, procure for and deposit with, and pay to, Owner,
from time to time, in form satisfactory to Owner, and, if appropriate, record in
the proper records with all filing and recording fees paid:
(1) The Transaction Documents, duly executed by the parties
thereto, each dated the Closing Date, the Assignment of Warranties, the
Architect Assignment and the Contractor Assignment, duly executed by
Developer and all other parties to the Architect Agreement and the
Contractor Agreement;
(2) If requested by Owner, a report by an examiner
satisfactory to Owner of a search of the Uniform Commercial Code records
of the [Indiana] Secretary of State and the County Clerk and County
Recorder or County Register of [Vanderburgh] County, [Indiana], which
shall show that, as of the date immediately preceding the date of each
Construction Advance, there exist no security interests in the Property,
except as approved by Owner in writing;
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(3) If requested by Owner, a copy of a soils and geological
report prepared by a qualified geotechnical engineer addressed to Owner
and a letter from Architect in form and content satisfactory to Owner
stating that the structural foundations for the Project have been
adequately designed considering soil conditions at the site, permitting
assignment of the Plans and Specifications to Owner for their use in the
Event of Default without responsibility on the part of Owner for the
Architect's fees, and certifying as to compliance of the Plans and
Specifications with applicable Laws, ordinances and regulations and such
other matters as Owner shall reasonably request;
(4) If requested at any time in writing by Owner, such
information, including without limitation (a) true and correct copies of
contracts and subcontracts, as Owner shall request relating to any
Contractor or other person supplying equipment, labor or materials to
the Work (including all Contractor Agreements and Architect Agreements)
and (b) a list of all subcontractors engaged or to be engaged in
connection with the Work, the form (approved by Owner) of the
subcontract to be used to engage such subcontractor, the date of any
subcontract entered into with such subcontractor, the scope of each
subcontractor's work under each such subcontract, and a statement of the
percentage of such work which has been completed at the time such
information is provided to Owner;
(5) Financial Statements of Tenant and Developer, in form
and substance satisfactory to Owner, including a balance sheet and
profit and loss statement, as of a date not more than 90 days prior to
the Closing Date, together with affidavits from appropriate officers of
each such party, each dated the Closing Date, to the effect that the
same are accurate and that no material adverse change has occurred as of
the Closing Date;
(6) Such written opinions of Tenant and Developer's counsel,
dated as of the Closing Date, in form and substance satisfactory to
Owner and its counsel, to such effect as Owner may require;
(7) The Approved Budget, and any revisions or updates
thereto required under this Agreement, including: (i) breakdowns of the
costs of all of the Work by trades, jobs and trade contractors and
subcontractors, (ii) a breakdown of Soft Costs and Hard Costs and, (iii)
if the Work is to be done in more than one stage, a separation of the
costs of the elements of the Work by stage.
(8) Policies of insurance as required in Paragraph 6.5
hereof;
(9) An ALTA Extended Coverage Owner's Policy of title
insurance (1970 Form) with respect to the Property, insuring or
committing to insure that Owner has a valid fee interest in and to the
Property and the Project, having the priority required by Owner, subject
only to such exceptions and encumbrances which Owner may, in its sole
discretion, approve in writing (the "Permitted Exceptions"), along with
(i) such endorsements and reinsurance as Owner may require and (ii) the
issuer's commitment to endorse, extend and date down such policy of
title insurance as of the date of each Construction Advance under this
Agreement, as made, up to the sum of the Maximum Project Amount and
Transactional Costs, such policy to be issued by First American Title
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Insurance Company or other carrier or carriers acceptable to Owner (the
"TITLE COMPANY");
(10) An ALTA survey of the Property certified by a civil or
registered engineer or land surveyor acceptable to Owner and showing (i)
the locations of any buildings, easements, rights of way and
encroachments affecting the Property, (ii) all improvements therein are
within the lot lines and in compliance with any restrictions of records
or Laws relating to the location thereof, (iii) the location of set-back
lines, (iv) no easements or other conditions exist which would preclude
the Final Completion of the Project in accordance with all Laws, and (v)
such other details related thereto as Owner may request, which survey
shall be acceptable to Owner in all respects and which shall be updated
from time to time as may be reasonably requested by Owner;
(11) Evidence satisfactory to Owner that all utility services
necessary to obtain the Governmental Approvals or otherwise necessary
for the Final Completion of the Project in accordance with the Plans and
Specifications and the effective operation of the Facility, including
without limitation water, storm and sanitary sewer, oil or gas, electric
and telephone facilities, are available at the boundary of the Property
and are of sufficient capacity to adequately service the Property in
accordance with all Laws and requirements of all Governmental Agencies
having jurisdiction over the Property or the operation of the Facility;
(12) Evidence satisfactory to Owner of compliance of the
Plans and Specifications with all lease, deed, zoning and plan
restrictions and with all applicable building, zoning, subdivision,
land-use, health, sanitation, environmental protection and other Laws,
ordinances and regulations of Governmental Agencies;
(13) The written report of (i) a qualified geotechnical or
engineering firm approved by Owner concerning the presence of Hazardous
Substances on or in the Property, such report to disclose, at a minimum
(1) the results of a review of prior uses of the Property disclosed by
local public records, (2) contacts with local officials to determine
whether any record exists with respect to the disposal of Hazardous
Substances at, on or in the Property, (3) if deemed necessary by such
firm, or by Owner, the results of soil samples and groundwater samples
consistent with the highest recognized standard of engineering practice
and (4) evaluation of the surrounding areas for sensitive environmental
receptors, such as drinking water ▇▇▇▇▇ or aquifers, hospitals and
schools and for potential environmental hazards of any nature. In
addition, such report shall confirm that there is no condition existing
on or about the Property which is likely to require remediation and (ii)
a registered soils engineer, approved by Owner, containing the results
of appropriate soils tests and foundation recommendations;
(14) Three complete sets of the Plans and Specifications in
final form approved and initialed by Tenant and Developer and Owner or
letter identifying and approving same and signed by said parties;
(d) Transaction Documents. The Transaction Documents shall be in
full force and effect without modification or claim of default.
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4.2. Construction Advances.
(a) Construction Advance Accounts. All Construction Advances will be
made by wire transfer to an account designated in writing by Developer. All
costs incurred in connection therewith shall be included in the Cost of the
Work. At its election, Owner may make arrangements to have the amount of any
Construction Advance (or portion thereof) paid over to Contractor for the
account of Developer or may elect to pay any Construction Advance by issuing a
check jointly payable to Developer and the Contractor and any other person
supplying labor, equipment or materials to the Work ("Joint Checks").
Alternatively, any such Construction Advance may be deposited, at Owner's
election, in an appropriately designated and controlled special bank account
established for such purpose, and the execution of this Agreement by Developer
shall and hereby does constitute an irrevocable direction and authorization so
to advance Construction Advances. No further discretion or authorization from
Developer shall be necessary to warrant such direct advances or advance by Joint
Check and all such advances shall satisfy pro tanto the obligations of Owner
hereunder as fully as if made as direct cash Construction Advances to Developer
regardless of the disposition thereof made by Developer or the inability of the
Developer to obtain the endorsement of all payees on any Joint Check. Owner may
elect to advance Construction Advances in such other manner as Owner may
reasonably determine. Developer shall cause each Construction Advance under this
Agreement to be paid to the persons specified in the "Requisition" (as defined
in Section 4.3((a))((1))) giving rise to such Construction Advance immediately
after each Construction Advance.
(b) Deposit of Additional Funds. Developer agrees that if, at any
time and for any reason, Owner shall determine in consultation with the
Architect or the Inspecting Architect, if any, that (a) the undisbursed balance
of the Maximum Project Amount less Imputed Interest (i.e., the Maximum Project
Amount less the sum of the Commitment Fee plus previous Construction Advances
and Imputed Interest thereon) is or becomes insufficient to Finally Complete the
Project and permit the opening of the Facility or (b) the undisbursed balance of
any line-item on the Approved Budget (i.e., the amount stated for such line-item
on the Approved Budget less the sum of previous Construction Advances on account
of that line-item plus Imputed Interest thereon) is or becomes insufficient to
complete such line-item and the total cost necessary to complete such line item
(including the sum of all prior disbursements plus Imputed Interest thereon)
exceeds 105% of the amount stated in the Approved Budget therefor, as
applicable, as set forth in the Plans and Specifications (regardless of how such
condition may be caused), Developer will, within 15 days after written request
by Owner, either deposit with Owner such funds as will be necessary to complete
the Project and permit the opening of the Facility or such funds in excess of
105% of the amount stated in the Approved Budget for such line item, as
applicable, (as determined in Owner's good faith judgment) or otherwise provide
Owner with security satisfactory to Owner that such funds are available to
Developer to complete the Project, open the Facility or complete the line item,
as applicable.
4.3. Conditions to Construction Advances. In addition to the
conditions stated in Section 4.1, no Construction Advance shall be made by Owner
unless each and every one of the following conditions is fulfilled to Owner's
satisfaction:
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(a) Notice of Progress Payments and Accompanying Documents. At least
ten business days before the date upon which any Construction Advance is
desired, but not more than once in each calendar month unless Owner assents to
more frequent requisitions (without obligation to do so), Developer shall give
notice to Owner, specifying the total advance which is desired, accompanied by:
(1) Developer's requisition in substantially the form of
Exhibit H attached hereto, certified as true and correct by Developer,
together with (i) current invoices for the full amount covered by the
requisition and a statement of the purpose for which the current advance
is desired, (ii) an Application and Certificate for Payment (AIA
Document G702), executed by the Prime Contractor and Prime Architect
(and if required by Owner in its sole and absolute discretion by any
Inspecting Architect), showing in complete detail all monies paid out or
costs incurred on account of Cost of the Work since the prior
Requisition and specifying the particular line-items on the Approved
Budget from which each portion of the Construction Advance is to be made
and the percentage of completion of each such line-item, and (iii) a
Continuation Sheet (AIA Document G703) (collectively, the
"REQUISITION");
(2) The written certificate of the Prime Architect (and, if
required by Owner in its sole and absolute discretion, of any Inspecting
Architect) in substantially the form attached hereto as Exhibit I ;
(3) An endorsement issued by the Title Company (or adequate
assurances from the Title Company that it is committed to issue such
endorsement), as of the date of the making of such Construction
Advances, stating that there are no liens or other encumbrances on the
Property, the Project or the Facility (other than real estate taxes for
the then current year payment of which is not in default and the
Permitted Encumbrances) nor any instruments of record under which such
lien or encumbrance may be obtained;
(4) If required by Owner, lien releases with respect to
progress payments for any Contractor not receiving final payment and
with respect to final payment for all other Contractors and otherwise as
contemplated in Section 4.5 and/or satisfactory evidence that Developer
has procured, and delivered to Owner copies of, receipted bills or other
evidence of payment by Developer, reasonably acceptable to Owner,
showing payment out of the proceeds of prior Construction Advances to
all parties who have furnished equipment, supplies, materials or
performed labor of any kind in conjunction with the construction of the
Facility and who were to have been paid therefor, subject to amounts
being withheld by Developer in good faith as a result of any bona fide
dispute conducted in accordance with Section 6.16 or Section 8 of this
Agreement and as disclosed in writing to and approved in advance by
Owner;
(5) If required by Owner, inspection of and an acceptable
report on the Improvements by the Inspecting Architect, if any, as to
work actually done during the preceding period or periods;
(6) a survey by the engineer or surveyor referred to in
Section 4.1((c))((10)) hereof as of a date within 20 days following the
pouring of the foundation of the Facility showing the items specified in
Section 4.1((c))((10)) and no encroachment of the
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improvements on the Property on any boundary line, easement, building
setback line or other restricted area;
(7) The Approved Budget and Project Schedule approved by
Owner in accordance with this Agreement; and
(8) Such other items as Owner may reasonably require,
including without limitation all materials which Developer receives or
is entitled to receive from the Contractor.
(b) No Defaults. Developer shall not be in default of any of its
obligations under this Agreement or the Transaction Documents (and no event
shall have occurred which, with the giving of notice, lapse of time or both,
would constitute such a default) and all representations and warranties of
Developer and Tenant made in this Agreement or in any of the other Transaction
Documents shall be true and correct as of the date of each proposed Construction
Advances with the same effect as if made on such date.
(c) Aggregate Construction Advances Less than Maximum Project
Amount. The amount of the Construction Advances requisitioned by Developer will
not cause the aggregate amount of Construction Advances (inclusive of all
Developer Fees and Developer Incentive Fees paid to Developer) plus all costs
incurred by Owner in connection with the administration, operation, negotiation
and preparation of the Transaction Documents, including this Agreement, plus all
Imputed Interest at the time of such Construction Advances to exceed the Maximum
Project Amount.
(d) No Condemnation. No portion of the Property or the Project shall
be the subject of any proceeding by any Governmental Agency for the
condemnation, seizure, or appropriation thereof, nor the subject of any
negotiation for sale in lieu of condemnation, seizure or appropriation. Neither
the Facility nor the Property shall have been materially damaged or destroyed by
fire or other cause (or if so damaged or destroyed, Developer shall have
deposited sufficient proceeds with Owner to replace all Work which must be
demolished, removed or replaced).
(e) Satisfactory Inspections. Owner shall have received satisfactory
evidence that the Work and the Project are progressing as indicated in each
Requisition and Architect's Certification, including, if so requested by Owner,
evidence of satisfactory completion of any required inspections of any
Governmental Agencies having jurisdiction over the Property, the Project or the
Facility.
(f) No Proceedings. There shall be no actions, suits or other
proceedings pending or threatened against or affecting, Developer, Guarantor,
the Project, Architect or Contractor at law, in equity or before any
Governmental Agency (including without limitation any licensing board with
jurisdiction over Architect or Contractor) which, if adversely determined, would
substantially impair the timely Final Completion of the Work and the Project and
the opening of the Facility.
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(g) No Adverse Change. No event or circumstance shall exist, in the
reasonable judgment of Owner, which would preclude completion of the Project in
compliance with all Laws, in accordance with the Approved Budget and the Project
Schedule, on or before the Completion Date.
4.4. Additional Conditions to Final Advance. In addition to the items
required under Sections 4.1 and 4.3 , the following items shall also be
furnished by Developer to Owner prior to the final Construction Advances under
this Agreement (which final Construction Advances shall include the unpaid
balance of the Cost of the Work, including the retention described in Section
4.8, but in no event shall the total Construction Advances plus Imputed Interest
exceed the Maximum Project Amount; provided, however, that, to the extent that
minor pick-up work and other punch-list items costing less than $100,000 in the
aggregate remain to be completed at the time Developer would otherwise be
entitled to the final Construction Advances under this Agreement, Owner shall
retain from such Construction Advances a sum equal to 150% of the Architect's,
or at the election of Owner, the Inspecting Architect's, estimate of the cost of
completing all such punch-list and pick-up items until such items have been
completed to Owner's satisfaction):
(1) Certificates of Final Completion of the Project, in form
and substance reasonably acceptable to Owner, of the Prime Architect and
the Inspecting Architects, if any;
(2) Evidence of the Final Completion of the Project,
satisfactory to Owner, including without limitation, evidence of the
issuance of all Government Approvals;
(3) An endorsement issued by the Title Company which insures
that the Project has been completed free of all mechanics',
materialmen's, supplier's and similar liens and claims thereof;
(4) Evidence that Tenant, under the Lease, is in possession
of the Property and that the Commencement Date under the Lease has
occurred;
(5) An "as-built" survey by the engineer or surveyor
referred to in Section 4.1((c))((10)) hereof as of the date of Final
Completion of the Project showing the items specified in Section
4.1((c))((10)); and
(6) Evidence that Developer has caused the Contractor to
provide a lien waiver and affidavit of payment of all subcontractors,
laborers and materialmen; and
(7) Recordation of a valid notice of completion of the
Project as necessary to establish the commencement of the shortest
statutory period for the filing of mechanics', materialmen's, supplier's
and similar liens.
4.5. Lien Releases and Contest. In connection with and as a condition
to the payment of any Construction Advances, Owner may require lien releases or
affidavits from, or the submission of other appropriate forms by, Developer,
Contractor, trade contractors, subcontractors, suppliers or materialmen, as
Owner may deem desirable; provided that Developer shall have the right to
contest in good faith the validity of any such lien if Developer shall at
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Owner's option either (a) fully bond against the lien in a manner sufficient to
remove the lien from record title to the Property or (b) first deposit with
Owner security satisfactory to Owner in such amounts as Owner shall reasonably
require, but not more than 150% of the amount of the claim, and provided further
that Developer shall thereafter diligently proceed to cause such lien to be
removed and discharged.
4.6. Quality of Work. No Construction Advances shall be due or paid
to Developer unless all Work to the requested date of such Construction Advances
is completed in a good and workmanlike manner, in compliance with all Laws and
the Plans and Specifications and without defects, but Owner may make
Construction Advances before the same shall become due if Owner, in its sole and
absolute discretion believes it advisable so to do, and all such Construction
Advances shall be deemed to have been made pursuant to this Agreement.
(a) The making of any Construction Advances shall not be deemed an
approval or acceptance by Owner of the Work theretofore done or materials
theretofore furnished.
(b) Owner shall not be required to make any Construction Advances
hereunder until the Requisition therefor is approved by its representatives
making any investigations which Owner deems necessary.
4.7. Limitation on Construction Advances. Owner shall not be required
to disburse an aggregate amount for any line-item of labor, materials,
equipment, supplies or services during each stage of construction of the
Project, which exceeds 105% the amount allocated to that line-item in the
Approved Budget.
4.8. Retention. Owner shall only be required to advance 90% of the
Hard Costs requisitioned. The remaining ten percent of the amount requisitioned
for Hard Costs, shall be held by Owner as retention, and shall be disbursed when
the Project is Finally Complete (except for punch-list items or pick-up work
aggregating less than $100,000 which shall be disbursed in the manner specified
in Sections 4.1 and 4.3).
4.9. Additional Construction Advances. Developer agrees that Owner
shall assume no duty with respect to the Work except to make the Construction
Advances as provided in this Agreement, subject to the conditions set forth in
this Agreement. Owner shall, however, have the right, but not the obligation, to
make Construction Advances to Developer in excess of the amounts Owner is
obligated to make under this Agreement, as Owner may deem advisable for purposes
of the completion of the Project, and in that event (a) all such additional
Construction Advances shall be subject to and made pursuant to the provisions
hereof, (b) Developer shall execute and deliver to Owner such promissory
note(s), mortgages and other instruments as Owner may reasonably request in
order to evidence and secure the repayment of such additional Construction
Advances upon Owner's demand therefor and (c) such Construction Advances shall
bear interest at a rate per annum equal to the lesser of the maximum rate of
interest permitted by law or the Advance Rate from the date disbursed to the
date such disbursement and all interest thereon is paid.
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4.10. Set-Off Against Construction Advances. Any sum, if any, which is
payable by Developer or Tenant to Owner shall, at the election of Owner, be
deemed a Construction Advance by Owner to Developer pursuant to the provisions
of this Agreement and shall thereby diminish the amount which Owner would
otherwise be required to disburse under this Agreement.
4.11. Verification. Prior to the first Construction Advances, and as a
condition to any further Construction Advances under this Agreement, Owner may
take such action, and Developer hereby covenants and agrees to cooperate with
and assist Owner in any such action as Owner may deem appropriate, to verify
that the conditions precedent to Construction Advances under this Agreement have
been fulfilled and that Developer has complied with the same. Without limiting
the generality of the foregoing, prior to and as a condition to any Construction
Advances, Owner may forward to any and all Contractors or other persons
supplying labor, material, equipment or supplies to the Work, a request for
verification in order to confirm the correctness of any information previously
furnished to Owner by Developer pursuant to this Agreement. Developer hereby
consents to Owner's direct contact with any Architect or Contractor or other
person supplying material, equipment, labor or supplies to the Work. The return
of such verification in form and substance satisfactory to Owner shall be a
condition precedent to Construction Advances hereunder.
4.12. Construction Advances Held in Trust. Notwithstanding anything to
the contrary contained herein, Developer shall hold in trust all amounts
disbursed pursuant to this Agreement exclusively for the payment of the Cost of
the Work.
4.13. Approvals by Owner. Prior to any Construction Advances under
this Agreement, Owner shall approve the Approved Budget, the Project Schedule,
the Plans and Specifications, the Architect Agreement and the Contractor
Agreement as provided in this Section 4.13. Developer shall submit each of the
foregoing documents to Owner as soon as possible and Owner shall, within 15 days
after its receipt of each of the foregoing documents and any and all other
information related thereto as Owner may reasonably request either (a) approve
such document or (b) notify Developer, in writing, of Owner's reasonable and
specific grounds for its disapproval of any such document. If Owner shall fail
to notify Developer of its reasonable and specific grounds for its disapproval
of any such document within the foregoing 15 day period, such document shall be
deemed to have been approved. If Owner shall timely notify Developer of its
reasonable and specific grounds for its disapproval of any such document,
Developer shall, prior to any Construction Advances under this Agreement, revise
such document and submit the revised document to Owner for its further
consideration and approval. The foregoing process shall be repeated until all of
the documents to be approved by Owner pursuant to this Agreement have been
approved. Notwithstanding Owner's review and approval of any documents to be
approved by Owner, such approval shall not in any way diminish the
responsibilities of Developer under this Agreement and Owner shall not be
responsible for the content of such documents or the compliance of such
documents with the requirements of this Agreement or applicable Laws.
5. REPRESENTATIONS AND WARRANTIES.
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5.1. Representations and Warranties of Developer and Guarantor. As a
material inducement to Owner to enter into this Agreement, Developer and
Guarantor represent and warrant to Owner that:
(a) Formation and Qualification. Developer and Guarantor are
corporations duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and are duly qualified and in good standing in the
State, and have all requisite power and authority to enter into this Agreement
and the Transaction Documents to which Developer or Guarantor is a party and to
conduct their respective businesses and own and lease their respective
properties.
(b) Transaction Documents. The execution, delivery and performance
of the Transaction Documents to which Developer and Guarantor are parties are
within the Developer's and Guarantor's power and authority, have been duly
authorized by all necessary action and do not and will not (1) require any
authorization which has not been obtained, (2) contravene the Charter Documents
of Developer or Guarantor, any applicable Laws or any agreement or restriction
binding upon or otherwise affecting Developer or Guarantor or their respective
properties, or (3) except to the extent created under the Transaction Documents,
result in or require the creation or imposition of any Lien upon or with respect
to any property now owned by Developer or Guarantor. No authorization of
Developer or Guarantor is required for the enforcement by Owner of its Remedies
under the Transaction Documents. Each Transaction Document, when executed and
delivered, will constitute the legal, valid, and binding obligation of Developer
and Guarantor, enforceable against Developer and Guarantor, as applicable, in
accordance with its terms, except as enforcement may be limited by principles of
equity, bankruptcy or similar Laws affecting the rights of creditors generally.
(c) Financial Information. The Financial Statements of Developer and
Guarantor which have been furnished to Owner fairly present Developer's and
Guarantor's financial condition as at the dates of such Financial Statements and
results of operations, properties or prospects of Developer and Guarantor.
Developer and Guarantor have filed all tax returns required to be filed by them
(and all such returns are true, accurate and complete in all material respects)
and have paid all Taxes due pursuant to such returns or otherwise or in respect
of any of their properties and to the current actual knowledge of Developer and
Guarantor, no basis exists for additional assessments which have not been
adequately reserved against in the Financial Statements referred to above except
as expressly otherwise disclosed to Owner in writing by Developer or Guarantor.
(d) Litigation and Other Matters. Except as otherwise disclosed in
writing to Owner (1) no actions or other proceedings affecting or relating to
Developer or Guarantor or any portion or aspect of the Project are pending or,
to the best knowledge of Developer and Guarantor, threatened and (2) no actions
or other proceedings are pending, or to the best knowledge of Developer or
Guarantor, threatened against or affecting Developer or Guarantor or any of
their property which (as regards both clauses (1) and (2) immediately
preceding), if determined adversely to Developer or Guarantor, could materially
impair the financial condition, operations, properties or prospects of Developer
or Guarantor or the ability of Developer or Guarantor to perform their
respective obligations under the Transaction Documents.
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(e) Hazardous Substances. To Developer's knowledge (a) no
underground storage tanks are located on the Property or were located on the
Property and subsequently removed or filled, (b) no asbestos or asbestos
containing material has been or will be installed, used, incorporated into or
disposed of on the Property, (c) no Hazardous Substances are located in the
immediate vicinity of the Property, no property adjoining the Property is being
used or has ever been used at any previous time for the disposal, storage,
treatment, processing or other handling of Hazardous Substances nor has any
property adjoining the Property been affected by any release of or contamination
by any Hazardous Substances and (d) no investigation, administrative order or
notice, consent order and agreement, litigation or settlement with respect to
Hazardous Substances is proposed, threatened, anticipated or in existence with
respect to any portion of the Property. The Property and its existing uses and,
to Developer's knowledge after diligent investigation and inquiry, its prior
uses comply and at all prior times have complied with all applicable Laws or
other requirements relating to environmental matters or Hazardous Substances.
There is no condition on the Property which (a) to Developer's knowledge is in
violation of any applicable governmental or other requirements relating to
Hazardous Substances, and (b) the Developer has not received any communication
from any Governmental Agency or instrumentality or other party that any such
condition exists. The Property is not currently on and, to the Developer's
knowledge after diligent investigation and inquiry, has never been on any
federal or state "Superfund" or "Superlien" list, nor is the Developer aware the
Property is anticipated or threatened to be placed on any such list. With
respect to any Property located within the State of Indiana, the Property is not
subject to the Emergency Planning and Community Right to Know Act nor is it
"property" within the meaning of Section 13-11-2-174 of the Indiana Code.
(f) Documents and Other Information. All documents and other
information delivered to Owner pursuant to any of the Transaction Documents to
which Developer or Guarantor are parties are and will be complete and correct in
all material respects at the time of delivery to Owner.
5.2. Representations and Warranties of Owner.
(a) Formation and Qualification. Owner is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Indiana and is duly qualified and in good standing under the Laws of the
State of Indiana and has all requisite power and authority to enter into this
Agreement, and each other Transaction Document to which it is a party and to
conduct its business and own and lease its properties.
6. DEVELOPER'S COVENANTS.
Developer agrees that it shall comply with all of the terms and
conditions of this Agreement and that it shall:
6.1. Completion. Take all steps and use its best efforts to Finally
Complete the Project as expeditiously as possible in accordance with the Plans
and Specifications, prosecute the Work and construction of the Project without
cessation except for delays caused entirely by Unavoidable Delays and, in all
events, cause the Substantial Completion of the Project on or
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before the Completion Date whether or not the Construction Advances under this
Agreement are sufficient therefor. The Project shall be constructed entirely on
the Property and shall not encroach upon or overhang any easement, right of way,
building set-back line or land or property right of others without the prior
written consent of Owner, which consent may be withheld in Owner's sole and
absolute discretion.
6.2. Title to Materials and Equipment. Use only "Fixtures" (as
defined in the Lease), materials and equipment to which Developer has absolute
title, except as otherwise specifically approved in writing in advance by Owner.
6.3. Compliance with Laws. (i) Comply with all applicable building,
fire, health, sanitation, environmental protection, land-use, subdivision and
zoning ordinances and regulations and other Laws promulgated by any Governmental
Agency or instrumentality, and all restrictions or other encumbrances affecting
title to or Owner's leasehold interest in the Property, (ii) fulfill in every
way the applicable requirements of any Governmental Agency or instrumentality
having jurisdiction over the Property, the Work or the operation of the Facility
and any board of fire underwriters and (iii) furnish Owner with such evidence
thereof as Owner may reasonably require.
6.4. Storage of Materials. Ensure that all materials supplied for, or
intended to be utilized in, the construction of the Project, but not yet affixed
thereto or incorporated therein, are stored on the Property or at such other
location or locations as may be approved in advance by Owner in writing, with
adequate safeguards, including such as may be reasonably required by Owner, to
prevent loss, theft, damage or commingling with other materials.
6.5. Insurance. Maintain or cause to be maintained policies of
insurance fire, extended coverage against other hazards, all risk, builder's
risk and any other insurance Owner may from time to time reasonably require
(including property insurance with respect to any completed portions of the
Project or the Work) and such additional insurance as may be required by the
Contractor Agreement (or any other contract with any person supplying labor,
material, equipment or supplies to the Work) and by applicable workers
compensation laws, all with such companies and in such form and amounts and on
such other terms as shall be reasonably satisfactory to Owner, insuring the
Property and any Fixtures, materials, supplies, scaffolds, equipment, tools,
furnishings and other property on the Property or acquired for use on the
Property up to the full replacement cost of such property, naming Owner as the
primary loss-payee and providing that loss proceeds shall be payable to Owner
and providing that Owner's interest shall be insured regardless of any breach by
Developer of any warranties, declarations or conditions of such policies.
Developer shall also maintain broad form general public liability insurance
regarding the Property and the Project in a minimum coverage amount with respect
to any primary policy of $1,000,000 per person, $3,000,000 per incident and an
additional excess or umbrella coverage of $10,000,000 combined single limit with
a maximum deductible of $10,000, which general liability insurance shall name
Owner as an additional named insured. All such policies shall be issued by
insurers duly authorized to issue such policies within the State and shall
require at least ten days' written notice to Owner prior to cancellation or
modification thereof. Developer shall furnish Owner with certificates or other
evidence satisfactory to Owner
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of compliance with the foregoing insurance provisions (including duplicate
original policies certified by the insurer if requested by Owner), and upon
default continuing beyond applicable grace periods, Owner may act either in its
name or as attorney for Developer (for that purpose by these presents Developer
hereby irrevocably constitutes Owner its true and lawful attorney-in-fact, with
full power of substitution, which power is coupled with an interest and Owner is
hereby irrevocably so duly authorized and appointed with full power of
revocation) in obtaining, adjusting, settling and canceling such insurance and
endorsing any drafts in payment of any loss. All of the foregoing policies shall
be assigned to Owner upon request. All of the foregoing policies shall expressly
waive any right of subrogation on the part of the insurer against Owner and its
shareholder(s). Developer hereby waives any and all right to claim or recover
against Owner and its directors, officers, shareholders, employees, agents,
representatives, affiliates and their respective successors and assigns, for
loss or damage to Developer or its property or the property of others under
Developer's control from any cause insured against or required to be insured
against by the provisions of this Section 6.5.
6.6. Financial Information. Furnish Owner with Financial Statements
of Guarantor, Developer and Tenant (including any regular statements which are
delivered to any investors therein or investors in Tenant Parent), details
relating to the financial condition of Guarantor, Developer and Tenant and such
budgets and revisions of budgets as Owner may from time to time reasonably
request in order to show the most current estimated cost of the Project, opening
the Facility and the Work and the amount of funds required, at any given time,
to Finally Complete the Project. In addition, upon the request of Owner,
Developer shall furnish Owner (or the Person(s) designated by Owner) a
certificate stating that no Event of Default exists under this Agreement or any
other Transaction Document and setting forth such other information regarding
the Developer, Guarantor, Tenant or the Project as Owner may reasonably request
from time to time.
6.7. Maintenance of Agreements. Maintain in full force and effect,
without modification (except as approved by Owner in advance in writing), this
Agreement, the Transaction Documents, the Architect Agreement, the Contractor
Agreement and any and all other agreements between Developer and any persons
supplying material, equipment, labor or supplies to the Work (collectively, the
"Material Agreements") and any instruments or agreements relating thereto and
perform all of its obligations under the Material Agreements.
6.8. Notice of Certain Matters. Give forthwith to Owner notice of
each of the following:
(a) any claim of any party of any breach under this Agreement or the
Material Agreements;
(b) any event which, with the giving of notice, the passage of time,
or both, would constitute a breach or default under this Agreement, the Material
Agreements or any Transaction Document;
(c) any litigation or claim affecting or relating to any one or more
of the Transaction Documents, the Property, the Project, the Work or the
Facility;
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(d) any dispute with any Governmental Agency relating in any manner
to the Work, the Project or the Facility;
(e) any commencement or threat of commencement of proceedings in
condemnation, eminent domain or similar proceedings relating to the Property,
the Project or the Facility
(f) any circumstance which may render the Approved Budget inaccurate
in any material respect; and
(g) any other event which may cause a material adverse change in the
condition of Developer or Guarantor.
6.9. Prevention of Liens. Not permit the recording of nor suffer to
exist any architect's, artisan's, materialman's, mechanic's or similar lien or
stop notice relating to the Property, the Work, the Project or the Facility and
not permit or suffer to exist any liens, mortgages, attachments (by trustee
process or otherwise) or executions or levies thereon or on any insurance
proceeds relating thereto or other encumbrances relating to the Property, the
Work or the Facility, any materials stored thereon or therein, or any sums due
or to become due to Developer hereunder and, in the event of recording of any
such stop notice, encumbrance or lien, at the request of Owner, Developer shall
immediately remove the same from the record by bonding, payment or otherwise.
Without limitation on the foregoing, Developer shall (a) pay and discharge all
claims for labor, materials, equipment or services furnished in connection with
the Work or the Project and (b) take such action as Owner may demand to release
Owner, the Property, the Work and the Facility from any obligation or liability
with respect to any lien, stop notice or claim therefor made by any Person
furnishing labor, services, equipment or materials to the Work or the Project.
6.10. Payment of Assessments. Except to the extent being contested in
good faith in accordance with Section 8 below, pay or cause to be paid prior to
the time when interest or penalties would accrue thereon all Impositions
relating to the Property or the Facility or the materials stored thereon or
therein and furnish Owner within 30 days after the date upon which any tax,
charge or assessment is due and payable, official receipts of the appropriate
authority, or other proof as are reasonably satisfactory to Owner, evidencing
the payment thereof.
6.11. Damage or Destruction; Eminent Domain. If any casualty occurs,
or if a taking occurs, immediately notify Owner and pay or cause to be paid the
insurance proceeds or condemnation award, as the case may be, to Owner alone, to
be applied in Owner's discretion, and in such order as Owner may determine, (a)
to the reasonable costs of collection of such amounts, (b) to repayment to Owner
of the outstanding amount of any loans received by Developer under Paragraph 6.8
of this Agreement, or (c) in accordance with this Agreement, as if payments from
such proceeds or awards were Construction Advances hereunder, to the
restoration, replacement and rebuilding of the Facility.
(a) If the Property or the Facility or any part thereof shall be
damaged by fire or other hazards against which insurance is held, if and when
Owner releases each portion of the insurance proceeds for the repair and
restoration of the Facility, Developer shall proceed with the
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restoration thereof, in accordance with the Plans and Specifications and subject
to all provisions of this Agreement and diligently prosecute the work of
restoration to completion even though the insurance proceeds plus the remaining
Construction Advances which Owner is obligated to make hereunder are not
sufficient therefor. No part of the cost of such restoration shall be made the
basis of any application for Construction Advances under this Agreement unless
such proceeds of insurance shall first be exhausted in the restoration of the
damage to the Facility.
(b) If notwithstanding the requirements of Section 6.5 above, the
proceeds of any insurance are paid to or otherwise received by Developer,
Developer shall hold such proceeds in trust for the benefit of Owner and shall
disburse all such funds to Owner for application as provided herein upon Owner's
demand therefor without deduction or offset of any kind.
6.12. Indemnification. Defend, hold harmless and indemnify Owner and
its directors, officers, shareholders, employees, agents, representatives,
affiliates and their respective successors and assigns from any claim arising
from (a) the performance or non-performance of the Work, (b) Developer's,
Contractors' and Architects' activities upon the Property and the activities of
such persons', agents, subcontractors, employees, materialmen and suppliers, or
(c) injury or damage to persons or property which may arise in connection with
the Facility, the Project, the Work or the Property.
6.13. Inspections. Permit Owner or its representatives, including
without limitation the Inspecting Architects, if any, to enter the Property at
any reasonable time to inspect the progress and quality of the Work and to
examine Developer's and Contractor's books of account so far as the same apply
to the Property and the Work at such reasonable times as Owner may request for
the purpose of determining Developer's compliance with the Plans and
Specifications, Project Budget, Project Schedules, and the Material Agreements,
and furnish Owner with such information as Owner may reasonably request for
determining such compliance.
6.14. No Material Changes. Not approve any material change in the
Plans and Specifications or execute any material change order under the
Contractor Agreement, any subcontract thereunder or under any other Agreement
with any person supplying equipment, labor, material or supplies to the Work
("material change" and "material change order" shall refer to a change or change
order exceeding $20,000 in cost so long as all change orders not requiring
Owner's consent hereunder shall not aggregate more than $150,000) nor assign any
such instrument or Developer's rights thereunder or under this Agreement or
permit Tenant to enter into any lease relating to the Property without in each
instance obtaining the prior written consent of Owner. With respect to any
amendments or supplements to the Plans and Specifications, Developer shall file
all such amendments and supplements with, and obtain all required Government
Approvals from, all Governmental Agencies and instrumentalities. Copies of such
approvals shall be filed forthwith with Owner.
6.15. Sign. Upon request of Owner, erect a sign on the Property at a
location selected by Owner indicating that the Facility is being financed by
Owner (subject to compliance with the ordinances of the municipality in which
the Property are located).
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6.16. Contests. To contest, vigorously and in good faith, any
proceedings which may be filed seeking to enjoin or otherwise prevent or declare
invalid or unlawful the construction, occupancy, maintenance or operation of the
Facility (or any portion thereof) and, in the event of an adverse ruling or
decision, to prosecute all allowable appeals therefrom, if deemed legally
feasible by Owner, and without limiting the generality of the foregoing, to
resist the entry or seek the stay of any temporary or permanent injunction that
may be entered, and to use its best efforts to bring about a favorable and
speedy disposition of all such proceedings referred to in this Section 6.16. All
such proceedings (including all of Owner's costs and reasonable fees and
disbursements of Owner's counsel in connection therewith) shall be at
Developer's sole cost and expense.
6.17. Material Contracts. Not enter into any material contract or
agreement with any person supplying equipment, labor, material or supplies to
the Work which would require the payment of more than $20,000 in any single
instance or $150,000 in the aggregate without the express prior written consent
of Owner.
6.18. No-Lien Contract. To the extent permitted under the Laws of the
State, ensure that the Prime Contract and all other Contractor Agreements are
executed and recorded in such a manner as to prevent the filing of liens with
respect to the Project or the Work Without limitation on the generality of the
foregoing, Developer shall insure that all Work performed within the State of
Indiana is performed under a No-Lien Agreement which complies in all respects
(including the recordation thereof and of the Contractor Agreements, including
but not limited to the Prime Contract) in the real property records of the
County in which the Project is located pursuant to Section 32-3-8-1 et seq. of
the Indiana Code.
6.19. Hazardous Materials. If an investigation or any monitoring of
site conditions or any cleanup, containment, restoration or other remedial work
(collectively, "REMEDIAL WORK") is required under any applicable Laws, or due to
the presence of Hazardous Substances at or threatened to be released onto or
upon the Property or otherwise required to cause the Property and the Project to
be free of all Hazardous Substances, Developer shall perform or cause to be
performed all Remedial Work at no cost or expense to Owner. All such Remedial
Work shall be performed expeditiously, in accordance with all applicable Laws
(including any requirement for a remedial action plan or other plan for the
performance of the Remedial Work, which plan shall have been approved by the
applicable Governmental Agencies prior to the commencement of the Remedial
Work). Developer shall protect, defend, indemnify and hold Owner, the Property,
the Project and the Work harmless from and against the cost of any Remedial Work
required to be performed under this Agreement and the presence of Hazardous
Materials on the Property at any time during the construction of the Project or
upon Final Completion thereof.
6.20. Certificates of Occupancy. The Developer shall furnish Owner a
copy of the final certificate of occupancy for the Project, as well as any
related operating licenses or other certificates of authority (unless extended
by Owner in Owner's reasonable discretion) on or prior to the Completion Date
(but no later than the date required by any Governmental Agency or Governmental
Approval) and satisfy within such period any other conditions, if any, necessary
to trigger the obligations of Lessee under the Lease to commence the payment of
rent. The
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commencement and first payment by Lessee of said rent payments under the Lease
shall be a condition of Owner's payment obligation with respect to the final
installment of the Developer's fee.
7. EVENTS OF DEFAULT AND REMEDIES OF OWNER.
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:
(a) Developer shall fail to perform any material term, covenant or
condition of this Agreement or any documents executed in connection herewith and
such failure is not cured by Developer within a period of thirty (30) days after
receipt by Developer of notice thereof from Owner, unless such failure cannot
with reasonable due diligence be cured within a period of thirty (30) days, in
which case such failure shall not be deemed to continue if Developer proceeds
promptly and with reasonable due diligence to cure the failure and thereafter
diligently completes the curing thereof as soon as reasonably possible but in
all events within a period of sixty (60) days after receipt by Developer of the
notice referred to above in this subparagraph;
(b) any representation or warranty of Developer or Guarantor
contained in this Agreement or any Transaction Document or made in connection
with the Project, this Agreement or any Transaction Document proves to have been
incorrect in any material respect when made or thereafter becomes incorrect in
any material respect;
(c) Developer is enjoined by any court or other Governmental Agency
from constructing the Project or entering into or performing its obligations
under this Agreement or any other Transaction Document and such injunction
continues unreleased and unstayed for a period of forty five (45) days from the
date of issuance;
(d) Without Owner's consent, Guarantor or Developer is dissolved or
liquidated or merged with or into any other Person or any election is made or
proceedings commenced in furtherance of any such dissolution or liquidation or
Developer or Guarantor otherwise ceases to continue to validly exist and remain
in good standing under the Laws of its State of organization or fails to remain
duly qualified and in good standing under the Laws of the State of Indiana or
all or substantially all of the assets of Developer or Guarantor are sold or
otherwise transferred
(e) Guarantor ceases to own 100% of the capital stock of Developer
or, after the completion of the Initial Public Offering of Guarantor (as
contemplated in Section 10.3 of the Facility Agreement), suffers a Change in
Control;
(f) Developer or Guarantor files for protection under the U.S.
Bankruptcy Code or under any similar Laws regarding insolvency or protection of
debtors from claims of creditors;
(g) Developer or Guarantor is subject to an order for relief by the
bankruptcy court or is unable or admits in writing its inability to pay its debt
as they mature or makes an assignment for the benefit of creditors or Developer
or Guarantor applies for or consents to the appointment of any receiver, trustee
or similar official for it or for all or any part of its property (or any such
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appointment is made without its consent and the appointment continues
undismissed, undischarged or unstayed for sixty (60) days from commencement
thereof); or Developer or Guarantor institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
custodianship, conservatorship, liquidation, rehabilitation or similar
proceeding relating to it or to all or any part of its property under the Laws
of any jurisdiction (or any such proceeding is instituted without its consent
and continues undismissed for sixty (60) days from commencement); or any
judgment, writ, warrant of attachment or execution or similar process is issued
or levied against any property of Developer or any Guarantor and is not
released, vacated or fully bonded within sixty (60) days after its initial issue
or levy;
(h) Work on the Project shall have ceased for a period of ten (10)
consecutive business days for any reason other than an Unavoidable Delay
(i) Any circumstance exists which would cause the Project not to be
Substantially Complete on or prior to the Completion Date or the Project is not
in fact Substantially Complete on or prior to the Completion Date; and
(j) An Event of Default shall have occurred under the Facility
Agreement or any other Transaction Document (including without limitation the
Completion Guarantee) by reason of the act or failure to act of Developer or
Guarantor.
7.2. REMEDIES OF OWNER. Upon the occurrence of any Event of Default
hereunder by Developer, Owner may, without further notice to or demand, if any,
upon Developer, which are expressly waived by Developer (except for notices or
demands otherwise required by applicable Laws to the extent not effectively
waived by Developer and any notices or demands specified in the Transaction
Documents), exercise any one or more of the following Remedies as Owner may
determine:
(a) Owner may recover all previously paid transaction expenses,
Developer fees and accrued and unpaid interest on Construction Advances at the
Advance Rate through the date of such Event of Default and at the Default Rate
thereafter, terminate further Construction Advances to Developer and recover
damages, resulting from Developer's default including, but not limited to, all
costs and expenses incurred by Owner in the negotiation and preparation of the
Transaction Documents relating to the Project, all costs of appraisal, title
fees, premiums and costs, recording fees and transfer costs and other closing
costs incurred by Owner in connection with this Agreement and the acquisition of
the Property, funds advanced by Owner in connection with the performance by
Owner (if Owner so elects in its sole and absolute discretion) of any
obligations of Developer or Guarantor which Developer or Guarantor has not
timely performed and any other expenditure made by Owner pursuant to any
Transaction Document;
(b) Owner may terminate Developer's rights with respect to the
Project and perform any of Developer's obligations in such manner as Owner may
reasonably determine; or
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(c) Owner may proceed to protect, exercise and enforce any and all
other Remedies provided under the Transaction Documents or by applicable Laws.
7.3. All actual and reasonable costs, expenses, charges and advances
of Owner in exercising any such remedies (including without limitation costs of
attorneys' and staff fees including costs of preparation for litigation
computerized research, telephone, fax, mileage, depositions, postage,
photocopies, process service, video tapes and similar expenses) shall be payable
by Developer to Owner as transaction expenses in accordance herewith. 7.3.
Remedies Cumulative. Each of the Remedies of Owner provided in the Transaction
Documents is cumulative and not exclusive of, and shall not prejudice, any other
Remedy provided in the Transaction Documents or by applicable Laws. Each Remedy
may be exercised from time to time as often as deemed necessary by Owner, and in
such order and manner as Owner may determine. No failure or delay on the part of
Owner in exercising any Remedy shall operate as a waiver of such Remedy; nor
shall any single or partial exercise of any Remedy preclude any other or further
exercise of such Remedy or of any other Remedy. No application of payments, or
any advances or other action by Owner, will cure or waive any Event of Default
or prevent acceleration, or continued acceleration, of amounts payable under the
Transaction Documents or prevent the exercise, or continued exercise, of any
Remedies of Owner.
8. PERMITTED CONTESTS.
Developer may contest by appropriate action any Imposition, and Owner
shall have no right to pay such Imposition on Developer's behalf during the
pendency of such contest, provided that (a) no "Event of Default" has occurred
and is continuing under this Agreement or under any of the other Transaction
Documents; (b) Developer has given Owner written notice that Developer is
contesting the application, interpretation or validity of the law, regulation,
order or agreement pertaining to the Imposition by appropriate legal or
administrative proceedings conducted in good faith and with due diligence and
dispatch, (c) such contest shall not subject Owner or any of its affiliates to
any assignment of all or any portion of the Owner's interest in any of the
Project to civil or criminal liability and does not jeopardize any such party's
interest in the Project, and (d) Developer shall give such security or
assurances as may be reasonably required by Owner to ensure ultimate compliance
with all legal or contractual requirements pertaining to the Imposition (and
payment of all costs, expenses, interest and penalties in connection therewith)
and to prevent any sale, forfeiture or loss by reason of nonpayment or
noncompliance.
9. GUARANTY OF COMPLETION.
If, for any reason whatsoever (including, without limitation, any
contingency under the Contractor Agreement), any Contractor shall abandon the
construction of the Project or fail to Finally Complete the Project prior to the
Completion Date and pay all costs therefor, then, in any such event, the
Developer shall, at the Developer's sole cost and expense, cause the Project to
be Finally Completed, prior to the Completion Date, in accordance with the Plans
and Specifications, free and clear of any Liens, including without limitation
liens for labor, equipment, supplies or materials entered or filed against the
Property or the Project in connection with the Work. Upon the
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occurrence of any default by the Contractor under the Contractor Agreement, the
Developer shall promptly notify Owner and shall, without notice or demand by
Owner, (i) assume direct responsibility and control over the construction and
Final Completion of the Project and the payment of all subcontractors, (ii)
proceed diligently and with dispatch to cure the default and (iii) Finally
Complete the Project in accordance with the terms and conditions of this
Agreement and the Contractor Agreement. Developer hereby agrees that any and all
rights of the Developer in and to the Property, whether by lien or otherwise,
which arise by virtue of the performance of any of the Developer's obligations
pursuant to this Agreement are, and at all times shall be and remain subject and
subordinate to the Lease and the terms and conditions of each of the other
Transaction Documents and Developer further agrees to execute, acknowledge and
record such documents in the county in which the Property is located as Owner
may deem necessary in order to implement and evidence such subordination.
10. GUARANTY OF PROJECT COSTS.
Developer hereby unconditionally covenants and guaranties to pay from
its own funds (a) any cost, fee or expense required to Finally Complete the
Project which is excluded from the Cost of the Work and (b) the amount, if any,
by which the sum of the Cost of the Work, Imputed Interest and all other costs
or expenses required for the development, construction and Final Completion of
the Project exceeds the Maximum Project Amount, for any reason whatsoever, even
if beyond the control of the Developer (including, by way of example, but not
limitation, construction delays due to Unavoidable Delays, shortages of
materials or obtaining necessary permits or approvals). If the sum of the total
Cost of the Work, the Imputed Interest and the other costs and expenses required
to Finally Complete the Project exceeds the Maximum Project Amount, Developer
shall immediately pay any and all such costs and expenses in excess of the
Maximum Project Amount which are required to Finally Complete the Project and
open the Facility, without requirement of demand or notice by Owner.
11. TERM.
11.1. Term. The term of this Agreement shall commence on the date
hereof and shall, unless sooner terminated as provided in Section 7.2((b))or
Section 12.8 below, or unless extended by agreement between Developer and Owner,
terminate upon Final Completion of the Project.
11.2. Termination by Developer. Developer may terminate this Agreement
following forty five (45) days written notice to Owner if the Developer has
fully complied with all of its obligations hereunder and under the Transaction
Documents, has satisfied all conditions for an advance of funds under this
Agreement and no Event of Default exists, and Owner nevertheless shall fail to
advance funds required under this Agreement and such failure is not cured within
such forty-five (45) day period. Upon such a termination, Developer shall also
be entitled to exercise an option to purchase the Project in its then current
condition (which option must be exercised, and the Purchase closed, if at all,
within ninety (90) days following the end of such aforesaid forty-five (45) day
period). The purchase price shall equal all Approved Budget funds previously
advanced or deemed advanced excluding fees and interest to Owner.
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12. MISCELLANEOUS.
12.1. Waiver of Trial by Jury. THE PARTIES TO THIS AGREEMENT DESIRE TO
AVOID THE ADDITIONAL TIME AND EXPENSE RELATED TO A JURY TRIAL OF ANY DISPUTES
ARISING HEREUNDER. THEREFORE, IT MUTUALLY AGREED BY AND BETWEEN THE PARTIES
HERETO, AND FOR THE1R SUCCESSORS AND ASSIGNS, THAT THEY SHALL AND HEREBY DO
WAIVE TRIAL BY JURY OF ANY CLAIM, COUNTERCLAIM OR THIRD PARTY CLAIM, INCLUDING
ANY AND ALL CLAIMS OF INJURY OR DAMAGES, BROUGHT BY EITHER PARTY AGAINST THE
OTHER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT AND THE
RELATIONSHIP WHICH ARISES HEREFROM. THE PARTIES ACKNOWLEDGE AND AGREE THAT THIS
WAIVER IS KNOWINGLY, FREELY AND VOLUNTARITY GIVEN, IS DESIRED BY ALL PARTIES,
AND IS IN THE BEST INTEREST OF ALL PARTIES.
12.2. Notice. Any and all notices, demands or other communications
(collectively, a Notice") required or desired to be given hereunder by any party
shall be in writing and shall be validly given or made to another party if
served either personally or if sent by Federal Express, Express Mail or other
similar overnight mail service, or if transmitted via facsimile, or if deposited
in the United States mail, certified or registered, postage prepaid, return
receipt requested. If such Notice is served personally, service shall be deemed
made conclusively at the time of such personal service. If such Notice is sent
by Federal Express, Express Mail or other similar overnight mail service,
service shall be deemed made conclusively on the date of delivery or refusal of
delivery. If such Notice is sent via facsimile, such service shall be deemed
made conclusively upon confirmation of transmission of such facsimile. If such
Notice is sent by certified or registered mail, such service shall be
conclusively deemed made seventy-two (72) hours after the deposit thereof in the
United States mail addressed to the party to whom such Notice is to be given as
hereinafter set forth:
If to Owner: AHP of Indiana, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President and General Counsel
If to Developer: BCC Development and Management Co.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq
With copies to: ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, L.L P
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Addresses for notice may be changed from time to time by written Notice to all
other parties.
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12.3. Governing Law This Agreement shall be interpreted according to
the laws of the State of [Indiana]. All disputes hereunder shall be adjudicated
in the federal courts sitting in the State of [Indiana], or should such courts
refuse to recognize jurisdiction over such matters, the courts of the State of
[Indiana].
12.4. Assignment. Neither party shall assign its rights and
obligations under this Agreement without the prior written approval of the other
party except that Developer may assign its rights and obligations to a
wholly-owned subsidiary or an affiliate of Developer. Developer shall provide
notice to Owner of such assignment. No such assignment shall relieve Developer
or Guarantor of its obligations hereunder.
12.5. Entire Agreement. This Agreement constitutes the entire
Agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior agreements, oral or written and all other
communications between the parties relating to such subject matter.
12.6. Amendments. This Agreement shall not be modified or amended
except by mutual written agreement.
12.7. Waiver of Breach. The waiver by either party of a breach or
violation of any provisions of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or other
provision.
12.8. Severability. In the event any provision of this Agreement is
held to be unenforceable or invalid for any reason, this Agreement shall remain
in full force and effect and enforceable in accordance with its terms
disregarding such enforceable or invalid provision; provided, however, that in
the event that a provision of this Agreement is rendered invalid or
unenforceable and its removal has the effect of materially altering the
obligations or benefits to either party, the party so affected shall have the
right to terminate this Agreement upon thirty (30) days prior written notice to
the other party.
12.9. Captions and Headings. The captions or headings in this
Agreement are made for convenience and general reference only and should not be
construed to describe, define or limit the scope and intent of the provisions of
this Agreement.
12.10. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same Agreement.
12.11. Binding Effect. This Agreement shall be binding and shall inure
to the benefit of the parties hereto, and their respective heirs, legatees,
executors, administrators, legal representatives, successors and assigns.
12.12. No Rule of Construction. The parties acknowledge that all
parties hereto, and their counsel, have read and fully negotiated all of the
language used in this Agreement. The parties acknowledge that, because all
parties and their counsel participated in negotiating and drafting
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this Agreement, no rule of construction shall apply to this Agreement which
construes ambiguous and unclear language in favor of or against any party
because such party drafted this Agreement.
12.13. No Third Party Beneficiary. This Agreement is solely for the
benefit of the parties hereto and shall not inure to the benefit of any
individual or entity not a party to this Agreement.
12.14. Time is of the Essence. With respect to all provisions of this
Agreement, time is of the essence
12.15. Other Terms The term "document" is used in its broadest sense
and encompasses agreements, certificates, opinions, consents, instruments and
other written material of every kind. The terms "including" and "include" mean
"including without limitation" and "including, but not limited to". The term
"any" as a modifier to any noun, shall be construed to mean "any and/or all"
preceding the same noun in the plural The terms "herein" "hereunder" and other
similar compounds of the word "here" refer to the entire document in which the
term appears and not to any particular provision or section of the document in
which the term appears and not to any particular provision or section of the
document. In all cases where Owner's approval or consent is required hereunder,
such approval or consent must be in writing and may be withheld in Owner's sole
and absolute discretion.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the 1st
day of February 1998, to be effective as of the day and year first above
written.
OWNER:
AHP OF INDIANA, INC, DEVELOPER:
an Indiana corporation
BCC DEVELOPMENT AND MANAGEMENT
CO., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------_
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
GUARANTOR:
BALANCED CARE CORPORATION
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
40
Schedule to Exhibit 10.74 filed pursuant to Instruction 2 to Item
601(a) of Regulation S-K
Development Agreement
Location Owner
Jackson, TN AHP of Tennessee, Inc.