EX
10.77.1
NORTH PHOENIX; ARIZONA
LEASEHOLD IMPROVEMENT AGREEMENT
AMONG
MEDITRUST ACQUISITION CORPORATION I
AND
EMERITUS PROPERTIES I, INC.
LEASEHOLD IMPROVEMENT AGREEMENT
THIS LEASEHOLD IMPROVEMENT AGREEMENT is made as of
December 30, I 997, by and among EMERITUS PROPERTIES I,
INC., a Washington corporation (the
"Lessee"), and MEDITRUST ACQUISITION CORPORATION I, a
Massachusetts corporation (the "Lessor").
l. BACKGROUND
l.1 Lessee.
Lessee is a corporation which is a wholly-owned
Subsidiary of the Guarantor (as hereinafter defined).
The Guarantor is a corporation the stock of which is
publicly traded on the American Stock Exchange.
1.2 The Land and Existing Improvements.
Lessor is the owner of a certain parcel of land
located in the City of Phoenix, Maricopa County,
Arizona and more particularly described on EXHIBIT A
(the "Land").
1.3 The Facility Lease.
Lessor and Lessee have entered into that certain
Facility Lease Agreement of even date herewith,
relating to the Land (the "Facility Lease"), a
Memorandum of which is to be recorded with the Maricopa
County, Arizona real estate records.
1.4 Project.
Lessee proposes to construct a 101-unit assisted
living facility and other improvements, including,
without limitation, accessory parking and landscaping
on the Land (collectively, the
"Improvements"). The Land and the Improvements are
collectively referred to herein as the
"Project." .
1.5 Lessor's Agreement to Fund the Project and
Lessee's Agreement to Supervise the Project.
Lessee and Lessor have agreed that the Project
will be a benefit to the premises demised under the
Facility Lease and to Lessee's and Lessor's respective
interests therein. Lessor and Lessee have further
agreed that, pursuant to, and in accordance with, the
terms and conditions of this Agreement, Lessor shall
fund an amount not to exceed Seven Million Seven
Hundred Seventeen Thousand Five Hundred Thirty-Six and
No Dollars ($7,7I7,536.00) of the cost of the Project
(the "Project Funds"). Lessee has agreed to supervise
and manage the construction of the Project and Lessor
has agreed to advance the Project Funds to pay for the
cost of the construction of the Project; all pursuant
to the terms and conditions of this Agreement.
1.6 Plans; the Architect and Architect's Contract.
The Improvements are to be constructed and
equipped in accordance with the plans and
specifications to be delivered as provided herein
(collectively, the "Project Plans"), prepared by
Architects ▇▇▇▇ & Associates, Inc. (the "Architect")
pursuant to the contract dated January 29, 1997,
amended February 14,1997, by and between Emeritus
Corporation and the Architect (the
"Architect's Contract").
1.7 Construction Contracts.
All of the Improvements are to be constructed
pursuant to a guaranteed maximum
contract (the "Construction Contract") to be delivered
as provided herein by and between Lessee and ADA
Construction Company, Inc. dated October 15,1997 (the
"General Contractor").
1.8 Schedule of Work and Completion Date; Schedule
of Draws.
The work necessary to complete and fully equip the
Project is to be (a) undertaken and completed in
accordance with the schedule of work and schedule of
values ("Schedules") to be delivered as provided
herein; and (b) substantially completed by the first
anniversary of the date. hereof (the "Completion Date")
in accordance with the terms hereof.
1.9 Project Budget.
Lessee has submitted, or shall submit in
accordance with the terms hereof prior to the making of
the first advance which includes amounts to be expended
on the construction or equipping of the Improvements),
to Lessor a line item budget (the "Project Budget"),
for the design and construction of the Project,
including (a) a breakdown of construction costs
(itemized as to trade category, subdivision of the work
to be performed and the names of each contractor), (b)
a breakdown of all soft costs in connection with the
construction of the Project, including, without
limitation, costs for such items as real estate taxes,
legal and accounting fees, survey costs, permits and
inspection fees, insurance premiums, architect's and
engineer's fees, marketing, management, leasing and
advertising expenses, and all amounts due in connection
with the Advance of Project Funds pursuant to this
Agreement, (c) a projected draw schedule and (d) a
projected progress schedule for the construction of the
Project.
1.10 Use of Project Funds.
The Project Funds are to be used, to the extent
sufficient therefor, solely for the payment of Project
costs set forth in the Project Budget.
1.11 Project Funds.
Subject to all of the terms, conditions and
provisions of this Agreement, and of the agreements and
instruments referred to herein, Lessor agrees to
advance the Project Funds and Lessee agrees to
supervise and manage the construction of the Project
and to pay the Rent (as hereinafter defined) due under
the Facility Lease (as the same may from time to time
be adjusted pursuant to the terms and conditions set
forth therein); it being understood that Lessee shall
be liable for the payment of Rent regarding such sums
as shall have been advanced from time to time under
this Agreement to Lessee.
1.12 Guaranties and Indemnities.
As an inducement to Lessor to enter into this
Agreement, advance the Project Funds and enter into the
Facility Lease, the Guarantor has agreed to furnish
certain guaranties as hereinafter described.
2. DEFINITIONS
In this Agreement, except as otherwise expressly
provided in the text of this Agreement
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or unless the context otherwise requires, all
capitalized terms shall have the meaning ascribed to
them in EXHIBIT E.
3. INTENTIONALLY OMITTED
4. LEASE DOCUMENTS; COLLATERAL SECURITY
4.1 Lease Documents.
The Project Funds shall be advanced, evidenced,
administered and governed by all of the terms,
conditions and provisions of each of the following:
A. a Seventh Amended and Restated Agreement
Regarding Related Transactions (Development)
of even date by and among Lessee, Lessor, ESC
I, L.P., and ESC G.P. I, Inc., as the same
may be amended from time to time;
B. this Agreement;
C. the Facility Lease;
D. a Collateral Assignment of Permits,
Approvals, Licenses, and Contracts of even
date granted by Lessee to Lessor (the
"Permits Assignment");
E. a Security Agreement of even date by
and between Lessee and Lessor (the
"Security Agreement") and related
UCC Financing Statements;
F. a Completion Guaranty of even date
executed by the Guarantor for the benefit of
Lessor guarantying the completion of the
Project and the satisfaction of the other
Guarantied Obligations (the "Completion
Guaranty");G. a Guaranty of Lease Obligations
of even date executed by the Guarantor for
the
benefit of Lessor guarantying the payment and
performance of the Lease
Obligations (the "Guaranty of Lease
Obligations");
H. an Environmental Indemnity Agreement
of even date by and among Lessee, the
Guarantor and Lessor (the "Environmental
Indemnity Agreement");
I. a Deposit Pledge Agreement of even date by and
between Lessee and Lessor
(the "Deposit Pledge Agreement");
.
J. a Group Two Negative Pledge
Agreement (Development) dated April 15, 1996
by and among Lessee, Lessor and Guarantor
(the "Negative Pledge Agreement");
K. an Assignment of Construction
Contract granted by Lessee to Lessor and
containing the consent of the General
Contractor (the "Construction Assignment");
L. an Assignment of Architect's
Contract of even date granted by Lessee to
Lessor and containing the consent of the
Architect (the "Architect's Assignment");
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M. an Affiliated Party Subordination
Agreement of even date by and among Lessee,
the Guarantor, various Affiliates of Lessee
and Lessor (the "Affiliated Party
Subordination Agreement"); and
N. all other documents, instruments, or
agreements now or hereafter evidencing or
securing the obligations under this Agreement
and the Facility Lease.
Items (A) through (N) above, as the same from time to
time may be hereinafter amended, modified or
supplemented, are referred to herein as the "Lease
Documents."
4.2 Lease Obligations.
Lessee agrees to pay and perform all indebtedness,
covenants, liabilities, obligations, agreements and
undertakings (other than Lessor's obligations) under
this Agreement and all of the other Lease Documents
(collectively, the "Lease Obligations").
4.3 Collateral Security.
The Lease Obligations shall be secured by the
following:
A. a perfected first priority security interest
in all Permits and Contracts pursuant to the
Permits Assignment;
B. a security interest in Tangible Personal
Property, and certain other Collateral and a
security interest in Receivables, all
pursuant to the Security Agreement;
C. the Completion Guaranty;
D. the Guaranty of Lease Obligations;
E. the Environmental Indemnity;
F. a perfected first priority interest in the
Cash Collateral pursuant to the Deposit
Pledge Agreement;
G. all other security interests in such other
property for which provision is made in the
Lease Documents or at law or in equity; and
H. certain other Related Party Agreements.
All of the property in which security interests are
granted as described in items (A) through (H) above are
referred to herein as the "Collateral."
5. REPRESENTATIONS AND WARRANTIES
In order to induce Lessor to advance the Project
Funds pursuant to the terms and conditions of this
Agreement, Lessee represents and warrants to Lessor
that:
5.1 Architect's Contract and Construction
Contract.
The Architect's Contract and the Construction
Contract have been validly executed by,
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and are binding upon Lessee and are in full force and
effect in accordance with the terms thereof as of the
date hereof. All of the parties to the Architect's
Contract Construction Contract have faithfully
performed all of their respective obligations
thereunder to the extent accrued as of the date hereof,
and none of the parties to the foregoing instruments
has asserted any claim of default thereunder and Lessee
has no reason to believe that such agreements have not
been validly executed by and binding upon the other
parties thereto;
5.2 Project Plans.
The two (2) copies of the Project Plans delivered
to Lessor by Lessee (a) are true and correct and
satisfactory to Lessee and (b) have been filed with and
approved by all appropriate Governmental Authorities.
All necessary Permits relating to the Project Plans to
be issued or granted by any applicable Governmental
Authority having or claiming jurisdiction over the
Leased Property which can be obtained in the ordinary
course as of the date hereof have been obtained and all
such Permits are in full force and effect, are not
subject to any unexpired appeal periods or any appeals
or challenges which have not been fully resolved in
favor of Lessee, and do not contain any conditions or
terms relating to the Leased Property which have not
been fully satisfied or which will not be fully
satisfied by the completion of the construction of the
Project (in accordance with the Project Plans and the
terms and provisions of this Agreement). Furthermore,
the Project Plans are the plans and specifications
which have been approved in writing by Lessor, any
construction heretofore performed on the Project has
been performed in accordance with the Project Plans and
all future construction on the Project shall be
performed in accordance with the Project Plans, as the
same may be amended or modified from time in accordance
with Section 6.3.2 hereof, and the terms and conditions
of this Agreement. There are no structural defects in
the Project of which Lessee has been advised or of
which Lessee has notice or knowledge except as
otherwise described in writing to Lessor or actually
known by Lessor. Lessee has not received any notice
claiming that, and Lessee has no knowledge that, the
Project Plans violate any Legal Requirement;
5.3 Prior Construction Work.
No Person has performed any construction work or
furnished any services in connection with any
construction carried on or to be carried on at the
Leased Property who or which remains unpaid at the time
of execution of this Agreement, except as indicated in
the requisition submitted simultaneously herewith or
otherwise expressly approved by Lessor and, if
applicable, the Other Permitted Uses;
5.4 Suitability of Project Plans.
The Project Plans provide for the construction and
renovation of all buildings and related improvements
necessary, both legally and practically, for the
construction of the Project in accordance with the
terms of this Agreement and, after the completion of
the construction thereof, for the operation of the
Project for its Primary Intended Use;
5.5 Compliance with Legal Requirements and
Applicable Agreements.
Upon the completion of construction of the
Project, which shall be constructed in
accordance with the Project Plans and the terms and
provisions of this Agreement, the Project shall be in
compliance with (a) all Legal Requirements; (b) all
Permits and Contracts and (c) all applicable by-laws,
codes, rules, regulations and restrictions of the Board
of Fire Underwriters or other insurance underwriters or
similar bodies.
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5.6 Permits and Contracts.
All Permits and Contracts required by or entered
into with any Governmental Authority or quasi-
governmental authority or agency for, or in connection
with, the construction of the Project which can be
obtained in the ordinary course as of the date hereof
have been obtained or executed, as the case may be. All
such Permits and Contracts are in full force and
effect, are not subject to any unexpired appeal periods
or any appeals or challenges which have not been
conclusively resolved in favor of any member of the
Leasing Group, and do not contain any conditions or
terms which have not been fully satisfied or which will
not be fully satisfied by the completion of the
construction of the Project (if constructed in
accordance with the Project Plans and the terms and
provisions of this Agreement). There is no action
pending, or, to the best knowledge and belief of
Lessee, recommended by the applicable Governmental
Authority having jurisdiction thereof, either to
revoke, repeal, cancel, modify, withdraw or suspend any
such Permit or Contract relating to the construction of
the Project, or any other action of any other type
which would have a material adverse effect on the
Project. All other Permits and Contracts required for
the completion of the construction of the Project and
the operation of the Facility are described on SCHEDULE
5.6 annexed hereto and Lessee has no reason to believe
such Permits and Contracts shall not be obtainable as
and when needed.
5.7 First Advance.
As of the date of the first advance of Project
Funds to Lessee pursuant to this Agreement, the amount
of the money expended by Lessee on account of the
construction of the Project in accordance with the
Project Plans and the items listed on Project Budget
will not be less than the amount of such first advance.
5.8 Valid and Binding.
Lessee is duly authorized to make and enter into
all of the Lease Documents to which Lessee is a party
and to carry out the transactions contemplated therein.
All of the Lease Documents to which Lessee is a party
have been duly executed and delivered by Lessee, and
each is a legal, valid and binding obligation of
Lessee, enforceable in accordance with its terms.
5.9 No Violation.
The execution, delivery and performance of the
Lease Documents and the consummation of the
transactions thereby contemplated shall not result in
any breach of, or constitute a default under, or result
in the acceleration of, or constitute an event which,
with the giving of notice or the passage of time, or
both, would result in default or acceleration of any
obligation of any member of the Leasing Group under any
of the Permits or Contracts or any other contract,
mortgage, lien, lease, agreement, instrument,
franchise, arbitration award, judgment, decree, bank
loan or credit agreement, trust indenture or other
instrument to which any member of the Leasing Group is
a party or by which any member of the Leasing Group may
be bound or affected and do not violate or contravene
any Legal Requirement.
5.10 Consents and Approvals.
Except as already obtained or filed or as
reasonably expected to be obtained in the
ordinary course of business prior to or upon the
Completion of the Project, as the case may be, no
consent or approval or other authorization of, or
exemption by, or declaration or filing with, any Person
and no waiver of any right by any Person is required to
authorize or permit, or is otherwise
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required as a condition of the execution, delivery and
performance of its obligations under the Lease
Documents, the Construction Contract or the Architect's
Agreement by any member of the Leasing Group or as a
condition to the validity (assuming the due
authorization, execution and delivery by Lessor of the
Lease Documents to which it is a party) and the
priority of any Liens granted to Lessor under the Lease
Documents, except the fling of the Financing
Statements.
5.11 Pending Actions, Notices and Reports.
(a) There is no action or investigation pending
or, to the best knowledge and belief of Lessee,
threatened, anticipated or contemplated (nor, to the
knowledge of Lessee, is there any reasonable basis
therefor) against or affecting the Leased Property or
any member of the Leasing Group (or any Affiliate
thereof before any Governmental Authority, which could
prevent or hinder the consummation of the transactions
contemplated hereby or call into question the validity
of any of the Lease Documents or any action taken or to
be taken in connection with the transactions
contemplated thereunder or which in any single case or
in the aggregate might result in any material adverse
change in the business, prospects, condition, affairs
or operations of any member of the Leasing Group or the
Leased Property (including, without limitation, any
action to revoke, withdraw or suspend any Permit
necessary or desirable for the construction of the
Project for its Primary Intended Use.
(b) No member of the Leasing Group has received
any notice of any claim, requirement or demand of any
Governmental Authority, to take action so as to make
the Project or the Leased Property conform to or comply
with any applicable Legal Requirement.
6. COVENANTS
6.1 Collection and Enforcement Costs.
Upon demand, Lessee shall reimburse Lessor for all
costs and expenses, including, without limitation,
attorneys' fees and expenses and court costs, paid or
reasonably incurred by Lessor in connection with the
collection of any sum due hereunder, or in connection
with the enforcement of any of Lessor's rights or any
member of the Leasing Group's obligations under this
Agreement or any of the other Lease Documents. Any
amount due and payable to Lessor pursuant to the
provisions of this Section shall be a demand obligation
and, to the extent permitted by law, shall be added to
the Lease Obligations and shall be secured by the Liens
created by the Lease Documents as fully and effectively
and with the same priority as every other obligation of
Lessee secured thereby and, if not paid within ten (
10) days after demand, shall thereafter, to the extent
permitted by applicable law, bear interest at the
Overdue Rate until the date of payment. The obligation
of Lessee to pay all costs, charges and sums due
hereunder or under any of the other Lease Documents
shall continue in full force and effect and in no way
shall be impaired, until the actual payment thereof to
Lessor. In the event of(a) a sale, conveyance, transfer
or other disposition of the Leased Property, (b) any
further agreement given to secure the payment of the
obligations set forth herein or (c) any agreement or
stipulation extending the time or modifying the terms
of payment set forth herein, Lessee shall nevertheless
remain obligated to pay the indebtedness evidenced by
this Agreement, as extended or modified by any such
agreement or stipulation, unless Lessee is released and
discharged from such obligation by a written agreement
executed by Lessor.
6.2 Continuing Effect of Representations and
Warranties.
All representations and warranties contained in
this Leasehold Improvement Agreement shall constitute
continuing representations and warranties which shall
remain true, correct and
7
complete throughout the Term.
6.3 Construction Covenants.
6.3.1 Commencement of Construction.
If construction of the Project has not
already begun, Lessee shall commence construction
of the Project within thirty (3 0) days from the
later of the date hereof or of issuance of a
building permit for the Project. Lessee shall
diligently and continuously cause the Project to
be constructed and completed and made ready for
occupancy and use in accordance with the Project
Plans all in a manner satisfactory to Lessor on or
before the Completion Date. Notwithstanding
anything to the contrary contained herein, Lessee
shall be and shall remain unconditionally liable
to Lessor for (a) the complete construction of the
Project in accordance with the Project Plans on or
before the Completion Date and whether or not
proceeds of the Project Funds remaining to be
disbursed hereunder, if any, are sufficient to
cover all costs of construction and (b) the
complete performance of all other obligations,
covenants, agreements and liabilities of Lessee
hereunder.
6.3.2 Quality of Materials and Workmanship.
The materials used in the Project shall be of the
quality called for by the Project Plans, and the
workmanship shall be in conformity with the
Construction Contract and this Agreement, and both the
quality of such materials and such workmanship shall be
satisfactory to Lessor. Lessee shall not make any
changes in, and shall not permit the General Contractor
or the Architect to make any changes in, the quality of
such materials, the Project Plans or the Project
Budget, whether by change order or otherwise, without
the prior written consent of Lessor, in each instance
(which consent may be withheld in Lessor's reasonable
discretion); provided, however, that such consent shall
not be required for any individual change which has
been approved by the Architect, which does not
materially affect the structure or exterior of the
Project, and the cost of which does not exceed TEN
THOUSAND DOLLARS ($10,000) or which changes, in the
aggregate, do not exceed ONE HUNDRED THOUSAND DOLLARS
($100,000) in. cost. Notwithstanding the foregoing,
prior to making any change in Project Plans, copies of
all change orders shall be submitted by Lessee to
Lessor and Lessee shall also deliver to Lessor evidence
satisfactory to Lessor, in its reasonable discretion,
that all necessary Permits and/or Contracts required by
any Governmental Authority in connection therewith have
been obtained or entered into, as the case may be.
6.3.3 Project Budget.
Upon the request of Lessor, Lessee shall furnish
Lessor with revisions for the Project Budget to reflect
(a) any changes approved by Lessor to the Project
Budget, (b) the total cost of the construction of the
Project completed through any specific date and (c) the
remaining cost to complete the construction of the
Project in accordance with the Project Plans and the
terms and provisions of this Agreement.
6.3.4 Architect Certificates.
Lessee agrees to cause the Architect to furnish
such statements as to progress and certificates of
completion as Lessor may reasonably require from time
to time during such period as this Agreement may be in
effect, all without expense to Lessor; provided,
however, that to the
8
extent the delivery of such certificates will require a
visit to the Project, Lessee shall have no obligation
to deliver the same more frequently than with every
other advance request hereunder. Lessee agrees to cause
the Architect to make the Project Plans available to
Lessor without expense to Lessor, and to agree that, in
the event that Lessor shall take over the Project by
reason of an occurrence of a Lease Default, Lessor
shall be entitled to use said Project Plans without any
additional compensation to the Architect above what is
required (and was not previously paid) under the
Architect's Contract.
6.3.5 Intentionally Deleted.
6.3.6 Lessor's Consultant.
Lessee agrees to pay the costs and expenses
reasonably incurred by Lessor to retain the Consultants
to perform various services to Lessor in connection
with the construction of the Project and the advances
of Project Funds contemplated hereunder, including,
without limitation, the following:
A. to review and analyze the Project Plans and
advise Lessor whether the same are
satisfactory for the intended purposes
thereof;
B. to make periodic inspections of the Leased
Property for the purpose of assuring that
construction performed in connection with the
Project prior to the date of such inspection
has been completed in accordance with the
Project Plans and this Agreement;
C. to review Lessee's then current
requisition to determine whether it is
consistent with the obligations of Lessee
under this Agreement, and to advise Lessor of
the anticipated costs of, and the time for,
the completion of the Project in accordance
with the Project Plans, and the adequacy of
reserves and contingencies related thereto;
D. to review and analyze any proposed changes to
the Project Plans and advise Lessor regarding
the same;
E. to review and analyze the Project Budget and
advise Lessor as to the sufficiency thereof;
and
F. to review and analyze the Architect's
Contract and the Construction Contract
entered into by Lessee in connection with the
construction of the Project and advise Lessor
regarding the same.
Except as otherwise expressly provided herein,
Lessee agrees promptly to make such changes or
corrections in the construction of the Project as may
be required by Lessor, based on the recommendation of
any of the Consultants, unless Lessee demonstrates to
Lessor's satisfaction that such corrective work is
inconsistent with the
Project Plans.
6.3.7 Title To Materials and Security Interest
Granted to Lessor.
Except as otherwise expressly provided herein,
Lessee shall not suffer the use in connection with any
construction relating to the Project of any materials,
fixtures or equipment
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intended to become part of the Project which are
purchased upon lease or conditional ▇▇▇▇ of sale or to
which Lessee does not have absolute and unencumbered
title. Lessee covenants to cause to be paid punctually
all sums becoming due for labor, materials, fixtures or
equipment used or purchased in connection with any such
construction and, in recognition of the fact that it is
intended that the Project Funds be used to pay for the
costs of the construction of the Project on behalf of
the Lessor, Lessee agrees that title to all materials,
fixtures and equipment that are incorporated into the
Project shall automatically pass to Lessor upon such
incorporation without the need for the execution or
delivery of any further instrument of conveyance.
Notwithstanding the foregoing, in order to more
fully secure Lessor with reference to all advances of
Project Funds made hereunder, Lessee hereby conveys to
Lessor a security interest in all of Lessee's right,
title and interest in materials on the Leased Property
which are not at any relevant time incorporated into
the Project and materials, wherever located, intended
for incorporation into the Project. Lessee agrees:
A. that Lessor shall have all the rights, with
reference to such security, as a secured
party is entitled to hold with reference to
any security interest under the UCC;
B. that such security interest shall cover cash
and non-cash proceeds of such materials;
.
C. that such materials will not be held for sale
to others or disposed of by Lessee without
the prior written consent of Lessor and, if
at any time located on the Leased Property
shall be suitably stored, secured and insured
and furthermore, shall not be removed from
the Leased Property; and
D. that such security interest shall be prior to
the rights of any other Person other than the
Permitted Prior Security Interests.
The undertakings of Lessee in this Section shall
also be applicable to any personal property that is
owned by Lessee and that is used (or to be used) in
connection with the Project, whether or not the
purchase thereof was financed by advances of Project
Funds made by Lessor.
Lessee agrees to execute such instruments as
Lessor may from time to time
request to perfect the security interest of Lessor in
any and all rights under this Agreement and the other
Lease Documents, and any and all property of Lessee
which, under applicable provisions of this Agreement
and/or any of the other Lease Documents, may or shall
stand as security for advances of Project Funds under
this Agreement and for the complete performance of the
Lease Obligations.
6.3.8 Compliance With Legal Requirements And
Applicable Agreements.
Lessee, the Project Plans and the Leased Property
and all uses thereof (including, without limitation,
the construction of the Project) shall comply with (a)
all Legal Requirements, (b) all Permits and Contracts,
(c) all applicable by-laws, codes, rules, regulations
and restrictions of the Board of Fire Underwriters or
other insurance underwriters or similar body and (d)
the Lease Documents, except to the extent any of the
matters represented in clause (a) or (c) are being duly
contested in accordance with the terms of the Facility
Lease.
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6.3.9 Liens.
The Leased Property shall at all times be free
from any attachment, encumbrance, lis pendens,
mechanic's or materialmen's lien or notice arising from
the furnishing of materials or labor and, with the
exception of the Permitted Encumbrances, all other
Liens of any kind except to the extent the same is
being duly contested in accordance with the terms of
the Facility Lease or the terms hereof. Lessee shall
not permit the recording of any notice of contract or
mechanic's or materialmen's lien relating to
construction of the Project or otherwise affecting the
Leased Property except to the extent the same is being
duly contested in accordance with the terms of the
Facility Lease or the terms hereof. Notwithstanding the
foregoing provisions of this Section 6.3.09, the
existence of an attachment or lis pendens for a period
not in excess of thirty (30) days shall not be deemed
to be a default hereunder provided that (a) there shall
be no cessation of construction of the Project, (b) a
Lease Default has not occurred and (c) Lessee shall
proceed promptly to cause such attachment or lis
pendens to be removed, but Lessor shall not be obliged
to make any further advance under this Agreement while
such attachment or lis pendens remains outstanding,
unless a bond, satisfactory to Lessor, has been posted
as security for such attachment or lis pendens.
6.3.10 Books And Records.
Lessee shall cause to be kept and maintained, and
shall permit Lessor and its representatives to inspect
at all reasonable times, accurate books of accounts in
which complete entries will be made in accordance with
GAAP, if applicable, reflecting all financial
transactions of Lessee relating to the Project
(showing, without limitation, all materials ordered and
received and all disbursements, accounts payable and
accounts receivable in connection with the construction
of the Project and the operation of the Leased
Property). Such books and records must accurately
reflect that all funds advanced hereunder for
construction of the Project have been used solely for
the payment of obligations and expenses properly
incurred in accordance with the Project Budget.
6.3.11 Inspection Of Construction.
Lessor and its representatives including, without
limitation, the Consultants, shall, at all times as
long as this Agreement remains in effect, have the
right to enter the Leased Property, upon reasonable
notice to Lessee and at reasonable times (except in the
event of an emergency) for the purpose of inspecting
the Project and the progress of the work and materials
thereon, and if any such- inspection reveals that
Lessee is not in compliance herewith (in its sole and
absolute discretion), then Lessor shall not be
obligated to make any further advances under this
Agreement to Lessee.
6.3.12 Notice Of Delay.
Lessee shall give to Lessor prompt written notice
of any fire, explosion, accident, flood, storm,
earthquake or other casualty or strike, lock out, act
of God or interruption of the construction of the
Project which is reasonably anticipated to interfere
with the ability of Lessee to complete the Project by
the Completion Date.
6.3.13 Bonds.
Performance, payment and ▇▇▇▇ ▇▇▇▇▇, in form and
substance and guaranteed by sureties satisfactory to
Lessor (in its sole and absolute discretion), shall be
furnished to Lessor in
11
connection with the Construction Contract in amounts at
least equivalent to the amount of such contract, naming
Lessor as a dual obligee and shall be furnished to
Lessor prior to the commencement of any work pursuant
to such contract.
6.3.14 Use of Project Funds.
Lessee shall utilize all advances by Lessor
pursuant to the terms of this Agreement only for those
items for which requisitions are permitted under this
Agreement or for reimbursement of expenditures already
made for items for which requisitions are so permitted.
Lessee agrees to hold all advances by Lessor hereunder
as a trust fund for the purpose of payment of the costs
and expenses permitted under this Agreement.
6.3.15 Occupancy of the Project.
Lessee shall not permit any occupancy of the
Project (other than such occupancy as is required in
connection with the construction thereto) prior to (a)
the substantial completion of that portion of the
Project being occupied and (b) the issuance by the
appropriate Governmental Authorities of a Certificate
of Occupancy (or its equivalent) permitting the
occupancy of the Project for its Primary Intended Use
and, if applicable, the Other Permitted Uses. The
Project shall not be deemed to have been completed
unless and until constructed in accordance with this
Agreement and a Certificate of Occupancy(or its
equivalent) permitting the occupancy of the Project for
its Primary Intended Use has been issued by the
applicable Governmental Authorities.
7. CONSTRUCTION ADVANCES
7.1 Conditions Precedent to First Advance of
Project Funds.
Prior to the first advance of Project Funds
contemplated by this Agreement, and as a condition of
Lessee's right to receive any of the proceeds of the
Project Funds, there shall have been furnished to
Lessor:
A. An owner's title insurance policy in form and
substance satisfactory to Lessor, in its sole
and absolute discretion, issued by a title
insurance company or companies satisfactory
to Lessor (the "Title Company") with such
endorsements, reinsurance and/or co-insurance
as Lessor may require, insuring Lessor's fee
title to the Leased Property free from all
Liens and without exception for (i) filed or
unfiled mechanics' liens, (ii) survey
matters, (iii) rights of parties in
possession, (iv) environmental liens and (v)
any other matters of any kind or nature
whatsoever other than the Permitted
Encumbrances (the "Title Policy");
B. Such evidence as Lessor may require that the
use contemplated for the Project, and all of
the improvements and construction
contemplated by the Project Plans, comply
with all applicable Legal Requirements, to
the extent in force and applicable;
C. Insurance policies and/or Certificates of
Insurance required pursuant to the terms and
provisions of the Facility Lease;
D. Such evidence as Lessor may require to determine
that the total cost of completion of the Project in all
respects, including all related direct and indirect
12
costs as previously approved by
Lessor, will not exceed the amount set forth in
the Project Budget;
E. Such evidence as Lessor may require that
Lessee's representations and warranties
contained herein and in all of the other
Lease Documents are true and correct in every
material respect;
F. Such evidence as Lessor may require as to the
satisfaction of such of the terms and
conditions of this Agreement and of the other
Lease Documents as may by their nature be
satisfied prior to the making of such
advance;
G. Such evidence as Lessor may require
that all outstanding Impositions which are
due and payable as of the date of the First
Advance pertaining to the Leased Property
have been paid in full in accordance with the
terms of the Facility Lease;
H. A current instrument survey,
satisfactory in form and content to Lessor,
prepared in accordance with the requirements
set forth in EXHIBIT G (the "Survey") and a
certificate substantially in the form of
EXHIBIT H (the "Surveyor's Certificate"),
prepared and signed by a surveyor licensed to
do business in the state where the Leased
Property is located with his or her seal
affixed thereto;
I. True and correct copies of the Construction
Contract and the Architect's Contract in
effect with respect to the Project, as well
as all receipted bills paid by Lessee to the
General Contractor and the Architect for
goods and/or services rendered with respect
to the Project prior to the date hereof;
J. A certificate from an engineer and/or
architect, registered as such in the state
where the Leased Property is located,
substantially in the form attached hereto as
EXHIBIT H, certifying as to the (i)
compliance of the Leased Property with all
applicable Legal Requirements, (ii) the
availability and adequacy of access/egress to
and from the Leased Property and (iii) the
availability and adequacy of sewer, drainage,
water, electric and other utility services to
the lot line of the Leased Property; together
with such other assurances concerning the
design of the Project as Lessor may require;
▇. ▇▇▇▇▇▇'▇ receipt of opinions, in forms
satisfactory to Lessor (in its sole and
absolute discretion), from Lessee's counsel
and the Guarantor's counsel, regarding (i)
the due execution, authority and
enforceability of the Lease Documents; (ii)
the compliance of the Leased Property and the
Project, in all material respects, with
applicable zoning and other land-use Legal
Requirements (except in such instances in
which a satisfactory title insurance zoning
endorsement has been issued); (iii) the valid
issuance of the Certificate of Need, if
applicable, and all other Permits required
for the construction of the Project, the
continuing effectiveness of said Certificate
of Need, if applicable, and other Permits and
Lessee's and Project's compliance therewith
and (iv) such other matters as Lessor may
reasonably request (collectively, the
"Opinions");
L. Payment of the Leasehold Improvement
Fee (subject, however, to the provisions of
Section 3 hereof;
13
M. True and correct copies of all Permits
and Contracts relating to the construction
and operation of the Project (including,
without limitation, an unconditional building
permit or a building permit which is subject
only to such conditions as will be fully
satisfied by the completion of the
construction of the Project in accordance
with the Project Plans and this Agreement);
N. Such evidence as Lessor may require that
there has been no material adverse change in
the financial condition and strength of
Lessee and the Guarantor, and that the
Leased Property shall have sustained no
impairment, reduction, loss or damage which
has not been fully restored and repaired,
and that no Condemnation proceedings or
other governmental action is or shall be
pending against or with respect thereto;
O. Such evidence as Lessor may require that the
General Contractor and the Architect maintain
adequate insurance, as determined in Lessor's
reasonable discretion;
P. True and correct copies of all
payment, performance and completion bonds
required pursuant to 6.3.13 hereof;
Q. A fully executed Construction Assignment, in
form and substance satisfactory to Lessor;
and
R. A fully executed and authorized Architect's
Assignment, in form and substance
satisfactory to Lessor.
7.2 Lessor's Right to Advance the Project Funds.
Without at any time waiving any of Lessor's rights
hereunder, Lessor shall have the right to make the
first advance of a portion of the Project Funds
hereunder without the satisfaction of each and every
condition precedent to Lessor's obligation to make such
advance, and Lessee agrees to accept such advance as
Lessor may elect to make. The making of any advance
hereunder shall not constitute an approval or
acceptance by Lessor of any work on the Project
theretofore completed.
7.3 Submission of Requests for Advances of the
Project Funds.
Advances under this Agreement shall be made not
more than once each month and at least ten ( 10) days
before the date upon which an advance is requested,
Lessee shall give notice to Lessor, specifying the
total advance which will be desired, accompanied by:
A. Itemized requisitions for advances or, at
Lessee's option, for reimbursements to Lessee
for prepaid items, signed by Lessee, the
Architect and the General Contractor on
A.I.A. Forms G702, G702A or G703 or such
other form(s) as Lessor may reasonably
require (together with copies of invoices or
receipted bills relating to items covered by
such requisitions when so requested by
Lessor). All such requisitions shall include
an indemnification of Lessor by the
Architect, the General Contractor and Lessee,
jointly and severally, to the extent such
indemnification is available from the General
Contractor and the Architect upon Lessee's
best efforts to obtain such indemnification,
against any and all claims of any
subcontractors, laborers and suppliers;
14
B. A certificate executed by Lessee
substantially in the form attached hereto as
EXHIBIT I;
C. A certificate executed by the
General Contractor substantially in the form
attached hereto as EXHIBIT J;
D. With respect to every other Advance
requested, a certificate executed by the
Architect substantially in the form attached
hereto as EXHIBIT K.
E. At Lessor's request, certificates
executed by the Consultants in such form as
Lessor may reasonably require;
F. To the event the Advance is not
clearly subject to effective coverage, an
endorsement of the Title Policy issued by the
Title Company, satisfactory in form and
substance to Lessor, redating the Title
Policy to the date that the then current
advance will be made, increasing the coverage
afforded by the Title Policy so that the same
shall constitute insurance in an amount at
least equal to the sum of the amount of the
insurance then existing under the Title
Policy plus the amount of the then current
advance of Project Funds to be disbursed to
Lessee under this Agreement and subject to no
additional exceptions other than the
Permitted Encumbrances;
G. If and when reasonably requested by
Lessor, satisfactory assurance that the
construction of the Project has been
performed in accordance with the requirements
of the Construction Contract, the Project
Plans, this Agreement and all of the other
Lease Documents and has been inspected and
found satisfactory by the parties hereto;
H. If and when reasonably requested by
Lessor, an updated Surveyor's Certificate
substantially in the form attached hereto as
EXHIBIT G and/or updated
Engineer's/Architect's Certificate
substantially in the form attached hereto as
EXHIBIT H;
I. If and when requested by Lessor,
updated Opinions from Lessee's counsel and
the Guarantor's counsel (in form and
substance satisfactory to Lessor in its sole
and absolute discretion);
J. If and when requested by Lessor, satisfactory
evidence that the funds remaining unadvanced
under this Agreement are sufficient for the
payment of all related direct and indirect
costs for the completion of the Project in
accordance with the terms and provisions
hereof. If the evidence furnished shall not
be satisfactory to Lessor, in its sole and
absolute discretion, it shall be a condition
to the making of any further advance
hereunder that Lessee will provide Lessor
with such financial guaranties (whether in
the form of a bond, cash deposit, letter of
credit or otherwise) as are acceptable to
Lessor, in its sole and absolute discretion,
to assure the completion of the construction
of the Project in accordance with the Project
Plans and the terms and conditions of this
Agreement. In the event that Lessor requires
a cash deposit from Lessee, Lessee shall
deposit with Lessor such funds, to be held in
an interest bearing account with the interest
accruing thereon to the benefit of Lessee,
which, together with such unadvanced funds of
the Loan, shall be sufficient to pay all of
the aforesaid costs. All funds so
15
deposited with Lessor along with the
proceeds thereof, shall be disbursed prior to
any further advance hereunder and upon
completion of the Project any remaining funds
so deposited or any unadvanced portion of the
Project Funds, shall be remitted to Lessee;
K. A certification of work completed by the
General Contractor, together with a statement
of the payment due therefor;
L. Partial lien waivers from the General
Contractor for all work theretofore
performed, and from all other contractors and
all subcontractors and suppliers for all
work, the cost of which in each instance
exceeds ONE THOUSAND DOLLARS ($ 1,000.00),
which was the subject of a requisition in the
immediately preceding month;
M. If and when reasonably requested, Lessee
shall deliver to Lessor an updated Survey of
the Leased Property, acceptable to Lessor (in
its reasonable discretion);
N. Evidence satisfactory to Lessor (in its
reasonable discretion) that all materials and
other property furnished by any contractors,
subcontractors, materialmen or other Persons,
the cost of which will be paid with the
proceeds of the advance to be made by Lessor,
are free and clear of all Liens, except (a)
encumbrances, if any, (securing indebtedness
due to Persons whose names, addresses and
amounts due to them are identified to Lessor)
that shall be discharged upon the
disbursement of the funds then being
requested, (b) the Liens created by the Lease
Documents and (c) the Permitted Encumbrances;
O. Such evidence as Lessor may require
that there has been no material adverse
change in the financial condition and
strength of Lessee and the Guarantor, and
that the Leased Property shall have sustained
no impairment, reduction, loss or damage
which has not been fully restored and
repaired and that no condemnation is or shall
be pending against or with respect thereto;
and
P. Prior to the first advance which includes
amounts to be expended on the construction or
equipping of the Improvements, Lessee shall,
to the extent not previously delivered to
Lessor, submit to Lessor true and correct
copies of (i) the Project Budget, (ii) the
Project Plans, (iii) the Schedules and (iv)
the Construction Contract, each of which
shall be in form and content satisfactory to
Lessor (in its sole and absolute discretion);
Lessee hereby designates ▇▇▇ ▇▇▇▇▇▇▇ as Lessee's
construction representative with authority to approve
requisitions and to execute certificates to be
delivered pursuant to Section 13.3B on behalf of
Lessee.
7.4 Advances by Wire Transfer.
All advances hereunder shall be made by wire
transfer of funds into a bank account
maintained by either Lessee or an authorized agent of
Lessee.
7.5 Conditions Precedent to All Advances.
16
A. Advances hereunder shall be made solely for
the payment of the costs and expenses
incurred by Lessee directly in connection
with the construction of the Project,
consistent with the Project Budget, which are
required to be paid out-of pocket to all
other Persons or to reimburse Lessee for out-
of pocket costs incurred by it pursuant to
the Project Budget. No funds advanced by
Lessor shall be utilized for any purpose
other than as specified herein and none of
the Project Funds shall be paid over to any
officer, stockholder or employee of any
member of the Leasing Group or to any of the
Persons collectively constituting any member
of the Leasing Group or those holding a
beneficial interest in any member of the
Leasing Group, or any employee thereof,
except to the extent funds are used to pay
compensation to an employee for and with
respect to activity of such employee in
construction of the Project.
B. The amount of each requisition shall represent
(i) the cost of the work completed on the
Project as of the date of such requisition,
which has not been paid for under prior
requisitions, (ii) the cost of all equipment,
fixtures and furnishings included within the
Project Budget approved by Lessor, which has
not been paid for under prior requisitions,
but not incorporated into any contract and
which have been delivered to the Leased
Property for incorporation into the Project;
provided that, in Lessor's judgment, such
materials are suitably stored, secured and
insured and that Lessee can furnish Lessor
with evidence satisfactory to Lessor of
Lessee's unencumbered title thereto and (iii)
approved soft costs, which have not been paid
for under prior requisitions.
C. All requisitions for the first fifty percent
(50%) of the Project Funds shall be subject
to a ten percent (10%) retainage for the
completion of the Project, and no retainage
shall be required with respect to all
requisitions thereafter. It is understood
that such retainage is intended to provide a
contingency fund to assure that the
construction of the Project shall be fully
completed in accordance with the Project
Plans and the terms and provisions of this
Agreement. All amounts so withheld shall be
disbursed after (i) construction of the
Project has been fully completed in
accordance with the Project Plans and the
terms and provisions of this Agreement, (ii)
all of the items set forth in Section 7.6
hereof have been delivered to Lessor and
(iii) the expiration of the period during
which liens may be perfected with respect to
any work performed or labor or materials
supplied in connection with the construction
of the Project or the receipt of such
evidence as may be required to assure Lessor
that no claim may thereafter arise with
respect to any work performed or labor or
materials supplied in connection with the
construction of the Project.
D. At the time of each advance, no event
which constitutes, or which, with notice or
lapse of time, or both, would constitute, a
Lease Default shall have occurred and be
continuing.
E. Without at any time waiving any of
Lessor's rights under this Agreement, Lessor
shall always have the right to make an
advance hereunder without satisfaction of
each and every condition upon Lessor's
obligation to make an advance under this
Agreement, and Lessee agrees to accept any
advance which Lessor may elect to make under
this Agreement. Notwithstanding the
foregoing, Lessor shall have the right,
notwithstanding a waiver relative to the
first advance or any subsequent advance
hereunder, to refuse to make any and all
subsequent advances under this Agreement
until each and every condition set forth in
this
17
Section has been satisfied. The
making of any advance hereunder shall not
constitute an approval or acceptance by
Lessor of any work on the Project theretofore
completed.
F. If, while this Agreement is in
effect, a claim is made that the Project does
not comply with any Legal Requirement or an
action is instituted before any Governmental
Authority with jurisdiction over the Leased
Property or Lessee in which a claim is made
as to whether the Project does so comply,
Lessor shall have the right to defer any
advance of Project Funds which Lessor would
otherwise be obligated to make until such
time as any such claim is finally disposed of
favorably to the position of Lessee, without
any obligation on the part of Lessor to make
a determination of, or judgment on, the
merits of any such claim. For the purposes of
the foregoing sentence, the term "claim"
shall mean an assertion by any Governmental
Authority or Person as to which, in each
case, Lessor has made a good faith
determination that the assertion may properly
be made by the party asserting the same, that
the assertion, on its face, is not without
foundation and that the interests of Lessor
require that the assertion be treated as
presenting a bona fide risk of liability or
adverse effect on the Project.
If any such proceeding is not favorably
resolved within thirty (30) days after the
commencement thereof, Lessor shall also have
the right, at its option, to treat the
commencement of such action as a Lease
Default, for which Lessor shall have all
rights herein specified for a Lease Default.
As aforesaid, Lessor shall have no obligation
to make a determination with reference to the
merits of any such claim. No waiver of the
foregoing right shall be implied from any
forbearance by Lessor in making such election
or any continuation by Lessor in making
advances under this Agreement.
In all events, Lessee agrees to notify Lessor
forthwith upon learning of the assertion of
any such claim or the commencement of any
such proceedings.
G. It is contemplated that all advances of the
Project Funds made by Lessor to Lessee will
be pursuant to this Agreement.
H. No inspections or any approvals of the
Project during or after construction shall
constitute a warranty or representation by
Lessor or any of the Consultants as to the
technical sufficiency, adequacy or safety of
any structure or any of its component parts,
including, without limitation, any fixtures,
equipment or furnishings, or as to the
subsoil conditions or any other physical
condition or feature pertaining to the Leased
Property. All acts, including any failure to
act, relating to the Leased Property by any
agent, representative or designee of Lessor
(including, without limitation, the
Consultants) are performed solely for the
benefit of Lessor to assure the payment and
performance of the Obligations and are not
for the benefit of Lessee or the benefit of
any other Person.
7.6 Completion of the Project.
Upon the completion of the construction of the
Project in accordance with the Project Plans and the
terms and provisions of this Agreement, Lessee shall
provide Lessor with (A) true, correct and complete
copies of (i) a final unconditional Certificate of
Occupancy (or its
18
equivalent) issued by the appropriate governmental
authorities, permitting the occupancy and use of the
Project for its Primary Intended Use and (ii) all
Permits issued by the appropriate Governmental
Authorities which are necessary in order to operate the
Project as a fully-licensed assisted living facility,
(B) a certification from the Architect or the
Consultants stating that the Project was completed in
accordance with the Project Plans, (C) an updated
Survey of the Leased Property, acceptable to Lessor (in
its sole and absolute discretion), (D) updated Opinions
and (E) such other items relating to the operation
and/or construction of the Project as may be reasonably
requested by Lessor.
8. LESSOR'S RIGHT TO MAKE PAYMENTS AND TAKE OTHER
ACTION
Lessor may, after ten ( 10) Business Days' prior
notice to Lessee of its intention so to do (except in
an emergency when such shorter notice shall be given as
is reasonable under the circumstances), unless Lessee
demonstrates the same has already been paid, pay any
sums due or claimed to be due for labor or materials
furnished in connection with the ownership,
construction, development, maintenance, management,
repair, use or operation of the Leased Property, and
any other sums which in the reasonable opinion of
Lessor, or its attorneys, it is expedient to pay, and
may take such other and further action which in the
reasonable opinion of Lessor is reasonably necessary in
order to secure (A) the completion of the Project in
accordance with the Project Plans and the terms and
conditions of this Agreement, (B) the protection and
priority of the security interests granted to Lessor
pursuant to the Lease Documents and (C) the performance
of all obligations under the Lease Documents. Lessor,
in its sole and absolute discretion, may charge any
such payments against any advance that may otherwise be
due hereunder to Lessee or may otherwise collect such
amounts from Lessee, and Lessee agrees to repay to
Lessor all such amounts, which may exceed the line item
amount therefor in the Project Budget. Any amount which
is not so charged against advances due hereunder and
all costs and expenses reasonably incurred by Lessor in
connection therewith (including, without limitation,
attorneys' fees and expenses and court costs) shall be
a demand obligation of Lessee and, to the extent
permitted by applicable law, shall be added to the
Lease Obligations and secured by the Liens created by
the Lease Documents, as fully and effectively and with
the same priority as every other obligation of Lessee
thereunder and, if not paid within ten ( 10) days after
demand, shall thereafter, to the extent permitted under
applicable law, bear interest at the Overdue Rate until
the date of payment.
If Lessee fails to observe or cause to be observed
any of the provisions of this Agreement and such
failure continues beyond any applicable notice or cure
period provided for under this Agreement, Lessor or a
lawfully appointed receiver of the Leased Property, at
their respective options, from time to time may
perform, or cause to be performed, any and all repairs
and such other work as they deem necessary to bring the
Leased Property into compliance with the provisions of
this Agreement may enter upon the Leased Property for
any of the foregoing purposes, and Lessee hereby waives
any claim against Lessor or such receiver arising out
of such entry or out of any other act carried out
pursuant to this Section. All amounts so expended or
incurred by Lessor and by such receiver and all costs
and expenses reasonably incurred in connection
therewith (including, without limitation, attorneys'
fees and expenses and court costs), shall be a demand
obligation of Lessee to Lessor or such receiver, and,
to the extent permitted by law, shall be added to the
Obligations and shall be secured by the Liens created
by the Lease Documents as fully and effectively and
with the same priority as every other obligation of
Lessee secured thereunder and, if not paid within ten (
10) days after demand, shall thereafter, to the extent
permitted by applicable law, bear interest at the
Overdue Rate until the date of payment.
9. INSURANCE; CASUALTY; TAKING
9.1 General Insurance Requirements.
19
Lessee shall at its sole cost and expense keep the
Leased Property and the business operations conducted
thereon insured as required under the Facility Lease.
9.2 Fire or Other Casualty or Condemnation.
In the event of any damage or destruction to the
Leased Property by reason of fire or other hazard or
casualty (a "Casualty") or a taking by power of eminent
domain or conveyance in lieu thereof of all or any
portion of the Leased Property (a "Condemnation"),
Lessee shall give immediate written notice thereof to
Lessor and comply with the provisions of the Facility
Lease governing Casualties and Condemnations.
10. EVENTS OF DEFAULT
Each of the following shall constitute an "Event
of Default" hereunder and shall entitle Lessor to
exercise its remedies hereunder and under any of the
other Lease Documents:
A. any failure of Lessee to pay any amount due
hereunder or under any of the other Lease
Documents within ten (10) days following the
date when such payment was due;
B. any failure in the observance or performance
of any other covenant, term, condition or
warranty provided in this Agreement or any of
the other Lease Documents, other than the
payment of any monetary obligation and other
than as specified in subsections (C) through
(F) below (referred to herein as a "Failure
to Perform"), continuing for thirty (30) days
after the giving of notice by Lessor to
Lessee specifying the nature of the Failure
to Perform; except as to matters not
susceptible to cure within thirty (30) days,
provided that with respect to such matters,
(i) Lessee commences the cure thereof within
thirty (30) days after the giving of such
notice by Lessor to Lessee, (ii) Lessee
continuously prosecutes such cure to
completion, (iii) such cure is completed
within one hundred twenty ( 120) days after
the giving of such notice by Lessor to Lessee
and (iv) such Failure to Perform does not
impair Lessor's rights with respect to the
Leased Property or otherwise impair the
Collateral or Lessor's security interest
therein;
C. the occurrence of any default or breach of
condition continuing beyond the expiration of
the applicable notice and grace periods, if
any, under any of the other Lease Documents;
D. if any representation, warranty or statement
contained herein or in any of the other Lease
Documents proves to be untrue in any material
respect as of the date when made or at any
time during the Term if such representation
or warranty is a continuing representation or
warranty pursuant to Section 6.2;
E. except as a result of any Casualty or a
partial or complete Condemnation, if a
suspension of any work in connection with the
construction of the Project occurs for a
period in excess often (10) Business Days,
irrespective of the cause thereof, provided
that Lessee shall not be deemed to be in
default under this Subsection if such
suspension is for circumstances not
reasonably within its control, but only if
Lessor, in its sole and absolute discretion,
shall determine
20
that such suspension shall not
create any risk that the construction of the
Project will not be completed (in accordance
with the Project Plans and the terms and
conditions of this Agreement) on or before
the Completion Date; and
F. if construction of the Project shall not be
completed in accordance with the
Project Plans and this Agreement (including,
without limitation, satisfaction of the
conditions set forth in Section 7.6) on or
before the Completion Date.
11. REMEDIES IN EVENT OF DEFAULT
Upon the occurrence of an Event of Default, at the
option of Lessor, which may be exercised at any time
after an Event of Default shall have occurred, Lessor
shall have all rights and remedies available to it, at
law or in equity, including, without limitation, all of
the rights and remedies under the Facility Lease and
the other Lease Documents. Subject to the requirements
of applicable law, all materials at that time on or
near the Leased Property which are the property of
Lessee and which are to be used in connection with the
completion of the Project shall be subject to the Liens
created by the Lease Documents.
In addition to, and without limitation of, the
foregoing, Lessor is authorized to charge all money
expended for completion of the Project against sums
hereunder which have not already been advanced (even if
the aggregate amount of such sums expended and all
amounts previously advanced hereunder exceed the amount
of the Project Funds which Lessor has agreed to advance
hereunder); and Lessee agrees to pay to Lessor Rent
under the Facility Lease (calculated, in part,
thereunder based upon all sums advanced hereunder,
including, without limitation, all sums expended in
good faith by Lessor in connection with the completion
of the Project), and, in addition thereto, Lessee
agrees to pay to Lessor (as Rent under the Facility
Lease), for services in connection with said completion
of the Project, such additional sums as shall
compensate Lessor for the time and effort Lessor and
its employees shall have expended in connection
therewith. Lessor is authorized, but not obligated in
any event, to do all such things in connection with the
construction of the Project as Lessor, in its sole and
absolute discretion, may deem advisable, including,
without limitation, the right to make any payments with
respect to any obligation of Lessee to Lessor or to any
other Person in connection with the completion of
construction of the Project and to make additions and
changes in the Project Plans, to employ contractors,
subcontractors and agents and to take any and all such
action, either in Lessor's own name or in the name of
Lessee, and Lessee hereby grants Lessor an irrevocable
power of attorney to act in its name in connection with
the foregoing. This power of attorney, being coupled
with an interest, shall be irrevocable until all of the
Obligations are fully paid and performed and shall not
be affected by any disability or incapacity which
Lessee may suffer and shall survive the same. The power
of attorney conferred on Lessor by the provisions of
this Section 11 is provided solely to protect the
interests of Lessor and shall not impose any duty on
Lessor to exercise any such power and neither Lessor
nor such attorney-in-fact shall be liable for any act,
omission, error in judgment or mistake of law, except
as the same may result from its gross negligence or
wilful misconduct. In the event that Lessor takes
possession of the Leased Property and assumes control
of the Project as aforesaid, it shall not be obligated
to continue the construction of the Project and/or the
operation of the Project for any period of time longer
than Lessor shall see fit (in its sole and absolute
discretion), and Lessor may thereafter, at any time,
abandon its efforts and refuse to make further payments
for the account of Lessee, whether or not the Project
has been completed.
In addition, at Lessor's option and without
demand, notice or protest, the occurrence of any Event
of Default shall also constitute a default under any
one or more of the Related Party Agreements.
21
12. GENERAL
The provisions set forth in Articles 22, 23 and
Sections 2.2,16.8 through 16.10, 24.2. through 24.6,
and 24.8 through 24.12 of the Facility Lease are hereby
incorporated by reference, mutatis, mutandis, and shall
be applicable to this Agreement as if set forth in full
herein.
This Agreement and the other Lease Documents set
forth the entire agreement of the parties with respect
to the subject matter and shall supersede in all
respects (a) the Letter of Intent with respect to the
Project, and (b) the letter dated April 11,1997, as
amended, from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ to ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ relating to the Land (including, without
limitation, the indemnities therein).
13. LEASE PROVISIONS PARAMOUNT
In the event of a conflict between the provisions
hereof and the provisions of the Facility Lease, the
provisions of the Facility Lease are paramount.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
22
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day
and year first above written.
ATTEST: LESSEE:
EMERITUS PROPERTIES I,
INC., a Washington
corporation
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇
▇. ▇▇▇▇▇
----------------------------------
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇.
▇▇▇▇▇
Title: Vice President of
Finance
ATTEST: LESSOR:
MEDITRUST ACQUISITION
CORPORATION a
Massachusetts
Corporation
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
--------------------------------- ----
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ESQ.
Title: Senior Vice
President
23