Exhibit 10.3
MASTER DEVELOPMENT AGREEMENT
between
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
and
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
September 18, 1996
TABLE OF CONTENTS
1. DEFINITIONS AND USE OF CERTAIN TERMS . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
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1.2 Other Terms . . . . . . . . . . . . . . . . . . . . 1
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2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. COMMITMENT TO FUND . . . . . . . . . . . . . . . . . . . 2
3.1 Total Commitment Amount . . . . . . . . . . . . . . 2
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3.2 Termination of Commitment . . . . . . . . . . . . . 2
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3.3 Event of Default . . . . . . . . . . . . . . . . . 2
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3.4 Cancellation and Termination Fees . . . . . . . . . 2
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4. PROJECT DEVELOPMENT . . . . . . . . . . . . . . . . . . 2
4.1 Project Identification and Approval . . . . . . . . 2
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4.2 Site Acquisition . . . . . . . . . . . . . . . . . 3
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4.3 Development of Approved Projects . . . . . . . . . 4
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4.4 Lease of Approved Projects . . . . . . . . . . . . 4
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4.5 Expenses . . . . . . . . . . . . . . . . . . . . . 5
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4.6 Opinion of Counsel . . . . . . . . . . . . . . . . 5
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4.7 Guaranties . . . . . . . . . . . . . . . . . . . . 5
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4.8 Option to Sell . . . . . . . . . . . . . . . . . . 5
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4.9 Closing of Transfer of Project Site . . . . . . . . 5
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5. REPRESENTATIONS OF DEVELOPER . . . . . . . . . . . . . . 6
5.1 Formation and Qualification . . . . . . . . . . . . 6
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5.2 Transaction Documents . . . . . . . . . . . . . . . 6
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5.3 Financial Information . . . . . . . . . . . . . . . 6
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5.4 Litigation and Other Matters . . . . . . . . . . . 7
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5.5 Documents and Other Information . . . . . . . . . . 7
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6. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . 7
7. EVENTS OF DEFAULT AND REMEDIES OF CAPSTONE . . . . . . . 7
7.1 Events of Default . . . . . . . . . . . . . . . . . 7
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7.2 Remedies of Capstone . . . . . . . . . . . . . . . 9
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7.3 Remedies Cumulative . . . . . . . . . . . . . . . . 9
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8. IMPOSITIONS . . . . . . . . . . . . . . . . . . . . . . 9
9. PERMITTED CONTESTS . . . . . . . . . . . . . . . . . . . 10
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 10
10.1 Waiver of Trial by Jury . . . . . . . . . . . . . . 10
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10.2 Notice . . . . . . . . . . . . . . . . . . . . . . 10
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10.3 Governing Law . . . . . . . . . . . . . . . . . . . 12
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10.4 Assignment . . . . . . . . . . . . . . . . . . . . 12
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10.5 Entire Agreement . . . . . . . . . . . . . . . . . 12
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10.6 Amendments . . . . . . . . . . . . . . . . . . . . 12
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10.7 Waiver of Breach . . . . . . . . . . . . . . . . . 12
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10.8 Severability . . . . . . . . . . . . . . . . . . . 12
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10.9 Captions and Headings . . . . . . . . . . . . . . . 12
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10.10 Counterparts . . . . . . . . . . . . . . . . . 12
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10.11 Binding Effect . . . . . . . . . . . . . . . . 12
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10.12 No Rule of Construction . . . . . . . . . . . 12
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10.13 No Third Party Beneficiary . . . . . . . . . . 13
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10.14 Time is of the Essence . . . . . . . . . . . . 13
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MASTER DEVELOPMENT AGREEMENT
THIS MASTER DEVELOPMENT AGREEMENT (this "Agreement") is made
and entered into as of September 18, 1996, between CAPSTONE
CAPITAL CORPORATION, a Maryland corporation ("Capstone") and
GRAND COURT LIFESTYLES, INC., a Delaware corporation
("Developer"):
RECITALS
WHEREAS, Capstone wishes to acquire various tracts of land
in various locations , on which to develop up to four assisted
and independent living facilities consisting of up to 150 units
each, and to subsequently develop such facilities;
WHEREAS, Developer has the experience with and the knowledge
of the acquisition, development and operation of the projects
previously described; and
WHEREAS, Capstone wishes to employ Developer to provide
Capstone with assistance in the site acquisition and development
of the projects previously described and, once developed, to
lease the same to Developer under long-term, triple net pass
through leases as more particularly set forth below.
WITNESSETH
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Capstone and the Developer do hereby agree as
follows:
1. DEFINITIONS AND USE OF CERTAIN TERMS.
1.1 Definitions. The definitions of certain terms used
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herein are set forth on Exhibit A attached hereto.
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1.2 Other Terms. The term "document" is used in its
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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 all cases where Capstone's approval or consent is
required hereunder, such approval or consent must be in writing
and, except as herein otherwise provided, may be withheld in
Capstone's sole and absolute discretion.
2. TERM. This Agreement shall be effective as of the date
hereof and, except as otherwise provided, shall continue in
effect for two years (the "Commitment Termination Date"). The
modification or termination of this Agreement shall not effect
the rights or obligations of either party under any Development
Agreement or Lease entered into between Capstone and Developer
prior to the effective date of the modification or termination.
3. COMMITMENT TO FUND.
3.1 Total Commitment Amount. Subject to the terms and
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conditions hereinafter set forth, Capstone agrees to fund the
acquisition and development of each of the Approved Projects from
time to time up to the Total Commitment Amount. Unless sooner
terminated pursuant to the provisions of Sections 3.2 or 3.3, the
Commitment shall be in effect from the date hereof until the
Commitment Termination Date. The Total Commitment Amount
available for funding hereunder for one or more Approved Projects
shall be reduced from time to time by the aggregate amount of the
Maximum Project Amounts set forth in the executed Development
Agreements.
3.2 Termination of Commitment. Developer may at any time
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prior to the Commitment Termination Date, terminate the
Commitment in full by giving three Business Days' prior written
notice thereof to Capstone and paying in full the Cancellation
Fee pursuant to Section 3.4. No termination of the Commitment or
reduction of the Total Commitment Amount shall be subject to
reinstatement.
3.3 Event of Default. Upon the occurrence of an Event of
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Default, Capstone may terminate the Commitment by written notice
to Developer.
3.4 Cancellation and Termination Fees. In the event all or
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a portion of the Commitment is terminated by Developer pursuant
to Section 3.2 or by Capstone pursuant to Section 3.3, Developer
shall pay a cancellation fee, which fee (the "Cancellation Fee")
shall be equal to one percent of the unfunded portion of the
Total Commitment Amount. In the event that on the Commitment
Termination Date any portion of the Total Commitment Amount
remains unfunded, Developer shall pay to Capstone a termination
fee, which fee (the "Termination Fee") shall be equal to one
percent of such unfunded amount in excess of $2,000,000.00. For
purposes of calculating the Cancellation Fee or the Termination
Fee, any portion of the Total Commitment Amount that is
designated for disbursement under a Development Agreement
executed pursuant to an Approved Development Plan shall be deemed
as funded even though some amounts remain undisbursed as of the
Commitment Termination Date.
4. PROJECT DEVELOPMENT.
4.1 Project Identification and Approval. As soon as
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reasonably practicable after the date hereof, Developer shall
identify up to four proposed Projects (the "Proposed Projects"),
and shall submit to Capstone a plan for each of the Proposed
Projects, which plan (the "Improvement Plan") shall include (i)
all plans, specifications, drawings, details and proforma budgets
necessary or appropriate for the construction, development, use
and operation of an assisted and independent living facility
containing up to approximately 150 units and approximately
130,000 gross square feet depending upon the number of units,
(ii) site analysis and description for the acquisition of the
real estate necessary or appropriate in connection with such
assisted and independent living facility, (iii) analysis and
description for the acquisition and installation of all personal
property necessary or appropriate for the use and operation of
the assisted and independent living facility, (iv) preliminary
estimates by Developer for the Real Estate Acquisition Amount
necessary or appropriate in connection with the Proposed Project,
and (v) and all other items that Capstone may reasonably request
in connection with the acquisition, construction, development and
operation of the Proposed Project. Capstone shall approve or
disapprove each Improvement Plan within 30 days after receipt of
the last of the foregoing items; provided that Capstone shall use
its best efforts to identify objections to the Improvement Plan
as the various items are received from Developer and shall
provide Developer with written notice of the same within ten days
after identifying any such objections. Each Improvement Plan is
subject to approval by Capstone and may be amended, modified or
supplemented by Developer with Capstone's approval (such approved
Improvement Plan, as from time to time amended, modified or
supplemented with Capstone's approval, the "Approved Development
Plan"). Each Approved Development Plan may include a lease-up
allocation of up to $450,000.00 and a contingency amount and a
developer's fee of up to five percent each of the total estimated
hard costs of construction of the Approved Project. Each
Approved Development Plan shall include reasonable estimates by
Capstone of the Real Estate Acquisition Amount for such Approved
Project, together with a line item budget (the "Approved Budget")
for such Approved Project with respect to which Capstone has
agreed to fund construction advances pursuant to the provisions
of the Development Agreement (and a copy of which Approved Budget
shall be attached to the applicable Development Agreement), as
originally approved in writing by Capstone and as supplemented
and modified in writing from time to time in accordance with the
terms of this Agreement and the Development Agreement. In the
event that Capstone shall disapprove any of the proposed
Improvement Plans or any amendment, modification or supplement
thereof, Capstone and Developer shall consult with each other
concerning Capstone's objections, and the parties shall in good
faith attempt to make appropriate modifications to satisfy such
objections. In no event shall Capstone be required to fund any
portion of the Total Commitment Amount other than (A) pursuant to
an Approved Development Plan or (B) at Capstone's option, to
reimburse Capstone for any Real Estate Acquisition Amount. For
purposes of this Agreement, the total amount reflected on the
applicable Approved Budget to be advanced for the development of
an Approved Project, including, but not limited to, the
applicable Real Estate Acquisition Amount, commitment fees, title
insurance premiums, attorneys fees incurred in connection with
the applicable Approved Project, the lease-up allocation, the
contingency amount, the developer's fee, the costs of
construction and development of such Approved Project as
contemplated by this Agreement, shall be referred to as the
"Maximum Project Amount."
4.2 Site Acquisition. Developer shall be responsible for
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the identification and analysis of the real estate for the
Proposed Projects and shall assist Capstone in the negotiations
for the purchase of the real estate necessary or appropriate in
connection with an Approved Project (the "Project Site"). The
Real Estate Acquisition Amounts for the acquisition of each
Project Site shall be funded by Capstone out of the Total
Commitment Amount. In the event that any Project Site is owned
by Developer, Developer shall sell the same to Capstone for an
amount equal to the total costs invested in such Project Site by
Developer and as approved by Capstone. All out-of-pocket
expenses incurred by Capstone in connection with the acquisition
of the Project Sites, including the purchase price, closing
costs, title premiums, recording fees and taxes, environmental
reports, surveys, appraisals, reasonable attorneys' fees and
expenses (collectively, the "Real Estate Acquisition Amount(s)")
shall be included in the determination of the Maximum Project
Amount for the Approved Project of which such Project Site is a
part and shall be deducted from the Total Commitment Amount as
described in Section 3.1 hereof.
4.3 Development of Approved Projects. Simultaneously with
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the purchase by Capstone of any Project Site, Developer shall
execute and deliver to Capstone, or to a Subsidiary of Capstone,
a development agreement for the development of the Approved
Project associated with such Project Site in substantially the
form attached hereto as Exhibit B (the "Development Agreement"),
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together with all guarantees and other documents contemplated
herein and therein, agreeing, among other things, (i) to develop
and construct the Approved Project for an amount not to exceed
the Maximum Project Amount, (ii) to obtain or execute a
construction contract for the Approved Project with a fixed price
or guaranteed maximum amount, such contract to be in a form and
with a general contractor reasonably acceptable to Capstone with
appropriate bonds for payment and performance issued by companies
reasonably acceptable to Capstone, (iii) to commence construction
of the Approved Project within 30 days after the closing of the
acquisition of the Project Site, and (iv) to complete
construction of the Approved Project (as defined in Section 10.1
of the Development Agreement) within 15 months after commencement
of construction. The parties acknowledge that Developer may
negotiate a more comprehensive design and build contract with the
general contractor for a particular Approved Project. In such
event, the parties will make necessary and appropriate changes to
the Development Agreement for such Approved Project to reflect
the design and build arrangement.
4.4 Lease of Approved Projects. Simultaneously with the
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purchase by Capstone of any Project Site, Developer shall execute
and deliver to Capstone a lease agreement for the Approved
Project associated with such Project Site, which lease agreement
(i) shall be in substantially the form attached hereto as Exhibit
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C the (the "Lease"), (ii) for the first Lease, shall include an
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initial term of 15 years from the completion of the Approved
Project pursuant to the terms of Section 10.1 of the Development
Agreement but in no event later than 15 months from the date of
the Development Agreement for the applicable Approved Project,
(iii) for all Leases executed subsequent to the first Lease,
shall include a term with the same expiration date as the first
Lease, (iv) shall provide for an initial annual rental rate equal
to the sum of the total Maximum Project Amount disbursed or
estimated to be disbursed in connection with such Approved
Project times the greater of (A) the Treasury Yield in effect ten
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days prior to the date of the completion of the Approved Project
pursuant to Section 10.1 of the Development Agreement plus 3.5%
and (B) 9.75 %. Notwithstanding the foregoing, it is the intent
of the parties that all amounts disbursed under the Commitment be
reimbursed by Developer or included within one of the Leases,
regardless of whether such amounts can be identified with any
particular Approved Project. Therefore, the parties agree that
any amounts disbursed by Capstone hereunder that are not
reimbursed by Developer, and which amounts cannot be associated
with any particular Approved Project, shall be allocated by
Capstone to one or more of the Approved Projects.
4.5 Expenses. To the extent not directly paid by Developer
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or included in an Approved Budget, all costs and expenses
incurred by Capstone in connection with this Agreement (the
"Transaction Expenses") shall be reimbursed by Developer to
Capstone within ten days after demand therefor by Capstone, or,
at Developer's option, included as an amount funded under the
applicable Development Agreement for purposes of calculating the
initial minimum rent due under the applicable Lease.
4.6 Opinion of Counsel. Simultaneously with the execution
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hereof, Developer shall deliver or cause to be delivered to
Capstone an opinion of counsel, in form and substance reasonably
satisfactory to Capstone, regarding the due authorization,
execution and enforceability of this Agreement and such other
matters as Capstone may reasonably request.
4.7 Guaranties. In the event that Developer uses a
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Subsidiary (or an entity comprised of its Subsidiaries) to
execute and deliver any of the Development Agreements or Leases,
Developer agrees to absolutely and unconditionally guarantee the
full, prompt and faithful performance by such Subsidiary of all
covenants and obligations to be performed by such Subsidiary
under any such Development Agreement or Lease. In the event
Capstone uses a Subsidiary (or an entity comprised of its
Subsidiaries) to execute and deliver any of the Development
Agreements, Capstone agrees to absolutely and unconditionally
guarantee the full, prompt and faithful performance by such
Subsidiary of all covenants and obligations to be performed by
such Subsidiary under any such Development Agreement.
4.8 Option to Sell. In the event that Developer fails to
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obtain a building permit for any Approved Project and commence
construction of the same within six months after the execution of
the applicable Development Agreement, then Capstone may, at its
sole option, require Developer to purchase the applicable Project
Site by delivery of written notice (the "Sale Notice") to
Developer at any time after such six-month period but prior to
the issuance of a building permit. The purchase price for the
Project Site shall be, as of the date of conveyance of the
Project Site pursuant to the terms of Section 4.9, the sum of the
Real Estate Acquisition Amount associated with the applicable
Project Site plus interest on such amount at the rate of the
Prime Rate plus one percent plus a cancellation fee equal to ten
percent of the sum of the Real Estate Acquisition Amount
associated with the applicable Project Site (collectively, the
"Termination Amount"). The conveyance of the Project Site by
Capstone and the payment of the Termination Amount shall be on
the terms, conditions and limitations set forth in Section 4.9.
4.9 Closing of Transfer of Project Site. In the event that
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Capstone exercises its right to sell the Project Site to
Developer pursuant to Section 4.8, Developer shall pay the
Termination Amount to Capstone as of the date of the conveyance
of the Project Site to Developer. The closing with respect to a
Capstone's exercise of its right to sell a Project Site to
Developer pursuant to Section 4.8 shall be no later than 45 days
after the Sale Notice. Upon receipt from Developer of the
applicable Termination Amount, together with any other amounts
owing to Capstone hereunder, Capstone shall deliver to Developer
an appropriate instrument of conveyance (in substantially the
same form used to convey the Project Site to Capstone) effective
to convey the entire interest of Capstone in and to the Project
Site to Developer, and such other standard documents usually and
customarily prepared in connection with such transfers, free and
clear of all encumbrances other than (A) those that Developer has
agreed hereunder to pay or discharge, (B) any other encumbrances
permitted to be imposed on the Project Site under the provisions
of this Agreement, the applicable Development Agreement or
through the actions of Developer, and (C) any matters affecting
title to the Project Site on or as of the date hereof. The
Termination Amount shall be paid in cash to Capstone, or as
Capstone may direct, in immediately available funds. All
expenses of such conveyance, including the cost of title
examination or standard coverage title insurance, attorneys' fees
incurred by Capstone in connection with such conveyance, transfer
taxes, recording fees and similar charges shall be paid by
Developer at the time of closing.
5. REPRESENTATIONS OF DEVELOPER. Developer represents and
warrants to Capstone that:
5.1 Formation and Qualification. Developer is a
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corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware, and has all
requisite power and authority to enter into this Agreement, any
of the Development Agreements, any of the Leases or any
guarantees and other documents contemplated therein
(collectively, the "Transaction Documents") and to conduct its
business and own and lease its properties.
5.2 Transaction Documents. The execution, delivery and
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performance of the Transaction Documents by Developer are within
such Developer's power and authority, have been duly authorized
by all necessary action and do not and will not (a) require any
Authorization which has not been obtained (except to the extent
otherwise indicated in Section 4.1 with respect to Authorizations
required in connection with any of the Proposed Projects), (b)
contravene the Charter Documents of Developer, any applicable
Laws or Other Requirements or any agreement or restriction
binding on or affecting Developer or its property, or (c) result
in or require the creation or imposition of any Lien or Right of
Others upon or with respect to any property now owned by
Developer. No Authorization of Developer (except which has
already been obtained) is required for the enforcement by
Capstone of its Remedies under the Transaction Documents. Each
Transaction Document, when executed and delivered, will
constitute the legal, valid and binding obligation of Developer,
enforceable against such Developer in accordance with its terms,
except as enforcement may be limited by principles of equity,
bankruptcy, insolvency or other similar Laws affecting the rights
of creditors generally.
5.3 Financial Information. (a) The Financial Statements of
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Developer which have been furnished to Capstone fairly present
Developer's financial condition as at the dates of such Financial
Statements and the results of operations for the periods covered
by such Financial Statements, and since the respective dates of
such Financial Statements, there has been no material adverse
change in the financial condition, operations, properties or
prospects of Developer. (b) Developer has filed all tax returns
required to be filed by it, and has paid all Taxes due pursuant
to such returns or in respect of any of its properties (except
for any such Taxes which are being actively contested in good
faith by appropriate proceedings), and to the current, actual
knowledge of Developer without special inquiry or investigation,
no basis exists for additional assessments which have not been
adequately reserved against in the Financial Statements referred
to above or otherwise disclosed in writing to Capstone.
5.4 Litigation and Other Matters. Except as otherwise
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disclosed in writing to Capstone: (a) no actions or other
proceedings affecting or relating to Developer or any of the
Proposed Projects are pending or, to the best knowledge of
Developer, threatened, and (b) no actions or other proceedings
are pending or, to the best knowledge of Developer, threatened
against or affecting Developer or any of its property which (as
regards both clauses (a) and (b) immediately preceding), if
determined adversely to such Developer, could materially impair
the financial condition, operations, properties or prospects of
such Developer or the ability of such Developer to perform its
obligations under the Transaction Documents.
5.5 Documents and Other Information. All Documents and
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other information delivered to Capstone pursuant to any of the
Transaction Documents are and will be complete and correct in all
material respects at the time of delivery to Capstone.
6. FINANCIAL STATEMENTS. As soon as available and in any event
within 90 days after the end of each Fiscal Year, Developer shall
deliver its Financial Statements as of the end of such Fiscal
Year, setting forth in comparative form the figures for the
previous Fiscal Year. As soon as available and in any event
within 45 days after the end of each of the first three quarterly
periods of each Fiscal Year, Developer shall deliver its
Financial Statements as of the end of such period, setting forth
in comparative form the figures for the previous Fiscal Year,
which statements may be internal statements and need not be
audited.
7. EVENTS OF DEFAULT AND REMEDIES OF CAPSTONE.
7.1 Events of Default. The occurrence of any one or more
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of the following events shall constitute an Event of Default:
(a) Developer shall fail to pay all or any portion of
any amount due under this Agreement within 10 days after
written notice from Capstone to Developer; or
(b) Developer shall fail to perform or observe any
other material term, covenant or condition of this Agreement
or any document executed in connection herewith and such
failure is not cured by Developer within a period of 30 days
after receipt by Developer of notice thereof from Capstone,
unless such failure cannot with due diligence be cured
within a period of 30 days, in which case such failure shall
not be deemed to continue if Developer proceeds promptly and
with due diligence to cure the failure and diligently
completes the curing thereof (as soon as reasonably
possible); or
(c) any Representation proves to have been incorrect
in any material respect when made; or
(d) Developer is enjoined by any court or other
Governmental Agency from constructing any of the Approved
projects or entering into any of the Transaction Documents
and such injunction continues unreleased and unstayed for 45
days; or
(e) Developer is dissolved or liquidated or merged
with or into any other Person; or for any period of more
than ten days Developer ceases to exist in its present form
and (where applicable) in good standing and duly qualified
under the Laws of the state of Delaware; or all or
substantially all of the assets of Developer are sold or
otherwise transferred; provided that the foregoing shall not
operate to prevent (i) merger or consolidation of any
Subsidiary into Developer or a sale, transfer or lease of
assets by any Subsidiary to Developer or (ii) a merger of
any Person into Developer; provided that Developer shall be
the surviving or continuing corporation and, after giving
effect to such merger or consolidation: (A) Developer shall
be in full compliance with the terms of this Agreement and
(B) the management of Developer shall be substantially
unchanged; or
(f) The Person or Persons who own at least 51% of the
Voting Shares of Developer as of the date of this Agreement
cease to own at least 51% of the Voting Shares of Developer;
Developer assigns or attempts to assign any rights or
interests under any Transaction Document without the prior
written consent of Capstone; or any Transaction Document
becomes or is claimed by Developer to be unenforceable
against Developer; or
(g) Developer is subject to an order for relief by the
bankruptcy court, or is unable or admits in writing its
inability to pay its debts as they mature or makes an
assignment for the benefit of creditors; or Developer
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 appointment is made without its
consent and the appointment continues undischarged and
unstayed for 60 days); or Developer 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 and unstayed for 60 days); or any judgment,
writ, warrant of attachment or execution or similar process
is issued or levied against any property of Developer and is
not released, vacated or fully bonded within 60 days after
its issue or levy; or
(h) Developer shall default beyond any applicable
grace period contained in one or more major credit
facilities which by their terms would permit an outstanding
balance equal to or greater than $5,000,000.00 in the
aggregate to be accelerated and the same shall be
accelerated by the lender or other applicable party; or
(i) Developer shall fail to maintain a Consolidated
Net Worth of at least $30,000,000.00; provided, however, if
Developer shall complete an initial public offering of
equity securities, Developer shall fail to maintain a
Consolidated Net Worth of at least 75% of its Consolidated
Net Worth that existed immediately after the completion of
such initial public offering, but not less than
$30,000,000.00.
7.2 Remedies of Capstone. Upon the occurrence of any Event
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of Default, Capstone 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 Capstone
may determine:
(a) Capstone may, at its option, terminate the
Commitment, or Capstone may waive the Event of Default or,
without waiving, determine, upon terms and conditions
satisfactory to Capstone, to make further disbursements of
the Commitment;
(b) Capstone may perform any of Developer's
obligations in such manner as Capstone may reasonably
determine; or
(c) Capstone may proceed to protect, exercise and
enforce any and all other Remedies provided under the
Transaction Documents or by applicable Laws.
All reasonable costs, expenses, charges and advances of
Capstone in exercising any such Remedies shall be payable by
Developer to Capstone as Transaction Expenses in accordance with
Section 4.5.
7.3 Remedies Cumulative. Each of the Remedies of Capstone
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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 Capstone, and in such order and manner as Capstone may
determine. No failure or delay on the part of Capstone 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 Capstone, 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 Capstone.
8. IMPOSITIONS. Prior to the commencement of the term of any
of the Leases, Developer will pay, or cause to be paid, all
Impositions before any fine, penalty, interest or cost may be
added for non-payment, such payments to be made directly to the
taxing authorities where feasible, and Developer will promptly,
upon request, furnish to Capstone copies of official receipts or
other satisfactory proof evidencing such payments. Developer's
obligation to pay such Impositions and the amount thereof shall
be deemed absolutely fixed upon the date such Impositions become
payable without a penalty.
9. PERMITTED CONTESTS. Notwithstanding any provision of this
Agreement to the contrary, Developer may contest by appropriate
action any Imposition, and Capstone 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, any Development Agreement or
under any document or instrument executed in connection therewith
(the "Documents"); (b) Developer has given Capstone 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
Capstone or any of the Capstone's affiliates or any assignee of
all or any portion of the Capstone's interest in any of the
Projects to civil or criminal liability and does not jeopardize
any such party's interest in the such Project; and (d) Developer
shall give such security or assurances as may be reasonably
required by Capstone 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.
10. MISCELLANEOUS.
10.1 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 IS
MUTUALLY AGREED BY AND BETWEEN THE PARTIES HERETO, AND FOR THEIR
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 VOLUNTARILY GIVEN, IS DESIRED BY ALL
PARTIES, AND IS IN THE BEST INTEREST OF ALL PARTIES.
10.2 Notice. Any notices, demands, approvals and other
------
communications provided for in this Agreement shall be in writing
and shall be delivered by telephonic facsimile, overnight air
courier, personal delivery or registered or certified U.S. Mail
with return receipt requested, postage paid, to the appropriate
party at its address as follows:
If to Capstone:
CAPSTONE CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Sirote & Permutt, P. C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Developer:
GRAND COURT LIFESTYLES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for notice may be changed from time to time by
written notice to all other parties. Any communication given by
mail will be effective (i) upon the earlier of (a) three business
days following deposit in a post office or other official
depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return
receipt; (ii) if given by telephone facsimile, when sent; and
(iii) if given by personal delivery or by overnight air courier,
when delivered to the appropriate address set forth.
10.3 Governing Law. This Agreement shall be interpreted
-------------
according to the laws of the State of Alabama. All disputes
hereunder shall be adjudicated in the federal courts sitting in
the State of Alabama, or should such courts refuse to recognize
jurisdiction over such matters, the courts of the State of
Alabama.
10.4 Assignment. Neither party shall assign their rights
----------
and obligations under this Agreement without the prior written
approval of the other party.
10.5 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.
10.6 Amendments. This Agreement shall not be modified or
----------
amended except by mutual written agreement.
10.7 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.
10.8 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
30 days' prior written notice to the other party.
10.9 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.
10.10 Counterparts. This Agreement may be executed in
------------
one or more counterparts, all of which together shall constitute
only one Agreement.
10.11 Binding Effect. This Agreement shall be binding
--------------
and shall enure to the benefit of the parties hereto, and their
respective heirs, legatees, executors, administrators, legal
representatives, successors and assigns.
10.12 No Rule of Construction. The parties acknowledge
-----------------------
that this Agreement was initially prepared by Capstone solely as
a convenience and 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 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.
10.13 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.
10.14 Time is of the Essence. With respect to all
----------------------
provisions of this Agreement, time is of the essence.
IN WITNESS WHEREOF, Capstone and Developer have executed
this Agreement by and through their duly authorized
representatives below, as of the day and year first written
above.
CAPSTONE:
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
DEVELOPER:
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Its President
--------------------------------
INDEX OF EXHIBITS TO
MASTER DEVELOPMENT AGREEMENT
BETWEEN CAPSTONE CAPITAL CORPORATION AND
GRAND COURT LIFESTYLES, INC.
Exhibit A - Definitions
Exhibit B - Form of Development Agreement
Exhibit C - Form of Lease Agreement
NOTE: This Index of Exhibits has been included in this
Agreement solely for the convenience and general
reference of the parties and shall not be construed to
describe, define or limit the scope or intent of the
provisions of this Agreement.
EXHIBIT A
DEFINITIONS
As used in this Agreement, the following terms shall have
the meanings as indicated:
"Approved Budget" has the meaning set forth in Section 4.1.
"Approved Development Plan" means an Improvement Plan
approved by Capstone pursuant to Section 4.1.
"Approved Project" means a Proposed Project approved by
Capstone pursuant to Section 4.1.
"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.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which national banks in
the City of Birmingham, Alabama are closed.
"Capstone" has the meaning set forth in the introductory
paragraph to this Agreement.
"Charter Documents" means (a) in the case of a corporation,
its articles 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.
"Commitment" means the agreement of Capstone, subject to the
terms and conditions of this Agreement, to fund up to the Total
Commitment Amount for the acquisition and development of the
Approved Projects.
"Consolidated Financial Statements" means for any Fiscal
Year, audited statements 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 Developer 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 Developer, and prepared in accordance
with generally accepted accounting principles consistently
applied, except as noted.
"Consolidated Net Worth" means at any time, the sum of the
following for Developer, on a consolidated basis determined in
accordance with generally accepted accounting principles:
(a) the amount of capital or stated capital (after
deducting the cost of any treasury shares or like
interests), plus
(b) the amount of capital surplus and retained
earnings (or, in the case of a capital surplus or retained
earnings deficit, minus the amount of such deficit), minus
(c) the sum of the following (without duplication of
deductions in respect of items already deducted in arriving
at capital surplus and retained earnings): (i) unamortized
debt discount and expense; (ii) any write-up in book value
of assets resulting from a revaluation thereof subsequent to
the most recent Consolidated Financial Statement prior to
the date thereof, except any net write-up in value of
foreign currency; (iii) any write-up resulting from a
reversal of a reserve for bad debts or depreciation; and
(iv) any write-up resulting from a change in methods of
accounting for inventory.
"Developer" has the meaning set forth in the introductory
paragraph to this Agreement.
"Development Agreement" has the meaning set forth in Section
4.3.
"Events of Default" means the events set forth in Section
7.1.
"Financial Statements" means for any Fiscal Year or other
accounting period for Developer, audited statements 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 Developer 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 Developer,
and prepared in accordance with generally accepted accounting
principles consistently applied, except as noted.
"Fiscal Year" means Developer's fiscal year, ending on
January 31 of each calendar year.
"Governmental Agency" means, as relates to one of the
Projects, (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.
"Impositions" means, collectively, all taxes relating to the
Project Sites and the Approved Projects, including all ad
valorem, sales and use, gross receipts, action, privilege, rent
or similar taxes, assessments (including all assessments for
public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be
completed prior to the termination hereof) water, sewer or other
rents and charges, excises, tax levies, fees (including license,
permit, inspection, authorization and similar fees), and all
other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of
every character in respect of the Project Sites and the Approved
Projects (including all interest and penalties thereon due to any
failure in payment by Developer); provided that nothing contained
in this Agreement shall be construed to require Developer to pay
any tax based on net income (whether denominated as a franchise
or capital stock or other tax) imposed on Capstone.
"Improvement Plan" has the meaning set forth in Section 4.1.
"Laws" means, as relates to one of the Projects, all
federal, state and local laws, rules, regulations, ordinances and
codes.
"Lease" has the meaning set forth in Section 4.4.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest or other charge or encumbrance, except for ad
valorem real estate taxes that are timely paid.
"Maximum Project Amount(s)" has the meaning set forth in
Section 4.1.
"Other Requirements" means (a) the terms, conditions and
requirements of all Transaction Documents, Authorizations and
Rights of Others relating to any of the Projects and all other
Documents, agreements and restrictions relating to, binding on or
affecting any of the Projects, including covenants, conditions
and restrictions, leases, easements, reservations, rights and
rights-of-way, (b) as relates to one of the Projects,
requirements and recommendations of the soils report and any
environmental impact report or negative declaration, (c) as
relates to one of the Projects, all building, zoning, land use,
planning and subdivision requirements, and (d) as relates to one
of the Projects, requirements relating to construction of any
off-site improvements.
"Person" means any person or entity, whether an individual,
trustee, corporation, partnership, joint stock company, trust,
unincorporated organization, bank, business association or firm,
joint venture, Governmental Agency or otherwise.
"Preliminary Budget" means a line item budget for a
Proposed Project with respect to all construction costs.
"Prime Rate" means the annual rate reported by The Wall
Street Journal, Eastern Edition (or, if The Wall Street Journal
shall no longer be published or shall cease to report such rates,
then a publication or journal generally accepted in the financial
industry as authoritative evidence of prevailing commercial
lending rates), from time to time as being the prevailing prime
rate (or, if more than one such rate shall be published in any
given edition, the arithmetic mean of such rates). The prime
rate is an index rate used by The Wall Street Journal to report
prevailing lending rates and may not necessarily be the most
favorable lending rate available. Any change in the Prime Rate
hereunder shall take effect on the effective date of such change
in the prime rate as reported by The Wall Street Journal, without
notice to Developer or any other action by Capstone. Interest
shall be computed on the basis that each year contains 360 days,
by multiplying the principal amount by the per annum rate set
forth above, dividing the product so obtained by 360, and
multiplying the quotient thereof by the actual number of days
elapsed.
"Project" means the construction, development and operation
of an assisted and independent living facility including any of
the following items necessary or appropriate in connection
therewith: (i) the construction of the buildings, structures and
other improvements, including site development work (if any),
(ii) the acquisition of the real estate, and (iii) the
acquisition and installation of any personal property.
"Project Site" has the meaning set forth in Section 4.2.
"Proposed Project" has the meaning set forth in Section 4.1.
"Real Estate Acquisition Amount(s)" has the meaning set
forth in Section 4.2.
"Remedy" means any right, power or remedy.
"Representations" means the representations and warranties
of Developer set forth in Section 5 and all other
representations, warranties and certifications to Capstone in any
of the Transaction Documents or in any other document delivered
under or in connection with the Transaction Documents.
"Right of Others" means, as to any property in which a
Person has an interest, any legal or equitable claim or other
interest (other than a Lien but including a leasehold interest, a
right of first refusal or a right of repossession or removal) in
or with respect to such property held by any other Person, and
any option or right held by any other Person to acquire any such
claim or other interest or any Lien in or with respect to such
property.
"Sale Notice" has the meaning set forth in Section 4.8
"Subsidiary" means any corporation 51% of the Voting Shares
of which is owned, directly or indirectly, by Developer.
"Taxes" means, as relates to one of the Projects, all taxes,
assessments, charges, fees and levies (including interest and
penalties) imposed, assessed or collected by any Governmental
Agency.
"Termination Amount" has the meaning set forth in Section
4.8.
"Title Policy" means an Texas Insurance Commission form
Owner's Policy of Title Insurance (Form T-1), together with such
endorsements thereto as are reasonably and customarily required
by institutional purchasers of real property similar to the
Project Site, issued by a title company reasonably acceptable to
Capstone, insuring title to the fee interest in the Project Site
in Capstone, subject only to the exceptions approved by Capstone
and to the standard printed exceptions included in the Texas
standard form Owner's Policy of Title Insurance, with the
following modifications: (a) the exception for areas and
boundaries shall be modified to read "shortages in area; (b) the
exception for ad valorem taxes shall reflect only taxes for the
current and subsequent years and subsequent taxes and assessments
by any taxing authority for prior years due to change in land
usage or ownership; (c) there shall be no general exception for
visible and apparent easements or roads and highways or similar
items (with any exception for visible and apparent easements or
roads and highways or similar items to be specifically referenced
to and shown on the survey and also identified by applicable
recording information); and (e) all other exceptions shall be
modified or endorsed in a manner reasonably acceptable to
Capstone.
"Total Commitment Amount" means $39,000,000.00.
"Transaction Documents" has the meaning set forth in Section
5.1.
"Transaction Expenses" has the meaning set forth in Section
4.5.
"Treasury Yield" means as of any date the weekly average
yield on United States Treasury Securities Constant Maturity
Series issued by the United States Government for a term of ten
years, as most recently published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15(519). If, with respect
to the Treasury Yield, Capstone shall determine that the sale of
Treasury Securities by the United States Government has been
suspended, or Treasury Securities are not being offered for sale,
or the weekly average yield is no longer printed by the Federal
Reserve Board in Federal Reserve Statistical Release H.15(519) or
for any other reason Capstone is not able to obtain a quotation
from the Federal Reserve for the sale of such Treasury
Securities, then Capstone shall forthwith give notice to
Developer and advise Developer of a new index for determining the
interest rate to be used in connection with this Agreement, which
rate, in the good faith judgment of Capstone, shall be
substantially equivalent to the Treasury Yield.
"Voting Shares" of any corporation means shares of 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.
EXHIBIT B
FORM OF
DEVELOPMENT AGREEMENT
DEVELOPMENT AGREEMENT
between
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
and
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
________________ ___, 1996
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
-----------
1.2 Singular and Plural Terms . . . . . . . . . . . . . 1
-------------------------
1.3 Accounting Principles . . . . . . . . . . . . . . . 1
---------------------
1.4 Exhibits Incorporated . . . . . . . . . . . . . . . 1
---------------------
1.5 References . . . . . . . . . . . . . . . . . . . . 1
----------
1.6 Other Terms . . . . . . . . . . . . . . . . . . . . 1
-----------
1.7 Headings . . . . . . . . . . . . . . . . . . . . . 2
--------
1.8 Other Documents . . . . . . . . . . . . . . . . . . 2
---------------
1.9 Intention . . . . . . . . . . . . . . . . . . . . . 2
---------
2. RECITALS . . . . . . . . . . . . . . . . . . . . . . . . 2
3. OWNER'S COMMITMENT TO FUND . . . . . . . . . . . . . . . 2
3.1 Terms of the Commitment . . . . . . . . . . . . . . 2
-----------------------
3.2 Fees Relating to Disbursements . . . . . . . . . . 2
------------------------------
3.3 Commitment Fee . . . . . . . . . . . . . . . . . . 2
--------------
3.4 Reimbursement of Owner . . . . . . . . . . . . . . 2
----------------------
4. DELIVERY OF DOCUMENTS . . . . . . . . . . . . . . . . . 3
5. DISBURSEMENTS . . . . . . . . . . . . . . . . . . . . . 3
5.1 Priority . . . . . . . . . . . . . . . . . . . . . 3
--------
5.2 Disbursement Requests . . . . . . . . . . . . . . . 4
---------------------
5.3 Manner of Disbursement . . . . . . . . . . . . . . 5
----------------------
5.4 Cost Overruns . . . . . . . . . . . . . . . . . . . 5
------------
5.5 Cost Savings . . . . . . . . . . . . . . . . . . . 5
------------
5.6 Stored Materials . . . . . . . . . . . . . . . . . 5
----------------
5.7 Balancing . . . . . . . . . . . . . . . . . . . . . 6
---------
5.8 Retainage . . . . . . . . . . . . . . . . . . . . . 7
---------
5.9 Developer's Fee . . . . . . . . . . . . . . . . . . 7
---------------
5.10 Estimated Completion Amount . . . . . . . . . . . . 7
---------------------------
5.11 Fees Relating to Estimated Completion Amount . . . 8
--------------------------------------------
6. CONDITIONS TO DISBURSEMENT . . . . . . . . . . . . . . . 8
6.1 First Disbursement . . . . . . . . . . . . . . . . 8
------------------
6.2 Any Disbursement . . . . . . . . . . . . . . . . . 10
----------------
6.3 Disbursement of Marketing and Lease-Up Allowances . 12
-------------------------------------------------
6.4 Contractor's Disbursement . . . . . . . . . . . . . 13
-------------------------
6.5 Final Disbursement . . . . . . . . . . . . . . . . 13
------------------
6.6 Disbursement of Developer's Fee . . . . . . . . . . 14
-------------------------------
7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 14
7.1 Formation, Qualification and Compliance . . . . . . 14
---------------------------------------
7.2 Execution and Performance of Documents . . . . . . 14
--------------------------------------
7.3 Financial and Other Information . . . . . . . . . . 15
-------------------------------
7.4 No Material Adverse Change . . . . . . . . . . . . 16
--------------------------
7.5 Tax Liability . . . . . . . . . . . . . . . . . . . 16
-------------
7.6 Government Requirements . . . . . . . . . . . . . . 16
-----------------------
7.7 No Adverse Conditions . . . . . . . . . . . . . . . 16
---------------------
7.8 Rights of Others . . . . . . . . . . . . . . . . . 16
----------------
7.9 Approved Budget . . . . . . . . . . . . . . . . . . 16
---------------
7.10 Litigation . . . . . . . . . . . . . . . . . . . . 16
----------
7.11 Project Agreements . . . . . . . . . . . . . . . . 17
------------------
7.12 Title to Assets . . . . . . . . . . . . . . . . . . 17
---------------
7.13 Name and Principal Place of Business . . . . . . . 17
------------------------------------
7.14 Hazardous Materials . . . . . . . . . . . . . . . . 17
-------------------
8. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 17
8.1 Payment of Taxes, Assessments Costs and Expenses . 17
------------------------------------------------
8.2 Title Insurance Endorsement . . . . . . . . . . . . 18
---------------------------
8.3 Continued Compliance . . . . . . . . . . . . . . . 18
--------------------
8.4 Books and Records . . . . . . . . . . . . . . . . . 18
-----------------
8.5 Maintenance and Security of the Property . . . . . 18
----------------------------------------
8.6 Financial Statements . . . . . . . . . . . . . . . 18
--------------------
8.7 Notice of Certain Matters . . . . . . . . . . . . . 19
-------------------------
8.8 Notice of Liens . . . . . . . . . . . . . . . . . . 19
---------------
8.9 Additional Reports and Information . . . . . . . . 19
----------------------------------
8.10 Further Assurances . . . . . . . . . . . . . . . . 20
------------------
8.11 Copies of Amendments . . . . . . . . . . . . . . . 20
--------------------
8.12 Continued Existence . . . . . . . . . . . . . . . . 20
-------------------
8.13 Hazardous Materials . . . . . . . . . . . . . . . . 20
-------------------
8.14 Building Permit . . . . . . . . . . . . . . . . . . 21
---------------
8.15 Consolidated Net Worth . . . . . . . . . . . . . . 21
----------------------
8.16 Name of Facility . . . . . . . . . . . . . . . . . 22
----------------
9. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . 22
9.1 Liens on Property . . . . . . . . . . . . . . . . . 22
-----------------
9.2 Liens on Personal Property . . . . . . . . . . . . 22
--------------------------
9.3 Changes in Approved Budget . . . . . . . . . . . . 22
--------------------------
9.4 Assignments of Obligations . . . . . . . . . . . . 22
--------------------------
9.5 Removal of Personal Property . . . . . . . . . . . 22
----------------------------
10. CONSTRUCTION COVENANTS . . . . . . . . . . . . . . . . . 23
10.1 Commencement and Completion of Project . . . . . . 23
--------------------------------------
10.2 Offsite Improvements . . . . . . . . . . . . . . . 23
--------------------
10.3 Change Orders . . . . . . . . . . . . . . . . . . . 23
-------------
10.4 Conformity with Improvement Plans . . . . . . . . . 23
---------------------------------
10.5 Owner's Engineer . . . . . . . . . . . . . . . . . 24
----------------
10.6 Encroachments . . . . . . . . . . . . . . . . . . . 24
-------------
10.7 Entry and Inspection . . . . . . . . . . . . . . . 24
--------------------
10.8 Construction Information . . . . . . . . . . . . . 24
------------------------
10.9 Permits and Warranties . . . . . . . . . . . . . . 25
----------------------
10.10 Protection Against Liens . . . . . . . . . . . 25
------------------------
10.11 Permitted Contests . . . . . . . . . . . . . . 25
------------------
11. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 26
11.1 Policies Required . . . . . . . . . . . . . . . . . 26
-----------------
11.2 Delivery of Proceeds to Owner . . . . . . . . . . . 27
-----------------------------
11.3 Application of Casualty Insurance Proceeds . . . . 27
------------------------------------------
11.4 Disbursement of Proceeds . . . . . . . . . . . . . 28
------------------------
11.5 Failure of Conditions . . . . . . . . . . . . . . . 28
---------------------
12. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . 28
13. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . 29
13.1 Events of Default . . . . . . . . . . . . . . . . . 29
-----------------
13.2 Remedies Upon Default . . . . . . . . . . . . . . . 30
---------------------
13.3 Cumulative Remedies; No Waiver . . . . . . . . . . 31
------------------------------
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 31
14.1 Actions . . . . . . . . . . . . . . . . . . . . . . 31
-------
14.2 Default by Owner . . . . . . . . . . . . . . . . . 32
----------------
14.3 Disclaimer . . . . . . . . . . . . . . . . . . . . 32
----------
14.4 Representations by Owner . . . . . . . . . . . . . 33
------------------------
14.5 Indemnity . . . . . . . . . . . . . . . . . . . . . 33
---------
14.6 Easements . . . . . . . . . . . . . . . . . . . . . 34
---------
14.7 Survival of Representations and Warranties . . . . 34
------------------------------------------
14.8 Notices . . . . . . . . . . . . . . . . . . . . . . 34
-------
14.9 No Third Parties Benefitted . . . . . . . . . . . . 35
---------------------------
14.10 Binding Effect . . . . . . . . . . . . . . . . 35
--------------
14.11 Counterparts . . . . . . . . . . . . . . . . . 36
------------
14.12 Prior Agreements; Amendments; Consents . . . . 36
--------------------------------------
14.13 Governing Law . . . . . . . . . . . . . . . . 36
-------------
14.14 Maximum Rate . . . . . . . . . . . . . . . . . 36
------------
14.15 Waivers . . . . . . . . . . . . . . . . . . . 37
-------
14.16 Severability of Provisions . . . . . . . . . . 38
--------------------------
14.17 Time of Essence . . . . . . . . . . . . . . . 38
---------------
EXHIBITS
--------
Exhibits Description Section
Reference
"A" Definitions 1.1
"A-1" Legal Description of Property Ex. A
"B" Approved Budget Ex. A
"C" Disbursement Request Ex. A, 3.1,
5.2
"D" Architect's Completion
Certificate
"E" NOT USED
"F" Architect's Consent and
Agreement Ex. A, 4.1(a)
"G" Not Used
"H" Contractor's Consent and
Agreement 4.1(c)
"I" Environmental Indemnity
Agreement 4.1(d)
"J" Assignment of Contract 4.1(e)
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT, dated as of
____________________, 1996 is between GRAND COURT LIFESTYLES,
INC., a Delaware corporation ("Developer"), and CAPSTONE CAPITAL
CORPORATION, a Maryland corporation ("Owner").
1. DEFINITIONS AND INTERPRETATION.
1.1 Definitions. The definitions of certain terms used
-----------
herein are set forth on Exhibit A attached hereto.
---------
1.2 Singular and Plural Terms. Any defined term used in
-------------------------
the plural in any Document shall refer to all members of the
relevant class and any defined term used in the singular shall
refer to any number of the members of the relevant class.
1.3 Accounting Principles. Any accounting term used and
----------------------
not specifically defined in any Document shall be construed in
conformity with, and all financial data required to be submitted
under any Document shall be prepared in conformity with,
generally accepted accounting principles applied on a consistent
basis.
1.4 Exhibits Incorporated. All exhibits to this Agreement,
----------------------
as now existing and as the same may from time to time be
supplemented and modified, are incorporated herein by this
reference.
1.5 References. Any reference to any Document or other
-----------
document shall include such document both as originally executed
and as it may from time to time be supplemented and modified.
References herein to Articles, Sections and Exhibits shall be
construed as references to this Agreement unless a different
document is named. References to subparagraphs shall be
construed as references to the same Section in which the
reference appears.
1.6 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". The requirement that any party "deliver"
any item to another party shall be construed to require that the
first party "deliver or cause to be delivered" such item to the
second party. 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 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 all cases where Owner's approval or
consent is required hereunder, such approval or consent may be
withheld in Owner's reasonable discretion.
1.7 Headings. All headings appearing in this Agreement and
---------
article and section headings in the Documents are for convenience
of reference only and shall be disregarded in construing this
Agreement and the Documents.
1.8 Other Documents. This Agreement shall be deemed a
----------------
supplement to the other Documents and shall not be construed as a
modification thereto. In the event of any conflict between the
provisions of this Agreement and those of any other Document, the
provisions of this Agreement shall control.
1.9 Intention. The provisions of this Section 1 shall
----------
apply in every instance except where a different meaning,
construction or reference is clearly specified and intended.
2. RECITALS. Owner holds title to the Property. Owner has
agreed to fund the cost of construction of the Improvements to
the Property, the purchase of the Personal Property and related
items, subject to and in accordance with the provisions of this
Agreement and the other Documents.
3. OWNER'S COMMITMENT TO FUND.
3.1 Terms of the Commitment. Subject to the terms and
-----------------------
conditions set forth herein, Owner agrees to fund the Maximum
Project Amount to Developer in one or more Disbursements. The
Disbursements of the Project Costs, and any distributions from
the Settlement Account, shall be solely for financing the
construction of the Project and related items in accordance with
the Improvement Plans and this Agreement, as set forth in the
Approved Budget. Each Disbursement shall be requested by
Developer pursuant to a Disbursement Request. So long as no
Event of Default has occurred and is continuing, Owner shall make
each Disbursement within ten days subsequent to the date of any
requested Disbursement by Developer.
3.2 Fees Relating to Disbursements. Except as provided in
------------------------------
Section 5.11, until the term of the Facility Lease shall have
commenced, the aggregate of all funds advanced by Owner to
Developer shall bear interest at the Base Rate. Interest shall
be computed on the basis that each year contains 360 days by
multiplying the amounts disbursed hereunder by the Base Rate,
dividing the product so obtained by 360, and then multiplying the
quotient thereof by the actual number of days elapsed. Such
interest shall be payable by Developer to Owner on the first day
of each month.
3.3 Commitment Fee. In consideration of the commitment to
--------------
make advancements pursuant to this Agreement, Developer shall pay
to Owner a commitment fee (the "Commitment Fee") on the date
hereof in the amount of one percent of the Project Costs other
than the Commitment Fee.
3.4 Reimbursement of Owner. Developer shall reimburse
----------------------
Owner (or Owner shall disburse the same to itself in accordance
with Section 5.3 for any amounts to be included in a
Disbursement) within ten days following receipt of Owner's demand
for all payments made by Owner and all costs incurred by Owner
(including appraisal fees, inspection fees and the reasonable
fees and expenses of Owner's attorneys) in connection with the
negotiation, preparation, execution, delivery, funds
administration (other than the customary duties normally
performed by Owner's staff without additional charges to Owner's
customers), modification, performance and enforcement of the
Documents and all related matters, including, but not limited to,
the following:
(a) Funds advanced by Owner pursuant to Sections
13.2(c) and 13.2(d) hereof following an Event of Default or
in connection with the performance by Owner of any
obligation that Developer has failed or refused to perform;
(b) Owner's commencement of, appearance in or defense
of, any action or proceeding purporting to affect the rights
or obligations of the Owner with respect to the Property or
of the parties to any Document, except for any action or
proceeding between Owner and Developer; and
(c) All claims, demands, causes of action,
liabilities, losses, commissions and other costs and
expenses against which the Owner has been indemnified by
Developer hereunder.
4. DELIVERY OF DOCUMENTS. In consideration of Owner's entry
into this Agreement, Developer shall deliver to Owner, in such
form and substance as Owner requires, prior to the initial
Disbursement:
(a) an Architect's Consent and Agreement executed by
the Architect substantially in the form attached as Exhibit
-------
F;
--
(b) a Contractor's Consent and Agreement executed by
the Contractor substantially in the form attached as Exhibit
-------
H;
--
(c) the Environmental Indemnity substantially in the
form attached as Exhibit I;
---------
(d) the Assignment of Contracts substantially in the
form attached as Exhibit J;
---------
(e) the Construction Contracts;
(f) the Certificate of Authority, in such form and
content as is acceptable to Owner; and
(g) such other documents, instruments, consents and
assurances as Owner may reasonably require in accordance
with the terms hereof.
5. DISBURSEMENTS.
5.1 Priority. The Maximum Project Amount or portions
--------
thereof shall be disbursed from time to time in the following
order of priority:
(a) First, if Owner so chooses and from time to time
in its sole discretion, to make payments deemed advisable by
Owner to protect the Property or Owner's interests under any
Document and to fulfill any payment obligations of Developer
under Section 8.1 and any reimbursement obligation not
timely made and required to be paid by Developer under
Section 3.4 hereof (collectively, the "Priority
Disbursements").
(b) Second, to pay for the remaining Project Costs on
a line item by line item basis in accordance with the Approved
Budget and in the order, and subject to the satisfaction of each
of the conditions, set forth in Sections 5 and 6 (collectively
the "Project Disbursements").
5.2 Disbursement Requests.
---------------------
(a) Project Disbursements shall be made only upon
Developer's written request in a Disbursement Request
containing each of the following items:
(i) a summary on a line item by line item basis
showing all amounts expended for Project Costs,
itemized in such detail as Owner may require;
(ii) for Disbursement Requests which include hard
costs, an Application and Certificate for Payment (AIA
Document G702) or other document acceptable to Owner,
containing certifications by Developer and Architect
that construction to the date of the Disbursement
Request is in accordance with the Improvement Plans and
accompanied, at the request of Owner, by invoices and
lien releases satisfactory to Owner, including in any
event partial lien releases executed by each
subcontractor who has received any payment for work
performed;
(iii) an endorsement to the Title Policy
evidencing that no mechanic's and materialmen's liens
or other encumbrances have been filed against the
Property, except as permitted herein; and
(iv) all other documents and information
reasonably required by Owner.
Disbursement Requests shall be limited to amounts
actually paid or obligations actually incurred by Developer
for labor, materials and other reasonable costs for the
Project and shall be submitted in duplicate. Disbursement
Requests may be submitted monthly but shall not be submitted
more often than once each calendar month. Notwithstanding
the foregoing, Owner may, in its sole discretion, make
Project Disbursements from time to time, in the absence of a
Disbursement Request.
(b) Except as otherwise provided herein or in any
other Document to the contrary, at the Owner's option, the
requested Disbursement shall be for an amount equal to
$100,000.00 or more.
5.3 Manner of Disbursement. Owner may, at its sole option,
----------------------
make any Disbursement by journal entry (if appropriate for
payment or reimbursement to Owner of a Priority Disbursement), by
check payable to Developer or by check payable jointly to
Developer and any laborer or supplier, or directly to the Title
Company, contractors, subcontractors, architects and other
claimants, or by any other means approved by Developer.
5.4 Cost Overruns. In the event that, for any reason, the
-------------
actual cost reasonably determined by Owner or Developer to be
required to assure completion of all matters included in any line
item in the Approved Budget exceeds the amount allocated to such
line item after application of any contingency funds or so much
thereof as shall be necessary and not previously applied and
after reallocation of any amount pursuant to Section 5.5, Owner
shall have no obligation to make further Disbursements until
Developer has paid or otherwise provided for the overrun as
required under Section 5.7. Amounts deposited by Developer in
the Settlement Account for any line item shall be held by Owner
or Owner's designated agent in trust and disbursed or caused to
be disbursed by Owner prior to the disbursement of any remaining
Project Costs for such line item; provided that Owner shall have
no obligation to Developer to supervise or otherwise ensure the
proper application of such amounts following disbursement.
5.5 Cost Savings. Upon completion of and disbursement for
------------
all matters covered by any line item in the Approved Budget, or
upon the execution of a contract or a subcontract for any line
item in an amount that is less than the amount allocated to that
line item in the Approved Budget, any remaining undisbursed
amounts allocated to that line item, or any amounts allocated to
that line item that exceed the amount of the contract or
subcontract, as the case may be, shall be reallocated to
"Contingency" in the Approved Budget and thereafter be available
for disbursement for Project Costs, subject to Owner's prior
written approval, which approval shall not be unreasonably
withheld.
5.6 Stored Materials. Owner shall have the right to
----------------
approve or disapprove specifically, in its sole but reasonable
judgement, all Disbursements for stored materials whether stored
on the Property or offsite (the "Stored Materials"). Without
limiting Owner's discretion, Owner may not approve a Disbursement
for Stored Materials unless the Disbursement Request includes
each of the following:
(a) evidence satisfactory to Owner that the Stored
Materials are included in the coverage of insurance policies
naming Owner as an additional insured;
(b) evidence satisfactory to Owner from the seller or
fabricator of the Stored Materials certifying that, upon
payment, ownership of any Stored Materials located off the
Property (the "Offsite Materials") will vest in Owner free
of any liens or claims of third parties;
(c) evidence that the seller, supplier or fabricator
acknowledges the Owner's right to enter the facility at
reasonable times to inspect or remove any Offsite Materials
(d) either (i) evidence satisfactory to Owner that the
Stored Materials are satisfactorily stored on the Property
in such a manner that they are protected against theft or
damage; or (ii) if the Stored Materials are Offsite
Materials, (1) evidence satisfactory to Owner that the
Offsite Materials are stored in a bonded warehouse or
storage yard approved by Owner; and (2) Owner shall have
received from Developer the original warehouse receipt.
With Owner's prior written approval, Stored Materials
may be stored in the yard or warehouse of the seller or
fabricator, subject to satisfaction of conditions specified
in paragraphs (a), (b) and (c) of this Section 5.6, and
provided further that Owner receives satisfactory evidence
that the Offsite Materials are protected against theft or
damage and have been suitably identified as belonging to
Developer for use in the Project. In no event shall Owner
be required to make Disbursements for Offsite Materials
until Owner has inspected and approved the Offsite Materials
or waived in writing the requirement for such inspection and
approval.
5.7 Balancing.
---------
(a) As a material condition of the commitment of Owner
to fund the Maximum Project Amount and of Owner's duty to
disburse the proceeds thereof, Developer covenants to pay
all Project Costs described in the Approved Budget in excess
of the Maximum Project Amount. Owner shall be obligated to
disburse proceeds of the Maximum Project Amount only when
the Maximum Project Amount is "in balance." The Maximum
Project Amount shall be "in balance" only at such times as
Developer shall have invested sufficient funds toward the
payment of Project Costs described in the Approved Budget so
that the undisbursed portion of the Maximum Project Amount
together with all retained amounts for each line item and
all amounts allocated and reallocated to contingency, shall,
on a line item by line item basis, be sufficient to pay all
Project Costs described in the Approved Budget. Amounts
allocated and reallocated to contingency shall be applied on
a line item by line item basis to any line item which is not
in balance, before any Developer investment is required. If
contingency funds are not available at the time a Developer
investment is made, but contingency funds become thereafter
available, then the contingency funds shall be used and
Developer's investment shall be immediately returned to the
extent of the available contingency funds.
(b) A determination as to whether or not the Maximum
Project Amount is "in balance" may be made by Owner at any
time, including at each time a Disbursement Request is made
by Developer. For purposes of each Disbursement Request,
the Maximum Project Amount shall be deemed to be "in
balance" when the sum of all retained amounts for each line
item plus "Balance To Fund" for that line item in the
Disbursement Request is equal to or greater than an amount
equal to (i) the sum shown under the heading "Scheduled
Value Revised" for that line item minus (ii) the sum shown
under the heading "Total Draws" for that line item, all as
set forth in the Disbursement Request.
(c) After notice from Owner that the Maximum Project
Amount is not "in balance", Developer shall:
(i) within ten days after receipt of such notice,
deposit with Owner in the Settlement Account the amount
of each line item shortfall necessary to put the
Maximum Project Amount "in balance"; or
(ii) within ten days after receipt of such notice,
provide Owner with such other assurance of, or security
for, the payment of Project Costs as Owner may in its
sole discretion approve or require. Any cash amounts
which are deposited by Developer to put the Maximum
Project Amount "in balance" shall be the next funds
disbursed by Owner, in accordance with the terms and
conditions of Section 5.3.
5.8 Retainage. Owner shall make Disbursements in the
---------
amount of the Project Costs contained in the Approved Budget to
the extent properly incurred, paid and substantiated by Developer
during the course of construction; provided that Owner shall
withhold ten percent of the first fifty percent (50%) of the hard
construction costs comprising any part of each respective draw as
set forth in the Approved Budget and five percent of the balance
thereof. Said percentages of all hard costs so retained will be
disbursed to Developer upon satisfaction of all conditions to the
Disbursement for the Project set forth in Section 6.4. To the
full extent permitted by applicable Law, Developer hereby waives
any requirement of law of the states of Texas or Alabama that
Owner deposit or maintain in a separate account such sums
retained.
5.9 Developer's Fee. Owner shall disburse the Developer's
---------------
Fee after the completion of the Project, as such completion is
defined in Section 10.1 hereof. Failure of the foregoing
condition shall relieve Owner of the obligation to pay the
Developer's Fee.
5.10 Estimated Completion Amount. To the extent that the
---------------------------
full amount of the Maximum Project Amount has not been disbursed
on or prior to the date of the commencement of the term of the
Facility Lease, Owner and Developer shall make a good faith
estimate of the portion of the undisbursed Maximum Project Amount
necessary or appropriate for the completion of the Project
including punch list items, tenant finishes, the "Lease-Up
Allowance" and the "Marketing Allowance" (as defined below) and
interest on the foregoing sums at the Base Rate (collectively,
the "Estimated Completion Amount"). So long as no Event of
Default has occurred, Owner shall permit withdrawals by Developer
of the Estimated Completion Amount for purposes of paying Project
Costs; provided that each such withdrawal shall be subject to
compliance by Developer with all the terms, conditions and
procedures for Disbursements set forth in this Agreement;
provided, further that the minimum disbursement set forth in
Section 5.2 shall not apply. On the earlier date to occur (the
"Release Date") of (i) a written notice from Developer notifying
Owner of Developer's release of the undisbursed portion of the
Estimated Completion Amount or (ii) the date which is 540 days
after the commencement of the term of the Facility Lease,
Developer and Owner will calculate the total amount of the
Maximum Project Amount that was disbursed hereunder together with
all interest owed to Owner pursuant to Sections 3.2 and 5.11 and
the parties shall revise the rental due under the Facility Lease
accordingly. Owner shall not be obligated to disburse any funds
hereunder after the Release Date.
5.11 Fees Relating to Estimated Completion Amount. Until
--------------------------------------------
the Release Date, the Estimated Completion Amount, less any
estimate for interest, shall bear interest at the Base Rate.
Interest on such amount shall be computed on the basis that each
year contains 360 days by multiplying the amounts disbursed
hereunder by the Base Rate, dividing the product so obtained by
360, and then multiplying the quotient thereof by the actual
number of days elapsed. Such interest shall be payable by
Developer to Owner on the first day of each month. Additionally,
Owner shall provide a credit to Developer equal to the amount of
interest on the balance of the undisbursed Estimated Completion
Amount that Developer would have earned had the same funds been
on deposit in an interest bearing, demand deposit account at
First Commercial Bank, Birmingham, Alabama. To the extent that
all or any portion of the Estimated Completion Amount is included
in the Project Amount (as defined in the Facility Lease) and rent
is paid thereon pursuant to the terms of the Facility Lease, then
no interest on such portion or all of the Estimated Completion
Amount shall be due or payable pursuant to the terms of this
Agreement.
As used herein, the term "Marketing Allowance" shall mean
the sum set forth on the Approved Budget, which sum shall be used
for expenses incurred by Developer in connection with the
marketing of the Project to prospective tenants. As used herein,
the term "Lease-Up Allowance" shall mean the sum set forth on the
Approved Budget, which sum shall be used to assist Developer in
paying rent due Owner under the Facility Lease during the initial
18 months of operation of the Project.
6. CONDITIONS TO DISBURSEMENT.
6.1 First Disbursement. Owner's obligation to make the
------------------
initial Disbursement is subject to the satisfaction by Developer
of the following conditions:
(a) Owner shall have received each of the following in
the form attached hereto as exhibits, or as otherwise
reasonably acceptable to Owner:
(i) the original executed Environmental
Indemnity;
(ii) the original executed Assignment of
Contracts;
(iii) the original executed copy of each of
Architect's Consent and Agreement and the Contractor's
Consent and Agreement;
(iv) a written opinion of Developer's counsel or
counsels covering such material relating to Developer,
the Project and this Agreement (including
enforceability) as Owner reasonably requires;
(v) copies of Developer's organizational
documents, certificates of good standing from the
appropriate state authority, and Certificates of
Authority authorizing the execution, delivery and
performance of the Documents, all certified to be true,
accurate and complete by a Designated Representative;
(vi) the Approved Budget;
(vii) a current survey of the Property
indicating the location of all building lines,
easements (visible, reflected in the public records or
otherwise) and any existing improvements or
encroachments, which survey shall contain no state of
facts objectionable to Owner and shall be accompanied
by a survey certificate acceptable to Owner and Title
Company. The survey shall indicate whether the
Property is located in a "Flood Control Area";
(viii) certificates of insurance for all
policies required pursuant to Section 11 hereof;
(ix) all financial statements of Developer (i)
required by Owner; or (ii) necessary to provide Owner
with true, accurate and complete knowledge of the
financial condition of Developer;
(x) evidence satisfactory to Owner of the
availability of all necessary utilities to the Property
and the zoning of the Property to allow the
construction of the Improvements;
(xi) a Phase I environmental report prepared by a
Person, and in form and substance, satisfactory to
Owner;
(xii) a list of subcontractors employed in
connection with the Project whose agreements call for
payment in excess of $150,000.00. The list shall show
the name, license number, address, contract name and
telephone number of each such subcontractor, a general
statement of the nature of the work to be done, the
labor and materials to be supplied, the names of
materialmen, if known and the approximate dollar value
of labor, work and materials itemized with respect to
each subcontractor and materialman. Owner and its
agents shall have the right (but not the obligation) to
directly contact each subcontractor and materialman to
verify the facts disclosed by any such list;
(xiii) Payment and Performance bonds in such
amounts showing Owner as an obligee, in such form and
issued by such companies as are reasonably acceptable
to Owner; and
(xiv) all other documents reasonably required
by Owner.
(b) Owner shall have received and approved in writing
(a) a soils report for the Property (the "Soils Report");
(b) a full set of the Improvement Plans; (c) evidence that
all necessary or appropriate approvals of Governmental
Agencies required in connection with the construction, use
and operation of the Project have been obtained (except as
provided in Section 6.5(b) and other than a certificate of
occupancy or construction inspections), including without
implied limitation, plot plan approvals, subdivision
approvals, environmental approvals (including an
environmental impact report if required under applicable
law), sewer and water permits and zoning and land use
entitlements; and (d) copies of all Project Agreements.
(c) Developer shall have delivered to Owner the Title
Policy subject only to the Permitted Encumbrances, the cost
of which shall be paid for from the Approved Budget.
(d) Owner shall have received a sworn statement from
an A.I.A. Architect acceptable to Owner giving, in such
detail as Owner may reasonably require, an estimate of the
time and cost of completing the construction of the Project
and stating, with such supporting details as Owner may
reasonably require, that to the best of their knowledge and
belief, and after due inquiry (a) the Approved Budget is an
accurate reflection of all of the Maximum Project Amount,
(b) the amounts to be subsequently advanced for such purpose
under this Agreement will be sufficient to pay all Project
Costs, and (c) the Project can be completed in accordance
with the Improvement Plans within the time period required
hereunder.
(e) Owner shall have received reasonably satisfactory
evidence from Developer, the Architect, or such other
parties as Owner shall in its sole discretion require that
the Improvement Plans are in compliance with all applicable
statutory requirements (if any) regarding the elimination of
architectural barriers for handicapped persons.
(f) Owner shall have approved all Project Agreements,
access rights, easements, and other arrangements necessary,
in the judgement of Owner, for the uninterrupted and orderly
operation of the Project.
(g) At Owner's election, Owner shall have received a
current Appraisal of the completed Project.
(h) Owner shall have received all other evidence and
information that it may reasonably require.
(i) All of the conditions set forth in the Master
Development Agreement shall have been satisfied.
6.2 Any Disbursement. Owner's obligation to make any
----------------
Disbursement (including the initial Disbursement and the final
Disbursement) is subject to the following conditions precedent,
except for item (g) which shall only be a condition precedent to
any Disbursement after the completion of the foundation:
(a) Owner and Owner's Engineer (for Disbursement
Requests which include hard costs) shall have received a
Disbursement Request and, for Disbursement Requests which
include hard costs, a completed and executed Application and
Certificate for Payment (AIA document G702), each executed
by a Designated Representative and Architect where
appropriate), together with such other documents required or
requested by Owner under Section 5.2(a).
(b) Neither all nor any portion of the Property shall
be the subject of any proceeding by a Governmental Agency
for the condemnation, seizure or appropriation thereof, nor
the subject of any negotiations for sale in lieu of
condemnation, seizure or appropriation, unless the portion
of the Property subject to any such proceeding or
negotiation, if taken, shall not render the remaining
portion of the Property unsuitable for its primary intended
use.
(c) Neither the Improvements nor the Project shall
have been rendered unsuitable for its primary intended use
by fire or other casualty, unless insured.
(d) The representations and warranties set forth in
Section 7 hereof and in the Master Development Agreement
shall be true, accurate and correct as of the date of each
Disbursement as though made as of that date, and Developer
shall have performed all of its covenants and obligations
hereunder to have been performed as of the date of such
Disbursement.
(e) No Event of Default which is continuing or not
otherwise cured or waived, shall have occurred and no event
shall have occurred which, with the giving of notice or the
passage of time or both, would constitute an Event of
Default.
(f) Owner shall have received from the Title Company,
in form and substance satisfactory to Owner, all
endorsements required as part of the Title Policy, and any
binders, supplements and modifications thereto as Owner
deems reasonably necessary to evidence that there are no
intervening liens or security interests against the Property
or the Project, the cost of which shall be paid for from the
Approved Budget.
(g) Within 30 days after pouring of the concrete slab
on the Project and upon completion of the foundation of the
Project, Developer shall have delivered (i) a survey
prepared by a duly licensed surveyor containing such
certificate as Owner may reasonably require, showing that
the location of the foundation is entirely within the
property lines and set-back lines and does not encroach upon
any easement or breach or violate any covenant, condition or
restriction of record, nor any applicable building or zoning
ordinance and (ii) a certificate prepared by a duly licensed
surveyor or architect in such form as Owner may reasonably
require, stating that the property was graded, the
foundation poured and the site work completed in compliance
with the requirements of the Soils Report, together with
such concrete and compaction test reports as Owner's
Engineer shall reasonably request.
(h) Developer shall have executed and acknowledged (or
caused to be executed and acknowledged) and delivered to
Owner all documents, and taken all actions required by Owner
from time to time to confirm the rights created or now or
hereafter intended to be created under the Documents, to
protect and further the validity, priority and
enforceability of the Documents, or otherwise to carry out
the purposes of the Documents and the transactions
contemplated thereunder.
(i) Owner shall be reasonably satisfied, based on its
own inspections or other reliable information, that the
progress of the Project, and its compliance with all
applicable laws and other requirements, is as represented to
Owner by Developer. For such purposes Owner may require
evidence of successful completion of any required
inspections of city and county officials or those of other
Governmental Agencies which may be required with respect to
different stages in the completion of the Improvements,
together with certificates of the Architect and/or
Contractor that the Project is progressing as represented by
Developer.
(j) Owner shall be satisfied that Developer has
complied with all applicable Laws, regulations and recorded
covenants, conditions and restrictions so as to permit the
lawful construction of the Project and that all required
governmental approvals and permits have been obtained by
Developer.
(k) Developer shall not be in default under the terms
and provisions of any Project Agreement, the Facility Lease
or the Master Development Agreement.
(l) All conditions to the initial Disbursement shall
have been satisfied.
(m) Notwithstanding anything contained herein to the
contrary, no Disbursements shall be made until Developer
shall have delivered to Owner a fully executed final
building permit for the Project from all appropriate
Governmental Agencies.
(n) There shall be no actions, suits or proceedings
pending, or to Developer's knowledge, threatened against or
affecting Developer or the Project, at law or in equity, or
before any governmental agency, which, if adversely
determined, would substantially impair the ability of
Developer to complete the Project in accordance with the
provisions hereof.
(o) All of the conditions set forth in the Master
Development Agreement shall have been satisfied.
6.3 Disbursement of Marketing and Lease-Up Allowances. The
-------------------------------------------------
"Marketing Allowance" on the Approved Budget shall be disbursed
to Developer in three equal monthly installments beginning with
the Disbursement made during the ninth month after the date
hereof. The "Lease-Up Allowance" on the Approved Budget shall be
included within the Estimated Completion Amount pursuant to
Section 5.10.
6.4 Contractor's Disbursement. Owner's obligation to
-------------------------
disburse the retainage under the construction contract is subject
to the following additional conditions precedent:
(a) Owner shall have received all of the title
insurance and related documents described in Section 6.2(f)
hereof.
(b) Owner shall, in its sole discretion, be satisfied
that the Architect, Surveyor and all contractors and
subcontractors have been paid and will be paid in full, or
have otherwise executed sufficient and satisfactory releases
of any and all mechanic's or materialman's lien or liens
which they may have or be entitled to, or that Developer has
otherwise sufficiently provided for the satisfaction of all
claims or liens by the Architect, Surveyor or any contractor
or subcontractor.
(c) Developer shall have furnished to Owner an "as
built" ALTA survey, certified to ALTA requirements, prepared
by an engineer or surveyor licensed in the State of Texas
acceptable to Owner, the cost of which shall be paid for
from the Approved Budget and shall:
(i) include a legal description of the land by
metes and bounds,and a computation of the area
comprising the Land in both acre, gross square feet and
net square feet measured in accordance with the
Building Owners and Managers Association Standard for
Measurement of Office Space (ANSI Standard 265.1-1980);
(ii) accurately show the location on the Property
of the Improvements, buildings and setback lines,
ditches, easements, roads, rights-of-way and
encroachments;
(iii) be certified to the Owner and the Title
Company;
(iv) legibly identify any and all recorded matters
shown on said survey by appropriate volume and page
recording references with dates of recording noted and
the survey shall show the location of all adjoining
streets.
6.5 Final Disbursement. Owner's obligation to disburse the
------------------
final balance of the Maximum Project Amount is subject to the
following additional conditions precedent:
(a) The Project shall be complete, as such completion
is defined in Section 10.1 hereof.
(b) Any portion of the Project requiring inspection or
certification by any Governmental Agency shall have been
inspected and certified as complete and all other necessary
approvals shall have been duly issued. (This subsection
shall not apply to Chapter 247 of the Texas Health and
Safety Code if at such time Developer does not provide
personal care services to the tenants at the Property).
(c) Owner, Contractor, Architect, Owner's Engineer and
Developer shall each have approved the completion of the
Project.
(d) Developer shall have filed a notice of completion
as required by the Laws, if any.
6.6 Disbursement of Developer's Fee. Notwithstanding
-------------------------------
anything to the contrary contained herein, Owner's obligation to
disburse the Developer's Fee is subject to and shall not occur
before the Project shall be complete, as such completion is
defined in Section 10.1 hereof.
7. REPRESENTATIONS AND WARRANTIES. As a material inducement to
Owner's entry into this Agreement, Developer represents and
warrants to Owner that:
7.1 Formation, Qualification and Compliance. Developer (a)
---------------------------------------
is either a corporation, limited partnership or limited liability
company duly formed, validly existing, and in good standing under
the laws of the States of Delaware or Texas; (b) has all
requisite authority to conduct its business and own and lease its
properties; and (c) is qualified and in good standing in every
jurisdiction in which the nature of its business makes
qualification necessary or where failure to qualify could have a
material adverse affect on its financial condition or the
performance of its obligations under the Documents. Developer is
in material compliance in all respects with all Laws and
requirements applicable to its business, the violation of which
might materially affect its obligations hereunder, and has
obtained all approvals, licenses, exemptions and other
authorizations from, and has accomplished all filings,
registrations and qualifications with, any Governmental Agency
that are necessary for the transaction of is business.
7.2 Execution and Performance of Documents. Developer
--------------------------------------
hereby represents and warrants to Owner as follows:
(a) Developer has all requisite power and authority to
execute and perform its respective obligations under the
Documents.
(b) The execution by Developer and the performance by
Developer of its obligations under each Documents have been
authorized by all necessary action and do not and will not:
(i) require any consent or approval not
heretofore obtained of any Person having any interest
in Developer;
(ii) violate any provision of, or require any
consent or approval not heretofore obtained under, the
partnership agreement, articles of incorporation,
bylaws or other governing documents applicable to
Developer;
(iii) result in or require the creation or
imposition of any lien, claim, charge or other right of
others of any kind (other than under the Documents) on
or with respect to any property or assets owned or
leased by Developer;
(iv) violate any provision of any law, order,
writ, judgment, injunction, decree, determination or
award presently in effect; or
(v) conflict with or constitute a breach or
default under, or permit the acceleration of
obligations owed pursuant to, any contract, loan
agreement, lease or other document to which Developer
is a party or by which Developer or any of its property
is bound.
(c) Developer, to the best of its knowledge, is not in
default in any respect under any law, regulation, order,
writ, judgment, injunction, decree, determination, award,
contract, or lease.
(d) No approval, license, exemption or other
authorization from, or filing, registration or qualification
with, any Governmental Agency is required in connection
with:
(i) the execution by Developer of, and the
performance by Developer of its obligations under the
Documents, other than customary building, drainage and
construction permits which will be secured by Developer
prior to undertaking those activities; and
(ii) the Documents.
(e) The Documents, when executed and delivered, will
constitute legal, valid and binding obligations of Developer
enforceable in accordance with their respective terms.
(f) The officers of Developer are properly in office
and fully authorized to execute the Documents.
(g) No event of Default which is continuing or not
otherwise cured or waived, shall have occurred and no event
shall have occurred which, with the giving of notice, the
passage of time, or both, would constitute an Event of
Default.
7.3 Financial and Other Information. All financial
-------------------------------
information furnished to Owner with respect to Developer in
connection with the Project (a) is complete and correct in all
respects as of the date of delivery thereof; (b) accurately
presents the financial condition of Developer as of the date of
delivery thereof; and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied.
All other documents and information furnished to Owner by
Developer with respect to Developer in connection with the
Project are complete, accurate and correct in all material
respects. Developer does not have any material liability or
material contingent liability which has not been disclosed to
Owner in writing and there is no material lien, claim, charge or
other right of others of any kind (including liens or retained
security titles of conditional vendors) on any property of
Developer not disclosed in such financial statements.
7.4 No Material Adverse Change. There has been no material
--------------------------
adverse change in the condition, financial or otherwise, of
Developer since the date of the most recent financial statements
delivered to Owner. Since that date, Developer has not entered
into any material transaction not disclosed in such financial
statements or otherwise disclosed to Owner in writing.
7.5 Tax Liability. Developer has filed all required
-------------
federal, state and local tax returns. Developer has paid all
federal, state and local taxes due (including any interest and
penalties) other than taxes being promptly and actively contested
by Developer in good faith and by appropriate proceedings and
which have been disclosed to Owner in writing. Developer is
maintaining adequate reserves for tax liabilities (including
contested liabilities) in accordance with generally accepted
accounting principles.
7.6 Government Requirements. Developer has reviewed and is
-----------------------
in compliance with all Laws relating to the Property. Developer
has obtained, and is complying with the conditions of, all
licenses, exemptions, approvals and other authorizations of
Governmental Agencies required in connection with the Property
and the Project, including each of the following as applicable:
(a) zoning, land use and planning requirements,
including requirements arising from, or relating to the
adoption or amendment of, any applicable general plan;
(b) subdivision and parcel map requirements;
(c) environmental requirements, including requirements
of the National Environmental Policy Act and the preparation
and approval of all required environmental impact statements
and reports;
(d) requirements in connection with use, occupancy and
building permits; and
(e) requirements of public utilities.
7.7 No Adverse Conditions. There are no existing, pending
---------------------
or, to the best of Developer's knowledge, threatened Force
Majeure Events or other natural, legal, or economic conditions
which could prevent completion of the Project in accordance with
the Improvement Plans.
7.8 Rights of Others. Developer has examined and, to the
----------------
best of Developer's knowledge, is in compliance with all
covenants, conditions, restrictions, easements, rights of way and
other rights of third parties relating to the Property.
7.9 Approved Budget. The Approved Budget is based on
---------------
information deemed reliable by Developer and represents
Developer's good faith estimate of all costs required to complete
the Project.
7.10 Litigation. There are no actions or proceedings
----------
pending, or, to the best of Developer's knowledge, threatened
against or affecting Developer or the Project before any
Governmental Agency.
7.11 Project Agreements. Developer has delivered to Owner
------------------
true and complete copies of all Project Agreements, together with
all supplements and modifications thereto.
7.12 Title to Assets. Developer has good and marketable
---------------
title to all assets disclosed in the financial statements
furnished to Owner except as otherwise shown therein.
7.13 Name and Principal Place of Business. Developer
------------------------------------
presently uses no trade name other than its actual name.
Developer shall, however, operate the Project under the trade
name "Grand Court ____________________." Developer's principal
place of business is ____________________ County,
____________________.
7.14 Hazardous Materials. Developer has no knowledge as a
-------------------
result of the Phase I environmental report or otherwise of (a)
the presence of any Hazardous Materials on the property; (b) the
presence of any underground storage tanks ("USTs") on the
Property; or (c) any spills, releases, discharges or disposal of
Hazardous Materials that have occurred or are presently occurring
off the Property as a result of any construction on or operation
and use of the Property. In connection with the construction on
or operation and use of the Property, Developer represents for
itself, its contractors, subcontractors and any other of its
agents, that, as of the date of this Agreement, it has no
knowledge, after due investigation, of any failure to comply with
all applicable local, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders
relating to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of any Hazardous Materials.
Developer represents and warrants to Owner that it has caused to
be prepared a Phase I environmental report investigating the
present and past uses of the Property and its environmental
engineers have made due inquiry of the appropriate governmental
agencies and offices having jurisdiction over the Property and
the laws regulating the environment, as to whether the Property
or any property in the immediate vicinity of the Property is or
has been the site of storage of or contamination by any Hazardous
Materials. Developer has provided Owner with a copy of the Phase
I environmental report. Activities that are included in the use
of the Property as an assisted and independent living facility,
and such other necessary and incidental uses in connection
therewith are excepted from this Section.
8. AFFIRMATIVE COVENANTS. While any obligation of Developer
under the Documents remains outstanding:
8.1 Payment of Taxes, Assessments Costs and Expenses.
------------------------------------------------
Developer shall pay or cause to be paid out of the Approved
Budget all costs and expenses required to satisfy the conditions
of this Agreement. Without limitation of the generality of the
foregoing, Developer shall pay or cause to be paid or discharged
out of the Approved Budget, when due, all taxes, assessments and
other governmental charges upon the Property or Improvements, as
well as all claims for work, services, labor and materials which,
if unpaid, might become a lien or charge upon the Property or
Improvements. Developer shall pay or caused to be paid out of
the Approved Budget all costs and expenses of Owner and Developer
in connection with the Project, including, but not limited to,
all expenses of hazard and liability insurance premiums,
reasonable fees for the examination of the status of title,
preparation and review of Documents, title insurance premiums and
closing and servicing fees, surveys, architect and engineer fees,
and other costs and expenses required by this Agreement or the
Master Development Agreement, including, but not limited to,
recording and filing fees and all mortgage taxes and intangible
taxes, costs of Title Company disbursements, if any, as well as
all costs related to this Agreement, any reasonable fees and
costs of outside and/or special counsel and fees and commissions
due to brokers in connection with this transaction. In the event
of default by Developer under this Agreement, Developer agrees to
pay all reasonable expenses incurred by Owner, including
reasonable attorneys' fees, in accordance with terms and
provisions of this Agreement. In connection with the foregoing
covenant, Owner and Developer represent to one another that they
have no agreement with any broker or other person for any
commission arising out of or in connection with the transaction
contemplated by this Agreement.
8.2 Title Insurance Endorsement. Developer shall deliver
---------------------------
to Owner in form and content satisfactory to Owner, all
endorsements and binders to the Title Policy required by Owner
hereunder from time to time, the cost of which shall be paid for
from the Approved Budget.
8.3 Continued Compliance. Comply with all Laws and
--------------------
requirements of Governmental Agencies, and all rights of third
parties, relating to the Property or Developer's business or
other properties, all as described more fully in Section 7.6. and
deliver to Owner from time to time, within ten days of Owner's
request therefor, evidence reasonably satisfactory to Owner that
Developer has complied with any such law, requirement or right.
8.4 Books and Records. Maintain complete books of account
-----------------
and other records reflecting its operations with respect to the
Property, including all contributions of equity investment
capital, in accordance with generally accepted accounting
principles consistently applied, and permit Owner and its agents,
at reasonable times, to inspect and copy any such records.
8.5 Maintenance and Security of the Property. Maintain the
----------------------------------------
Property in good condition and repair, take all measures
reasonably required by Owner to protect the physical security of
the Property, and not permit any waste or damage with respect to
the Property.
8.6 Financial Statements. Deliver to Owner, or cause to be
--------------------
delivered:
(a) As soon as available and in any event within 90
days after the end of each Fiscal Year, a statement of
Developer's financial position as of the end of such Fiscal
Year and the related statements of revenues and expenses for
such Fiscal Year, setting forth in each case in comparative
form the figures for the previous Fiscal Year all reported
on by any accounting firm reasonably acceptable to Owner,
whose report shall state that such financial statements
present fairly the financial position of Developer as of the
end of such Fiscal Year and the results of its operations
and changes in financial position for such Fiscal Year.
(b) As soon as available and in any event within 45
days after the end of each of the first three quarterly
periods of each Fiscal Year, a statement of Developer's
financial position as of the end of such period and the
related statements of revenues and expenses for such quarter
of the Fiscal Year, setting forth in comparative form the
figures for the previous Fiscal Year, which statements may
be internal statements and need not be audited.
8.7 Notice of Certain Matters. Give notice to Owner of any
-------------------------
one or more of the following with respect to which Developer may
have knowledge:
(a) any litigation or claim of any kind demanding
injunctive relief or affecting or relating to the Property
and involving an amount in excess of $20,000.00 and any
litigation or claim of any kind that might otherwise subject
Developer to liability in excess of $1,000,000.00, whether
covered by insurance or not;
(b) any dispute between Developer and any Governmental
Agency relating to the Property, the adverse determination
of which might materially affect the Property;
(c) any commencement of proceedings in condemnation or
eminent domain relating to the Property;
(d) any trade name hereafter used by Developer;
(e) any material aspect of the Project that is not in
conformity with the Improvement Plans;
(f) any circumstance that may render the Approved
Budget materially inaccurate with respect to any estimated
Project Cost;
(g) any Event of Default or event which, with the
giving of notice or the passage of time or both, would
constitute an Event of Default; and
(h) any other event or condition causing a material
adverse change in the financial condition of Developer.
8.8 Notice of Liens. Give notice to Owner of the creation
---------------
of any lien on any portion of the Property or the Personal
Property within five Business Days after Developer receives
notice of its creation.
8.9 Additional Reports and Information. Deliver to Owner,
----------------------------------
within ten Business Days of Owner's request therefor, (a) copies
of all regular or periodic financial statements and reports that
Developer sends to any partners or investors; (b) copies of
regular or periodic reports which are available for public
inspection or which Developer is required to file with any
Governmental Agency; and (c) in form and substance reasonably
satisfactory to Owner (i) a certificate stating that no Event of
Default remains uncured or setting forth all existing Events of
Default in reasonable detail and (ii) all other information
relating to Developer, the Property or the Project reasonably
required by Owner from time to time.
8.10 Further Assurances. Execute and acknowledge (or cause
------------------
to be executed and acknowledged) and deliver to Owner all
documents, and take all actions, reasonably required by Owner
from time to time to confirm the rights created or now or
hereafter intended to be created under the Documents, to protect
and further the validity, priority and enforceability of the
Documents, or otherwise to carry out the purposes of the
Documents and the transactions contemplated thereunder.
8.11 Copies of Amendments. Promptly deliver to Owner a copy
--------------------
of any Change Orders required pursuant to Section 10.3 and copies
of any supplement, modification or amendment to any document
delivered to Owner pursuant to this Agreement.
8.12 Continued Existence. Maintain its existence and
-------------------
continue to be in good standing in the States of Delaware and
Texas, as applicable.
8.13 Hazardous Materials. In the event any investigation or
-------------------
monitoring of site conditions or any cleanup, containment,
restoration, removal or other remedial work ("Remedial Work") is
required (a) under any applicable federal, state or local law or
regulation, (b) by any judicial or administrative order, (c) in
order to comply with any agreements affecting the Property, (d)
to maintain the Property in a standard of environmental condition
which prevents the release of any Hazardous Materials to adjacent
property and otherwise is consistent with the prudent ownership
of property of the character of the Property, (e) as a result of
the existence of Hazardous Materials on the Property, or (f) as a
result of any activities on the Property which directly or
indirectly result in the Property becoming contaminated with
Hazardous Materials, Developer shall perform or cause to be
performed such Remedial Work; provided that, Developer may
withhold commencement of such Remedial Work pending resolution of
any good faith contest regarding the application, interpretation
or validity of any law, regulation, order or agreement, subject
to the requirements set forth below. All Remedial Work shall be
conducted (i) in a diligent and timely fashion by a licensed
environmental engineer, (ii) pursuant to a detailed written plan
for the Remedial Work approved by any Governmental Agency with a
legal or contractual right to grant such approval, (iii) with
such insurance coverage pertaining to liabilities arising out of
the Remedial Work as is then customarily maintained with respect
to such activities, and (iv) only following receipt of all
required permits, licenses or approvals. In addition, Developer
shall submit to the Owner promptly upon receipt or preparation,
copies of any and all reports, studies, analysis, correspondence,
governmental comments or approvals, proposed removal or other
Remedial Work contracts and similar information prepared or
received by Developer in connection with any Remedial Work or
Hazardous Materials relating to the property. All costs and
expenses of such Remedial Work shall be paid by Developer (unless
it is a Project Cost specifically set forth in the Approved
Budget), including, without limitation, the charges of the
Remedial Work contractors and the consulting environmental
engineer, any taxes or penalties assessed in connection with the
Remedial Work and the Owner's reasonable fees and costs incurred
in connection with monitoring or reviewing such Remedial Work.
In the event Developer should fail to commence or cause to be
commenced such Remedial Work, in a timely fashion, or fail
diligently to prosecute to completion such Remedial Work, the
Owner (following ten days written notice to Developer) may, but
shall not be required to, cause such Remedial Work to be
performed. All such costs shall be due and payable by Developer
ten days after the Owner's demand therefor. Notwithstanding any
provision of this Agreement to the contrary, Developer may
contest by appropriate action any Remedial Work requirement
imposed by any Governmental Agency, and the Owner shall have no
right to perform such required Remedial Work on Developer's
behalf during the pendency of such contest, provided that (a) no
Event of Default has occurred and is continuing, (b) Developer
has given the Owner written notice that Developer is contesting
or shall contest, and Developer does in fact contest, the
application, interpretation or validity of the law, regulation,
order or agreement pertaining to the Remedial Work by appropriate
legal or administrative proceedings conducted in good faith and
with due diligence and dispatch, (c) such contest shall not
subject the Owner, any of the Owner's directors, trustees,
beneficiaries, officers, shareholders, employees and agents, or
any assignee of all or any portion of the Owner's interest in the
Property to civil or criminal liability and does not jeopardize
any such parties' lien upon or interest in the property, and (d)
Developer shall give such security or assurances as may be
reasonably required by the Owner to insure ultimate compliance
with all legal or contractual requirements pertaining to the
Remedial Work (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.
Developer agrees to immediately notify Owner if Developer becomes
aware of (a) any Hazardous Materials or other environmental
problem or liability with respect to the Property, or any
adjacent property or (b) any lien, action or notice relating to
Hazardous Materials and served on Developer or imposed against
the Property, as the case may be, by any Governmental Agency.
Developer agrees to protect, defend, indemnify and hold Owner
harmless from and against all claims, demands, damages, losses,
liens, liabilities, penalties, fines, lawsuits and other
proceedings (including, without limitation, the cost of any
required cleanup of such Hazardous Materials and all reasonable
attorneys' fees and expenses incurred by Owner in connection
therewith) arising directly or indirectly from or out of, or in
any way connected with (a) the inaccuracy of the representations
set forth in Section 7.14 and (b) any activities on the Property
which directly or indirectly results in the Property or any
adjacent and contiguous property becoming contaminated with
Hazardous Materials, (c) the discovery of Hazardous Materials on
the Property, and (d) the cleanup of Hazardous Materials from the
Property. Developer acknowledges that it will be solely
responsible for all costs and expenses relating to the cleanup of
Hazardous Materials from the Property or from any other
properties which become contaminated with Hazardous Material as a
result of activities on or the contamination of the Property.
Developer's obligations under this Section 8.13 shall survive the
completion of the Project as contemplated by this Agreement.
8.14 Building Permit. Secure a final building permit for
---------------
the Project from all applicable Governmental Agencies on or
before ________________________ ___, 1996.
8.15 Consolidated Net Worth. Developer shall maintain, on a
----------------------
consolidated basis, a Consolidated Net Worth of at least
$30,000,000.00, as reflected from time to time in the financial
statements provided to Owner pursuant to Section 8.6; provided,
however, if Developer shall complete an initial public offering
of equity securities, then the Consolidated Net Worth which
Developer shall maintain shall be at least 75% of its
Consolidated Net Worth that existed immediately after the
completion of the initial public offering, but not less than
$30,000,000.00.
8.16 Name of Facility. Developer may select the name of the
----------------
Project, which name will at all times be the exclusive property
of Developer.
9. NEGATIVE COVENANTS. While any obligations of Developer to
Owner remain outstanding, Developer shall not, unless Owner
otherwise consents in writing:
9.1 Liens on Property. Cause or suffer to become effective
-----------------
any lien, restriction or other encumbrance upon the title
affecting any part of the Property other than (i) the Permitted
Encumbrances, (ii) taxes not delinquent, and (iii) easements
permitted under Section 14.6.
9.2 Liens on Personal Property. Except for motor vehicles,
--------------------------
or kitchen equipment (limited to dishwashers and ice machines) or
office equipment that is obtained under one or more leases,
install in, or use in connection with, the Property any personal
property (other than the Personal Property) which any Person
other than Owner has the right to remove or repossess under any
circumstances, or on which any Person other than Owner has a
lien.
9.3 Changes in Approved Budget. Supplement, modify or
--------------------------
amend the Approved Budget, unless such supplement, modification
or amendment results from a Change Order for which Owner's prior
written approval is not required.
9.4 Assignments of Obligations. Assign or delegate any
--------------------------
obligation or rights under the Documents.
9.5 Removal of Personal Property. Remove or permit the
----------------------------
removal from the Property of any items of Personal Property
(other than tools and construction equipment used in the
construction of the Project) unless (i) no Event of Default (or
event which, with the giving of notice or the passage of time or
both, would constitute an Event of Default) has occurred and is
continuing and (ii) if the same was either paid for with funds
from Owner or was a substitution for an item paid for with funds
from Owner, Developer promptly either (a) substitutes and
installs on the Property other items of equal or greater value in
the operation of the Property as a modern facility, all of which
items shall be free of liens, and executes and delivers to Owner
all documents required by Owner in connection with such items, or
(b) (1) in the case of the sale or scrapping of any items, pays
to Owner the sale proceeds or scrap value, as applicable (2) in
the case of the trade-in of any items for other items of Personal
Property not installed on the Property, pays to Owner the amount
of the credit received and (3) in the case of any other
disposition, pays to Owner an amount equal to the original cost
of the items less depreciation at rates calculated in accordance
with generally accepted accounting principles.
10. CONSTRUCTION COVENANTS.
10.1 Commencement and Completion of Project. Developer
--------------------------------------
shall commence construction of the Project within 30 days of the
date hereof (assuming that all the conditions in Section 6.1 have
been satisfied), diligently proceed with the construction of the
Project and substantially complete the construction of the
Project within 15 months of the commencement of construction for
an aggregate amount not to exceed the Maximum Project Amount
unless Developer brings the costs "in balance" as provided in
Section 5.7. The Project shall be considered complete for
purposes of this Agreement only when: (a) all work described in
the Improvement Plans has been completed and fully paid for or
will be paid for with the final Disbursement to be made
hereunder, (b) all work requiring inspection or certification by
any Governmental Agency has been completed and all requisite
certificates, approvals and other necessary authorizations
(including any required certificates of occupancy) have been
obtained, (c) streets, if any, and offsite utilities have been
completed to the satisfaction of all applicable authorities, (d)
sufficient undisbursed amounts of the Maximum Project Amount
remain available to pay any and all budgeted amounts for post-
completion cost (including amounts budgeted for tenant
improvements and any post-Developer's Fees or other amounts due
under this Agreement), and (e) Owner has received a Completion
Certificate from the Architect in the form attached hereto as
Exhibit D.
---------
10.2 Offsite Improvements. Developer shall promptly
--------------------
commence and substantially complete all offsite improvements of
the public streets, walks and like areas adjoining the Project as
well as any requirement to provide utilities and other facilities
in accordance with requirements of any Governmental Agencies.
Developer hereby indemnifies and holds Owner harmless against any
claim of any surety furnishing a bond for such work to any
Governmental Agency, whether such claim is founded upon existing
or future liability and whether such liability is express or
implied.
10.3 Change Orders. The Improvement Plans shall not be
-------------
modified except pursuant to change orders ("Change Orders")
approved by Owner pursuant to this Section 10.3. All Change
Orders shall be submitted to Owner for Owner's approval before
Developer becomes committed thereto if (i) the change materially
affects structural aspects of the Improvements or (ii) if such
Change Order involves an amount in excess of $50,000.00. If
acceptable to Owner, a properly submitted Change Order will be
approved in writing by Owner within ten Business Days of its
receipt; provided that in the event Owner reasonably determines
(and notifies Developer within such ten Business Day period) that
Owner needs to study, or consult with construction or other
experts in connection with the impact of such Change Order, such
ten Business Day approval period shall be extended for an
additional five Business Days, provided Owner has received all
necessary information in order to make such decision, or five
Business Days beyond the date Owner receives such information,
whichever is later.
10.4 Conformity with Improvement Plans. Developer shall
---------------------------------
cause the Project to be constructed in substantial conformity
with the Improvement Plans. If any aspect of the Project is not
in substantial conformity with the Improvement Plans, Owner shall
have the right to stop the work and order repair or
reconstruction in accordance with the Improvement Plans and to
withhold further Disbursements until the Project is in
substantial conformity with the Improvement Plans. Upon notice
from Owner to Developer (or Developer's discovery irrespective of
such notice) that any aspect of the Project is not in substantial
conformity with the Improvement Plans, Developer shall commence
correcting the deviation promptly, and in any event within ten
Business Days of the notice or discovery, and shall prosecute
such work diligently to completion, which, absent causes beyond
Developer's control, shall not be later than 45 days after such
notice or discovery. If Owner determines that the corrective
work is not proceeding satisfactorily, Owner may take over such
corrective work and complete it at Developer's expense from the
Approved Budget.
10.5 Owner's Engineer. Developer hereby acknowledges and
----------------
agrees that Owner has employed, and shall continue to employ the
Owner's Engineer, all costs of which (not to exceed $1,000.00 per
month), shall be paid by Developer out of the Approved Budget, to
assist Owner in connection with Owner's review and approval of
all plans, specifications, contracts, budgets and related
matters, and to regularly inspect the progress of the Project and
approve all Disbursement Requests.
10.6 Encroachments. 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 of
others unless, in connection with any such encroachment,
Developer (a) records a document, signed by all property owners,
easement holders and other Persons whose rights are affected by
the encroachment or overhang, consenting to the encroachment or
overhang, and sufficient to ensure that Owner's rights with
respect to the Property could not be impaired by the encroachment
or overhang and (b) furnishes to Owner all other documents,
including any title insurance endorsements, reasonably required
by Owner. From time to time upon demand, Developer shall furnish
satisfactory evidence of compliance with this Section 10.6.
10.7 Entry and Inspection. At all reasonable times prior to
--------------------
completion of the Project, Owner and its agents shall have (a)
the right of free access to the Property and all sites away from
the Property where materials for the Project are stored, (b) the
right to inspect all labor performed and materials furnished for
the Project, and (c) the right to inspect and copy all documents
pertaining to the Project. Without limiting the generality of
the foregoing, the Owner may cause the Owner's Engineer to
inspect the Project at least once each calendar month in
connection with Developer's request for a Disbursement.
10.8 Construction Information. Developer shall furnish to
------------------------
Owner, within ten days after the end of each calendar month prior
to completion of the Project, a report in form and content
satisfactory to Owner, certified as correct by Contractor and
Developer, setting forth all Project Costs accrued as of the end
of that month, all Project Costs projected as of the end of that
month, and all changes from the previous such report which are
known or reasonably anticipated by Developer or Contractor. From
time to time during the course of construction, if requested by
Owner and within ten days after receipt of such request,
Developer shall furnish Owner with reports of Project Costs,
construction progress schedules and contractor's cost breakdowns
for the Project, itemized as to trade description and item,
showing the name of the contractor(s) and/or subcontractor(s),
and including indirect costs such as real estate taxes, legal and
accounting fees, insurance, architects' and engineers' fees, the
fees or other amounts due under this Agreement and contractor's
overhead.
10.9 Permits and Warranties. Promptly upon receipt of the
----------------------
same by Developer, Developer shall furnish Owner with true and
complete copies of (a) all licenses, permits, approvals,
exemptions and other authorizations required in connection with
the Project and (b) all warranties and guaranties received from
any Person furnishing labor, materials, equipment, fixtures or
furnishings in connection with the Project.
10.10 Protection Against Liens.
------------------------
(a) Developer shall pay and discharge all claims for
labor, materials and services furnished in connection with
the Project that are outside of the Approved Budget and take
all actions required to prevent the assertion of claims of
lien against the Property.
(b) Upon demand by Owner, Developer shall make all
demands and claims that Owner shall specify upon laborers,
materialmen and other Persons who have furnished (or claim
to have furnished) labor, services or materials in
connection with the Project. Nothing contained herein shall
obligate Developer to pay any claim so long as such claim is
being promptly and actively contested by Developer in good
faith and by appropriate proceedings; provided that
Developer shall, within 30 days after receipt of the notice
of the filing of any claim of lien, provide Owner with other
security or assurances that Owner may reasonably require.
(c) In the event that any lien, stop notice or claim
is asserted against Owner by any Person furnishing labor,
services, equipment or materials to the Project, Developer
shall, upon demand by Owner, take such action as Owner may
reasonably require to release Owner from any obligation or
liability with respect to such lien, stop notice or claim,
including (i) if the claim is being contested in good faith
by appropriate proceedings, obtaining a bond or other
security, in form, substance and amount satisfactory to
Owner or (ii) payment of such claim. If Developer fails to
take such action, Owner may, in its sole discretion, file an
interpleader action requiring all claimants to interplead
and litigate their respective claims, and in any such action
Owner shall be released and discharged from all obligations
with respect to any funds deposited in court.
10.11 Permitted Contests. Notwithstanding any provision
------------------
of this Agreement to the contrary, 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 any of the
other 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 the Owner's
affiliates or any assignee of all or any portion of the Owner's
interest in any of the Projects to civil or criminal liability
and does not jeopardize any such party's interest in the such
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.
11. INSURANCE.
11.1 Policies Required. While any obligation of Developer
-----------------
under any Document remains outstanding, Developer shall procure
out of the Approved Budget and maintain, or shall cause to be
procured and maintained, continuously in effect policies of
insurance in form and amounts and issued by companies,
associations or organizations satisfactory to Owner covering such
casualties, risk, perils, liabilities and other hazards
reasonably required by Owner. All original policies, or
certificates thereof, and endorsements and renewals thereof shall
be delivered to and retained by Owner unless Owner waives this
requirement in writing. All policies shall expressly protect or
recognize Owner's interest as required by Owner. Without
limiting the generality of the foregoing, Developer shall provide
or cause to be provided the following types of insurance
coverage:
(a) During construction of the Project or any
subsequent renovation of the Improvements: (i) Builder's
Risk Insurance on an "all risks" basis, including Stored
Materials and materials while in transit, naming Owner as
loss payee in the loss payable clause, (ii) Broad Form
Public Liability Insurance in a minimum amount of
$5,000,000.00 per occurrence in respect of bodily injury and
death and $10,000,000.00 for property damage carried by
Developer and by the Contractor naming Owner as a
certificate holder, (iii) Workers' Compensation and
Employer's Liability Insurance naming Owner as a certificate
holder, (iv) Flood Insurance, unless Developer provides
Owner with a letter from the Surveyor certifying that the
Property is not within a one hundred year flood plain or
zone, and (v) Hurricane Insurance in a minimum amount after
deductible equal to the Maximum Project Amount.
(b) After the Project has been completed and until
satisfaction of all obligations under this Agreement (i)
property insurance on an "all risks" cost basis in an amount
equal to the replacement cost of the physical value of the
Improvements but in no event less than the face amount of
the Maximum Project Amount, naming Owner as an additional
insured and loss payee; (ii) Broad Form Public Liability
Insurance in a minimum amount of $5,000,000.00 naming Owner
as a certificate holder if requested by Owner; (iii)
Worker's Compensation and Employer's Liability Insurance
naming Owner as a certificate holder if requested by Owner;
(iv) Flood Insurance, unless Developer provides Owner with a
letter from Developer's engineer certifying that the
Property is not located within a one hundred year floor
plain or zone; (v) Hurricane Insurance in a minimum amount
after deductible equal to the replacement cost of the
physical value of the Improvements but in no event less than
the Maximum Project Amount; and (vi) Rent loss insurance
against loss of income by reason of any hazard covered under
the Insurance required under this subparagraph (b) in an
amount sufficient to avoid any coinsurance penalty, but in
any event for not less than one year's gross receipts from
all sources of income from the Project.
(c) In the event that Owner shall at any time
reasonably and in good faith believe the limits of the
personal injury, property damage or general public liability
insurance then carried to be insufficient, the parties shall
endeavor to agree on the proper and reasonable limits for
such insurance to be carried and such insurance shall
thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section.
If the parties shall be unable to agree thereon, the proper
and reasonable limits for such insurance shall be determined
by an impartial third party selected by the parties the
costs of which shall be divided equally between the parties.
Such redeterminations, whether made by the parties or by
arbitration, shall be made no more frequently than every
year.
All policies of insurance shall name Owner as an
additional insured. Developer shall furnish Owner with a
certified copy of an original or a certificate of insurance
for all policies of insurance required by this Section 11.1.
All policies or certificates, as the case may be, of
insurance shall set forth the coverage, the limits of
liability, the name of the carrier, the policy number and
the period of coverage. In addition, all policies of
insurance required under the terms hereof shall contain an
endorsement or agreement by the insurer that any loss shall
be payable in accordance with the terms of such policy
notwithstanding any act or negligence of Developer or any
party holding under Developer which might otherwise result
in a forfeiture of said insurance and the further agreement
of the insurer waiving all rights of setoff, counterclaim or
reductions against Developer. At least ten days prior to
the expiration of each required policy, Developer shall
deliver to Owner evidence of the renewal or replacement of
such policy, continuing such insurance in the form as
required by this Agreement. All such policies shall contain
a provision that they will not be cancelled, allowed to
lapse without renewal, surrendered or amended (which
provision shall include any reduction in the scope or limits
of coverage) without at least 30 days' prior written notice
to Owner or ten days' prior written notice in the event of
non-payment of any premiums due.
11.2 Delivery of Proceeds to Owner. In the event that,
-----------------------------
notwithstanding the loss payable requirement of Section 11.1, the
proceeds of any insurance policy described therein are paid to
Developer, Developer shall deliver such proceeds to Owner
immediately upon receipt.
11.3 Application of Casualty Insurance Proceeds. Any
------------------------------------------
proceeds collected (the "Proceeds") under any fire or other
physical damage insurance policy described in Section 11.1. shall
be disbursed to Developer as provided in Section 11.4 but only
upon fulfillment of each of the following conditions within 180
days following the occurrence of the damage for which the
Proceeds are collected:
(a) Developer shall demonstrate to Owner's reasonable
satisfaction that the Proceeds, together with amounts
deposited by Developer pursuant to subparagraph (b)
immediately below, will be adequate to accomplish the repair
and reconstruction of the Improvements and to restore the
fair market value of the Property to at least the value it
had immediately prior to sustaining the damage. Such
demonstration shall include delivery to Owner of (i) plans
and specifications satisfactory to Owner and (ii) a
construction contract in form and content, and with a
contractor, satisfactory to Owner,
(b) To the extent that the Proceeds are insufficient
to accomplish the repairs and reconstruction required
pursuant to subparagraph (a) above, Developer shall deliver
to Owner funds (the "Shortfall Funds") in the amount of such
shortfall, which funds shall be, at Owner's option, assigned
to Owner as security for Developer's obligations hereunder
and shall be maintained in the Settlement Account with Owner
and disbursed in the same manner as the Proceeds; provided
that in the event it becomes necessary for Developer to
deliver Shortfall Funds to Owner, Developer shall have the
option to purchase the Project upon ten days' prior notice
for a purchase price equal to the total Project Costs
disbursed by Owner, including any accrued but unpaid
interest with respect to such Project Costs, and the payment
of all expenses in connection with such purchase, including
title insurance, survey, recording fees, environmental
reports and reasonable attorneys' fees of Owner.
(c) Developer shall execute such documents, in form
and content satisfactory to Owner, as Owner requires to
evidence and secure Developer's obligation to use all
amounts disbursed for the prompt repair and reconstruction
of the Property in accordance with the plans and
specifications approved by Owner.
(d) There shall have occurred no Event of Default
which is continuing or has not otherwise been cured or
waived, or event which, with the giving of notice or the
passage of time or both, would constitute an Event of
Default, and Owner shall have received a certificate to that
effect signed by a Designated Representative.
11.4 Disbursement of Proceeds. Any Proceeds and Shortfall
------------------------
Funds to be disbursed to Developer shall be held in the
Settlement Account and disbursed in accordance with the
Disbursement procedures and related provisions of this Agreement.
Any amounts remaining undisbursed following completion of (and
full payment for) such repairs and reconstruction shall be
returned to Developer up to the amount of any Shortfall Funds
deposited by Developer, and any other amounts remaining shall
either be paid to Developer or applied by Owner against the
previously disbursed portion of the Maximum Project Amount (which
amounts shall be disbursed again pursuant to the terms hereof),
in such order as Owner choose in its sole discretion.
11.5 Failure of Conditions. In the event Developer fails to
---------------------
fulfill the conditions set forth in Sections 11.3(a) through
11.3(d) within 180 days following the date on which the damage
occurs, the Proceeds shall be retained by Owner and Owner shall
have no further obligation for any Disbursement to Developer
pursuant to this Agreement.
12. CONDEMNATION. All compensation, awards and other amounts
payable in connection with any taking of any portion of the
Property for public use, and any proceeds of any related
settlement regardless of whether eminent domain proceedings are
instituted in connection therewith (collectively, "Compensation")
shall belong to Owner. Developer shall deliver all Compensation
to Owner immediately upon receipt. Any Compensation received by
Owner shall be disbursed to Developer for repairs and
reconstruction, all in accordance with the rights, procedures and
other provisions set forth in Section 11.3 for the application of
casualty insurance proceeds; provided that in the event of any
condemnation of the Property, Developer shall have the option to
purchase the Project upon ten days' prior notice for a purchase
price equal to the total Project Costs disbursed by Owner,
including any accrued but unpaid interest with respect to such
Project Costs, and the payment of all expenses in connection with
such purchase, including title insurance, survey, recording fees,
environmental reports and reasonable attorneys' fees of Owner.
13. DEFAULTS AND REMEDIES.
13.1 Events of Default. The occurrence and continuation of
-----------------
any of the following, whatever the reason therefor, shall
constitute an Event of Default:
(a) An event of default shall occur under the Master
Development Agreement or any other development agreement
between Owner or any of its Affiliates and Developer or any
of its Affiliates; or
(b) Developer shall fail to make a payment payable by
Developer under this Agreement when the same becomes due and
payable and such failure continues for a period of ten days
after written notice from Owner to Developer; or
(c) Any representation, warranty or statement made in
any Document or in any other instrument delivered by
Developer in connection with any Document proves to have
been incorrect in any material respect when made or becomes
so at any time; or
(d) Work on the Project ceases for 21 consecutive days
for any reason (other than Force Majeure Events); or
(e) The Project is not substantially completed within
the period specified in Section 10.1, free and clear of
mechanics', materialmen's and other liens, claims or stop
notices asserted by suppliers of labor, services or
materials; provided that the existence of any such lien(s)
shall not constitute an Event of Default so long as all such
liens are being promptly and actively contested in good
faith and by appropriate proceedings and Developer has
furnished a bond or other security in form, substance and
amount satisfactory to Owner in connection therewith; or
(f) Developer is dissolved or liquidated or merged
with or into any other Person; or for any period of more
than ten days Developer ceases to exist in its present form
and (where applicable) in good standing and duly qualified
under the Laws of the states of Delaware and Texas; or all
or substantially all of the assets of Developer are sold or
otherwise transferred; provided that the foregoing shall not
operate to prevent (i) merger or consolidation of any
subsidiary into Developer or a sale, transfer or lease of
assets by any subsidiary to Developer or (ii) a merger of
any Person into Developer; provided that Developer shall be
the surviving or continuing corporation and, after giving
effect to such merger or consolidation: (A) Developer shall
be in full compliance with the terms of this Agreement and
(B) the management of Developer shall be substantially
unchanged; or
(g) Developer shall (a) be adjudicated as bankrupt or
insolvent; (b) make a general assignment for the benefit of
its creditors; (c) file a petition, answer or consent
seeking, or have entered against it (or fail reasonably to
contest the material allegations of any petition for) an
order for relief (or any similar remedy) under any provision
of Title 11 of the United States Code or any other federal,
state or foreign Law relating to insolvency, bankruptcy,
rehabilitation, liquidation or organization, or consent to
the institution of any proceedings thereunder; (d) convene a
meeting of its or his creditors, or any class thereof, for
the purpose of effecting a moratorium upon or extension or
composition of its debts; (e) fail to pay its debts as the
mature, unless such debts are being contested in good faith
in an appropriate civil action filed in a court of competent
jurisdiction; (f) admit in writing that he or it is
generally not able to pay his or its debts as they mature or
generally not pay his or its debts as they mature; (g) apply
for a consent to the appointment of a receiver, trustee,
custodian, liquidator or other similar official of all or a
portion of his or its assets; or (h) become insolvent; or
(h) If (a) a petition is filed or any case or
proceeding described in subparagraph (h) above is commenced
against Developer or against its assets unless such petition
and the case or proceeding initiated thereby is dismissed or
stayed within 60 days from the date of the filing; (b) an
answer is filed by Developer admitting the allegations of
any such petition; or (c) a court of competent jurisdiction
enters an order, judgment or decree appointing, without the
consent of Developer, a custodian, trustee, agent or
receiver of it, or for all or any part of its property, or
authorizing the taking possession by a custodian, trustee,
agent or receiver of it, or all or any part of its property
unless such appointment is vacated or dismissed or such
possession is terminated within 60 days from the date of
such appointment or commencement of such possession, but not
later than five days before the proposed sale of any assets
of Developer by such custodian, trustee, agent or receiver,
other than in the ordinary course of the business of
Developer; or
(i) Developer, in any material respect, modifies,
amends or terminates any of the Project Agreements without
the Owner's prior written consent; or
(j) Developer fails to secure a building permit for
the Project on or before 30 days from the date hereof.
13.2 Remedies Upon Default. Upon the occurrence of any
---------------------
Event of Default, Owner may, at its option, do any or all of the
following:
(a) Terminate the disbursement or release of Maximum
Project Amount proceeds and apply all or any part of such
proceeds to the Project as Owner deems appropriate in its
sole discretion, until such Event of Default is cured;
(b) Let contracts for, or otherwise proceed with, the
completion of the Project and pay the cost thereof out of
the proceeds of the Maximum Project Amount and funds in the
Settlement Account, and should such cost amount to more than
the total of such funds, then Owner shall have the right
(but no obligation) to pay such additional costs by
expenditure of its own funds (subject to reimbursement by
Developer);
(c) If the Event of Default may be cured by the
payment of money, Owner shall have the right (but no
obligation) to make such payment from any funds in the
Settlement Account or from its own funds; provided that the
making of such payment by Owner from its own funds shall not
be deemed to cure the Event of Default, and provided further
that, if such payment is made from the Settlement Account
and results, or in Owner's judgment may result, in the
reduction of the funds in the Settlement Account below the
amount required to complete the Project, such payment shall
not be deemed to cure the Event of Default until an amount
equal to the shortfall is deposited by Developer in the
Settlement Account pursuant to Section 5.7. hereof; and
(d) Exercise any of its rights under any of the
Documents and any other rights provided by law, all in such
order and manner as Owner in its sole discretion may
determine.
13.3 Cumulative Remedies; No Waiver. Owner's rights and
------------------------------
remedies under the Documents are cumulative and shall be in
addition to all rights and remedies provided by law or in equity
from time to time, or right of offset. The exercise by Owner of
any right or remedy shall not constitute a cure or waiver of any
Event of Default, nor invalidate any notice of default or any act
done pursuant to any such notice, nor prejudice Owner in the
exercise of any other right or remedy, until Owner realizes all
amounts owed to it under the Documents and all Events of Default
are cured. No waiver by Owner of any default shall be implied
from any omission by Owner to take action on account of such
default if such default persists or is repeated. No waiver by
Owner of any default shall affect any default other than the
default expressly waived, and any such waiver shall be operative
only for the time and to the extent stated. No waiver of any
covenant or condition of any Document shall be construed as a
waiver of any subsequent breach of the same covenant or
condition. Owner's consent to or approval of any act by
Developer requiring further consent or approval shall not be
deemed to waive or render unnecessary Owner's consent to or
approval of any subsequent act.
14. MISCELLANEOUS.
14.1 Actions. Owner shall have the right to commence,
-------
appear in and defend any action or proceeding purporting to
affect the rights or obligations of the parties to any Document.
14.2 Default by Owner. Owner shall be in default of its
----------------
obligations under this Agreement if Owner shall fail to observe
or perform any term, covenant or condition of this Agreement on
its part to be performed and such failure shall continue for a
period of 30 days after written notice thereof is received by
Owner, unless such failure cannot with due diligence be cured
within a period of 30 days, in which case such failure shall not
be deemed to continue if Owner, within said 30-day period,
proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof. In the event Owner
fails to cure any such default, Developer may purchase the
Project from Owner for a purchase price equal to the sum of all
Project Costs disbursed to date together with interest on such
sums at the Base Rate from the date of disbursement through the
date of payment. In the event Developer elects to purchase the
Project, it shall deliver a notice thereof to Owner specifying a
date occurring no less than 90 days subsequent to the date of
such notice on which it shall purchase the Project, and the same
shall be thereupon conveyed in accordance with the provisions of
Article XVII of the Facility Lease.
14.3 Disclaimer. Developer acknowledges and agrees that:
----------
(a) The relationship between Developer and Owner is
and shall remain solely that of owner and developer, and
Owner neither undertakes nor assumes any responsibility to
select, review, inspect, supervise, pass judgment upon or
inform Developer of any matter in connection with the
Project, including matters relating to the suitability of:
(A) the Improvement Plans, (B) architects, contractors,
subcontractors and materialmen, or the workmanship of or the
materials used by any of them, or (C) the progress of the
Project and its conformity with the Improvement Plans.
Developer shall rely entirely on its own judgment with
respect to the foregoing matters and acknowledges that any
review, inspection, supervision, exercise of judgement or
information supplies to Developer by Owner in connection
with such matters is solely for the protection of Owner and
that neither Developer nor any third party is entitled to
rely on it;
(b) Notwithstanding any other provision of any
Document: (A) Owner is not a partner, joint venturer,
alter-ego, manager, controlling person or other business
associated or participant of any kind of Developer and Owner
does not intend to ever assume any such status and (B) Owner
shall not be deemed responsible for or a participant in any
acts, omissions or decisions of Developer; and
(c) Owner shall not be directly or indirectly liable
or responsible for any loss or injury of any kind to any
person or property resulting from any construction on, or
occupancy or use of, the Property, whether arising from:
(A) any defect in any building, grading, landscaping or
other onsite or offsite improvement, (B) any act or omission
of Developer or any of Developer's agents, employees,
independent contractors, licensees or invitees, (C) any
accident on the Property or any fire, flood or other
casualty or hazard thereon, (D) the failure of Developer or
any of Developer's licensees, employees, invitees, agents,
independent contractors or other representatives to maintain
the Property in a safe condition, and (E) any nuisance made
or suffered on the Property; unless any of the foregoing
arises from or results from the active negligence or willful
misconduct of the Owner, its employees or agents.
14.4 Representations by Owner. Owner is a duly formed and
------------------------
validly existing Maryland corporation and has the requisite power
and authority to enter into this Agreement. By accepting or
approving anything required to be performed or given to Owner
under the Documents (other than the foregoing representation
regarding formation, validity and authority), including any
certificate, financial statement, survey, appraisal or insurance
policy, Owner shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no
such acceptance or approval shall constitute a warranty or
representation by Owner to anyone.
14.5 Indemnity. Developer hereby indemnifies and holds
---------
harmless Owner and its directors, officers, agents and employees
(collectively, "Indemnitee") from and against:
(a) all claims, demands and causes of action asserted
against any Indemnitee by any Person if the claim, demand or
cause of action directly or indirectly relates to (i) a
claim, demand or cause of action that the Person has or
asserts based on Developer's acts or omissions against the
Property, Developer, (ii) the payment of any commission,
charge or brokerage fee incurred in connection with this
Agreement or the Documents based on Developer's acts or
omissions, or (iii) any act or omission of Developer, any
contractor, subcontractor or material supplier, engineer,
architect or other Person with respect to the Property, or
(iv) any claim or cause of action of any kind by any Person
based on Developer's acts or omissions, which would have the
effect of denying Owner the full benefit or protection of
any provision of any Document (excluding charges and
assessments by Governmental Agencies imposed upon Owner in
the normal course of Owner's business); and
(b) all liabilities, losses and other costs (including
court costs and attorneys' fees) incurred by any Indemnitee
as a result of any claim, demand or cause of action
described in subparagraph (a).
(c) In case any claim, demand or cause of action shall
be brought by any third party against any Indemnitee
hereunder, such Indemnitee shall promptly notify Developer
in writing and Developer shall assume the defense thereof,
including the employment of counsel approved in writing by
such Indemnitee, which approval shall not be unreasonably
withheld. In addition, in case any Indemnitee shall become
aware of any facts which might result in any such claim,
demand or cause of action, such Indemnitee shall promptly
notify Developer thereof in writing, who shall have the
right to take such action as may be reasonably appropriate
to resolve such matter. An Indemnitee shall have the right
to employ separate counsel in any such third party action,
but the fees and expenses of such counsel shall be at the
expense of such Indemnitee unless the employment of such
counsel has been separately authorized in writing by
Developer or Developer has failed to employ counsel. An
Indemnitee shall cooperate fully in the defense of any such
third party claim, demand and cause of action and shall
engage in no conduct prejudicial to the defense thereof.
Developer shall not be liable for any settlement of any such
third party claim, demand or cause of action effected
without its consent, but if settled with the consent of
Developer or if there shall be a final judgment for the
plaintiff in any such third party action, Developer shall
indemnify and hold harmless the Indemnitee from and against
any loss or liability by reason of such settlement or
judgment.
Owner's rights of indemnity shall not be directly or
indirectly limited, prejudiced, impaired or eliminated in
any way by any finding or allegation that Owner's conduct is
active, passive or subject to any other classification or
that Owner is directly or indirectly responsible under any
theory of any kind for any act or omission by Developer or
any other person. Notwithstanding the foregoing Developer
shall not be obligated to indemnify Owner or any Indemnitee
with respect to any willful misconduct or act of negligence
of Owner.
14.6 Easements. Developer shall not, without the prior
---------
written consent of Owner, which consent shall not be unreasonably
withheld, (a) initiate, join in or consent to any private
restrictive covenant or other public or private restrictions as
to the use of the Property or any zoning reclassification of the
Property (or any part thereof); or (b) seek any variance under
(or deviation from) any existing zoning laws or ordinances
applicable to the Property (or any part thereof); or (c)
voluntarily grant any easement, right of way, privilege, license,
franchise or other property right affecting the Property, other
than easements for utilities servicing the Property, or otherwise
allow any such right to be created voluntarily by defaulting
under any obligation or affirmatively acquiescing or consenting
to the same.
14.7 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties of Developer in the Documents
shall survive the execution of this Agreement and the completion
of the Project and have been or will be relied on by Owner
notwithstanding any investigation made by or on behalf of Owner.
For the purpose of the foregoing, all statements contained in any
document prepared or executed by Developer in connection with the
transactions contemplated hereby, shall be deemed to be
representations and warranties of Developer contained in the
Documents.
14.8 Notices. Any notices, demands, approvals and other
-------
communications provided for in this Agreement shall be in writing
and shall be delivered by telephonic facsimile, overnight air
courier, personal delivery or registered or certified U.S. Mail
with return receipt requested, postage paid, to the appropriate
party at its address as follows:
If to Owner:
CAPSTONE CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Sirote & Permutt, P. C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Developer:
GRAND COURT LIFESTYLES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for notice may be changed from time to time by
written notice to all other parties. Any communication given by
mail will be effective (i) upon the earlier of (a) three business
days following deposit in a post office or other official
depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return
receipt; (ii) if given by telephone facsimile, when sent; and
(iii) if given by personal delivery or by overnight air courier,
when delivered to the appropriate address set forth.
14.9 No Third Parties Benefitted. This Agreement is made
---------------------------
for the purpose of setting forth certain rights and obligations
of Developer and Owner in connection with the Project. It is
made for the sole protection of Developer, Owner and their
respective successors and assigns, and no other Person shall have
any rights hereunder or by reason hereof.
14.10 Binding Effect. This Agreement shall bind, and
--------------
shall inure to the benefit of, Developer and Owner and their
respective successors and assigns.
14.11 Counterparts. Any Document may be executed in any
------------
number of counterparts and any party thereto may execute any
counterpart, each of which when executed and delivered will be
deemed to be an original and all of which, taken together, will
be deemed to be but one and the same document. The execution of
any Document by any party will not become effective until
counterparts have been executed by all of the parties thereto.
14.12 Prior Agreements; Amendments; Consents. This
--------------------------------------
Agreement, together with the Documents, contain the entire
agreement between Owner and Developer with respect to the Project
and all prior negotiations, understandings and agreements are
superseded by this Agreement. No supplement, extension,
termination or other modification of any provision of any
Document, and no consent to any departure by Developer therefrom,
shall be effective unless in writing and signed by Owner, and
then only in the specific instance and for the specific purpose
given.
14.13 Governing Law. All of the Documents shall be
-------------
governed by, and construed and enforced in accordance with, the
laws of the State of Alabama. Without limiting the right of
Owner to bring any action or proceeding against Developer or the
Property arising out of or relating to its obligation under the
Documents (an "Action") in the courts of other jurisdictions,
Developer hereby irrevocably submits to the jurisdiction of the
courts of the State of Alabama or any federal court in the State
of Alabama and Developer hereby irrevocably agrees that any
Action may be heard and determined in such state or federal
court. Developer hereby irrevocably waives, to the fullest
extent that it may effectively do so, the defense of an
inconvenient forum to the maintenance of any Action in the
jurisdiction. Developer hereby irrevocably agrees that the
summons and complaint or any other process in any Action in any
jurisdiction may be served by mailing to any of the addresses set
forth herein or by hand delivery to a person of suitable age and
discretion at any such address. Such service shall be complete
on the date such process is so mailed or delivered.
14.14 Maximum Rate. As used herein, the term "Maximum
------------
Rate" shall mean and refer to the maximum rate of non-usurious
charges and interest, if any, that Owner may from time to time
charge Developer and in regard to which Developer would be
prevented successfully from raising the claim or defense of usury
under applicable law as now, or to the extent permitted by law,
as may hereafter be, in effect (said law permitting the highest
rate being herein referred to as the "Interest Law"). It is the
intention of Developer and Owner to conform strictly to the
Interest Law applicable to this transaction. Accordingly, it is
agreed that notwithstanding any provision to the contrary in this
Agreement or in any of the Documents or instruments relating
thereto, the aggregate of all interest and any other charges or
consideration constituting interest under applicable Interest Law
that is taken, reserved, contracted for, charged or received
under this Agreement or under any of the other aforesaid
agreements or otherwise in connection with this transaction shall
under no circumstances exceed the maximum amount of interest
allowed by the Interest Law applicable to this transaction. If
any excess of interest in such respect is provided for, or shall
be adjudicated to be so provided for, in this Agreement or in any
of the Documents or other instruments relating thereto, then in
such event (a) the provisions of this Section shall govern and
control, (b) neither Developer nor Developer's heirs, legal
representatives, successors or assigns or any other party liable
for Developer's obligations hereunder shall be obligated to pay
the amount of such interest to the extent that it is in excess of
the maximum amount of interest allowed by the Interest Law
applicable to this transaction, (c) any excess shall be deemed a
mistake and cancelled automatically and, if theretofore paid,
shall be credited by Owner (or refunded to Developer), and (d)
the effective rate of interest shall be automatically subject to
reduction to the Maximum Rate as now or hereafter construed by
courts of appropriate jurisdiction. All sums paid or agreed to
be paid the Owner for the use, forbearance or detention of the
indebtedness shall, to the extent permitted by the Interest Law
applicable to this transaction, be amortized, prorated, allocated
and spread throughout the full term of the indebtedness.
14.15 Waivers. Each of the parties hereto recognizes
-------
that in matters related to this Agreement, it may be entitled to
a trial in which matters of fact are determined by a jury (as
opposed to a trial in which such matters are determined by a
federal or state judge). Each of the undersigned also recognizes
that one of the remedies available to it in any trial may, under
certain circumstances, be the right to receive damages in excess
of those actually sustained by it. In the past, in some
instances, such damages have equaled or exceeded the amount of
actual damages.
(a) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR (II) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OR THEIR RIGHT TO TRIAL BY JURY.
(b) TO THE MAXIMUM EXTENT NOW PERMITTED BY LAW, EACH
OF THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE, OR CONSEQUENTIAL DAMAGES, OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
(c) EACH OF THE UNDERSIGNED HEREBY CERTIFIES THAT
NEITHER ANY REPRESENTATIVE OR AGENT OF THE OWNER NOR THE
OWNER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
IMPLIED THAT THE OWNER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH OF
THE UNDERSIGNED ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO OR BECOME A SURETY WITH RESPECT TO THIS
TRANSACTION BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS HEREIN.
14.16 Severability of Provisions. No provision of any
--------------------------
Document that is held to be inoperative, unenforceable or invalid
shall affect the remaining provisions, and to this end all
provisions of the Documents are hereby declared to be severable.
14.17 Time of Essence. Time is of the essence in all of
---------------
the Documents.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
Developer:
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By:
---------------------------
Its:
--------------------------
Owner:
CAPSTONE CAPITAL CORPORATION
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
EXHIBIT A
DEFINITIONS
As used in this Development Agreement (and in all other
Documents, unless otherwise defined), the following capitalized
terms shall have the following meanings:
"Affiliate" means any Person directly or indirectly
controlling, controlled by or under direct or indirect common
control with Developer or Owner, as the case may be. For the
purposes of this definition, "control", as used with respect to
any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such Person, through the ownership of voting
securities, partnership interests or other equity interests.
"Agreement" means this Development Agreement as it may be
supplemented, amended, renewed, restated, extended or replaced.
"Appraisal" means an appraisal of the Property prepared by
an M.A.I. appraiser approved by Owner in writing.
"Approved Budget" means the line item budget for the Project
with respect to which Owner has agreed to fund construction
advances pursuant to the provisions of this Agreement, as
originally approved in writing by Owner and as supplemented and
modified in writing from time to time in accordance with the
terms of this Agreement, a copy of which Approved Budget is
attached hereto as Exhibit B.
---------
"Architect" means [Architect and Associates, Ltd.] and/or
any other architect for the Project approved by Owner in writing.
"Architect Agreement" means that certain agreement with the
Architect for work on the Project.
"Assignment of Contracts" means the assignment to be
executed and delivered by Developer assigning to Owner the
Project Agreements and all plans and other documents executed,
prepared or used by Developer in connection with the Project (as
hereafter defined).
"Base Rate" means the sum of the Prime Rate plus one
percent.
"Business Day" means any day other than a day on which
banking institutions in Birmingham, Alabama are authorized by law
to close.
"Certificate of Authority" means the certificate to be
delivered by Developer to Owner pursuant to Section 4.1 hereof
pursuant to the terms of which Developer appoints a Designated
Representative for purposes of this Agreement, as amended from
time to time.
"Change Orders" means changes in the Improvement Plans
pursuant to Section 10.3 hereof.
"Commitment Fee" has the meaning set forth in Section 3.3.
"Consolidated Net Worth" means at any time, the sum of the
following for Developer on a consolidated basis determined in
accordance with generally accepted accounting principles:
(a) the amount of capital or stated capital (after
deducting the cost of any treasury shares or like
interests), plus
(b) the amount of capital surplus and retained
earnings (or, in the case of a capital surplus or retained
earnings deficit, minus the amount of such deficit), minus
(c) the sum of the following (without duplication of
deductions in respect of items already deducted in arriving
at capital surplus and retained earnings): (i) unamortized
debt discount and expense; (ii) any write-up in book value
of assets resulting from a revaluation thereof subsequent to
the most recent financial statement of Developer prior to
the date thereof, except any net write-up in value of
foreign currency; (iii) any write-up resulting from a
reversal of a reserve for bad debts or depreciation; and
(iv) any write-up resulting from a change in methods of
accounting for inventory.
"Construction Contracts" means any and all construction
contracts between Developer and Contractor (as hereafter defined)
or between Developer and any other person or entity relating to
the rendering of services or the furnishing of material,
supplies, equipment or labor in connection with the construction
of the Improvements, each of which contract shall be for a fixed
price or guaranteed maximum amount and shall otherwise be in form
and substance satisfactory to Owner.
"Contractor" means [Acme Construction Co., Inc.] or any
other general contractor for the Project approved by Owner from
time to time.
"Designated Representative" means any of the individuals
identified on the Certificate of Authority delivered by Developer
to the Owner on the date of this Agreement, or any subsequent
Certificate of Authority so delivered identifying the individuals
having the authority to act on behalf of Developer in connection
with the Project, this Agreement and the Documents.
"Developer's Fee" means the line item on the Approved Budget
in the amount of $________.00 labeled "Developer's Fee Section
5.9 Payment" to be paid to Developer.
"Disbursement" means an advance by Owner of any of the
Project Costs or from the Settlement Account.
"Disbursement Request" means a request by Developer for
Disbursements in the form attached hereto as Exhibit C.
---------
"Documents" mean, collectively, this Agreement, the Master
Development Agreement, the Environmental Indemnity, the Project
Consents, the Project Agreements and any other document that
Owner requires from time to time to effectuate the purposes of
this Agreement, but excluding the Facility Lease.
"Environmental Indemnity" means the Environmental Indemnity
Agreement of even date herewith executed by Developer in favor of
Owner.
"Estimated Completion Amount" has the meaning set forth in
Section 5.10.
"Event of Default" means any event so designated in Section
13 hereof.
"Facility Lease" means that certain lease agreement of even
date herewith between Owner, as landlord, and Developer, as
tenant, for the lease of the Project.
"Fiscal Year" means Developer's fiscal year, ending on
January 31 of each calendar year.
"Force Majeure Events" means only delays due to strikes,
acts of God, inability to obtain labor or materials, governmental
restrictions, litigation, enemy action, civil commotion, fire or
similar causes, provided such similar causes are also beyond
Developer's reasonable control.
"Governmental Agency" means the United States, the State,
County, City, Town or Township in which the Property is located,
or any other political subdivision in which any portion of the
Property is located, and any other political subdivision, agency,
authority, board, department, or instrumentality properly
exercising jurisdiction over Developer, Contractor, project
manager or any part of the Property.
"Hazardous Materials" means any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials as defined in
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801 et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Section 6901 et seq.), the
Atomic Energy Act, and in the regulations adopted and
publications promulgated pursuant thereto, and all asbestos
(friable or non-friable), petroleum derivatives, polychlorinated
biphenyls, flammable substances and materials defined as
hazardous materials under any federal, state or local laws,
ordinances, codes, rules, orders, regulations or policies
governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal
thereof.
"Impositions" means, collectively, all taxes relating to the
Project, including all ad valorem, sales and use, gross receipts,
action, privilege, rent or similar taxes, assessments (including
all assessments for public improvements or benefits, whether or
not commenced or completed prior to the date hereof and whether
or not to be completed prior to the termination hereof) water,
sewer or other rents and charges, excises, tax levies, fees
(including license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Project
(including all interest and penalties thereon due to any failure
in payment by Developer); provided that nothing contained in this
Agreement shall be construed to require Developer to pay any tax
based on gross or net income (whether denominated as a franchise
or capital stock or other tax) imposed on Owner.
"Improvement Plans" means the final working plans and
specifications for the construction of the Project, including,
but not limited to, drawings, specifications, details and manuals
for the construction of the Project prepared and signed by the
Architect. All mechanical, electrical, structural and other
specialized drawings and specifications shall be signed by
licensed engineers of the respective disciplines normally
responsible for such drawings and specifications.
"Improvements" means the assisted and independent living
facility to be known as Grand Court containing
----------------
approximately units and gross square feet (
---- -------- --------
Net Rentable) with surface parking for automobiles
--------
together with all appurtenant improvements to be constructed on
the Property in accordance with the Improvement Plans.
"Interest Law" has the meaning set forth in Section 14.14.
"Laws" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations,
ordinances, codes and administrative or judicial decisions or
precedents, of or by any Governmental Agency.
"Lease-Up Allowance" has the meaning set forth in Section
5.11.
"Marketing Allowance" has the meaning set forth in Section
5.11.
"Master Development Agreement" means that certain master
development agreement dated June 20, 1996, between Developer and
Owner for the development, construction, use and operation of up
to four assisted and independent living facilities, including the
Project.
"Maximum Project Amount" means the maximum sum indicated on
the Approved Budget to be advanced by Developer for payment of
the Project Costs, the Commitment Fee and the Developer's Fee in
accordance with, and subject to the terms and provisions of, this
Agreement, and is equal to $ .00.
----------------
"Maximum Rate" is defined in Section 14.13.
"Owner's Engineer" means CLJ Associates, Inc. or any other
individual or engineering firm hired by Owner to advise and
assist Owner in connection with the Project, including inspecting
the progress of construction.
"Permitted Encumbrances" means, collectively, all exceptions
to the Title Policy approved by Owner in writing and all other
liens, restrictions and other title limitations hereafter
approved by Owner in writing.
"Person" means any entity, whether an individual, trustee,
corporation, partnership, joint venture, trust, estate,
unincorporated organization, Governmental Agency or otherwise.
"Personal Property" means all of Owner's interest in all
furniture, furnishings, fixtures, machinery, equipment, inventory
and other personal property of every kind, whether now existing
or hereafter acquired, tangible and intangible, now or hereafter
located on or about the Property, and used or to be used in the
future in connection with the operation of the Project, and, in
all events, paid for with funds from Owner.
"Prime Rate" means the annual rate reported by The Wall
Street Journal, Eastern Edition (or, if The Wall Street Journal
shall no longer be published or shall cease to report such rates,
then a publication or journal generally acceptable in the
financial industry as authoritative evidence of prevailing
commercial lending rates) from time to time as being the
prevailing prime rate (or, if more than one such rate shall be
published in any given edition, the arithmetic mean of such
rates). The prime rate is an index rate used by The Wall Street
Journal to report prevailing lending rates and may not
necessarily be its most favorable lending rate available. Any
change in the Prime Rate hereunder shall take effect on the
effective date of such change in the prime rate as reported by
The Wall Street Journal, without notice to Lessee or any other
action by Lessor. Interest shall be computed on the basis that
each year contains 360 days, by multiplying the principal amount
by the per annum rate set forth above, dividing the product so
obtained by 360, and multiplying the quotient thereof by the
actual number of days elapsed.
"Project" means the Property and the Improvements to be
constructed thereon in accordance with the Improvement Plans,
including but not limited to all "off-site" construction work to
be performed by Developer.
"Project Agreements" means, collectively, all agreements
entered into by Developer with Persons other than Owner in
connection with the Project, including without limitation, the
Construction Contracts and the Architect Agreement.
"Project Consents" means the Architect's Consent and
Agreement and the Contractor's Consent and Agreement described in
Section 4.
"Project Costs" means the total of the costs, expenses and
fees required for the construction of the Project as set forth in
the Approved Budget, including the Developer's Fee, the
Commitment Fee any applicable Real Estate Acquisition Amount (as
defined in the Master Development Agreement), transaction costs,
marketing and lease-up costs, contingency, soft costs and the
costs of the Personal Property.
"Property" means the real property located in
County, Texas, and described in Exhibit A-1
---------------- -----------
attached hereto, together with all easements and other rights now
or hereafter made appurtenant thereto.
"Release Date" has the meaning set forth in Section 5.10.
"Settlement Account" means an interest bearing account
established and maintained solely by Owner at a bank where
deposits are insured by the FDIC selected by Owner.
"Shortfall Funds" has the meaning set forth in Section
11.3(b).
"Surveyor" means [Straight Line, Inc.]
"Title Company" means any title insurance company selected
by Developer and reasonably acceptable to Owner.
"Title Policy" means an Texas Insurance Commission form of
Owner Policy of Title Insurance (Form T-1), together with such
endorsements thereto as are reasonably and customarily required
by institutional purchasers of real property similar to the
Project, issued by a title company reasonably acceptable to
Owner, insuring title to the fee interest in the Project in Owner
in an amount at least equal to the Maximum Project Amount,
subject only to the exceptions approved by Owner and to the
standard printed exceptions included in the Texas standard form
owner policy of title insurance, with the following
modifications: (a) the exception for areas and boundaries shall
be modified to read "shortages in area; (b) the exception for ad
valorem taxes shall reflect only taxes for the current and
subsequent years and subsequent taxes and assessments by any
taxing authority for prior years due to changes in land usage or
ownership; (c) there shall be no general exception for visible
and apparent easements or roads and highways or similar items
(with any exception for visible and apparent easements or roads
and highways or similar items to be specifically referenced to
and shown on the survey and also identified by applicable
recording information); and (e) all other exceptions shall be
modified or endorsed in a manner reasonably acceptable to Owner.
EXHIBIT A-1
LEGAL DESCRIPTION
EXHIBIT B
APPROVED BUDGET
[to be supplied]
EXHIBIT C
----------------------------------------------------------------------
DESCRIPTION SCHEDULED SCHEDULED PRIOR
VALUE VALUE DRAWS
REVISED
----------------------------------------------------------------------
LAND:
Acquisition Cost
Assessment/Impact Fees
Engineering/Environmental/Testing
Landscaping (in construction cost)
CONSTRUCTION COST:
Covered Parking
Base Building (including builder's
risk insurance and bond premium)
Tenant Finish Allowance
FF&E (public areas, recreational
spaces and dining rooms)
INDIRECT COST:
Architectural & Engineering
Marketing Allowance
Appraisal
Legal Expenses/Accounting
Administrative/Management
Closing Cost/Title Policy
Real Estate Taxes (during construction)
Insurance/Bond
Commitment Fee
Inspection Fee
Interest During Construction
Broker/Dealer Fees
Tenant Relocation
Lease Up Allowance
Leasing Fees
Developer Fees
Capstone's Engineer
CONTINGENCY
---------------------------------------------------------------------
TOTAL
---------------------------------------------------------------------
PURCHASE DOWN PAYMENT
TOTAL CONSTRUCTION LOAN FUNDED
TOTAL COST TO DATE:
LESS PRIOR DRAWS:
CURRENT AMOUNT REQUESTED
---------------------------------------------------------------------
---------------------------------------------------------------------
CURRENT TOTAL BALANCE TO
DESCRIPTION DRAWS DRAWS FUND
---------------------------------------------------------------------
LAND:
Acquisition Cost
Assessment/Impact Fees
Engineering/Environmental/Testing
Landscaping (in construction cost)
CONSTRUCTION COST:
Covered Parking
Base Building (including builder's risk
insurance and bond premium)
Tenant Finish Allowance
FF&E (public areas, recreational spaces and
dining rooms)
INDIRECT COST:
Architectural & Engineering
Marketing Allowance
Appraisal
Legal Expenses/Accounting
Administrative/Management
Closing Cost/Title Policy
Real Estate Taxes (during construction)
Insurance/Bond
Commitment Fee
Inspection Fee
Interest During Construction
Broker/Dealer Fees
Tenant Relocation
Lease Up Allowance
Leasing Fees
Developer Fees
Capstone's Engineer
CONTINGENCY
----------------------------------------------------------------------
TOTAL
----------------------------------------------------------------------
CERTIFICATION
In accordance with the terms of the Development Agreement between
CAPSTONE CAPITAL CORPORATION and GRAND COURT LIFESTYLES, INC.
dated ________________________ ___, 1996 (the "Development
Agreement"), you are hereby authorized and requested to make
immediate disbursement of funds held by you for the Project in
the amount of the Disbursement Request specified, in accordance
with the attached Disbursement Request and Developer's
Application and Certificate for Payment, which are incorporated
herein by this reference and made a part hereof and which
indicate the Item from which funds are requested and supporting
invoices. You are further hereby authorized, at your option, to
make such disbursement to the Developer's Settlement Account
identified in the Development Agreement or at your further
option, to transfer any or all of such funds so disbursed into
the disbursement account of the Contractor maintained with you
for the Project, or as otherwise permitted by the Development
Agreement.
The undersigned hereby certifies that:
(i) the labor, services and/or materials covered hereby
have been performed upon or furnished to the above referred to
Project;
(ii) there have been no changes in the Approved Budget
attached as Exhibit B to the above-referenced Development
---------
Agreement, except those approved by you in writing;
(iii) all construction to date has been performed
substantially in accordance with the plans and specifications for
the Improvements approved by you, and there have been no changes
in those plans and specifications except as may be expressly
permitted by the above-referenced Development Agreement or as
have been approved by you in writing;
(iv) there have been no material changes in the scope or
time of performance of the work of construction, nor any material
extra work, labor or materials ordered or contracted for, nor are
any such changes or extras contemplated, except as may be
expressly permitted by the above-referenced Development Agreement
or as have been approved by you in writing;
(v) the payments to be made with the funds requested herein
will pay all bills received to date for any labor, materials and
services furnished in connection with construction of the
Improvements;
(vi) all amounts previously disbursed by you for labor,
services and/or materials for the above referred to Project
pursuant to previous Applications have been paid to the parties
entitled thereto; and
(vii) all conditions to the disbursement of the funds
requested herein set forth in the above-referenced Development
Agreement have been fulfilled, and to the knowledge of the
undersigned, no Event of Default under the above-referenced
Development Agreement has occurred and is continuing.
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By:
--------------------------
Its:
-------------------------
Date:
----------------------
STATE OF
------------- )
)
COUNTY OF
------------ )
SUBSCRIBED AND SWORN to before me on this day of
----
, 1996.
-----------
---------------------------------
Notary Public in and for
The State of
--------------------
Name:
---------------------------
My Commission Expires:
-----------
EXHIBIT D
ARCHITECT'S COMPLETION CERTIFICATE
STATE OF
---------- )
)
COUNTY OF
-------- )
TO: CAPSTONE CAPITAL CORPORATION
The undersigned, Architect and Associates, Ltd. (the
"Architect"), does hereby state to the best of their knowledge,
information and belief as follows:
(1) That is was retained by GRAND COURT LIFESTYLES, INC., a
Delaware corporation ("Developer"), in connection with that
certain project consisting of an assisted and independent living
facility containing gross square foot ( Net
-------- --------
Rentable) and appurtenant improvements known as
(the "Project") and located on
------------------------
approximately acres of land, in County,
-------- ----------------
, as more particularly described in Exhibit A
---------------- ---------
attached hereto and made part hereof by reference (the "Land")
and, as such, is Architect or record.
(2) That it prepared and/or coordinated the plans and
specifications identified in Exhibit B attached hereto and made a
---------
part hereof by reference (the "Plans and Specifications"), which
Plans and Specifications were used in connection with the
construction of the Project and copies of which have been
delivered to Owner.
(3) That, based upon periodic site inspections (a) the
construction of the improvements and the development of the
Project have been substantially completed in accordance with the
Plans and Specifications, including the installation of specified
fixed machinery and equipment, such as plumbing, heating,
ventilation, air conditioning, systems and other building
facilities; (b) the Project and said machinery, equipment,
systems and facilities are in good working order and condition;
(c) all certificates of occupancy and other permits required by
applicable law prior to occupancy of the Project have been
secured; (d) the final inspection by the City of
----------------
Building Department has been completed and the Project has been
approved by the Building Department for
----------------
occupancy; and (e) the only items remaining to be completed are
the punch list set forth in the AIA Form Certificate of
Substantial Completion delivered herewith.
The term "substantially completed," as used herein, means
that the Project is sufficiently complete, in accordance with the
Plans and Specifications, so that the Project can be
substantially occupied and utilized for the use for which it is
intended.
(4) That the undersigned is an architect duly licensed and in
good standing under the laws of the State of Texas.
(5) That, as of this date, the undersigned has no legal interest
in or to the Project or the Land upon which the Project is
constructed.
IN WITNESS WHEREOF, the undersigned has hereunto set its
hand and seal this day of
---------- ----------------------------,
1996.
ARCHITECT AND ASSOCIATES, LTD.
By:
------------------------
Name:
----------------------
Title:
---------------------
ATTEST:
-----------------------
(Corporate Seal)
ACKNOWLEDGEMENT
STATE OF
---------- )
)
COUNTY OF
---------- )
The foregoing instrument was acknowledged before me this
day of , 1996, by
------- ---------------------- -----------------
, as of
--------------------- -------------------------------
Architect and Associates, Ltd. on behalf of the corporation.
-----------------------------
Notary Public in and for
The State of
-----------------
Name:
------------------------
My Commission Expires:
-------
EXHIBIT E
NOT USED
EXHIBIT F
ARCHITECT'S CONSENT AND AGREEMENT
This Architect's Consent and Agreement ("Agreement"), dated
as of ________________________ ___, 1996, is executed by
Architect and Associates, Ltd. (the "Architect") in connection
with that certain Development Agreement (the "Development
Agreement") dated ________________________ ___, 1996, between
GRAND COURT LIFESTYLES, INC., a Delaware corporation
("Developer"), and CAPSTONE CAPITAL CORPORATION ("Owner"),
pursuant to which Owner has agreed to make certain advances (the
"Advances") in an amount sufficient to finance the construction
of an ancillary hospital facility and appurtenant facilities (the
"Improvements") to be constructed in accordance with certain
plans and specifications to be prepared by Architect on the real
property situated in ________________ County, ________________,
at the ________________________________, more particularly
described in Exhibit 1 attached hereto and incorporated herein by
---------
this reference (the "Property"). The Property and the
Improvements are collectively referred to herein as the
"Project." The Architect will be the general architect and the
general engineer for the Project pursuant to the following: _____
______________________________ (the "Contract").
1. CONSENT TO ASSIGNMENT.
---------------------
Architect hereby consents to and agrees to be bound by all the
provisions of that certain Assignment of Contracts (the
"Assignment") by and between Owner and Developer, dated of even
date with the Development Agreement, the provisions of which are
hereby incorporated fully by reference. Architect acknowledges
that the Assignment shall not, in the absence of an affirmative
assumption in writing by Owner of Developer's obligations
thereunder, be deemed to impose any liability or obligation upon
Owner and Architect further agrees that: (a) Architect shall
give written notice to Owner of any default of Developer under
the Contract at least 30 days prior to suspending or terminating
its obligations under the Contract, (b) Architect shall, at the
request of Owner and without regard to any prior default of
Developer under the Contract, continue to perform under the terms
of the Contract if Owner undertakes to complete or cause the
completion of the Project, provided that Owner compensates
Architect pursuant to the Contract for the services rendered by
Architect from and after the date on which Owner undertakes to
complete the Project, (c) Owner shall have the right to use all
plans, specifications and drawings for the Project prepared by or
for Architect or by and for any architects or engineers or
contractors for the Project, and the ideas, designs and concepts
contained therein, in connection with such completion without
payment of any additional fees or charges to Architect for such
use, and (d) during and/or upon completion of the Project,
Architect shall execute such certificates or other
acknowledgements as Owner may reasonably request to evidence
(including the Architect's Completion Certificate attached hereto
as Exhibit 2) (i) that Architect has prepared or approved certain
---------
plans and specifications for the Project, (ii) that such plans
and specifications have not been modified or amended except as
set forth therein, (iii) that the Project has been constructed to
date in accordance with such plans and specifications prepared by
or approved by Architect, without any material deviation and/or
(iv) the Architect's estimate of the time and cost necessary to
complete the project in accordance with such plans and
specifications and whether the Approved Budget (as defined in the
Development Agreement) is an accurate reflection of such costs,
whether the amounts remaining to be advanced from the Approved
Budget will be sufficient to complete the Project, and whether
the Project can be completed within the time period originally
estimated.
2. MAINTENANCE OF LICENSE. Architect agrees that it will be at
----------------------
all times during the performance of work on the Project a duly
licensed architect and engineer under the laws and regulations of
the state where the Project is located.
3. COMPLIANCE WITH LAWS. Architect shall comply, and shall
--------------------
report to Owner any failure known to Architect of Developer, the
Project of any person or entity furnishing materials or services
in connection with the construction of the Project to comply with
all applicable governmental laws, ordinances, regulations and
requirements relating to the construction of the Improvements.
4. NO PREVIOUS ASSIGNMENT. Architect hereby represents and
----------------------
warrants to Owner that Architect has not consented to any
previous assignment of (a) any contract between Developer and
Architect that relates to the Project or the construction of the
Improvements or (b) any interest of Architect or Developer in the
Contract, except in favor of Owner.
5. BINDING OBLIGATION. Architect hereby represents and
------------------
warrants to Owner that the Contract constitutes the valid and
binding obligation of the Architect and is enforceable in
accordance with its terms.
6. PERFORMANCE OF COVENANTS. Architect hereby represents and
------------------------
warrants to Owner that all covenants, conditions and agreements
of Architect contained in the Contract have been performed as
required therein except for those which are not due to be
preformed until after the date of this Agreement.
7. NOTICES.
-------
All notices and demands permitted or required under this
Agreement shall be in writing and shall be delivered personally,
by courier (including overnight courier service), by telecopy or
by certified or registered mail, return receipt requested,
postage prepaid. Notices delivered personally, by courier
service or by telecopy shall be effective upon delivery. Mailed
notices shall be effective upon the earlier of (a) three business
days after mailing or (b) actual receipt as evidenced by the
return receipt. The addresses of Owner and Architect for
purposes of this notice hereunder are as follows:
If to Owner:
CAPSTONE CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Architect:
Architect and Associates, Ltd.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (214) ____________
Telecopy: (214) _____________
Either party hereto may change its address for purposes of
notice hereunder by notice to the other pursuant to this Section
7.
8. ASSIGNMENT. Architect hereby agrees and acknowledges that
----------
Owner may assign its rights under the Contract without the
consent of the Architect.
9. MISCELLANEOUS.
-------------
9.1 AMENDMENT.
---------
This Agreement may be amended only be a written instrument signed
by Owner and Architect.
9.2 COSTS OF ENFORCEMENT.
--------------------
In the event that either Owner or Architect files an action
against the other to interpret or enforce the terms of this
Agreement, the prevailing party in such action shall be entitled
to recover its reasonable attorney's fees and costs, whether or
not such actio is prosecuted to final judgement.
9.3 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall inure to the benefit of the successors and
assigns of Owner and shall bind the successors, assigns, heirs
and personal representatives of Architect.
9.4 GOVERNING LAW.
-------------
This Agreement shall be governed by and construed under the laws
of the state where the Project is located, except to the extent
preempted by federal law, in which case, federal law shall
control.
ARCHITECT:
ARCHITECT AND ASSOCIATES, LTD.
By: __________________________
Name: ________________________
Title: _______________________
THE STATE OF ____________ )
COUNTY OF ______________ )
This foregoing instrument was acknowledged before me this
___ day of ______, 1996 by ______________________________,
_______ of Architect and Associates, Ltd. on behalf of the
corporation.
______________________________
Notary Public in and for the
State of _____________________
Name: ________________________
My Commission Expires: _______
EXHIBIT 1
LEGAL DESCRIPTION
EXHIBIT 2
ARCHITECT'S COMPLETION CERTIFICATE
STATE OF __________ )
)
COUNTY OF _________ )
TO: CAPSTONE CAPITAL CORPORATION
The undersigned, Architect and Associates, Ltd. (the
"Architect"), does hereby state to the best of their knowledge,
information and belief as follows:
(1) That it was retained by GRAND COURT LIFESTYLES, INC., a
Delaware corporation ("Developer") in connection with that
certain project consisting of an assisted and independent living
facility containing ________ gross square foot (________ Net
Rentable) and appurtenant improvements known as
________________________________ (the "Project") and located on
approximately ________ acres of land, in ________________ County,
Texas, as more particularly described in Exhibit A attached
---------
hereto and made part hereof by reference (the "Land") and, as
such, is Architect of record.
(2) That it prepared and/or coordinated the plans and
specifications identified in Exhibit B attached hereto and made a
---------
part hereof by reference (the "Plans and Specifications"), which
Plans and Specifications were used in connection with the
construction of the Project and copies of which have been
delivered to Owner.
(3) That, based upon periodic site inspections (a) the
construction of the improvements and the development of the
Project have been substantially completed in accordance with the
Plans and Specifications, including the installation of specified
fixed machinery and equipment, such as plumbing, heating,
ventilation, air-conditioning, systems and other building
facilities, (b) the Project and said machinery, equipment,
systems and facilities are in good working order and condition,
(c) all certificates of occupancy and other permits required by
applicable law prior to occupancy of the Project have been
secured, (d) the final inspection by the City of ________________
Building Department has been completed and the Project has been
approved by the ________________ Building Department for
occupancy, and (e) the only items remaining to be completed are
the punch list items set forth in the AIA Form Certificate of
Substantial Completion delivered herewith. The term
"substantially completed," as used herein, means that the Project
is sufficiently complete, in accordance with the Plans and
Specifications, so that the Project can be substantially occupied
and utilized for the use for which it is intended.
(4) That the undersigned is an architect duly licensed and in
good standing under the laws of the State of Texas.
(5) That, as of this date, the undersigned has no legal interest
in or to the Project or the Land upon which the Project is
constructed.
IN WITNESS WHEREOF, the undersigned has hereunto set its
hand and seal this _________ day of _______________________, 1996.
ARCHITECT AND ASSOCIATES, LTD.
By: __________________________
Name: ________________________
Title: _______________________
ATTEST:
___________________________ (Corporate seal)
ACKNOWLEDGEMENT
STATE OF ___________ )
)
COUNTY OF _________ )
The foregoing instrument was acknowledged before me this
_____ day of _______________, 1996, by __________________________
____, as ___________________________ of Architect and Associates,
Ltd. on behalf of the corporation.
______________________________
Notary Public in and for
The State of _________________
Name: ________________________
My Commission Expires: _______
EXHIBIT G
NOT USED
EXHIBIT H
CONTRACTOR'S CONSENT AND AGREEMENT
THIS CONTRACTOR'S CONSENT AND AGREEMENT ("Agreement"), dated
as of ________________________ ___, 1996, is executed by Acme
Construction Co., Inc. (the "Contractor") in connection with that
certain Development Agreement (the "Development Agreement") dated
________________________ ___, 1996, by and between GRAND COURT
LIFESTYLES, INC., a Delaware corporation ("Developer"), and
CAPSTONE CAPITAL CORPORATION ("Owner"), pursuant to which Owner
has agreed to make certain advances (the "Advances") to Developer
in a sufficient amount to finance the construction of an assisted
and independent living facility and appurtenant facilities (the
"Improvements") on real property situated in ________________
County, Texas, known as ________________________________, being
more particularly described in Exhibit A attached hereto and
---------
incorporated herein by this reference (the "Property").
1. CONTRACTOR'S REPRESENTATIONS:
----------------------------
Contractor warrants and represents to the Owner that the
following are true and correct:
(a) That Contractor has agreed to act as general
contractor and supply materials and perform labor in
connection with the construction of the Improvements on the
Property.
(b) That the entire agreement between Contractor and
Developer for the construction of the Improvements shall be
evidenced by an Agreement to be executed by Developer and
Contractor (hereinafter referred to as the "Construction
Contract") following the date hereof, in the form attached
hereto as Exhibit B and made a part hereof for all
---------
purposes.
(c) That the Construction Contract provides for a
fixed sum to be paid Contractor for the Construction of the
Improvements, which fixed sum is not to exceed
$________________.00 (hereinafter referred to as the
"Guaranteed Maximum Cost").
(d) That the Guaranteed Maximum cost (i) includes all
fees due or to become due Contractor for the completion of
the Improvements and the cost of all labor and materials
necessary to complete the same and (ii) is based on the
Specifications described in the Construction Contract.
(e) Upon execution by all parties thereto, the
Construction Contract shall constitute the valid and binding
agreement of Contractor, enforceable in accordance with its
terms, and Contractor has full authority under all state or
local laws and regulations to perform all of its obligations
under said Construction Contract.
2. CONTRACTOR'S AGREEMENTS:
-----------------------
Developer has advised Contractor that Developer will obtain the
Advances from Owner for, among other things, the construction of
the Improvements. Contractor hereby agrees to each and every one
of the following for the benefit of Owner and as an inducement to
Owner to make Advances to Developer for construction of the
Improvements:
(a) Contractor will (i) store all materials that are
pre-purchased under the Construction Contract at the
Property in a manner acceptable to Owner or in a warehouse
acceptable to Owner, (ii) verify that the Builder's Risk
Insurance Policy relating to the Improvements specifically
covers any materials so pre-purchased and (iii) execute any
and all documents Owner shall reasonably require to transfer
title to said pre-purchased materials to Owner.
(b) Contractor guarantees that if for any reason, by
virtue of Contractor's participation in the erection or
construction of said Improvements or that of any
subcontractor performing work or supplying materials covered
by the Construction Contract, a lien or liens is or are
filed against the Property or the Improvements, for
materials or labor, Contractor will immediately obtain a
settlement of such lien or liens and obtain and furnish
Developer and Owner a release thereof, or if it cannot
obtain such a release, within 30 days of the date of filing
of such lien, Contractor agrees to indemnify Developer and
Owner for any and all reasonable costs Developer or Owner
may incur in removing said lien or liens and provide
Developer and Owner with such security or assurances that
Developer and Owner may reasonably require.
(c) In the event of default by Developer under any
term, covenant or provision of the Construction Contract,
Contractor will give the Owner 30 days' prior written notice
of such default prior to Contractor's exercise of any of its
rights or remedies under such Construction Contract or at
law, and Owner shall have the right, but not the obligation,
during said 30-day period to cure such default. Only in the
event Owner fails to cure or cause to be cured any such
default during said 30-day period shall Contractor have the
right to terminate the Construction Contract. Contractor
will deliver to Owner a copy of all notices of termination
given by Contractor to Developer under the Construction
Contract simultaneously with the delivery of any such notice
of termination to Developer.
(d) In the event of default by Developer under the
Development Agreement or any of the documents relating to
the Advances, Contractor shall, at the request of Owner, its
successors or assigns, continue performance on Owner's, its
successors or assigns, behalf in accordance with the terms
of the Construction Contract, provided that Contractor shall
be paid all sums due or to become due it in accordance with
said Construction Contract for all work, labor and materials
rendered.
(e) In the event Contractor determines that any ▇▇▇▇
in the amount of $25,000.00 or more for labor or materials
performed or furnished by others in connection with the
construction and equipping of the Improvements should not be
paid, Contractor shall notify Owner in writing of its
determination prior to the time Contractor exercises any
right under the Construction Contract not to pay said ▇▇▇▇.
(f) Contractor will not amend or modify the
Construction Contract or enter into any Change Orders
without the prior written consent of Owner, which approval
shall not be unreasonably withheld or delayed, if such
amendment, modification or Change Order will result in the
occurrence of any one of the following:
(i) an increase or decrease in the contract price
under the Construction Contract by more than
$50,000.00, when added to all prior Change Orders; or
(ii) the change materially affects the structural
aspects of the Improvements.
In the event Contractor fails to secure such approval,
the Construction Contract shall, for the purposes of
Contractor's obligation to continue performance thereunder
for Owner's benefit, be deemed not to have been modified by
such Change Order or otherwise.
(g) In the event any of the Advances are disbursed by
Owner directly to Contractor, Contractor will receive any
such Advances and will hold the same as a trust fund for the
purposes of paying the costs of labor, equipment and
supplies used in constructing the Improvements on the
Property and Contractor will apply the same first to payment
of such costs then due and payable before using any part
thereof for any other purpose.
(h) The All Risk Builder's Risk Insurance required
under the Construction contract and any other casualty
insurance maintained on the Improvements (all of the
foregoing being hereinafter referred to as the "Casualty
Insurance") shall also name Owner as a loss payee. In case
of any damage to or loss of any of the Improvements by fire,
storm or other casualty, any Casualty Insurance proceeds
arising from said damage or loss will be disbursed to Owner.
Owner shall hold all such insurance proceeds or disburse the
same in accordance with the terms and conditions of the
Development Agreement.
(i) Upon Owner's request, Contractor shall furnish to
the Owner a current list of all persons or firms with whom
Contractor has entered into sub-contracts or other
agreements relating to the performance of work or furnishing
of materials in connection with the Improvements, together
with a statement as to the status of each of such sub-
contracts or agreements and the respective amounts, if any,
owed by Contractor thereunder.
(j) Contractor further agrees to (i) execute such
affidavits and certificates as Owner shall reasonably
require to further evidence the agreements herein contained,
(ii) on request from Owner, furnish Owner with copies of
such information as the Developer is entitled to receive
under the Construction Contract and (iii) cooperate with
Owner's representative in its inspection of the progress of
construction of the Improvements.
(k) The relationship of Owner to Developer is one of a
creditor to a debtor and Owner is not a joint venturer or
partner of Developer.
(l) Contractor further agrees that nothing herein
shall impose upon Owner any obligation for payment or
performance in favor of Contractor unless Owner notifies
Contractor in writing after a default by Developer under the
Documents that (i) Owner has elected to assert the
Developer's rights under the Construction Contract and (ii)
Owner agrees to pay Contractor the sums due Contractor under
the terms of the Construction Contract.
(m) Contractor has executed this Agreement for the
purpose of inducing Owner to advance sums to Developer under
the above described Development Agreement and with full
knowledge and intent that Owner shall rely upon the
representations, warranties and agreements herein contained
when making advances to Developer, and that but for this
instrument and the representations, warranties and
agreements herein contained, Owner would not take such
actions.
3. DEVELOPER'S CONSENT.
-------------------
Developer has joined herein to evidence its consent to all the
agreements of Contractor contained in this Agreement.
EXECUTED this the ______ day of _______________________,
1996.
CONTRACTOR:
ACME CONSTRUCTION CO., INC.
By: __________________________
Name: ________________________
Title: _______________________
DEVELOPER:
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By____________________________
Its___________________________
ATTEST:
___________________________ (Corporate seal)
ACKNOWLEDGEMENT
STATE OF ___________ )
)
COUNTY OF _________ )
The foregoing instrument was acknowledged before me this
_____ day of _______________ , 1996, by _________________________
_____, as _______________________________ of Acme Construction
Co., Inc., on behalf of the corporation.
______________________________
Notary Public in and for
The State of _________________
Name: ________________________
My Commission Expires: _______
STATE OF __________ )
)
COUNTY OF__________ )
The foregoing instrument was acknowledged before me this
_____ day of _______________, 1996, by ________________, as _____
__________ of GRAND COURT LIFESTYLES, INC., on behalf of the
corporation.
______________________________
Notary Public in and for
The State of _________________
Name: ________________________
My Commission Expires: _______
EXHIBIT A
LEGAL DESCRIPION
EXHIBIT B
CONSTRUCTION CONTRACT
EXHIBIT I
ENVIRONMENTAL INDEMNITY AGREEMENT
This Environmental Indemnity Agreement is made and entered
into effective for all purposes as of ________________________
___, 1996, by GRAND COURT LIFESTYLES, INC., a Delaware
corporation ("Indemnitor"), to and for the benefit of CAPSTONE
CAPITAL CORPORATION a Maryland corporation ("Owner").
RECITALS
--------
A. On the date of this Agreement the Owner has executed a
Development Agreement with Indemnitor (the "Development
Agreement") pursuant to the terms of which Indemnitor has agreed
to construct certain improvements (the "Improvements") and Owner
has agreed to fund certain costs of constructing such
Improvements with respect to certain real property located in
________________ County, ________________, described on Exhibit A
---------
attached hereto (the "Property").
B. The Owner has required the execution and delivery of
this Agreement as a condition precedent to the execution of the
Development Agreement. The Owner would not be willing to enter
into the Development Agreement in the absence of the execution
and delivery by Indemnitor of this Agreement.
AGREEMENT
---------
NOW, THEREFORE,Indemnitor, as an inducement to the Owner to
enter into the Development Agreement, hereby covenants and agrees
to and for the benefit of the Owner as follows:
1. HAZARDOUS MATERIAL.
------------------
As used in this Agreement, the term "Hazardous Materials" shall
mean any flammable explosives, radioactive materials, hazardous
wastes, hazardous materials, hazardous or toxic substances, or
related materials as defined in the Comprehensive Environmental
Response, compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9.601 et. seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Section 18.01 et.
sec.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. Section 69.01 et. sec.), the Atomic Energy Act, and in
the regulations adopted and publications promulgated pursuant
thereto, and all friable asbestos, petroleum derivatives,
polychlorinated biphenyls, and materials defined as hazardous
materials under any federal, state or local laws, ordinances,
codes, rules, orders, regulations or policies governing the use
storage, treatment, transportation, manufacture, refinement,
handling, production or disposal thereof.
2. REPRESENTATION.
--------------
Indemnitor warrants and represents to Owner that based on the
Phase I environmental report dated ________________ ___, 1996,
prepared by ________________________, it has no knowledge of (a)
the presence of any Hazardous Materials on the Property; or (b)
any material spills, releases, discharges or disposal of
Hazardous Materials that have occurred or are presently occurring
on the Property as a result of any construction on or operation
and use of the Property. In connection with the operation and
use of the Property, Indemnitor warrants and represents that, as
of the date of this Agreement, it has no knowledge, based on such
environmental report, of any failure to comply in all material
respects with all applicable law, state and federal environmental
laws, regulations, ordinances and administrative and judicial
orders relating to the generation, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous
Materials. Indemnitor represents and warrants to Owner that
Indemnitor by obtaining such environmental report has
investigated the present and past uses of the Property and have
made inquiry of the appropriate governmental agencies and offices
having jurisdiction over the Property and the laws regulating the
environment, as to whether the Property or any property in the
immediate vicinity of the Property is or has been the site of
storage of or contamination by any Hazardous Materials.
3. COVENANT.
--------
Indemnitor covenants and agrees not to cause or permit the
presence, use, generation, release, discharge, storage, disposal
or transportation of any Hazardous Materials on, under, in,
about, to or from the Property.
4. INDEMNIFICATION.
---------------
Indemnitor shall exonerate, indemnify, pay and protect, defend
(with counsel approved by the Owner) and save the Owner, and the
directors, trustees, beneficiaries, officers, shareholders,
employees and agents of the Owner (collectively, the "Related
Parties"), harmless from and against any claims (including,
without limitation, third party claims for personal injury or
real personal property damage), actions, administrative
proceedings (including informal proceedings), judgments, damages,
punitive damages, penalties, fines, costs, taxes, assessments,
liabilities (including, without limitation, sums paid in
settlements of claims, which settlements have been approved in
writing by Indemnitor), interest or losses, including reasonable
attorney's fees and expenses (including, without limitation, any
such reasonable fees and expenses incurred in enforcing this
Agreement or collecting any sums due hereunder), consultant fees,
and expert fees, together with all other costs and expenses of
any kind or nature (collectively, the "Costs") that arise
directly or indirectly in connection with the presence, suspected
presence, release or suspected release of any Hazardous Materials
in or into the air, soil, ground water, surface water or
improvements at, on, about, under or within the Property, or any
portion thereof, or elsewhere in connection with (i) the
activities of Indemnitor, its employees, agents or contractors,
(ii) the transportation of Hazardous Materials to and from the
Property, or (iii) the construction and development of the
Improvements (all of the foregoing collectively the "Indemnified
Claims"). The indemnification provided in this paragraph shall
specifically apply to and include claims or actions brought by or
on behalf of tenants, patients or employees of Indemnitor;
Indemnitor hereby expressly waives (with respect to any claims of
the Owner arising under this Agreement) any immunity to which
Indemnitor may otherwise be entitled under any industrial or
worker's compensation laws. In the event the Owner or any of its
Related Parties shall suffer or incur any such costs, Indemnitor
shall pay to the Owner or such Related Party the total of all
such Costs suffered or incurred by the Owner or such Related
Party within ten days after demand therefor. Without limiting
the generality of the foregoing, the indemnification provided by
this paragraph 4 shall specifically cover costs, including,
without limitation, capital, operating and maintenance costs,
incurred in connection with any investigation or monitoring of
site conditions, any clean-up, containment, remedial, removal or
restoration work required or performed by any federal, state or
local governmental agency or political subdivision ("Governmental
Agency") or performed by any non-governmental entity or person as
required by any Governmental Agency because of the presence,
suspected presence, release or suspected release of any Hazardous
Materials in or into the air, soil, groundwater, surface water or
improvements at, on, under or within the Property (or any portion
thereof), or elsewhere in connection with the transportation of
Hazardous Materials to or from the Property, and any claims of
third parties for loss or damage due to such Hazardous Materials
or the construction and development of the Improvements.
Notwithstanding anything contained herein to the contrary,
Indemnitor shall not be liable for the negligence or willful
misconduct of Owner.
In case any Indemnified Claim is brought or threatened by
any third party against the Owner or any of its Related Persons
(collectively an "Indemnitee") hereunder such Indemnitee shall
promptly notify the Indemnitor in writing and the Indemnitor
shall assume the defense thereof, including the employment of
counsel approved in writing by the Indemnitee, which approval
shall not be unreasonably withheld. In addition, in case any
Indemnitee shall become aware of any facts which might result in
any such Indemnified Claim, such Indemnitee shall promptly notify
the Indemnitor thereof in writing, who shall have the right to
take such action as it may deem appropriate to resolve such
matter. An Indemnitee shall have the right to employ separate
counsel in any such third party action, but the fees and expenses
of such counsel shall be at the expense of such Indemnitee unless
the employment of such counsel has been separately authorized in
writing by the Indemnitor or the Indemnitor has failed to employ
counsel. An Indemnitee shall cooperate fully in the defense of
any such third party claim, demand and cause of action and shall
engage in no conduct prejudicial to the defense thereof. The
Indemnitor shall not be liable for any settlement of any such
third party claim, demand or cause of action effected without its
consent, but if settled with the consent of the Indemnitor or if
there shall be a final judgment for the plaintiff in any such
third party action, the Indemnitor shall indemnify and hold
harmless the Indemnitee from and against any loss or liability by
reason of such settlement or judgment.
5. REMEDIAL WORK.
-------------
In the event any investigation or monitoring of site conditions
or any clean-up, containment, restoration, removal or other
remedial work ("Remedial Work") is required (a) under any
applicable federal, state or local law or regulation or (b) by
any judicial, arbitral, or administrative order or (c) in order
to comply with any agreements affecting the Property or (d) to
maintain the Property in a standard of environmental condition
which prevents the release of any Hazardous Materials to adjacent
property and otherwise is consistent with the prudent ownership
of property of the character of the Property or (e) as a result
of the existence of Hazardous Materials on the Property during or
prior to Indemnitor's final completion of the Improvements and
performance of all obligations of Indemnitor under the
Development Agreement or (f) as a result of any activities on the
Property during or prior to Indemnitor's final completion of the
Improvements and performance of all obligations of Indemnitor
under the Development Agreement which directly or indirectly
result in the Property becoming contaminated with Hazardous
Materials, Indemnitor shall perform or cause to be performed such
Remedial Work; provided that Indemnitor may withhold commencement
of such Remedial Work pending resolution of any good faith
contest regarding the application, interpretation or validity of
any law, regulation, order or agreement, subject to the
requirements of Paragraph 6 set forth below. All Remedial Work
shall be conducted (i) in a diligent and timely fashion by a
licensed environmental engineer, (ii) pursuant to a detailed
written plan for the Remedial Work approved by any Governmental
Agency with a legal or contractual right to grant such approval,
(iii) with such insurance coverage pertaining to liabilities
arising out of the Remedial Work as is then customarily
maintained with respect to such activities, and (iv) only
following receipt of all required permits, licenses or approvals.
In addition, Indemnitor shall submit to the Owner promptly upon
receipt or preparation, copies of any and all reports, studies,
analysis, correspondence, governmental comments or approvals,
proposed removal or other Remedial Work contracts and similar
information prepared or received by Indemnitor in connection with
any Remedial Work or Hazardous Materials relating to the
Property. All costs and expenses of such Remedial Work shall be
paid by Indemnitor, including, without limitation, the charges of
the Remedial Work contractors and the consulting environmental
engineer, any taxes or penalties assessed in connection with the
Remedial Work and the Owner's reasonable fees and costs incurred
in connection with monitoring or reviewing of such Remedial Work.
In the event Indemnitor should fail to commence or cause to be
commenced such Remedial Work, in a timely fashion, or fail
diligently to prosecute to completion, such Remedial Work, the
Owner (following ten (10) days written notice to Indemnitor) may,
but shall not be required to, cause such Remedial Work to be
performed, and all costs and expenses thereof, or incurred in
connection therewith shall be Costs within the meaning of
paragraph 4 above. All such costs shall be due and payable by
Indemnitor within ten days after the Owner's demand therefor.
6. PERMITTED CONTESTS.
------------------
Notwithstanding any provision of this Agreement to the contrary,
Indemnitor may contest by appropriate action any Remedial Work
requirement imposed by any Governmental Agency, and Owner shall
have no right to perform such required Remedial Work on
Indemnitor's behalf during the pendency of such contest, provided
that (a) no "Event of Default" has occurred and is continuing
under the Development Agreement or under any document or
instrument executed in connection therewith (the "Documents") (b)
Indemnitor has given the Owner written notice that Indemnitor is
contesting or shall contest and Indemnitor does in fact contest
the application, interpretation or validity of the law,
regulation, order or agreement pertaining to the Remedial Work by
appropriate legal or administrative proceedings conducted in good
faith and with due diligence and dispatch (c) such contest shall
not subject the Owner or any of the Owner's Related Parties or
any assignee of all or any portion of the Owner's interest in the
Property to civil or criminal liability and does not jeopardize
any such party's interest in the Property and (d) Indemnitor
shall give such security or assurances as may be reasonably
required by the Owner to ensure ultimate compliance with all
legal or contractual requirements pertaining to the Remedial Work
(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.
7. REPORTS AND CLAIMS.
------------------
Indemnitor shall deliver to the Owner copies of any reports,
analyses, correspondence, notices, licenses, approvals, orders or
other written materials relating to the environmental condition
of the Property promptly upon receipt, completion or delivery
thereof. Indemnitor shall give notice to the Owner of any claim,
action, administrative proceeding (including, without limitation,
informal proceedings) or other demand by any governmental agency
or other third party involving Costs or Remedial Action at the
time such claim or other demand first becomes known to
Indemnitor. Receipt of any such notice shall not be deemed to
create any obligation on the Owner to defend or otherwise respond
to any claim or demand. All notices, approvals, consents,
requests, and demands upon the respective parties hereto shall be
in writing and shall be delivered by telephonic facsimile,
overnight air courier, personal delivery or registered or
certified U.S. Mail with return receipt requested, postage paid,
to the appropriate party at its address as follows:
To the Owner:
CAPSTONE CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
To Indemnitor:
GRAND COURT LIFESTYLES, INC.
%GRAND COURT LIFESTYLES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for notice may be changed from time to time by
written notice to all other parties. Any communication given by
mail will be effective (i) upon the earlier of (a) three business
days following deposit in a post office or other official
depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return
receipt; (ii) if given by telephone facsimile, when sent; and
(iii) if given by personal delivery or by overnight air courier,
when delivered to the appropriate address set forth.
8. DEFENSE OF CLAIMS.
-----------------
If for any reason, any claim, action, notice, administrative
proceeding (including, without limitation, informal proceedings)
or other demand is made by any Governmental Agency or other third
party which implicate Costs or Remedial Work, Indemnitor shall
cooperate with the Owner in any defense or other appropriate
response to any such claim or demand. Indemnitor's duty to
cooperate and right to participate in the defense or response to
any such claim or demand shall not be deemed to limit or
otherwise modify Indemnitor's obligations under this Agreement.
The Owner shall give notice to Indemnitor of any claim or demand
governed by this paragraph 8 at the time such claim or other
demand first becomes known to the Owner.
9. SUBROGATION OF INDEMNITY RIGHTS.
-------------------------------
If Indemnitor fails to fully perform its obligations under
paragraphs 4 and 5 above, the Owner shall be subrogated to any
rights or claims Indemnitor may have against any present, future
or former owners, tenants or other occupants or users of the
Property, any portion thereof, or any adjacent or proximate
properties, relating to the recovery of Costs or the performance
of Remedial Work.
10. ASSIGNMENT BY OWNER.
-------------------
No consent by Indemnitor shall be required for any assignment or
reassignment of the rights of the Owner under this Agreement.
11. MERGER, CONSOLIDATION OR SALE OF ASSETS.
---------------------------------------
In the event Indemnitor is dissolved, liquidated or terminated or
all or substantially all the assets of Indemnitor are sold or
otherwise transferred to one or more persons or other entities,
the surviving entity or transferee of assets, as the case may be,
shall deliver to the Owner an acknowledged instrument in
recordable form assuming all obligations, covenants and
responsibilities of Indemnitor under this Agreement.
12. INDEPENDENT OBLIGATION'S SURVIVAL.
---------------------------------
The obligations of Indemnitor under this Agreement shall survive
the completion of the obligations of Indemnitor under the
Development Agreement. The obligations of Indemnitor under this
Agreement are separate and distinct from the obligations of
Indemnitor under the Documents. This Agreement may be enforced
by the Owner without regard to or affecting any rights and
remedies the Owner may have against Indemnitor under the
Documents.
13. DEFAULT INTEREST.
----------------
In addition to all other rights and remedies of the Owner against
Indemnitor as provided herein, or under applicable law,
Indemnitor shall pay to the Owner, immediately upon demand
therefor, Default Interest (as defined below) on any Costs and
other payments required to be paid by Indemnitor to the Owner
under this Agreement which are not paid within ten days after
demand therefor. Default Interest shall be paid by Indemnitor
from the date such payment becomes delinquent through and
including the date of payment of such delinquent sums. "Default
Interest" shall accrue at a per annum interest rate equal to the
greater of (i) the Base Rate (as defined in the Development
Agreement) or (ii) a rate which is four points above the Prime
Rate (as defined in the Development Agreement).
14. MISCELLANEOUS.
-------------
If there shall be more that one Indemnitor hereunder, or pursuant
to any other indemnification of Owner relating to Hazardous
Materials arising out of or in connection with the Development
Agreement or the Documents ("Other Indemnitor"), each Indemnitor
and Other Indemnitor agree that (a) the obligations of the
Indemnitor hereunder, and each Other Indemnitor, are joint and
several, (b) a release of any one or more Indemnitors or Other
Indemnitors or any limitation of this Agreement in favor of or
for the benefit of one or more Indemnitors or Other Indemnitors
shall not in any way be deemed a release of or limitation in
favor of or for the benefit of any Indemnitor or Other Indemnitor
not so released, and (c) a separate action hereunder may be
brought and prosecuted against any or all Indemnitors or Other
Indemnitors. If any term of this Agreement or any application
thereof shall be invalid, illegal or unenforceable, the remainder
of this Agreement and any other application of such term shall
not be affected thereby. No delay or omission in exercising any
right hereunder shall operate as a waiver of such right or any
other right. this Agreement shall be binding upon, inure to the
benefit of and be enforceable by Indemnitor and the Owner, and
their respective successors and assigns, including (without
limitation) any assignee or purchaser of all or any portion of
the Owner's interest in (i) the Documents, or (ii) the Property.
This Agreement shall be governed and construed in accordance with
the laws of the State of Alabama.
IN WITNESS WHEREOF, Indemnitor has caused this Agreement to
be executed as of the day and year first written above.
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By____________________________
Its___________________________
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT J
ASSIGNMENT OF CONTRACTS
THIS ASSIGNMENT OF CONTRACTS ("Assignment"), dated as of
________________________ ___, 1996, is made by GRAND COURT
LIFESTYLES, INC., a Delaware corporation ("Developer"), in favor
of CAPSTONE CAPITAL CORPORATION, a Maryland corporation
("Owner"), in connection with and pursuant to the terms of that
certain Development Agreement of even date herewith between
Developer and Owner. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth for
them in the Development Agreement.
1. Assignment.
----------
Developer hereby assigns and transfers, to the extent assignable
and transferrable, to Owner all of its right, title and interest
in and to:
(a) all purchase, construction, development, easement,
property rights, service, supply, management, maintenance,
landscaping, gardening, parking, engineering, consulting and
architectural contracts and agreements to which Developer is
a party, or under which Developer has an interest, and all
other similar contracts and agreements to which Developer is
a party, or under which Developer has an interest, relating
to the Project and the Property (excluding specifically the
Development Agreement of even date herewith between
Developer and Owner) which includes that certain real
property described in Exhibit A attached hereto and
---------
incorporated herein by this reference, whomsoever the
parties are to such contracts and agreements and whether
such contracts and agreements are currently in existence or
are subsequently entered into, including, without
limitation, the contracts described in Addendum 1 attached
----------
hereto and incorporated herein by this reference, if any,
together with all amendments, modifications and supplements
to any of the contracts and agreements described in this
subsection (a) and any collateral for any third party's
performance under any of the contracts and agreements
described in this subsection (a);
(b) all plans, specifications, surveys, drawings, and
other technical descriptions of whatever nature now or
hereafter existing which relate to the development,
construction, reconstruction, restoration, decoration,
repair or replacement of the Project, including without
limitation the Plans and specifications for any on-site and
off-site improvements to be constructed as part of the
Project, including without limitation those prepared by
Architect and Associates, Ltd. and all amendments,
modifications and supplements to any of the instruments
described in this subsection (b) (collectively, the
"Plans"); and
(c) all construction bonds, completion bonds or other
surety for the Project, and all amendments, modifications
and supplements to any of the instruments described in this
subsection (c).
All of the writings described in subsections (a), (b), and
(c) above are sometimes herein referred to collectively as
the "Contracts."
2. Representations and Warranties.
------------------------------
Developer represents and warrants that (a) it is the true owner
of the interest under the Contracts which it assigns and
transfers herein, (b) it has not assigned or granted a security
interest in any of the Contracts to any Person other than Owner,
(c) its interest in each of the Contracts is not subject to any
claims, set offs, encumbrances or deductions, (d) the Contracts
have not been amended except as disclosed to Owner, (e) it is not
in default under the terms of any Contract, (f) all covenants,
conditions and agreements have been performed as required by the
Contracts by all parties thereto, except those which are not due
to be performed until after the date of this Agreement, and (g)
Addendum 1 sets forth a true, correct and complete list of all
----------
material Contracts which are in effect as of the date hereof.
3. No Assumption By Owner and Developer's Covenants. Neither
------------------------------------------------
this Assignment nor any action or actions on the part of Owner
shall constitute an assumption by Owner of any obligations of
Developer under the Contracts, and Developer shall continue to be
liable for all obligations thereunder. Developer hereby agrees
to punctually perform any and all obligations it may have under
the Contracts, to take such steps as may be necessary or
appropriate to secure performance by all other parties of their
obligations under the Contracts and not to amend, or terminate
with or without cause, any of the Contracts, without the express
prior written consent of Owner. Owner may, at its option, but
shall not be obligated to, perform or discharge any obligation of
Developer under any of the Contracts, at Developer's expense, in
the event that Developer fails to do so. Developer agrees to
indemnify and hold the Owner harmless against and from any loss,
cost liability or expense (including without limitation all
attorney's and accountants' fees and expenses, court costs and
investigation expense) resulting from any failure of Developer
to perform its obligations under the Contracts.
4. Use of Plans. Owner may use the Plans for any purpose
------------
relating to the Project, including, without limitation,
inspections of construction and the completion of the Project and
for no other purpose. For the purpose of completing,
maintaining, restoring and otherwise dealing with the Project
subject to the same sole purpose limitation, Owner may reassign
its right, title and interest in the Plans to any persons or
entities succeeding to the Owner's interest in the Project in
Owner's sole discretion without any requirements for the consent
of Developer, and any such reassignment shall be valid and
binding upon Developer as fully as if Developer had expressly
approved the same.
5. No Approval of Plans. Owner's acceptance of this Assignment
--------------------
shall not constitute approval of the Plans by Owner. Owner has
no liability or obligation whatsoever in connection with the
Plans and no responsibility for the adequacy thereof or for the
construction and completion of the Project. Owner has the right,
but not the duty to inspect the Improvements, and if Owner should
inspect the Improvements, Owner shall have no liability or
obligation to Developer arising out of such inspection. No such
inspection nor any failure by Owner to make objection after any
such inspection shall constitute a representation by Owner that
the Improvements are in accordance with the Plans or constitute a
waiver of the Owner's right thereafter to insist that the
Improvements be constructed in strict accordance with the Plans.
6. Benefits Conditionally Retained by Developer. Owner hereby
--------------------------------------------
grants Developer the right to continue to receive the benefits
of, and exercise the rights under, the Contracts unless and until
an Event of Default occurs, in which event such rights may be
revoked at any time during the continuance of any Default at the
option of Owner.
7. Action By Owner Following Default. Owner shall have the
---------------------------------
right (but shall have no obligation) at any time following the
occurrence of an Event of Default (but shall have no obligation)
remaining uncured without notice and without taking possession of
the Property to take in its name or in the name or Developer or
otherwise, such action as Owner may at any time or from time to
time determine to be necessary to cure any default under the
Contracts or to protect or exercise the rights of Developer or
Owner thereunder, and may otherwise exercise any other rights or
remedies Owner has under the Development Agreement. Owner shall
incur no liability if any action taken by it or on its behalf
pursuant to this Assignment shall prove to be in whole or in part
inadequate or invalid, unless due to Owner's gross negligence or
willful misconduct; and Developer agrees to indemnify and hold
Owner free and harmless from and against any loss, costs,
liability or expense (including but not limited to reasonable
attorney's and accountants' fees and expenses, court costs and
investigation expenses) in connection with its actions hereunder,
unless due to Owner's negligence or willful misconduct.
8. Power of Attorney. Developer hereby irrevocably constitutes
-----------------
and appoints Owner its true and lawful agent and attorney-in-
fact, with, following the occurrence of an Event of Default under
the Documents, full power of substitution, to demand, receive and
enforce all rights of Developer under the Contracts, to modify,
supplement and terminate the Contracts, to give appropriate
releases, receipts for or on behalf of Developer in connection
with the Contracts, in the name, place and stead of Developer or
in Owner's name,with the same force and effect as Developer could
do if this Assignment had not been made. Developer authorizes
any third party to exclusively rely on the certificate of an
officer of the Owner for the establishment of such an Event of
Default and hereby waives and releases any claim Developer may
have against such third party for such reliance. Developer
hereby agrees to deliver to Owner, upon Owner's written demand,
originals of all of the Contracts and such other instruments and
documents as Owner may reasonably require in order to permit
Owner's succession to the right, title and interest of Developer
in and to the Contracts as provided herein. It is hereby
recognized that the power of attorney herein granted is coupled
with an interest and is irrevocable.
9. Binding Effect. This Assignment shall be binding upon
--------------
Developer and Developer's heirs, executors, administrators, legal
representatives, successors and assigns, and shall inure to the
benefit of the Owner and its successors and assigns. The Owner
may reassign its right, title and interest in and to the
Contracts in whole or in part, to any person or entities
succeeding to Owner's interest in the Property, in the Owner's
sole discretion without any requirement for the Developer's
consent, and any such reassignment shall be valid and binding
upon Developer as fully as if Developer has expressly approved
the same.
10. Governing Law. This Assignment shall be governed by and
-------------
construed under the laws of the state where the Project is
located, except to the extent preempted by federal law, in which
case federal law shall control.
DEVELOPER:
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By____________________________
Its___________________________
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT C
FORM OF
LEASE AGREEMENT
LEASE AGREEMENT
CAPSTONE CAPITAL CORPORATION
a Maryland Corporation
("LESSOR")
AND
GRAND COURT LIFESTYLES, INC.
a Delaware Corporation
("LESSEE")
____________________ ___, 1996
FOR THE LEASE OF AN ASSISTED AND
INDEPENDENT LIVING FACILITY LOCATED AT
________________________________
________________________________
TABLE OF CONTENTS
ARTICLE I LEASED PROPERTY; TERM . . . . . . . . . . . . . 1
---------------------
ARTICLE II RENT . . . . . . . . . . . . . . . . . . . . . . 2
----
2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT . . 2
2.2 CALCULATION OF INCREASES TO MINIMUM RENT . . . . 3
2.3 ADDITIONAL CHARGES. . . . . . . . . . . . . . . 3
2.4 NET LEASE . . . . . . . . . . . . . . . . . . . 4
ARTICLE III IMPOSITIONS . . . . . . . . . . . . . . . . . . 4
-----------
3.1 PAYMENT OF IMPOSITIONS . . . . . . . . . . . . . 4
3.2 PRORATION OF IMPOSITIONS . . . . . . . . . . . . 5
3.3 UTILITY CHARGES . . . . . . . . . . . . . . . . 5
3.4 INSURANCE PREMIUMS . . . . . . . . . . . . . . . 5
ARTICLE IV NO TERMINATION . . . . . . . . . . . . . . . . . 5
--------------
ARTICLE V OWNERSHIP OF LEASED PROPERTY . . . . . . . . . 6
----------------------------
5.1 OWNERSHIP OF THE PROPERTY . . . . . . . . . . . 6
5.2 PERSONAL PROPERTY . . . . . . . . . . . . . . . 6
ARTICLE VI CONDITION AND USE OF LEASED PROPERTY . . . . . . 6
------------------------------------
6.1 CONDITION OF THE LEASED PROPERTY . . . . . . . . 6
6.2 USE OF THE LEASED PROPERTY . . . . . . . . . . . 7
6.3 MANAGEMENT OF FACILITY . . . . . . . . . . . . . 7
6.4 LESSOR TO GRANT EASEMENTS . . . . . . . . . . . 8
ARTICLE VII LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS . . 8
-------------------------------------------
7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS 8
7.2 LEGAL REQUIREMENT COVENANTS . . . . . . . . . . 8
ARTICLE VIII REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS . 9
--------------------------------------------
8.1 MAINTENANCE AND REPAIR . . . . . . . . . . . . . 9
8.2 ENCROACHMENTS; RESTRICTIONS . . . . . . . . . . 10
8.3 ANNUAL INSPECTIONS . . . . . . . . . . . . . . . 10
ARTICLE IX CAPITAL ADDITIONS . . . . . . . . . . . . . . . 11
-----------------
9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED
PROPERTY . . . . . . . . . . . . . . . . . . . . 11
9.2 CAPITAL ADDITIONS FINANCED BY LESSEE . . . . . . 11
9.3 CAPITAL ADDITIONS FINANCED BY LESSOR . . . . . . 12
9.4 NON-CAPITAL ADDITIONS . . . . . . . . . . . . . 14
9.5 SALVAGE . . . . . . . . . . . . . . . . . . . . 14
ARTICLE X LIENS . . . . . . . . . . . . . . . . . . . . . 14
-----
ARTICLE XI PERMITTED CONTESTS . . . . . . . . . . . . . . . 15
------------------
ARTICLE XII INSURANCE . . . . . . . . . . . . . . . . . . . 15
---------
12.1 GENERAL INSURANCE REQUIREMENTS . . . . . . . . . 15
12.2 REPLACEMENT COST . . . . . . . . . . . . . . . . 17
12.3 ADDITIONAL INSURANCE . . . . . . . . . . . . . . 17
12.4 WAIVER OF SUBROGATION . . . . . . . . . . . . . 17
12.5 FORM OF INSURANCE . . . . . . . . . . . . . . . 17
12.6 CHANGE IN LIMITS . . . . . . . . . . . . . . . . 18
12.7 BLANKET POLICY . . . . . . . . . . . . . . . . . 18
12.8 NO SEPARATE INSURANCE . . . . . . . . . . . . . 18
12.9 INSURANCE FOR CONTRACTORS . . . . . . . . . . . 18
ARTICLE XIII FIRE AND CASUALTY . . . . . . . . . . . . . . 19
-----------------
13.1 INSURANCE PROCEEDS . . . . . . . . . . . . . . . 19
13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION
COVERED BY INSURANCE . . . . . . . . . . . . . . 19
13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION
NOT COVERED BY INSURANCE . . . . . . . . . . . . 20
13.4 LESSEE'S PROPERTY . . . . . . . . . . . . . . . 20
13.5 RESTORATION OF LESSEE'S PROPERTY . . . . . . . . 20
13.6 NO ABATEMENT OF THE RENT . . . . . . . . . . . . 20
13.7 DAMAGE NEAR END OF TERM . . . . . . . . . . . . 20
13.8 PURCHASE . . . . . . . . . . . . . . . . . . . . 21
13.9 WAIVER . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XIV CONDEMNATION . . . . . . . . . . . . . . . . . . 21
------------
14.1 PARTIES' RIGHTS AND OBLIGATIONS . . . . . . . . 21
14.2 TOTAL TAKING . . . . . . . . . . . . . . . . . . 21
14.3 PARTIAL TAKING . . . . . . . . . . . . . . . . . 21
14.4 RESTORATION . . . . . . . . . . . . . . . . . . 22
14.5 AWARD DISTRIBUTION . . . . . . . . . . . . . . . 22
14.6 TEMPORARY TAKING . . . . . . . . . . . . . . . . 22
14.7 PURCHASE OR SUBSTITUTION . . . . . . . . . . . . 22
ARTICLE XV DEFAULT . . . . . . . . . . . . . . . . . . . . 22
-------
15.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . 22
15.2 REMEDIES . . . . . . . . . . . . . . . . . . . . 24
15.4 PAYMENT TO REDUCE MINIMUM RENT . . . . . . . . . 26
15.5 WAIVER . . . . . . . . . . . . . . . . . . . . . 26
15.6 APPLICATION OF FUNDS . . . . . . . . . . . . . . 26
15.7 NOTICES BY LESSOR . . . . . . . . . . . . . . . 26
ARTICLE XVI LESSOR'S RIGHT TO CURE . . . . . . . . . . . . . 26
----------------------
ARTICLE XVII PURCHASE OF THE LEASED PROPERTY . . . . . . . 26
-------------------------------
ARTICLE XVIII HOLDING OVER . . . . . . . . . . . . . . . . . 27
------------
ARTICLE XIX OPTION TO PURCHASE; ABANDONMENT . . . . . . . . 28
-------------------------------
19.1 OPTION TO PURCHASE . . . . . . . . . . . . . . . 28
19.2 DISCONTINUANCE OF OPERATIONS ON THE
LEASED PROPERTY . . . . . . . . . . . . . . . 28
19.3 CONVEYANCE OF LEASED PROPERTY . . . . . . . . . 28
ARTICLE XX RESERVED . . . . . . . . . . . . . . . . . . . . 28
--------
ARTICLE XXI RISK OF LOSS . . . . . . . . . . . . . . . . . . 28
------------
ARTICLE XXII INDEMNIFICATION . . . . . . . . . . . . . . . 29
---------------
ARTICLE XXIII SUBLETTING AND ASSIGNMENT . . . . . . . . . . 30
-------------------------
23.1 SUBLETTING AND ASSIGNMENT . . . . . . . . . . . 30
23.2 NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT . 30
ARTICLE XXIV OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS 31
-----------------------------------------------
24.1 ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . 31
24.2 FINANCIAL STATEMENTS AND CERTIFICATES . . . . . 31
ARTICLE XXV INSPECTION . . . . . . . . . . . . . . . . . . . 32
----------
ARTICLE XXVI QUIET ENJOYMENT . . . . . . . . . . . . . . . 32
---------------
ARTICLE XXVII NOTICES . . . . . . . . . . . . . . . . . . . 32
-------
ARTICLE XXVIII APPRAISAL . . . . . . . . . . . . . . . . . . 34
---------
ARTICLE XXIX PURCHASE . . . . . . . . . . . . . . . . . . . 35
--------
29.1 FIRST REFUSAL TO PURCHASE. . . . . . . . . . . . 35
29.2 NEGATIVE PLEDGE. . . . . . . . . . . . . . . . . 35
ARTICLE XXX DEFAULT BY LESSOR . . . . . . . . . . . . . . . 35
-----------------
30.1 DEFAULT BY LESSOR . . . . . . . . . . . . . . . 35
30.2 LESSEE'S RIGHT TO CURE . . . . . . . . . . . . . 36
ARTICLE XXXI RESERVED . . . . . . . . . . . . . . . . . . . 36
--------
ARTICLE XXXII FINANCING OF THE LEASED PROPERTY . . . . . . . 36
--------------------------------
ARTICLE XXXIII SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE 37
---------------------------------------------
ARTICLE XXXIV EXTENDED TERMS . . . . . . . . . . . . . . . . 37
--------------
ARTICLE XXXV MISCELLANEOUS . . . . . . . . . . . . . . . . 38
-------------
35.1 NO WAIVER . . . . . . . . . . . . . . . . . . . 38
35.2 REMEDIES CUMULATIVE . . . . . . . . . . . . . . 38
35.3 SURRENDER . . . . . . . . . . . . . . . . . . . 38
35.4 NO MERGER OF TITLE . . . . . . . . . . . . . . . 38
35.5 TRANSFERS BY LESSOR . . . . . . . . . . . . . . 38
35.6 GENERAL . . . . . . . . . . . . . . . . . . . . 38
35.7 MEMORANDUM OF LEASE . . . . . . . . . . . . . . 39
35.8 TRANSFER OF LICENSES . . . . . . . . . . . . . . 39
ARTICLE XXXVI GLOSSARY OF TERMS . . . . . . . . . . . . . . 39
-----------------
LEASE
THIS LEASE ("Lease") dated as of ____________________ ___,
1996 is entered into by and between CAPSTONE CAPITAL CORPORATION,
a Maryland corporation, having its principal office at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessor") and
GRAND COURT LIFESTYLES, INC., a Delaware corporation, having its
principal office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee").
ARTICLE 1
LEASED PROPERTY; TERM
----------------------
Upon and subject to the terms and conditions hereinafter set
forth, Lessor leases to Lessee and Lessee rents from Lessor all
of Lessor's rights and interest in and to the following property
(collectively, the "Leased Property"):
(a) the real property more particularly described on
Exhibit A attached hereto together with all covenants, licenses,
privileges and benefits thereto belonging, and any easements,
rights-of-way, rights of ingress and egress or other interests of
Lessor in, on or to any land, highway, street, road or avenue,
open or proposed, in, on, across, in front of, abutting or
adjoining such real property, including all strips and gores
adjacent to or lying between such real property and any adjacent
real property (the "Land");
(b) all buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind
(including all alleyways and connecting tunnels, crosswalks,
sidewalks, landscaping, parking lots and structures and roadways
appurtenant to such buildings and structures presently or
hereafter situated upon the Land, and Capital Additions financed
by Lessor (but specifically excluding Capital Additions financed
by Lessee), drainage and all above-ground and underground utility
structures) (collectively, the "Leased Improvements");
(c) all permanently affixed equipment, machinery,
fixtures and other items of real and/or personal property,
including all components thereof, now and hereafter located in,
on or used in connection with, and permanently affixed to or
incorporated into the Leased Improvements, including all
furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air
and water pollution control, waste disposal, air-cooling and air
conditioning systems and apparatus, sprinkler systems and fire
and theft protection equipment, carpet, moveable or immoveable
walls or partitions and built-in oxygen and vacuum systems, all
of which are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all
items included within the category of Personal Property
(collectively the "Fixtures");
(d) the Personal Property;
(e) to the extent permitted by law, all permits,
approvals, and other intangible property or any interest therein
now or hereafter owned or held by Lessor in connection with the
Leased Property or any business or businesses now or hereafter
conducted by Lessee or any Tenant or with the use thereof,
including all leases, contract rights, agreements, trade names,
water rights and reservations, zoning rights, business licenses
and warranties (including those relating to construction or
fabrication) related to the Leased Property or any part thereof,
but specifically excluding the general corporate trademarks,
service marks, operations, manuals, logos, insignia or books and
records of Lessee, which Lessor agrees never have been, are not
now and will not become by virtue of this Lease owned in any
manner by Lessor; and
(f) all site plans, surveys, soil and substrata
studies, architectural drawings, plans and specifications,
engineering plans and studies, floor plans, landscape plans, and
other plans and studies that relate to the Land or the Leased
Improvements and are in Lessor's possession or control.
SUBJECT, HOWEVER, to the matters set forth on Exhibit B attached
---------
hereto (the "Permitted Exceptions"), to have and to hold for a
fixed term of ___ years (the "Initial Term") commencing on the
earlier date (the "Commencement Date") to occur of (i) the date
of completion of the construction of the Leased Improvements on
the Land as defined in Section 10.1 of that certain Development
Agreement of even date herewith (the "Development Agreement")
between Lessor and Lessee, (ii) the date a Tenant first takes
occupancy pursuant to a Tenant Lease, and (iii) the date which is
fifteen months from the date hereof, and ending at midnight on
last day of the 180th month after the Commencement Date [OR FOR
LEASES AFTER THE INITIAL LEASE, THE SAME EXPIRATION DATE AS SUCH
INITIAL LEASE], unless sooner terminated pursuant to the terms
hereof.
ARTICLE 2
RENT
----
2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT. Lessee
shall pay to Lessor, without notice, demand, set off (except as
set forth in Section 30.2) or counterclaim, in advance in lawful
money of the United States of America, at Lessor's address set
forth herein or at such other place or to such other person,
firms or corporations as Lessor from time to time may designate
in writing, Minimum Rent, as adjusted annually pursuant to
Section 2.1(b) during the Term, as follows:
(a) Minimum Rent. Lessee will pay to Lessor as rent
------------
(as adjusted from time to time in accordance with Section
2.1(b), 2.1(e), or 15.4, the "Minimum Rent") for the Leased
Property the annual sum equal to the product of (i) the
Project Amount times (ii) the greater of (X) 9.75% or (Y)
-----
the Treasury Yield in effect ten days prior to the Commencement
Date plus 3.5%. The Minimum Rent shall be payable in advance
----
in 12 equal, consecutive monthly installments on the first
day of each calendar month during the Term. The parties
shall execute an acknowledgement of the Commencement Date and the
initial Minimum Rent calculated pursuant to this Section 2.1(a)
as soon as reasonably practicable after the Commencement Date.
The Minimum Rent shall be prorated for any partial month, and is
subject to adjustment as provided in Sections 2.1(b), 2.1(e) and
9.3(b)(iv) below.
(b) Increases to Minimum Rent. On each anniversary of the
-------------------------
Commencement Date (each such annual date referred to as the
"Adjustment Date") throughout the Initial Term and any Extended
Terms, the then-current Minimum Rent shall be increased annually
effective as of such Adjustment Date by an amount equal to three
percent of the Minimum Rent in effect for the previous twelve-
month period.
(c) Capital Replacement Account. Lessee will pay to Lessor
---------------------------
for deposit in a money market account in a federally insured bank
in Birmingham, Alabama acceptable to Lessor and Lessee the sums
set forth on Exhibit C attached hereto, which funds (the "Capital
---------
Replacement Account") shall be made available to Lessee to make
repairs and replacements for the Leased Property as approved by
Lessor, the costs of which according to generally accepted
accounting principles must be depreciated over periods greater
than one year. The Capital Replacement Account shall be in the
name of Lessor, and interest earned on such account shall be
retained in the Capital Replacement Account. Lessee shall make
detailed requests for such funds in writing to Lessor in the same
form as a Request pursuant Section 9.3 hereof. Within 30 days of
such Request, Lessor shall reasonably approve the amount of
requested funds and make mutually agreeable arrangements for the
disbursement of the funds, or provide Lessee with written notice
in reasonable detail specifying Lessor's objections to such
Request.
(d) Payment of Minimum Rent. All payments of Minimum Rent
-----------------------
shall be made in lawful money of the United States by wire
transfer of same day funds to Lessor's account #0000040999 at
First Commercial Bank, Birmingham, Alabama, ABA Routing
#▇▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, with advice to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ at (▇▇▇) ▇▇▇-▇▇▇▇ (or such other account or location
specified by Lessor from time to time in writing) on or before
2:00 p.m., Birmingham time, on any Business Day.
(e) Recalculation of Minimum Rent. The parties agree that
-----------------------------
the Project Amount may be estimated as of the Commencement Date
pursuant to the terms of the Development Agreement. Lessor shall
recalculate the Minimum Rent pursuant to Section 2.1(a) (using
the same rate used to calculate the initial Minimum Rent pursuant
to Section 2.1(a)(ii) above) as soon as reasonably practicable
after the determination of the final Project Amount under the
Development Agreement, whereupon the parties shall execute an
acknowledgement of such recalculated Minimum Rent.
2.2 CALCULATION OF INCREASES TO MINIMUM RENT. On or about
each Adjustment Date, Lessor will calculate the increase in the
Minimum Rent for the one-year period commencing with such
Adjustment Date pursuant to the provisions of Section 2.1(b) and
will provide Lessee with written notice of same.
2.3 ADDITIONAL CHARGES. Lessee will also pay and discharge
as and when due all other amounts, liabilities, obligations and
Impositions in connection with the Leased Property, which amounts
Lessee assumes or agrees to pay under this Lease including, to
the extent applicable, any ground lease payments and any
condominium or owner's association dues, assessments or other
charges, insurance premiums, utilities, and all fines, penalties,
interest and costs which may be added for non-payment or late
payment of any such items (collectively, the "Additional
Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease,
by statute or otherwise, in the case of non-payment of the
Additional Charges, as well as the Minimum Rent. If any
installment of Minimum Rent or Additional Charges (but only as to
those Additional Charges which are payable directly to Lessor)
shall not be paid within ten days after the date when due, Lessee
will pay Lessor on demand, as Additional Charges, interest (to
the extent permitted by law) computed at the Overdue Rate on the
amount of such installment, from the due date when due to the
date of payment in full thereof. In the event Lessor provides
Lessee with written notice of failure to timely pay any
installment of Minimum Rent or any Additional Charges pursuant to
Section 15.1(b) more than three times within any twelve-month
period, Lessee shall pay an administrative fee to Lessor in the
amount of $500.00 for each additional written notice Lessor gives
pursuant to Section 15.1(b) during the next twelve months. To
the extent that Lessee pays any Additional Charges to Lessor or
the Facility Mortgagee pursuant to any requirement of this Lease,
Lessee shall be relieved of its obligation to pay such Additional
Charges to the entity to which such Additional Charges would
otherwise be due and Lessor shall timely pay, or shall cause the
Facility Mortgagee to timely pay, any such Additional Charges to
the person to whom the same are due. Additional charges shall be
deemed Rent hereunder.
2.4 NET LEASE. The Rent shall be paid absolutely net to
Lessor, so that this Lease shall yield to Lessor the full amount
of the installments of Minimum Rent and the payments of
Additional Charges throughout the Term but subject to any
provisions of this Lease which expressly provide for payments by
Lessor or the adjustment of the Rent or other charges.
ARTICLE 3
IMPOSITIONS
-----------
3.1 PAYMENT OF IMPOSITIONS. Subject to Article XI relating
to permitted contests, Lessee will pay, or cause to be paid, all
Impositions before any fine, penalty, interest or cost may be
added for non-payment, such payments to be made directly to the
taxing authorities where feasible, and Lessee will promptly, upon
request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. Lessee's obligation
to pay such Impositions and the amount thereof shall be deemed
absolutely fixed upon the date such Impositions become a lien
upon the Leased Property or any part thereof. If any such
Imposition may lawfully be paid in installments (whether or not
interest shall accrue on the unpaid balance of such Imposition),
Lessee may exercise the option to pay the same (and any accrued
interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments
during the Term hereof as the same become due and before any
fine, penalty, premium, further interest or cost may be added
thereto. Lessor, at its expense, shall, to the extent permitted
by applicable law, prepare and file all tax returns and reports
as may be required by governmental authorities in respect of
Lessor's net income, gross receipts, franchise taxes and taxes on
its capital stock. Lessee, at its expense, shall, to the extent
permitted by applicable laws and regulations, prepare and file
all other tax returns and reports in respect of any Imposition as
may be required by governmental authorities. If any refund shall
be due from any taxing authority in respect of any Imposition
paid by Lessee, the same shall be paid over to or retained by
Lessee if no Event of Default shall have occurred hereunder and
be continuing. Any such funds retained by Lessor due to an Event
of Default shall be applied as provided in Article XV. Lessor
and Lessee shall, upon request of the other, provide such data as
is maintained by the party to whom the request is made with
respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event governmental
authorities classify any property covered by this Lease as
personal property, Lessee shall file all personal property tax
returns in such jurisdictions where filing is required. Lessor
and Lessee will provide the other party, upon request, with cost
and depreciation records necessary for filing returns for any
property so classified as personal property. Where Lessor is
legally required to file personal property tax returns, and
Lessee is obligated for the same hereunder, Lessee will be
provided with copies of assessment notices in sufficient time for
Lessee to file a protest. Lessee may, upon giving 30 days' prior
written notice to Lessor, at Lessee's option and at Lessee's sole
cost and expense, protest, appeal, or institute such other
proceedings as Lessee may deem appropriate to effect a reduction
of real estate or personal property assessments and Lessor, if
requested by Lessee and at Lessee's expense as aforesaid, shall
fully cooperate with Lessee in such protest, appeal, or other
action. ▇▇▇▇▇▇▇▇ for reimbursement by Lessee to Lessor of
personal property taxes shall be accompanied by copies of an
invoice therefor and payments thereof which identify the personal
property with respect to which such payments are made. Lessor
will cooperate with Lessee in order that Lessee may fulfill its
obligations hereunder, including the execution of any instruments
or documents reasonably requested by Lessee.
3.2 PRORATION OF IMPOSITIONS. Any Imposition imposed in
respect of the tax-fiscal period during which the Term terminates
shall be prorated between Lessor and Lessee, whether or not such
Imposition is imposed before or after such termination, and
Lessee's and Lessor's obligation to pay their respective prorated
shares thereof shall survive such termination.
3.3 UTILITY CHARGES. Lessee will, or will cause Tenants
to, contract for, in its own name, and will pay or cause to be
paid all charges for, electricity, power, gas, oil, water and
other utilities used in the Leased Property during the Term.
3.4 INSURANCE PREMIUMS. Lessee will contract for, in its
own name, and will pay or cause to be paid all premiums for, the
insurance coverage required to be maintained by Lessee pursuant
to Article XII during the Term.
ARTICLE 4
NO TERMINATION
--------------
Except as provided in this Lease, Lessee shall remain bound
by this Lease in accordance with its terms and shall neither take
any action without the consent of Lessor to modify, surrender or
terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of the Rent, or set-off against
the Rent, nor shall the respective obligations of Lessor and
Lessee be otherwise affected by reason of (a) any damage to, or
destruction of, the Leased Property or any portion thereof from
whatever cause or any Taking of the Leased Property or any
portion thereof, except as otherwise provided in Articles XIII
and XIV, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any
portion thereof, or the interference with such use by any person,
corporation, partnership or other entity, or by reason of
eviction by paramount title, (c) any claim which Lessee has or
might have against Lessor or by reason of any default or breach
of any warranty by Lessor under this Lease or any other agreement
between Lessor and Lessee or to which Lessor and Lessee are
parties, (d) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Lessor or any assignee or
transferee of Lessor, or (e) any other cause whatsoever whether
similar or dissimilar to any of the foregoing except for actions
or omissions of Lessor. Lessee hereby specifically waives all
rights arising from any occurrence whatsoever which may now or
hereafter be conferred upon it by law to (i) modify, surrender or
terminate this Lease or quit or surrender the Leased Property or
any portion thereof, or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums
payable by Lessee hereunder, except as otherwise specifically
provided in this Lease. The obligations of Lessor and Lessee
hereunder shall be separate and independent covenants and
agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the
obligations to pay the same shall be terminated pursuant to the
express provisions of this Lease. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to
pursue any claim or seek any damages it may have against Lessor
as a result of a breach by Lessor of the terms of this Lease.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY
----------------------------
5.1 OWNERSHIP OF THE PROPERTY. Lessee acknowledges that
the Leased Property is the property of Lessor and that Lessee has
only the right to the possession and use of the Leased Property
upon the terms and conditions of this Lease.
5.2 PERSONAL PROPERTY. Lessee may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place
on any parcels of the Land or in any of the Leased Improvements
any items of the Personal Property, and may remove, replace or
substitute for the same from time to time in the ordinary course
of Lessee's business. Lessee shall provide and maintain during
the entire Term all such Personal Property as shall be necessary
in order to operate the Facility in compliance with all licensure
and certification requirements, in compliance with all applicable
Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the
Primary Intended Use.
ARTICLE 6
CONDITION AND USE OF LEASED PROPERTY
------------------------------------
6.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges
receipt and delivery of possession of the Leased Property and
that Lessee has examined and otherwise acquired knowledge of the
condition of the Leased Property prior to the execution and
delivery of this Lease and has found the same to be in good order
and repair and satisfactory for its purpose hereunder. Lessee is
leasing the Leased Property "as is" in its present condition.
Lessee waives any claim or action against Lessor in respect of
the condition of the Leased Property. LESSOR MAKES NO WARRANTY
OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
SUITABILITY, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS
SATISFACTORY TO IT IN ALL RESPECTS.
6.2 USE OF THE LEASED PROPERTY.
(a) After the Commencement Date and during the entire Term,
Lessee shall use or cause to be used the Leased Property and the
improvements thereon as an assisted and independent living
facility and for such other uses as may be necessary in
connection with or incidental to such use (the "Primary Intended
Use"). Lessee shall not use the Leased Property or any portion
thereof for any other use without the prior written consent of
Lessor, which consent shall not be unreasonably withheld or
delayed.
(b) Lessee covenants that it will obtain and maintain all
material approvals needed to use and operate the Leased Property
and the Facility for the Primary Intended Use in compliance with
all applicable Legal Requirements.
(c) Lessee covenants and agrees that during the Term it
will use its reasonable best efforts to operate continuously the
Leased Property in accordance with its Primary Intended Use and
to maintain its certifications for reimbursement, if any, and
licensure and its accreditation, if compliance with accreditation
standards is required to maintain the operations of the Facility
and if a failure to comply would adversely affect operations of
the Facility.
(d) Lessee shall not commit or suffer to be committed any
waste on the Leased Property, or in the Facility or cause or
permit any nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased
Property or any portion thereof, including any Capital Addition
whether or not financed by Lessor, to be used in such a manner as
(i) might reasonably tend to impair Lessor's estate therein or in
any portion thereof, or (ii) may reasonably result in a claim or
claims of adverse usage or adverse possession by the public, as
such, or of implied dedication of the Leased Property or any
portion thereof.
(f) Lessee will not utilize any Hazardous Materials on the
Leased Property except in accordance with applicable Legal
Requirements and will not permit any contamination which may
require remediation under any applicable Hazardous Materials Law.
Lessee agrees not to dispose of any Hazardous Materials or
substances within the sewerage system of the Leased Property, and
that it will handle all "red bag" wastes in accordance with
applicable Hazardous Materials Laws.
6.3 MANAGEMENT OF FACILITY. Unless otherwise agreed to in
writing by Lessor (i) Lessee shall cause the Facility to be
managed (including any leasing activities) at all times by Lessee
or an Affiliate of Lessee, (ii) Lessee shall not enter into any
agreement (oral or written) with respect to such management and
leasing activities unless the terms thereof and the proposed
manager or leasing agent have been approved in writing by Lessor,
(iii) all such management or leasing agreements must be in
writing, and (iv) all management or leasing agreements with an
Affiliate of Lessee must contain provisions to the effect that
(A) the obligation of Lessee to pay management fees is
subordinate to its obligation to pay the Rent, and (B) the
manager shall not have the right to collect any management fees
during the continuance of an Event of Default but may
cumulatively collect any management fee so suspended after the
Event of Default has been cured.
6.4 LESSOR TO GRANT EASEMENTS. Lessor will, from time to
time, at the request of Lessee and at Lessee's cost and expense,
but subject to the approval of Lessor (a) grant easements and
other rights in the nature of easements, (b) release existing
easements or other rights in the nature of easements which are
for the benefit of the Leased Property, (c) dedicate or transfer
unimproved portions of the Leased Property for road, highway or
other public purposes, (d) execute petitions to have the Leased
Property annexed to any municipal corporation or utility
district, (e) execute amendments to any covenants and
restrictions affecting the Leased Property, and (f) execute and
deliver to any person such instruments as may be necessary or
appropriate to confirm or effect such grants, releases,
dedications and transfers (to the extent of its interest in the
Leased Property), but only upon delivery to Lessor of an
Officer's Certificate stating (and such other information as
Lessor may reasonably require confirming) that such grant,
release, dedication, transfer, petition or amendment is required
or beneficial for and not detrimental to the proper conduct of
the business of Lessee on the Leased Property and does not reduce
the value thereof.
ARTICLE 7
LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS
-------------------------------------------
7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS.
Subject to Article XI relating to permitted contests, Lessee, at
its expense, will promptly (a) comply with all material Legal
Requirements and Insurance Requirements in respect of the use,
operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require
structural change in any of the Leased Improvements or interfere
with the use and enjoyment of the Leased Property, and (b)
directly or indirectly with the cooperation of Lessor, but at
Lessee's sole cost and expense, procure, maintain and comply with
all material licenses, certificates of need, if any, and other
authorizations required for (i) any use of the Leased Property
then being made, and for (ii) the proper erection, installation,
operation and maintenance of the Leased Improvements or any part
thereof, including any Capital Additions.
7.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and
agrees that the Leased Property shall not be used for any
unlawful purpose. Lessee shall, directly or indirectly with the
cooperation of Lessor, but at Lessee's sole cost and expense,
acquire and maintain all material licenses, certificates, permits
and other authorizations and approvals needed to operate the
Leased Property in its customary manner for the Primary Intended
Use and any other use conducted on the Leased Property as may be
permitted from time to time hereunder. Lessee further covenants
and agrees that Lessee's use of the Leased Property and Lessee's
maintenance, alteration, and operation of the same, and all parts
thereof, shall at all times conform to all applicable Legal
Requirements.
ARTICLE 8
REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS
--------------------------------------------
8.1 MAINTENANCE AND REPAIR.
(a) Lessee, at its expense, will keep the Leased Property
and all private roadways, sidewalks and curbs appurtenant thereto
in reasonably good order and repair, ordinary wear and tear
excepted (whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements, the age of
the Leased Property or any portion thereof), and except as
otherwise provided in Articles XIII and XIV, with reasonable
promptness will make all necessary and appropriate repairs
thereto of every kind and nature, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen
or unforeseen or arising by reason of a condition existing prior
to or after the commencement of the Term of this Lease (concealed
or otherwise). All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original
work and shall be accomplished by Lessee or a party selected by
Lessee. Lessee will not take or omit to take any action the
taking or omission of which might materially impair the value or
usefulness of the Leased Property or any part thereof for the
Primary Intended Use. If Lessee fails to perform any of its
obligations hereunder, or if Lessor reasonably determines that
action is necessary and is not being taken, Lessor may, on giving
30 days' written notice to Lessee (other than in a case
reasonably deemed by Lessor to be an emergency, in which case no
such notice shall be required), without demand on Lessee, perform
any such obligations in such manner and to such extent and take
such other action as Lessor may deem appropriate, and all costs,
expenses and charges of Lessor relating to any such action shall
constitute Additional Charges and shall be payable by Lessee to
Lessor in accordance with Section 2.3.
(b) Except for the use of any insurance proceeds (to the
extent required by Sections 13.1 and 13.2) and any Award (to the
extent required by Section 14.3) Lessor shall not under any
circumstances be required to build or rebuild any improvements on
the Leased Property, or to make any repairs, replacements,
alterations, restorations, or renewals of any nature or
description to the Leased Property, whether ordinary or
extraordinary, structural or nonstructural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect
thereto in connection with this Lease, or to maintain the Leased
Property in any way.
(c) Nothing contained in this Lease and no action or
inaction by Lessor shall be construed as (i) constituting the
consent or request of Lessor, expressed or implied, to any
contractor, subcontractor, laborer, materialman or vendor to or
for the performance of any particular labor or services or the
furnishing of any particular materials or other property for the
construction, alteration, addition, repair or demolition of or to
the Leased Property or any part thereof, or (ii) giving Lessee
any right, power or permission to contract for or permit the
performance of any labor or services or the finishing of any
materials or other property in such fashion as would permit the
making of any claim against Lessor in respect thereof or to make
any agreement that may create, or in any way be the basis for,
any right, title, interest, lien, claim or other encumbrance upon
the estate of Lessor in the Leased Property or any portion
thereof.
(d) Unless Lessor shall convey any of the Leased Property
to Lessee pursuant to the provisions of this Lease, Lessee will,
upon the expiration or prior termination of this Lease, vacate
and surrender the Leased Property to Lessor in the condition in
which the Leased Property was originally received from Lessor,
except for ordinary wear and tear (subject to the obligation of
Lessee to maintain the Property in good order and repair during
the entire Term), damage caused by the gross negligence or
willful acts of Lessor, and damage or destruction described in
Article XIII or resulting from a Taking described in Article XIV
which Lessee is not required by the terms of this Lease to repair
or restore, and except as repaired, rebuilt, restored, altered or
added to as permitted or required by the provisions of this
Lease.
8.2 ENCROACHMENTS; RESTRICTIONS. If any of the
Improvements shall, at any time, encroach upon any property,
street or right-of-way adjacent to the Leased Property, or shall
violate the agreements or conditions contained in any applicable
Legal Requirement, lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof, or shall
impair the rights of others under any easement or right-of-way to
which the Leased Property is subject, then promptly upon the
request of Lessor, Lessee shall at its expense, subject to its
right to contest the existence of any such encroachment,
violation or impairment, (a) obtain valid and effective waivers
or settlements of all claims, liabilities and damages resulting
from each such encroachment, violation or impairment, whether the
same shall affect Lessor or Lessee, or (b) make such changes in
the Improvements, and take such other actions, as Lessor in the
good faith exercise of its judgment deems reasonably practicable,
to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the
Leased Improvements, and in any event take all such actions as
may be necessary in order to be able to continue the operation of
the Facility for the Primary Intended Use substantially in the
manner and to the extent the Facility was operated prior to the
assertion of such violation or encroachment. Any such alteration
shall be made in conformity with the applicable requirements of
Article IX. Lessee's obligations under this Section 8.2 shall be
in addition to and shall in no way discharge or diminish any
obligation of any insurer under any policy of title or other
insurance and Lessee shall be entitled to a credit for any sums
recovered by Lessor under any such policy of title or other
insurance and Lessee shall also be entitled to a credit in the
amount of sums recovered against any purchase price obligation if
Lessee purchases the Leased Property pursuant to any right
hereunder. In the event the purchase of the Leased Property is
consummated before any such proceeds are paid to Lessor, Lessee
will pay the full purchase price to Lessor and Lessor will remit
any such insurance proceeds within 15 days of the receipt
thereof.
8.3 ANNUAL INSPECTIONS. From time to time during the Term,
Lessor and its agents shall have the right to inspect the Leased
Property and all systems contained therein at any reasonable time
to determine Lessee's compliance with its obligations under this
Lease, including those obligations set forth in Article VII and
this Article VIII. Lessee shall be responsible for the costs of
such inspections, which costs shall not exceed the sum of $2,000
per year for each year of the Lease.
ARTICLE 9
CAPITAL ADDITIONS
-----------------
9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED
PROPERTY.
(a) If no Event of Default shall have occurred and be
continuing, Lessee shall have the right, upon and subject to the
terms and conditions set forth below, to construct or install
Capital Additions on the Leased Property with the prior written
consent of Lessor which consent shall not be unreasonably
withheld; provided that Lessee shall not be permitted to create
any Encumbrance on the Leased Property in connection with such
Capital Addition without first complying with Section 9.1(b)
hereof. Prior to commencing construction of any Capital
Addition, Lessee shall submit to Lessor in writing a proposal
setting forth in reasonable detail any proposed Capital Addition
and shall provide to Lessor such plans and specifications,
permits, licenses, contracts and other information concerning the
proposed Capital Addition as Lessor may reasonably request.
Without limiting the generality of the foregoing, such proposal
shall indicate the approximate projected cost of constructing
such Capital Addition and the use or uses to which it will be
put.
(b) Prior to commencing construction of any Capital
Addition, Lessee shall first request Lessor to provide funds to
pay for such Capital Addition in accordance with the provisions
of Section 9.3. If Lessor declines or is unable to provide such
financing on terms acceptable to Lessee and Lessee rejects
Lessor's offer of financing, Lessee may arrange or provide other
financing, subject to the provisions of Section 9.2. Lessor will
reasonably cooperate with Lessee regarding the grant of any
consents or easements or the like necessary or appropriate in
connection with any Capital Addition; provided that no Capital
Addition shall be made which would tie in or connect any Leased
Improvements on the Leased Property with any other improvements
on property adjacent to the Leased Property (and not part of the
Land covered by this Lease) including tie-ins of buildings or
other structures or utilities, unless Lessee shall have obtained
the prior written approval of Lessor, which approval shall not be
unreasonably withheld. All proposed Capital Additions shall be
architecturally integrated into and consistent with the Leased
Property.
9.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee
finances or arranges to finance any Capital Addition with a party
other than Lessor or if Lessee pays cash for any Capital
Addition, this Lease shall be and hereby is amended to provide as
follows:
(a) There shall be no adjustment in the Minimum Rent by
reason of any such Capital Addition.
(b) Upon the expiration or earlier termination of this
Lease, Lessor shall compensate Lessee for all Capital Additions
paid for or financed by Lessee in any of the following ways:
(i) By purchasing all Capital Additions paid for
by Lessee from Lessee for cash in the amount of the
Fair Market Added Value at the time of purchase by
Lessor of all such Capital Additions paid for or
financed by Lessee; or
(ii) Such other arrangement regarding such
compensation as shall be mutually acceptable to Lessor
and Lessee.
Any amount owed by Lessee to Lessor under this Lease at such
termination or expiration may be deducted from any compensation
for Capital Additions payable by Lessor to Lessee under this
Section 9.2.
9.3 CAPITAL ADDITIONS FINANCED BY LESSOR.
(a) Lessee shall request that Lessor provide or arrange
financing for a Capital Addition by providing to Lessor such
information about the Capital Addition as Lessor may reasonably
request (a "Request"), including all information referred to in
Section 9.1 above. Lessor may, but shall be under no obligation
to provide or obtain the funds necessary to meet the Request.
Within 30 days of receipt of a Request, Lessor shall notify
Lessee as to whether it will finance the proposed Capital
Addition and, if so, the terms and conditions upon which it would
do so, including the terms of any amendment to this Lease. In no
event (i) shall the portion of the projected Capital Addition
Cost comprised of land (if any), materials, labor charges
(including architectural and builders fee) and fixtures and
interest be less than 90% of the total amount of such cost, or
(ii) shall Lessee or any of its Affiliates be entitled to any
commission or development fee, directly or indirectly, as a
portion of the Capital Addition Cost. Any Capital Addition not
financed by Lessor must still be approved in writing by Lessor
pursuant to the terms of Section 9.1 hereof, which consent will
not be unreasonably withheld. Lessee may withdraw its Request by
notice to Lessor at any time before or after receipt of Lessor's
terms and conditions.
(b) If Lessor agrees to finance the proposed Capital
Addition, Lessor's obligation to advance any funds shall be
subject to receipt of all of the following, in form and substance
reasonably satisfactory to Lessor:
(i) such loan documentation as may be required by
Lessor;
(ii) any information, certificates, licenses,
permits or documents requested by Lessor, or by any
lender with whom Lessor has agreed or may agree to
provide financing, necessary or appropriate to confirm
that Lessee will be able to use the Capital Addition
upon completion thereof in accordance with the Primary
Intended Use, including all required federal, state or
local government licenses and approvals;
(iii) an Officer's Certificate and, if
requested, a certificate from Lessee's architect,
setting forth in detail reasonably satisfactory to
Lessor the projected (or actual, if available) cost of
the proposed Capital Addition;
(iv) an amendment to this Lease, duly executed and
acknowledged, in form and substance satisfactory to
Lessor and Lessee (the "Lease Amendment"), containing
such provisions as may be necessary or appropriate due
to the Capital Addition, including any appropriate
changes in the legal description of the Land and the
Rent, all such changes to be mutually agreed upon by
Lessor and Lessee;
(v) a deed conveying title to Lessor to any land
and improvements or other rights acquired for the
purpose of constructing the Capital Addition, free and
clear of any liens or encumbrances except those
approved in writing by Lessor and, both prior to and
following completion of the Capital Addition, an as-
built survey thereof reasonably satisfactory to Lessor;
(vi) endorsements to any outstanding policy of
title insurance covering the Leased Property or a
supplemental policy of title insurance covering the
Leased Property reasonably satisfactory in form and
substance to Lessor (A) updating the same without any
additional exceptions, except as may be permitted by
Lessor; and (B) increasing the coverage thereof by an
amount equal to the Fair Market Value of the Capital
Addition (except to the extent covered by the owner's
policy of title insurance referred to in subparagraph
(vii) below);
(vii) if required by Lessor, (A) an owner's
policy of title insurance insuring fee simple title to
any land conveyed to Lessor pursuant to subparagraph
(v), free and clear of all liens and encumbrances
except those approved by Lessor and (B) a lender's
policy of title insurance satisfactory in form and
substance to Lessor and the Lending Institution
advancing any portion of the Capital Addition Cost;
(viii) if required by Lessor upon completion of
the Capital Addition, an M.A.I appraisal of the Leased
Property; and
(ix) such other certificates (including
endorsements increasing the insurance coverage, if any,
at the time required by Section 12.1), documents,
customary opinions of Lessee's counsel, appraisals,
surveys, certified copies of duly adopted resolutions
of the Board of Directors of Lessee authorizing the
execution and delivery of the Lease Amendment and any
other instruments or documents as may be reasonably
required by Lessor.
(c) Upon making a Request to finance a Capital Addition,
whether or not such financing is actually consummated, Lessee
shall pay the reasonable costs and expenses of Lessor and any
Lending Institution which has committed to finance such Capital
Addition paid or incurred in connection with the financing of the
Capital Addition, including (i) the fees and expenses of their
respective counsel, (ii) the amount of any recording or transfer
taxes and fees, (iii) documentary stamp taxes, if any, (iv) title
insurance charges, (v) appraisal fees, if any, and (vi)
commitment fees, if any.
9.4 NON-CAPITAL ADDITIONS. Lessee shall have the right and
the obligation to make additions, modifications or improvements
to the Leased Property which are not Capital Additions, including
tenant improvements made in connection with the Tenant Leases,
from time to time as may reasonably be necessary for its uses and
purposes and to permit Lessee to comply fully with its
obligations set forth in this Lease; provided that such action
will be undertaken expeditiously, in a workmanlike manner and
will not significantly alter the character or purpose or detract
from the value or operating efficiency of the Leased Property and
will not significantly impair the revenue producing capability of
the Leased Property or adversely affect the ability of Lessee to
comply with the provisions of this Lease. Title to all non-
Capital Additions, modifications and improvements shall, without
payment by Lessor at any time, be included under the terms of
this Lease and, upon expiration or earlier termination of this
Lease, shall pass to and become the property of Lessor.
9.5 SALVAGE. All useable materials (unless the value of
such materials has been netted against the cost of the following
described Capital Additions or repairs) which are scrapped or
removed in connection with the making of either Capital Additions
permitted by Section 9.1 or repairs required by Article VIII
shall be disposed of, at the request of Lessor, and the net
proceeds thereof remitted to Lessor within 15 days of such
disposal.
ARTICLE 10
LIENS
-----
Subject to the provisions of Article XI relating to
permitted contests, Lessee will not directly or indirectly create
or suffer to exist and will promptly discharge at its expense any
lien, encumbrance, attachment, title retention agreement or claim
upon the Leased Property or any attachment, levy, claim or
encumbrance in respect of the Rent, not including, however, (a)
this Lease, (b) the matters, if any, set forth in Exhibit B
---------
attached hereto, (c) restrictions, liens and other encumbrances
which are consented to in writing by Lessor, or any easements
granted pursuant to the provisions of Section 6.3 of this Lease,
(d) liens for those taxes of Lessor which Lessee is not required
to pay hereunder, (e) subleases permitted by Article XXIII, (f)
liens for Impositions or for sums resulting from noncompliance
with Legal Requirements so long as (1) the same are not yet
payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested
in accordance with the provisions of Article XI, (g) liens of
mechanics, laborers, materialmen, suppliers or vendors for sums
either disputed or not yet due, provided that (1) the payment of
such sums shall not be postponed for more than 60 days after the
completion of the action (including any appeal from any judgment
rendered therein) giving rise to such lien and such reserve or
other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made
therefor or (2) any such liens are in the process of being
contested in accordance with the provisions of Article XI, (h)
any Encumbrance placed on the Leased Property by Lessor, and (i)
any conditions as a result of the action or inaction of Lessor.
ARTICLE 11
PERMITTED CONTESTS
------------------
Lessee, after ten days' prior written notice to Lessor, on
its own or on Lessor's behalf (or in Lessor's name), but at
Lessee's expense, may contest, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Imposition,
Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim (collectively "Charge") not
otherwise permitted by Article X, which is required to be paid or
discharged by Lessee or any Tenant; provided that (a) in the case
of an unpaid Charge, the commencement and continuation of such
proceedings, or the posting of a bond or certificate of deposit
as may be permitted by applicable law, shall suspend the
collection thereof from Lessor and from the Leased Property; (b)
neither the Leased Property nor any Rent therefrom nor any part
thereof or interest therein would be in any immediate danger of
being sold, forfeited, attached or lost; (c) Lessor would not be
in any immediate danger of civil or criminal liability for
failure to comply therewith pending the outcome of such
proceedings; (d) in the event that any such contest shall involve
a sum of money or potential loss in excess of $50,000.00, then
Lessee shall deliver to Lessor and its counsel an Officer's
Certificate as to the matters set forth in clauses (a), (b) and
(c) and such opinions of legal counsel as Lessor may reasonably
request; (e) in the case of an Insurance Requirement, the
coverage required by Article XII shall be maintained; and (f) if
such contest be finally resolved against Lessor or Lessee, Lessee
shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and
penalties accrued thereon, or otherwise comply with the
applicable Charge; provided further that nothing contained herein
shall be construed to permit Lessee to contest the payment of the
Rent, or any other sums payable by Lessee to Lessor hereunder.
Lessor, at Lessee's expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be
required in any such contest and, if reasonably requested by
Lessee or if Lessor so desires and then at its own expense,
Lessor shall join as a party therein. Lessor shall do all things
reasonably requested by Lessee in connection with such action.
Lessee shall indemnify and save Lessor harmless against any
liability, cost or expense of any kind that may be imposed upon
Lessor in connection with any such contest and any loss resulting
therefrom.
ARTICLE 12
INSURANCE
---------
12.1 GENERAL INSURANCE REQUIREMENTS. During the Term of
this Lease, Lessee shall at all times keep the Leased Property,
and all property located in or on the Leased Property insured
with the kinds and amounts of insurance described below and
written by companies reasonably acceptable to Lessor authorized
to do insurance business in the state in which the Leased
Property is located. The policies must name Lessor as an
additional insured and losses shall be payable to Lessor and/or
Lessee as provided in Article XIII. In addition, upon notice to
Lessee of the identity of the Facility Mortgagee, the policies
shall name as an additional insured the holder ("Facility
Mortgagee") of any mortgage, deed of trust or other security
agreement securing any Encumbrance placed on the Leased Property
or any part thereof in accordance with the provisions of Article
XXXII ("Facility Mortgage"), if any, by way of a standard form of
mortgagee's loss payable endorsement. Any loss adjustment in
excess of $100,000.00 shall require the written consent of Lessor
and each affected Facility Mortgagee. Evidence of insurance
shall be deposited with Lessor and, if requested, with any
Facility Mortgagee(s). If any provision of any Facility Mortgage
which constitutes a first lien on the Leased Property requires
deposits of insurance to be made with such Facility Mortgagee,
Lessee shall either pay to Lessor monthly the amounts required
and Lessor shall transfer such amounts to such Facility Mortgagee
or, pursuant to written direction by Lessor, Lessee shall make
such deposits directly with such Facility Mortgagee. The
policies on the Leased Property, including the Leased
Improvements, the Fixtures and the Personal Property, shall
insure against the following risks:
(a) Loss or damage by fire, vandalism and malicious
mischief, extended coverage perils commonly known as "All Risk"
and all physical loss perils, including sprinkler leakage and
business interruption, in an amount not less than 100% of the
then Full Replacement Cost thereof (as defined below in Section
12.2) after deductible with a replacement cost endorsement
sufficient to prevent Lessee from becoming a co-insurer together
with an agreed value endorsement;
(b) Loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus now or hereafter installed in the
Facility, in such limits with respect to any one accident as may
be reasonably requested by Lessor from time to time;
(c) Loss or damage by hurricane in the amount of the Full
Replacement Cost, after deductible;
(d) Loss of rental under a rental value insurance policy
covering risk of loss during the first 12 months of
reconstruction necessitated by the occurrence of any of the
hazards described in Sections 12.1(a), 12.1(b) or 12.1 (c), in an
amount sufficient to prevent Lessee from becoming a co-insurer;
provided that in the event that Lessee shall not be in default
hereunder and Lessor shall receive any proceeds from such rental
insurance which, when added to rental amounts received with
respect to the applicable time period, exceed the amount of
rental owed by Lessee hereunder, Lessor shall immediately pay
such excess to Lessee;
(e) Claims for personal injury or property damage under a
policy of comprehensive general public liability insurance
including insurance against assumed or contractual liability
including indemnities under this Lease, with amounts not less
than $5,000,000.00 per occurrence in respect of bodily injury and
death and $10,000,000.00 for property damage; provided that if it
becomes customary for tenants occupying similar buildings in the
same City where the Leased Property is located to be required to
provide liability coverage with higher limits than the foregoing,
then Lessee shall provide Lessor with an insurance policy with
coverage limits that are not less than such customary limits; and
(f) Flood (when the Facility other than the parking area is
located in whole or in part within a designated ▇▇▇-▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇) and such other hazards and in such amounts as may be
customary for comparable properties in the area and if available
from insurance companies authorized to do business in the state
in which the Leased Property is located.
12.2 REPLACEMENT COST. The term "Full Replacement Cost" as
used herein shall mean the actual replacement cost of the
Facility from time to time, including increased cost of
construction endorsement, less exclusions provided in the normal
fire insurance policy. In the event Lessor or Lessee believes
that the Full Replacement Cost has increased or decreased at any
time during the Term, it shall have the right at its own expense
to have such Full Replacement Cost redetermined by the insurance
company which is then providing the largest amount of casualty
insurance carried on the Leased Property, hereinafter referred to
as the "impartial appraiser". The party desiring to have the
Full Replacement Cost so redetermined shall forthwith, on receipt
of such determination by the impartial appraiser, give written
notice thereof to the other party hereto. The determination of
such impartial appraiser shall be final and binding on the
parties hereto, and Lessee shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this
Article to the amount so determined by the impartial appraiser.
12.3 ADDITIONAL INSURANCE. In addition to the insurance
described above, but subject to the provisions of clause (d) in
Article XXXIII, Lessee shall maintain such additional insurance
as may be reasonably required from time to time by any Facility
Mortgagee which is consistent with insurance coverage for similar
properties in the city, county and state where the Leased
Property is located, or required pursuant to any applicable Legal
Requirement, and shall at all times maintain or cause to be
maintained adequate worker's compensation insurance coverage for
all persons employed by Lessee on the Leased Property, in
accordance with all applicable Legal Requirements.
12.4 WAIVER OF SUBROGATION. All insurance policies carried
by either party covering the Leased Property, the Fixtures, the
Facility and/or the Personal Property, including contents, fire
and casualty insurance, shall expressly waive any right of
subrogation on the part of the insurer against the other party.
The parties hereto agree that their policies will include such a
waiver clause or endorsement so long as the same is obtainable
without extra cost, and in the event of such an extra charge the
other party, at its election, may request and pay the same, but
shall not be obligated to do so.
12.5 FORM OF INSURANCE. All of the policies of insurance
referred to in this Section shall be written in form reasonably
satisfactory to Lessor by insurance companies reasonably
satisfactory to Lessor; provided that the deductibles for
insurance required by Sections 12.1(a), 12.1(b) and 12.1 (d)
shall be no greater than $50,000.00, the deductible for coverage
required by Section 12.1(c) shall be no greater than two percent
of the Full Replacement Cost and the deductible for coverage
required by Section 12.1(e) shall be no greater than $100,000.00.
Lessee shall pay all premiums therefor, and deliver such policies
or certificates thereof to Lessor prior to their effective date
(and, with respect to any renewal policy, at least 30 days prior
to the expiration of the existing policy). In the event of the
failure of Lessee to effect such insurance in the names herein
called for or to pay the premiums therefor, or to deliver such
policies or certificates thereof to Lessor at the times required,
Lessor shall be entitled, but shall have no obligation, to enact
such insurance and pay the premiums therefor, which premiums
shall be repayable by Lessee to Lessor upon written demand
therefor, and failure to repay the same shall constitute an Event
of Default within the meaning of Section 15.1(c). Each insurer
mentioned in this Section shall agree, by endorsement on the
policy or policies issued by it, or by independent instrument
furnished to Lessor, that it will give to Lessor prior written
notice before the policy or policies in question shall be
altered, allowed to expire or canceled.
12.6 CHANGE IN LIMITS. In the event that Lessor shall at
any time reasonably and in good faith believe the limits of the
personal injury, property damage or general public liability
insurance then carried to be insufficient or in the event the
Facility Mortgagee requires additional insurance coverage, the
parties shall endeavor to agree on the proper and reasonable
limits for such insurance to be carried and such insurance shall
thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section. If
the parties shall be unable to agree thereon, the proper and
reasonable limits for such insurance shall be determined by an
impartial third party selected by the parties the costs of which
shall be divided equally between the parties. Such
redeterminations, whether made by the parties or by arbitration,
shall be made no more frequently than every year.
12.7 BLANKET POLICY. Notwithstanding anything to the
contrary contained in this Section, Lessee's obligations to carry
the insurance provided for herein may be brought within the
coverage of a so-called blanket policy or policies of insurance
carried and maintained by Lessee; provided that the coverage
afforded Lessor will not be reduced or diminished or otherwise be
different from that which would exist under separate policies
meeting all other requirements of this Lease; and provided
further that the requirements of this Article XII are otherwise
satisfied.
12.8 NO SEPARATE INSURANCE. Without the prior written
consent of Lessor, Lessee shall not, on Lessee's own initiative
or pursuant to the request or requirement of any third party,
take out separate insurance concurrent in form or contributing in
the event of loss with that required in this Article XII to be
furnished by, or which may reasonably be required by a Facility
Mortgagee to be furnished by, Lessee, or increase the amounts of
any then-existing insurance required under this Article XII by
securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the
insurance, including in all cases Lessor and all Facility
Mortgagees, are included therein as additional insureds and the
loss is payable under said insurance in the same manner as losses
are required to be payable under this Lease. Lessee shall
immediately notify Lessor of the taking out of any such separate
insurance or of the increasing of any of the amounts of the then-
existing insurance required under this Article XII by securing an
additional policy or additional policies.
12.9 INSURANCE FOR CONTRACTORS. If Lessee shall engage or
cause to be engaged any contractor to perform work on the Leased
Property, Lessee shall require such contractor to carry and
maintain insurance coverage comparable to the foregoing
requirements, at no expense to Lessor; provided that in cases
where such coverage is excessive in relation to the work being
done, Lessee may allow any such contractor to carry or maintain
alternative coverage in reasonable amounts upon Lessor's prior
written consent, which shall not be unreasonably withheld.
ARTICLE 13
FIRE AND CASUALTY
-----------------
13.1 INSURANCE PROCEEDS. All proceeds payable by reason of
any loss or damage to the Leased Property or any portion thereof,
and insured under any policy of insurance required by Article XII
of this Lease shall be paid to Lessor and held by Lessor in trust
(subject to the provisions of Section 13.7) and shall be made
available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any
portion thereof, and shall be paid out by Lessor from time to
time for the reasonable cost of such reconstruction or repair in
accordance with this Article XIII after Lessee has expended an
amount equal to or exceeding the deductible under any applicable
insurance policy. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the
Leased Property shall be retained by Lessee free and clear upon
completion of any such repair and restoration except as otherwise
specifically provided below in this Article XIII; provided that
in the event neither Lessor nor Lessee is required or elects to
repair or restore the Leased Property, then all such insurance
proceeds shall be retained by Lessor. All salvage resulting from
any risk covered by insurance shall belong to Lessee, including
any salvage relating to Capital Additions paid for by Lessee.
13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION
COVERED BY INSURANCE.
(a) Except as provided in Section 13.7, if during the Term,
the Facility is totally or partially destroyed from a risk
covered by the insurance described in Article XII and the
Facility thereby is rendered Unsuitable for its Primary Intended
Use, Lessee shall have the option, by giving notice to Lessor
within 60 days following the date of such destruction, to (i)
apply all proceeds payable with respect thereto to restore the
Facility to substantially the same condition as existed
immediately before the damage or destruction, or (ii) offer to
acquire the Leased Property from Lessor for a purchase price
equal to the Minimum Purchase Price of the Leased Property
immediately prior to such damage or destruction. In the event
Lessor does not accept Lessee's offer to so purchase the Leased
Property within 30 days after the date of such offer, Lessee may
either (a) by giving notice to Lessor within 30 days after
receipt of Lessor's notice, withdraw its offer to purchase the
Leased Property and proceed to restore the Facility to
substantially the same condition as existed immediately before
the damage or destruction, or (b) terminate the offer and this
Lease upon 30 days' prior written notice to Lessor, in which case
the insurance proceeds shall be the sole property of Lessor.
(b) Except as provided in Section 13.7, if during the Term,
the Facility is partially destroyed from a risk covered by the
insurance described in Article XII, but the Facility is not
thereby rendered Unsuitable for its Primary Intended Use, Lessee
shall restore the Facility to substantially the same condition as
existed immediately before the damage or destruction. Such
damage or destruction shall not terminate this Lease; provided
that if Lessee cannot within a reasonable time obtain all
necessary governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need,
after diligent efforts to do so, in order to be able to perform
all required repair and restoration work and to operate the
Facility for its Primary Intended Use in substantially the same
manner as immediately prior to such damage or destruction, Lessee
may offer to purchase the Leased Property for a purchase price
equal to the Minimum Purchase Price of the Leased Property
immediately prior to such damage or destruction. In the event
Lessor does not accept Lessee's offer to so purchase the Leased
Property within 30 days after receipt of the offer to purchase
described in the preceding sentence, Lessee may either (a)
withdraw its offer to purchase the Leased Property and proceed to
restore the Facility, to the extent possible, to substantially
the same condition as existed immediately before the partial
destruction, or (b) terminate the offer and this Lease by written
notice to Lessor, in which case any insurance proceeds shall be
the sole property of Lessor.
(c) In the event Lessor accepts Lessee's offer to purchase
the Leased Property, this Lease shall terminate upon payment of
the purchase price and execution and delivery of all appropriate
documentation. In such event Lessor shall remit to Lessee, or
allow Lessee a credit toward the purchase price in an amount
equal to, all insurance proceeds received by Lessor with respect
to the Facility.
13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION
NOT COVERED BY INSURANCE. Except as provided in Section 13.7, if
during the Term the Facility is totally or materially destroyed
from a risk (including earthquake) not covered by the insurance
described in Article XII, whether or not such damage or
destruction renders the Facility Unsuitable for Its Primary
Intended Use, Lessee shall either (a) restore the Facility to
substantially the same condition it was in immediately before
such damage or destruction and such damage or destruction shall
not terminate this Lease, or (b) acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Price
immediately prior to such damage or destruction.
13.4 LESSEE'S PROPERTY. Lessee shall use any insurance
proceeds payable by reason of any loss of or damage to any of the
Personal Property to restore such Personal Property to the Leased
Property with items of substantially equivalent value to the
items being replaced.
13.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is
required or elects to restore the Facility as provided in
Sections 13.2 or 13.3, Lessee shall also restore the Personal
Property related thereto as required by Section 13.4 and all
Capital Additions paid for or financed by Lessor. Insurance
proceeds payable by reason of damage to Capital Additions paid
for or financed by Lessor shall be paid to Lessor and Lessor
shall hold such insurance proceeds in trust to pay the cost of
repairing or replacing such Capital Additions in the event Lessee
does not terminate this Lease or purchase the Leased Property
pursuant to Section 13.2.
13.6 NO ABATEMENT OF THE RENT. This Lease shall remain in
full force and effect and Lessee's obligation to make rental
payments and to pay all other charges required by this Lease
shall remain unabated during any period required for repair and
restoration.
13.7 DAMAGE NEAR END OF TERM. Notwithstanding any
provisions of Sections 13.2 or 13.3 to the contrary, if damage to
or destruction of the Facility occurs during the last 12 months
of the Term, and if such damage or destruction cannot be fully
repaired and restored within the lesser of (i) six months or (ii)
the period remaining in the Term immediately following the date
of loss, then either party shall have the right to terminate this
Lease by giving notice of termination to the other within 30 days
after the date of such damage or destruction, in which event
Lessor shall be entitled to retain the insurance proceeds and
Lessee shall pay to Lessor on demand the amount of any deductible
or uninsured loss arising in connection therewith; provided that
any such notice given by Lessor shall be void and of no force and
effect if Lessee exercises an available option to extend the Term
for one Extended Term, or one additional Extended Term, as the
case may be, within 30 days following receipt of such termination
notice.
13.8 PURCHASE. In the event Lessee purchases the Leased
Property pursuant to the terms of this Article, this Lease shall
terminate upon payment of the purchase price and execution and
delivery of all documentation in accordance with Article XVII.
In the event any insurance proceeds have been paid to Lessor,
Lessor will allow Lessee a credit toward the purchase price in an
amount equal to all such insurance proceeds. In the event the
purchase of the Leased Property is consummated before any such
proceeds are paid to Lessor, Lessee will pay the full purchase
price to Lessor and Lessor will remit any such insurance proceeds
within 15 days of the receipt thereof.
13.9 WAIVER. Lessee hereby knowingly and expressly waives
any statutory or common law rights of termination which may arise
by reason of any damage or destruction of the Facility.
ARTICLE 14
CONDEMNATION
------------
14.1 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term
there is any Taking of all or any part of the Leased Property or
any interest in this Lease by Condemnation, the rights and
obligations of the parties shall be determined by this Article
XIV.
14.2 TOTAL TAKING. If there is a Taking of all of the
Leased Property by Condemnation, this Lease shall terminate on
the Date of Taking, and the Minimum Rent and all Additional
Charges paid or payable hereunder shall be apportioned and paid
to the Date of Taking.
14.3 PARTIAL TAKING. If there is a Taking of a portion of
the Leased Property by Condemnation such that the Facility is not
thereby rendered Unsuitable for Its Primary Intended Use, this
Lease shall remain in effect. If, however, the Facility is
thereby rendered Unsuitable for Its Primary Intended Use, Lessee
shall have the right within 60 days of the Date of Taking (a) to
take such proceeds of any Award as shall be necessary and restore
the Facility, at its own expense, to the extent possible, to
substantially the same condition as existed immediately before
the partial Taking, or (b) to offer to acquire the Leased
Property from Lessor for a purchase price equal to the Minimum
Purchase Price of the Leased Property immediately prior to such
partial Taking, in which event this Lease shall terminate upon
payment of the purchase price and Lessee shall obtain and retain
the proceeds of the related Award. Lessee shall exercise its
option by giving Lessor notice thereof within 60 days after
Lessee receives notice of the Taking. In the event Lessor does
not accept Lessee's offer to so purchase the Leased Property
within 30 days after receipt of the notice described in the
preceding sentence, Lessee may either (a) withdraw its offer to
purchase the Leased Property and proceed to restore the Facility,
to the extent possible, to substantially the same condition as
existed immediately before the partial Taking, or (b) terminate
the offer and this Lease by written notice to Lessor.
14.4 RESTORATION. If there is a partial Taking of the
Leased Property and this Lease remains in full force and effect
pursuant to Section 14.3, Lessee shall accomplish all necessary
restoration in order that the Leased Property may continue to be
used for its Primary Intended Use.
14.5 AWARD DISTRIBUTION. In the event Lessee purchases the
Leased Property pursuant to Section 14.3, the entire Award shall
belong to Lessee and Lessor agrees to assign to Lessee all of its
rights thereto. In any other event, the entire Award shall
belong to and be paid to Lessor; provided that, if this Lease is
terminated without Lessee's purchase of the Facility, then Lessee
shall be entitled to receive from the Award, if and to the extent
there is included in such Award any sum attributable to the
Capital Additions to the Facility for which Lessee would be
entitled to reimbursement at the end of the Term pursuant to the
provisions of Section 9.2(b), plus any sum attributable to the
Lessee's Personal Property and any reasonable removal and
relocation costs included in the Award. If Lessee is required or
elects to restore the Facility, Lessor agrees that its portion of
the Award shall be used for such restoration and it shall hold
such portion of the Award in trust, for application to the cost
of the restoration.
14.6 TEMPORARY TAKING. The Taking of the Leased Property,
or any part thereof, by military or other public authority shall
constitute a Taking by Condemnation only when the use and
occupancy by the Taking authority has continued for longer than
six months. During any such six-month period all the provisions
of this Lease shall remain in full force and effect and the Rent
shall not be abated or reduced during such period of Taking;
provided that to the extent any compensation is paid by the
Taking authority as a result of such temporary Taking, Lessee
will retain such compensation.
14.7 PURCHASE OR SUBSTITUTION. In the event Lessor accepts
any offer by Lessee to purchase the Leased Property, this Lease
shall terminate upon payment of the purchase price and execution
and delivery of all appropriate documentation in accordance with
Article XVII.
ARTICLE 15
DEFAULT
-------
15.1 EVENTS OF DEFAULT. The occurrence and continuation of
any one or more of the following events shall constitute events
of default (individually, an "Event of Default" and,
collectively, "Events of Default") hereunder:
(a) An event of default shall occur under any other lease
between Lessor or any of its Affiliates and Lessee or any of its
Affiliates (collectively, the "Affiliated Leases"), or
(b) Lessee shall fail to make a payment of the Rent payable
by Lessee under this Lease when the same becomes due and payable
and such failure continues for a period of ten calendar days
after written notice from Lessor to Lessee, or
(c) Lessee shall fail to observe or perform any other
material term, covenant or condition of this Lease or any
document executed in connection herewith and such failure is not
cured by Lessee within a period of 30 days after receipt by
Lessee of notice thereof from Lessor, unless such failure cannot
with due diligence be cured within a period of 30 days, in which
case such failure shall not be deemed to continue if Lessee
proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof (as soon as reasonably
possible), or
(d) Lessee shall:
(i) admit in writing its inability to pay its
debts generally as they become due,
(ii) file a petition in bankruptcy or a petition
to take advantage of any insolvency law,
(iii) make an assignment for the benefit of
its creditors,
(iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its
property, or
(v) file a petition or answer seeking
reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute
of the United States of America or any state thereof,
or
(e) Lessee shall default beyond any applicable grace period
contained in one or more major credit facilities which by their
terms would permit an outstanding balance equal to or greater
than $5,000,000.00 in the aggregate to be accelerated and the
same shall be accelerated by the lenders or other applicable
parties, or
(f) Lessee [or Guarantor, if Lessee is not Grand Court
Lifestyles, Inc.] shall fail to maintain a Consolidated Net Worth
of at least $30,000,000.00; provided, however, Lessee [or
Guarantor] shall complete an initial public offering of equity
securities, then Lessee [or Guarantor] shall fail to maintain a
Consolidated Net Worth of at least 75% of its Consolidated Net
Worth that existed immediately after the completion of the
initial public offering, but not less than $30,000,000.00 or
(g) Commencing on the first day of the 22nd month after the
Commencement Date, Lessee shall fail to maintain a Coverage Ratio
of at least 1.25 for more than three consecutive months unless
Lessee shall have cured the foregoing default pursuant to Section
15.4.
15.2 REMEDIES. If an Event of Default shall have occurred,
Lessor may, at its election, then or at any time thereafter but
prior to the exercise of any option to purchase available to
Lessee hereunder, pursue any one or more of the following
remedies, in addition to any remedies which may be permitted by
law or by other provisions of this Lease, without further notice
or demand:
(a) Without any notice or demand whatsoever, Lessor may
take any one or more actions permissible at law to ensure
performance by Lessee of Lessee's covenants and obligations under
this Lease. In this regard, it is agreed that if Lessee abandons
or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from
deterioration and continue to demand from Lessee the monthly
rentals and other charges provided in this Lease. Lessor shall
use reasonable efforts to relet but shall have no absolute
obligation to relet. If Lessor relets the Leased Property, such
action by Lessor shall not be deemed as an acceptance of Lessee's
surrender of the Leased Property unless Lessor expressly notifies
Lessee of such acceptance in writing, Lessee hereby acknowledging
that Lessor shall otherwise be reletting as Lessee's agent. It
is further agreed in this regard that in the event of any Event
of Default described in this Article XV, Lessor shall have the
right to enter upon the Leased Property and do whatever Lessee is
obligated to do under the terms of this Lease. Lessee agrees to
reimburse Lessor on demand for any reasonable expenses which
Lessor may incur in thus effecting compliance with Lessee's
obligations under this Lease, and further agrees that Lessor
shall not be liable for any damages resulting to Lessee from such
action, except as may result from Lessor's negligence or willful
misconduct.
(b) Lessor may terminate this Lease by written notice to
Lessee, in which event Lessee shall immediately surrender the
Leased Property to Lessor, and if Lessee fails to do so, Lessor
may, without prejudice to any other remedy which Lessor may have
for possession or arrearage in rent (including any interest which
may have accrued pursuant to Section 2.3 of this Lease or
otherwise), enter upon and take possession of the Leased Property
and expel or remove Lessee and any other person who may be
occupying said premises or any part thereof other than Tenants
pursuant to Tenant Leases. In addition, Lessee agrees to pay to
Lessor on demand the amount of all loss and damage which Lessor
may suffer by reason of any termination effected pursuant to this
subsection (b), said loss and damage to be determined, at
Lessor's option, by either of the following alternative measures
of damages:
(i) Although Lessor shall be under no absolute
obligation to attempt and shall be obligated only to
use reasonable efforts, to relet the Leased Property,
until the Leased Property is relet Lessee shall pay to
Lessor on or before the first day of each calendar
month the monthly rentals and other charges provided in
this Lease. After the Leased Property has been relet
by Lessor, Lessee shall pay to Lessor on the 10th day
of each calendar month the excess, if any, of the
monthly rentals and other charges provided in this
Lease for the preceding calendar month over the monthly
rentals and other charges actually collected by Lessor
for such month. If it is necessary for Lessor to bring
suit in order to collect any deficiency, Lessor shall
have a right to allow such deficiencies to accumulate
and to bring an action on several or all of the accrued
deficiencies at one time. Any such suit shall not
prejudice in any way the right of Lessor to bring a
similar action for any subsequent deficiency or
deficiencies. Any amount collected by Lessor from
subsequent tenants for any calendar month in excess of
the monthly rentals and other charges provided in this
Lease shall be credited to Lessee in reduction of
Lessee's liability for any calendar month for which the
amount collected by Lessor will be less than the
monthly rentals and other charges provided in this
Lease, but Lessee shall have no right to such excess
other than the above described credit.
(ii) When Lessor desires, Lessor may demand a
final settlement not to exceed the Minimum Purchase
Price at the time of such final settlement. Upon
demand for a final settlement, Lessor shall have a
right to, and Lessee hereby agrees to pay, the
difference between the total of all monthly rentals and
other charges provided in this Lease for the remainder
of the Term and the reasonable rental value of the
Leased Property for such period (including a reasonable
time to relet the Leased Property), as determined
pursuant to the provisions of Article XXVIII hereof,
such difference to be discounted to present value at a
rate equal to the lowest rate of capitalization
(highest present worth) reasonably consistent with
industry standards at the time of such determination
and allowed by applicable law. In the event that the
final settlement equals the Minimum Purchase Price,
then Lessor shall transfer the Leased Property to
Lessee pursuant to the terms of Article XVII.
The rights and remedies of Lessor hereunder are cumulative,
and pursuit of any of the above remedies shall not preclude
pursuit of any other remedies prescribed in other sections of
this Lease and any other remedies provided by law or equity.
Forbearance by Lessor to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or
construed to constitute a waiver of such Event of Default.
Exercise by Lessor of any one or more remedies shall not
constitute an acceptance of surrender of the Leased Property by
Lessee, it being understood that such surrender can be effected
only by the prior written agreement of Lessor and Lessee.
15.3 ADDITIONAL EXPENSES. In addition to payments required
pursuant to subsections (a) and (b) of Section 15.2 above, Lessee
shall compensate Lessor for all reasonable expenses incurred by
Lessor in repossessing the Leased Property (including any
increase in insurance premiums caused by the vacancy of the
Leased Property), all reasonable expenses incurred by Lessor in
reletting (including repairs, replacements, advertisements and
brokerage fees), all fees and expenses incurred by Lessor as a
direct or indirect result of any appropriate action by a Facility
Mortgagee, any expenses of Lessor incurred for the installation
of separate lines or meters for any public utilities not
previously metered separately from adjacent property of Lessee
and a reasonable allowance for Lessor's administrative efforts,
salaries and overhead attributable directly or indirectly to
Lessee's default and Lessor's pursuing the rights and remedies
provided herein and under applicable law. Notwithstanding the
foregoing, Lessee's obligation to compensate Lessor for the
foregoing items shall be decreased by the excess of any rent
received by Lessor directly from Tenants pursuant to the Tenant
Leases over and above the Rent due hereunder.
15.4 PAYMENT TO REDUCE MINIMUM RENT. In the event of the
occurrence of an Event of Default pursuant to Section 15.1(g)
above, Lessee may make a cash payment to Lessor to reduce the
Project Amount, in which case the Minimum Rent shall be
recalculated pursuant to Section 2.1(a); provided that Lessee
shall make a cash payment only in an amount necessary to increase
the Coverage Ratio to 1.25.
15.5 WAIVER. If this Lease is terminated pursuant to law or
the provisions of this Article XV, Lessee waives, to the extent
permitted by applicable law, (a) any right of redemption, reentry
or repossession and (b) the benefit of any laws now or hereafter
in force exempting property from liability for rent or for debt.
15.6 APPLICATION OF FUNDS. All payments otherwise payable
to Lessee which are received by Lessor under any of the
provisions of this Lease during the existence or continuance of
any Event of Default shall be applied to Lessee's obligations in
the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is
located.
15.7 NOTICES BY LESSOR. The provisions of this Article XV
concerning notices shall be liberally construed insofar as the
contents of such notices are concerned, and any such notice shall
be sufficient if it shall generally apprise Lessee of the nature
and approximate extent of any default.
ARTICLE 16
LESSOR'S RIGHT TO CURE
----------------------
If Lessee, without the prior written consent of Lessor,
shall fail to make any payment, or to perform any act required to
be made or performed under this Lease and to cure the same within
the relevant time periods provided in Section 15.1, Lessor,
without waiving or releasing any obligation or Event of Default,
may (but shall be under no obligation to) make such payment or
perform such act for the account and at the expense of Lessee,
and may, to the extent permitted by law, enter upon the Leased
Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of Lessee. All sums so
paid by Lessor, together with a late charge thereon (to the
extent permitted by law) at the Overdue Rate from the date on
which such sums or expenses are paid or incurred by Lessor, and
all costs and expenses (including reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so
incurred shall be paid by Lessee to Lessor on demand. The
obligations of Lessee and rights of Lessor contained in this
Article shall survive the expiration or earlier termination of
this Lease.
ARTICLE 17
PURCHASE OF THE LEASED PROPERTY
-------------------------------
In the event Lessee purchases the Leased Property from
Lessor pursuant to any of the terms of this Lease, Lessor shall,
upon receipt from Lessee of the applicable purchase price (after
credit for the balance of the Capital Replacement Account or the
proceeds of any Taking or any casualty), together with full
payment of any unpaid Rent due and payable with respect to any
period ending on or before the date of the purchase and any other
amounts owing to Lessor hereunder, deliver to Lessee an
appropriate special warranty deed (in substantially the same form
used to convey the Leased Property to Lessor) and any other
documents reasonably requested by Lessee to convey the interest
of Lessor in and to the Leased Property to Lessee, and such other
standard documents usually and customarily prepared in connection
with such transfers, free and clear of all encumbrances other
than (a) those that Lessee has agreed hereunder to pay or
discharge, (b) those mortgage liens, if any, which Lessee has
agreed in writing to accept and to take title subject to, (c) any
other Encumbrances permitted to be imposed on the Leased Property
under the provisions of Article XXXII which are assumable at no
cost to Lessee, and (d) any matters affecting the Leased Property
on or as of the Commencement Date. The difference between the
applicable purchase price and the total of the encumbrances
assigned or taken subject to shall be paid in cash to Lessor, or
as Lessor may direct, in federal or other immediately available
funds except as otherwise mutually agreed by Lessor and Lessee.
The closing of any such sale shall be contingent upon and subject
to Lessee obtaining all required governmental consents and
approvals for such transfer. If such sale shall fail to be
consummated by reason of the inability of Lessee to obtain all
such approvals and consents, any options to extend the Term which
otherwise would have expired during the period from the date when
Lessee elected or became obligated to purchase the Leased
Property until Lessee's inability to obtain the approvals and
consents is confirmed shall be deemed to remain in effect for 30
days after the end of such period. The closing with respect to
any such sale shall be appropriately timed to accommodate the
determination of the Minimum Purchase Price in accordance with
Article XXVIII. All expenses of such conveyance, including the
cost of title examination or standard coverage title insurance,
reasonable attorneys' fees incurred by Lessor in connection with
such conveyance, transfer taxes and recording fees shall be paid
by Lessee.
ARTICLE 18
HOLDING OVER
------------
If Lessee shall for any reason remain in possession of the
Leased Property after the expiration of the Term or any earlier
termination of the Term hereof, such possession shall be as a
tenancy at will during which time Lessee shall pay as rental each
month an amount equal to the sum of (a) 150% of the aggregate of
1/12 of the aggregate Minimum Rent payable with respect to the
last complete year prior to the expiration of the Term, plus (b)
all Additional Charges accruing during such month, plus (c) all
other sums, if any, payable pursuant to the provisions of this
Lease with respect to the Leased Property. During such period of
tenancy, Lessee and Lessor shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease
and to continue its occupancy and use of the Leased Property.
Nothing contained herein shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease.
ARTICLE 19
OPTION TO PURCHASE; ABANDONMENT
-------------------------------
19.1 OPTION TO PURCHASE. For the independent consideration
of $10.00, receipt of which is hereby acknowledged by Lessor,
Lessor hereby grants to Lessee an option to purchase the Leased
Property after the fourth anniversary of the Commencement Date on
the following terms and conditions. In the event that Lessor has
not terminated this Lease pursuant to the provisions of Section
15.2 or otherwise Lessee may after the fourth anniversary of the
Commencement Date give notice to Lessor of Lessee's exercise of
its option to purchase the Leased Property for a purchase price
equal to the Minimum Purchase Price. Notwithstanding anything
herein to the contrary, this Lease shall not be terminated by
Lessor pursuant to the provisions of Sections 15.2 or otherwise
until Lessor has provided Lessee with 21 days prior written
notice of such termination. The option to purchase in this
Section 19.1 is in addition to all other rights and options
herein to purchase the Leased Property.
19.2 DISCONTINUANCE OF OPERATIONS ON THE LEASED PROPERTY.
If Lessee has discontinued use of the Leased Property for the
Primary Intended Use for 90 consecutive days, all as set forth in
an Officer's Certificate delivered to Lessor, except due to a
casualty loss or with Lessor's prior written consent pursuant to
Article IX or otherwise, Lessee, if Lessor has not terminated
this Lease prior to such date as provided in Section 15.1, will
offer to purchase the Leased Property for the Minimum Purchase
Price on the first Payment Date occurring not less than 120 days
after the date of such Officer's Certificate.
19.3 CONVEYANCE OF LEASED PROPERTY. In the event Lessee
elects to purchase the Leased Property pursuant to Sections 19.1
or 19.2, then on the first Payment Date occurring not less than
120 days (subject to extension by revision of appraisal delays,
if any) after the date of the Officer's Certificate referred to
in Section 19.2 or the written notice referred to in Section
19.1, Lessor shall, upon receipt from Lessee of the Minimum
Purchase Price, as of the date of such purchase and all Rent and
or other sums then due and payable under this Lease (excluding
any installment of Minimum Rent due on such Payment Date), convey
the Leased Property to Lessee on such date in accordance with the
mechanism set forth in Article XVII and this Lease shall
thereupon terminate as to the Leased Property.
ARTICLE 20
RESERVED
--------
ARTICLE 21
RISK OF LOSS
------------
Except as otherwise provided in this Lease, during the Term
of this Lease, the risk of loss or of decrease in the enjoyment
and beneficial use of the Leased Property in consequence of the
damage or destruction thereof by fire, the elements, casualties,
thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than such
consequences by Lessor and those claiming from, through or under
Lessor) is assumed by Lessee and, Lessor shall in no event be
answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Lessee to any abatement of the
Rent except as specifically provided in this Lease, unless caused
by Lessor's negligence or willful misconduct.
ARTICLE 22
INDEMNIFICATION
---------------
Notwithstanding the existence of any insurance or self
insurance provided for in Article XII, and without regard to the
policy limits of any such insurance or self insurance, Lessee
will protect, indemnify, save harmless and defend Lessor from and
against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including reasonable
attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Lessor by reason
of: (a) any accident, injury to or death of persons or loss to
property occurring on or about the Leased Property, including any
claims of malpractice, (b) any use, misuse, no use, condition,
maintenance or repair by Lessee of the Leased Property, (c) any
Impositions (which are the obligations of Lessee to pay pursuant
to the applicable provisions of this Lease), (d) any failure on
the part of Lessee to perform or comply with any of the terms of
this Lease, (e) the non-performance of any of the terms and
provisions of any and all existing and future subleases of the
Leased Property to be performed by Lessee as landlord thereunder
and (f) the violation of any Hazardous Materials Law (an
"Indemnified Claim"). Any amounts which become payable by Lessee
under this Section shall be paid within ten days after liability
therefor on the part of Lessor is finally determined by
litigation or otherwise (including the expiration of any time for
appeals) and, if not timely paid, shall bear interest (to the
extent permitted by law) at the Overdue Rate from the date of
such determination to the date of payment. Lessee, at its
expense, shall contest, resist and defend any such claim, action
or proceeding asserted or instituted against Lessor or may
compromise or otherwise dispose of the same as Lessee sees fit.
Lessor shall cooperate with Lessee in a reasonable manner to
permit Lessee to satisfy Lessee's obligations hereunder,
including the execution of any instruments or documents
reasonably requested by Lessee. Nothing herein shall be
construed as indemnifying Lessor or its agents for their own
negligent acts or omissions or willful misconduct. Lessee's
liability for a breach of the provisions of this Article shall
survive any termination of this Lease.
In case any Indemnified Claim is brought or threatened by
any third party against Lessor hereunder, Lessor shall promptly
notify Lessee in writing and Lessee shall assume defense thereof,
including the employment of counsel approved in writing by such
Lessor, which approval shall not be unreasonably withheld. In
addition, in case Lessor shall become aware of any facts which
might result in any such claim, demand or cause of action, Lessor
shall promptly notify Lessee thereof in writing, who shall have
the right to take such action as may be deemed reasonably
appropriate to resolve such matter. Lessor shall have the right
to employ separate counsel in any such third party action, but
the fees and expenses of such counsel shall be at the expense of
Lessor unless the employment of such counsel has been separately
authorized in writing Lessee or Lessee has failed to employ
counsel. Lessor shall cooperate fully in the defense any such
third party claim, demand and cause of action and shall engage in
no conduct prejudicial to the defense thereof. Lessee shall not
be liable for any settlement of any such party claim, demand or
cause of action effected without its consent, but if settled with
consent of Lessee or if there shall be a final judgment for the
plaintiff in any such third action, Lessee shall indemnify and
hold harmless Lessor from and against any loss or liability by
reason of such settlement or judgment.
ARTICLE 23
SUBLETTING AND ASSIGNMENT
-------------------------
23.1 SUBLETTING AND ASSIGNMENT. Subject to the rights of
Tenants under existing Tenant Leases and subject to the
provisions of Section 23.3 below and any other express conditions
or limitations set forth herein, Lessee may, without the consent
of Lessor, sublet all or any part of the Leased Property
consistently with the Primary Intended Use. Lessor shall not
unreasonably withhold its consent to any other or further
subletting or assignment; provided that (a) in the case of a
subletting, the sublessee shall comply with the provisions of
Section 23.2, (b) in the case of an assignment, the assignee
shall assume in writing and agree to keep and perform all of the
terms of this Lease on the part of Lessee to be kept and
performed and shall be and become jointly and severally liable
with Lessee for the performance thereof, (c) an original
counterpart of each such sublease and assignment and assumption,
duly executed by Lessee and such sublessee or assignee, as the
case may be, in form and substance reasonably satisfactory to
Lessor, shall be delivered promptly to Lessor, and (d) in case of
either an assignment or subletting, Lessee shall remain primarily
liable, as principal rather than as surety, for the prompt
payment of the Rent and for the performance and observance of all
of the covenants and conditions to be performed by Lessee
hereunder. In addition to Lessee's rights to sublet and assign
as provided in this section above, Lessee shall also have the
right (upon Lessor's prior consent, which consent shall not
unreasonably be withheld) to enter into Tenant Leases which
extend beyond the Term of this Lease. To the extent that any
such Tenant Leases extend beyond the Term of this Lease, Lessor
shall receive the rents from, and be responsible for any
obligations on the part of the landlord or lessor under such
Tenant Leases. Any and all such Tenant Leases shall, to the
extent applicable, be subject to the provisions of this Section
and Section 23.2.
23.2 NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT. Except
for existing Tenant Leases, Lessee shall insert in each sublease
permitted under Section 23.1 provisions to the effect that (a)
such sublease is subject and subordinate to all of the terms and
provisions of this Lease and to the rights of Lessor hereunder,
(b) in the event this Lease shall terminate before the expiration
of such sublease, the sublessee thereunder will, at Lessor's
option, attorn to Lessor and waive any right the sublessee may
have to terminate the sublease or to surrender possession
thereunder as a result of the termination of this Lease and (c)
in the event the sublessee receives a written notice from Lessor
or Lessor's assignees, if any, stating that Lessee is in default
under this Lease, the sublessee, shall thereafter be obligated to
pay all rentals accruing under said sublease directly to the
party giving such notice, or as such party may direct. All
rentals received from the sublessee by Lessor or Lessor's
assignees, if any, shall be credited against amounts owing by
Lessee under this Lease. Lessor agrees that notwithstanding any
default, termination, expiration, sale, entry or other act or
omission of Lessee pursuant to the terms of this Lease, or at law
or in equity, Tenant's possession shall not be disturbed unless
such possession may otherwise be terminated pursuant to the terms
of the applicable Tenant Lease. Lessor hereby agrees, upon
Lessee's request, to execute a nondisturbance agreement in favor
of any Tenant or in favor of any sublessee under any sublease
permitted under Section 23.1 above; provided that the Tenant or
any such sublessee has acknowledged all of the foregoing
provisions and executed all documents required by this Section
23.2.
ARTICLE 24
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS
-----------------------------------------------
24.1 ESTOPPEL CERTIFICATE. At any time and from time to
time within 20 days following written request by Lessor, Lessee
will furnish to Lessor an Officer's Certificate certifying that
this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting
forth the modifications, or such other facts and circumstances
relating to the effect of this Lease as may be applicable) and
the dates to which the Rent has been paid. Any such Officer's
Certificate furnished pursuant to this Article may be relied upon
by Lessor, any prospective purchaser of the Leased Property and
any third parties who have an interest in the Leased Property,
including any Lender or professional advisor of Lessor.
24.2 FINANCIAL STATEMENTS AND CERTIFICATES. Lessee will
furnish the following statements to Lessor; provided that Lessor
shall keep confidential items furnished by Lessee which are not
generally available to the public:
(i) within 120 days after the end of each Fiscal
Years (A) a copy of the Consolidated Financial
Statements for such Fiscal Year; (B) an Officer's
Certificate stating (x) that no Event of Default, or
event which, with the giving of notice or the passage
of time, or both, would constitute an Event of Default,
has occurred and is continuing and has not been waived,
or, if there shall have occurred and be continuing such
an Event of Default, specifying the nature thereof and
the steps being taken to remedy the same, and (y) that
to the best of the signer's knowledge and belief,
Lessee is not in default in the performance or
observance of any of the terms of any loans or credit
facilities which by their terms would permit an
outstanding balance equal to or greater than
$5,000,000.00 in the aggregate, which default would
permit the holder thereof to accelerate its stated
maturity; (C) a current rent or lease roll for the
Leased Property setting forth rental information in
reasonable detail regarding all of the Tenants and
Tenant Leases, including any space utilized by Lessee;
(D) a statement of revenues and expenses of the Leased
Property for the prior twelve-month period in detail
reasonably satisfactory to Lessor; and (E) an Officer's
Certificate specifying in detail reasonably
satisfactory to Lessor, the compliance of Lessee and
the Leased Property with Sections 15.1(f) and 15.1(g);
(ii) within 45 days after the end of each of the
first three quarterly periods of each Fiscal Year,
Consolidated Financial Statements as of the end of each
such period, which statements may be internal
statements and need not be audited; and
(iii) with reasonable promptness, such other
information respecting the financial condition, affairs
and properties of Lessee as Lessor may reasonably
request from time to time.
ARTICLE 25
INSPECTION
----------
Lessee shall permit Lessor and its authorized
representatives to inspect the Leased Property during usual
business hours subject to any security, health, safety or
confidentiality requirements of Lessee, the rights of the
Tenants, any Insurance Requirements relating to the Leased
Property, or any other restrictions imposed by law or applicable
regulations.
ARTICLE 26
QUIET ENJOYMENT
----------------
So long as Lessee shall pay all Rent as the same becomes due
and shall fully comply with all of the terms of this Lease and
fully perform its obligations hereunder, Lessee shall peaceably
and quietly have, hold and enjoy the Leased Property for the Term
hereof, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to all liens
and encumbrances of record as of the date hereof or hereafter
consented to by Lessee. No failure by Lessor to comply with the
foregoing covenant shall give Lessee any right to cancel or
terminate this Lease, or to fail to pay any other sum payable
under this Lease, or to fail to perform any other obligation of
Lessee hereunder. Notwithstanding the foregoing, Lessee shall
have the right by separate and independent action to pursue any
claim or seek any damages it may have against Lessor as a result
of a breach by Lessor of the covenant of quiet enjoyment
contained in this Article.
ARTICLE 27
NOTICES
-------
Any notices, demands, approvals and other communications
provided for in this Lease shall be in writing and shall be
delivered by telephonic facsimile, overnight air courier,
personal delivery or registered or certified U.S. Mail with
return receipt requested, postage paid, to the appropriate party
at its address as follows:
If to Lessor:
CAPSTONE CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Sirote & Permutt, P. C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee:
GRAND COURT LIFESTYLES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for notice may be changed from time to time by
written notice to all other parties. Any communication given by
mail will be effective (i) upon the earlier of (a) three business
days following deposit in a post office or other official
depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return
receipt; (ii) if given by telephone facsimile, when sent; and
(iii) if given by personal delivery or by overnight air courier,
when delivered to the appropriate address set forth.
ARTICLE 28
APPRAISAL
---------
In the event that it becomes necessary to determine the
Minimum Purchase Price or the Fair Market Rental Value of the
Leased Property, the Replacement Value for the Leased
Improvements or the Fair Market Value of the Land for any purpose
of this Lease, the party required or permitted to give notice of
such required determination shall include in the notice the name
of a person selected to act as an appraiser on its behalf.
Within ten days after receipt of any such notice, Lessor (or
Lessee, as the case may be) shall by notice to Lessee (or Lessor,
as the case may be) appoint a second person as an appraiser on
its behalf. The appraisers thus appointed (each of whom must be
a member of the American Institute of Real Estate Appraisers or
any successor organization thereto) shall, within 45 days after
the date of the notice appointing the first appraiser, proceed to
appraise the appropriate property interest to determine any of
the foregoing values as of the relevant date (giving effect to
the impact, if any, of inflation from the date of their decision
to the relevant date); provided that if only one appraiser shall
have been so appointed, or if two appraisers shall have been so
appointed but only one such appraiser shall have made such
determination within 50 days after the making of Lessee's or
Lessor's request, then the determination of such appraiser shall
be final and binding upon the parties. If two appraisers shall
have been appointed and shall have made their determinations
within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed
ten percent of the lesser of such amounts, then the relevant
value shall be an amount equal to 50% of the sum of the amounts
so determined. If the difference between the amounts so
determined shall exceed 10% of the lesser of such amounts, then
such two appraisers shall have 20 days to appoint a third
appraiser, but if such appraisers fail to do so, then either
party may request the American Arbitration Association or any
successor organization thereto to appoint an appraiser within 20
days of such request, and both parties shall be bound by any
appointment so made within such 20-day period. If no such
appraiser shall have been appointed within such 20 days or within
90 days of the original request for a determination of any such
value, whichever is earlier, either Lessor or Lessee may apply to
any court having jurisdiction to have appointment made by such
court. Any appraiser appointed, by the American Arbitration
Association or by such court, shall be instructed to determine
the relevant value within 30 days after appointment of such
appraiser. The determination of the appraiser which differs most
in terms of dollar amount from the determinations of the other
two appraisers shall be excluded, and 50% of the sum of the
remaining two determinations shall be final and binding upon
Lessor and Lessee as the relevant value. However, in the event
that following the appraisal performed by said third appraiser,
the dollar amount of two of such appraisals are higher and lower,
respectively, than the dollar amount of the remaining appraisal
in equal degrees, the determinations of both the highest and
lowest appraisal, respectively, shall be rejected and the
determination of the remaining appraisal shall be final and
binding upon Lessor and Lessee as the relevant value. This
provision for determination by appraisal shall be specifically
enforceable to the extent such remedy is available under
applicable law, and any determination hereunder shall be final
and binding upon the parties except as otherwise provided by
applicable law. Lessor and Lessee shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-
half of the fees and expenses of the third appraiser and one-half
of all other costs and expenses incurred in connection with each
appraisal.
ARTICLE 29
PURCHASE RIGHTS
---------------
29.1 FIRST REFUSAL TO PURCHASE. During the Term hereof
(provided that no Event of Default has occurred and is
continuing), Lessee shall have a first refusal option to purchase
the Leased Property upon the same terms and conditions as Lessor,
or its successors and assigns, shall propose to sell the Leased
Property, or shall have received an offer from a third party to
purchase the Leased Property, which Lessor intends to accept (or
has accepted subject to Lessee's right of first refusal granted
herein). If, during the Term, Lessor receives such an offer or
reaches such agreement with a third party or proposes to offer
the Leased Property for sale, Lessor shall promptly notify Lessee
of the purchase price and all other material terms and conditions
of such agreement or proposed sale together with a copy of such
offer, and Lessee shall have 30 days after receipt of such notice
from Lessor within which time to exercise Lessee's option to
purchase. If Lessee exercises its option, then such purchase
shall be consummated within the time set forth in the third-party
offer and in accordance with the provisions of Article XVII
hereof to the extent not inconsistent herewith. If Lessee does
not exercise Lessee's option to purchase within said 30-day
period after receipt of said notice from Lessor, Lessor shall be
free for a period of 90 days after the expiration of said 30-day
period to sell the Leased Property to the third party at the
price and terms set forth in such offer. Whether or not such
sale is consummated, all the terms and conditions of this Lease
shall survive and Lessee shall be entitled to exercise its right
of first refusal as provided in this section, as to any
subsequent sale of the Leased Property during the Term of this
Lease.
29.2 NEGATIVE PLEDGE. Lessee shall not, and shall not
permit any of its Affiliates to, create, incur, permit or suffer
to exist any lien upon the Lessee's Personal Property or the
Leased Property now owned or hereafter acquired, except for the
Permitted Liens.
ARTICLE 30
DEFAULT BY LESSOR
-----------------
30.1 DEFAULT BY LESSOR. Lessor shall be in default of its
obligations under this Lease if Lessor shall fail to observe or
perform any term, covenant or condition of this Lease on its part
to be performed and such failure shall continue for a period of
30 days after written notice thereof is received by Lessor,
unless such failure cannot with due diligence be cured within a
period of 30 days, in which case such failure shall not be deemed
to continue if Lessor, within said 30-day period, proceeds
promptly and with due diligence to cure the failure and
diligently completes the curing thereof. The time within which
Lessor shall be obligated to cure any such failure shall also be
subject to extension of time due to the occurrence of any
Unavoidable Delay. In the event Lessor fails to cure any such
default, Lessee, without waiving or releasing any obligations
hereunder, and in addition to all other remedies available to
Lessee hereunder or at law or in equity, may purchase the Leased
Property from Lessor for a purchase price equal to the Minimum
Purchase Price minus an amount equal to any damage suffered by
Lessee by reason of such default. In the event Lessee elects to
purchase the Leased Property, it shall deliver a notice thereof
to Lessor specifying a Payment Date occurring no less than 90
days subsequent to the date of such notice on which it shall
purchase the Leased Property, and the same shall be thereupon
conveyed in accordance with the provisions of Article XVII. Any
sums owed Lessee by Lessor hereunder shall bear interest at the
Overdue Rate from the date due and payable until the date paid.
30.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of
Section 30.1, if Lessor shall breach any covenant to be performed
by it under this Lease, Lessee, after giving notice to and demand
upon Lessor in accordance with Section 30.1, without waiving or
releasing any obligation of Lessor hereunder, and in addition to
all other remedies available hereunder and at law or in equity to
Lessee, Lessee may (but shall be under no obligation at any time
thereafter to) make such payment or perform such act for the
account and at the expense of Lessor. All sums so paid by Lessee
and all costs and expenses (including reasonable attorneys' fees)
so incurred, together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid or incurred
by Lessee, shall be paid by Lessor to Lessee on demand or set off
against the Rent. The rights of Lessee hereunder to cure and to
secure payment from Lessor in accordance with this Section 30.2
shall survive the termination of this Lease.
ARTICLE 31
RESERVED
--------
ARTICLE 32
FINANCING OF THE LEASED PROPERTY
---------------------------------
Lessor agrees that it will not grant or create any mortgage,
deed of trust, lien, encumbrance or other title retention
agreement upon the Leased Property to secure any indebtedness of
Lessor (an "Encumbrance"), unless each holder of such an
Encumbrance agrees (a) as a condition of the effectiveness of
such notice to Lessor, to give Lessee the same notice, if any,
given to Lessor of any default or acceleration of any obligation
underlying any such Encumbrance or any sale in foreclosure of
such Encumbrance, (b) to permit Lessee to appear with its
representatives and to bid at any public foreclosure sale with
respect to any such Encumbrance, (c) agrees to release the Leased
Property from the Encumbrance upon the exercise by Lessee of a
right to purchase contained in this Lease and the payment by
Lessee of the applicable purchase price, and (d) enters into an
agreement with Lessee containing the provisions described in
Article XXXIII of this Lease. Lessee agrees to execute and
deliver to Lessor or the holder of an Encumbrance any written
agreement required by this Article within ten days of written
request thereof by Lessor or the holder of an Encumbrance.
ARTICLE 33
SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
---------------------------------------------
At the request from time to time by one or more holders of
an Encumbrance that may hereafter be placed upon the Leased
Property or any part thereof, and any and all renewals,
replacements, modifications, consolidations, spreaders and
extensions thereof, Lessee will subordinate this Lease and all of
Lessee's rights and estate hereunder to each such Encumbrance and
will attorn to and recognize such holder (or the purchaser at any
foreclosure sale or any sale under a power of sale contained in
any such Encumbrance or a holder by a deed in lieu of
foreclosure, as the case may be) as Lessor under this Lease for
the balance of the Term then remaining, subject to all of the
terms and provisions of this Lease; provided that each such
holder simultaneously with or prior to recording any such
Encumbrance executes and delivers a written agreement in
recordable form (a) consenting to this Lease and agreeing that,
notwithstanding any such other lease, mortgage, deed of trust,
right, title or interest, or any default, expiration,
termination, foreclosure, sale, entry or other act or omission
under, pursuant to or affecting any of the foregoing, Lessee
shall not be disturbed in peaceful enjoyment of the Leased
Property nor shall this Lease be terminated or canceled at any
time, except in the event Lessor shall have the right to
terminate this Lease under the terms and provisions expressly set
forth herein; (b) agreeing that it will be bound by all the terms
of this Lease, perform and observe all of Lessor's obligations
set forth herein; (c) agreeing that all proceeds of the casualty
insurance described in Article XIII of this Lease and all Awards
described in Article XIV will be made available to Lessor and
Lessee for restoration of the Leased Property as and to the
extent required by this Lease, subject only to reasonable
regulation regarding the manner of disbursement and application
thereof; and (d) agreeing that Lessee shall not be required to
pay amounts to comply with any insurance requirements of such
Facility Mortgagee in excess of the amounts necessary to satisfy
the insurance requirements set forth in this Lease. Lessee
agrees to execute and deliver to Lessor or the holder of an
Encumbrance any written agreement required by this Article within
ten days of written request thereof by Lessor or the holder of an
Encumbrance. Lessee agrees to execute at the request from time
to time of Lessor or an institutional investor a certificate
setting forth any defaults of Lessor hereunder and the dates
through which Rent has been paid and such other matters as may be
reasonably requested.
ARTICLE 34
EXTENDED TERMS
--------------
If no Event of Default shall have occurred and be
continuing, Lessee is hereby granted the right to extend the Term
of this Lease for three consecutive five-year periods ("Extended
Term") for a maximum possible Term of 30 years, by giving written
notice to Lessor of each such extension at least 180 days, but
not more than 270 days, prior to the expiration of the then-
current Term; subject, however, to the provisions of Section 13.7
hereof; provided that this Lease may not be extended unless all
of the Affiliated Leases are extended by Lessee and its
Affiliates. Lessee may not exercise its option for more than one
Extended Term at a time. During each Extended Term, all of the
terms and conditions of this Lease shall continue in full force
and effect, except that the Minimum Rent for and during each of
the Extended Terms shall be the greater of (i) the Fair Market
Rental Value on the first day of such Extended Term or (ii) the
Minimum Rent in effect immediately prior to the first day of such
Extended Term. In any event, the Minimum Rent shall continue to
be increased throughout the Extended Terms in accordance with the
provisions of Section 2.1(b) hereof.
ARTICLE 35
MISCELLANEOUS
-------------
35.1 NO WAIVER. No failure by Lessor or Lessee to insist
upon the strict performance of any term hereof or to exercise any
right, power or remedy consequent upon a breach thereof, and no
acceptance of full or partial payment of the Rent during the
continuance of any such breach, shall constitute a waiver of any
such breach or any such term. To the extent permitted by law, no
waiver of any breach shall affect or alter this Lease, which
shall continue in full force and effect with respect to any other
then existing or subsequent breach.
35.2 REMEDIES CUMULATIVE. To the extent permitted by law,
each legal, equitable or contractual right, power and remedy of
Lessor or Lessee now or hereafter provided either in this Lease
or by statute or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not
preclude the simultaneous or subsequent exercise by Lessor or
Lessee of any or all of such other rights, powers and remedies.
35.3 SURRENDER. No surrender to Lessor of this Lease or of
the Leased Property or any part thereof, or of any interest
therein, shall be valid or effective unless agreed to and
accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such
surrender.
35.4 NO MERGER OF TITLE. There shall be no merger of this
Lease or of the leasehold estate created hereby by reason of the
fact that the same person, firm, corporation or other entity may
acquire, own or hold, directly or indirectly, (a) this Lease or
the leasehold estate created hereby or any interest in this Lease
or such leasehold estate and (b) the fee estate in the Leased
Property.
35.5 TRANSFERS BY LESSOR. If Lessor or any successor owner
of the Leased Property shall convey the Leased Property in
accordance with the terms hereof, other than as security for a
debt, the grantee or transferee of the Leased Property shall
expressly assume all obligations of Lessor hereunder arising or
accruing from and after the date of such conveyance or transfer,
and shall be reasonably capable of performing the obligations of
Lessor hereunder and Lessor or such successor owner, as the case
may be, shall thereupon be released from all future liabilities
and obligations of Lessor under this Lease arising or accruing
from and after the date of such conveyance or other transfer and
all such future liabilities and obligations shall thereupon be
binding upon the new owner.
35.6 GENERAL. Anything contained in this Lease to the
contrary notwithstanding, all claims against, and liabilities of,
Lessee and Lessor against the other arising out of or relating to
this Lease and arising prior to any date of termination of this
Lease shall survive such termination. If any term or provision
of this Lease or any application thereof shall be invalid or
unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected
thereby. If any late charges provided for in any provision of
this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges
shall be fixed at the maximum permissible rate. Neither this
Lease nor any provision hereof may be changed, waived, discharged
or terminated except by an instrument in writing and in
recordable form signed by Lessor and Lessee. All the terms and
provisions of this Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. The headings in this Lease are for convenience of
reference only and shall not limit or otherwise affect the
meaning hereof. This Lease shall be governed by and construed in
accordance with the laws of state where the Leased Property is
located, but not including its conflict of laws rules. This
Lease may be executed in one or more counterparts, each of which
shall be an original but, when taken together, shall constitute
but one document.
35.7 MEMORANDUM OF LEASE. Lessor and Lessee shall upon
execution hereof enter into a short form memorandum of this Lease
in form suitable for recording under the laws of the state in
which the Leased Property is located in which reference to this
Lease, and all options contained herein, shall be made.
35.8 TRANSFER OF LICENSES. Upon the expiration or earlier
termination of the Term, Lessee shall take all reasonable action
necessary to effect or useful in effecting, if permissible, the
transfer to Lessor or Lessor's nominee of all licenses, operating
permits and other governmental authorizations and all service
contracts which may be necessary or useful in the operation of
the Facility and which relate exclusively to the Facility which
have not previously been transferred or assigned to Lessor.
ARTICLE 36
GLOSSARY OF TERMS
-----------------
36.1 For purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (a)
the terms defined in this Article XXXVI have the meanings
assigned to them in this Article XXXVI and include the plural as
well as the singular, (b) all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance
with generally accepted accounting principles as at the time
applicable, (c) all references in this Lease to designated
"Articles", "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this
Lease, and (d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Lease as a whole and
not to any particular Article, Section or other subdivision, (e)
the word "including" shall mean "including without limitation,"
and (f) all consents required of Lessor hereunder shall be in
Lessor's sole and absolute discretion, unless otherwise
specifically set forth herein. For purposes of this Lease, the
following terms shall have the meanings indicated:
"Additional Charges" has the meaning set forth in Section
2.3 hereof together with any other items specifically included as
"Additional Charges" in this Agreement.
"Adjustment Date" has the meaning set forth in Section
2.1(b) hereof.
"Affiliate", when used with respect to Lessee, means any
Person directly or indirectly controlling, controlled by or under
direct or indirect common control with Lessee, as the case may
be. For the purposes of this definition, "control", as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, through the ownership of
voting securities, partnership interests or other equity
interests.
"Affiliated Leases" has the meaning set forth in Section
15.1(a).
"Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation.
"Base Amount" means the sum of (A) the Project Amount, plus
----
(B) the sum of all Capital Addition Costs relating to the Leased
Property paid for or financed by Lessor which as of the date of
purchase of the Leased Property by Lessee have not been repaid by
Lessee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which national banks in
the City of Birmingham, Alabama are closed.
"Capital Additions" means one or more new buildings or one
or more additional structures annexed to any portion of any of
the Leased Improvements, which are constructed on any parcel or
portion of the Land during the Term, including the construction
of a new wing or new story, or the rebuilding of the existing
Leased Improvements or any portion thereof not normal, ordinary
or recurring to maintain the Leased Property, excluding, however,
any construction governed by the provisions of Article XIII.
"Capital Addition Cost" means the cost of any Capital
Additions made by Lessee whether paid for by Lessee or Lessor.
Such cost shall include and be limited to (a) the cost of
construction of the Capital Additions, including site preparation
and improvement, materials, labor, supervision and certain
related design, engineering and architectural services and the
cost of any fixtures, construction financing and miscellaneous
items approved in writing by Lessor, (b) if agreed to by Lessor
in writing in advance, the cost of any land contiguous to the
Leased Property purchased for the purpose of placing thereon the
Capital Additions or any portion thereof or for providing means
of access thereto, or parking facilities therefor, including the
cost of surveying the same, (c) the cost of insurance, real
estate taxes, water and sewage charges and other carrying charges
for such Capital Additions during construction, (d) the cost of
title insurance, (e) reasonable fees and expenses of legal
counsel and accountants, (f) filing, registration and recording
taxes and fees, (g) documentary stamp taxes, if any, (h)
environmental assessments and boundary surveys and (i) all
reasonable costs and expenses of Lessor and any Lending
Institution which has committed to finance the Capital Additions,
including, (A) the reasonable fees and expenses of their
respective legal counsel, (B) all printing expenses, (C) the
amount of any filing, registration and recording taxes and fees,
(D) documentary stamp taxes, if any, (E) title insurance charges,
appraisal fees, if any, (F) rating agency fees, if any, and (G)
commitment fees, if any, charged by any Lending Institution
advancing or offering to advance any portion of the financing for
such Capital Additions.
"Capital Replacement Account" has the meaning set forth in
Section 2.1(c).
"Charge" has the meaning set forth in Article XI hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" has the meaning set forth in Article I.
"Condemnation" means the transfer of all or any part of the
Leased Property as a result of (i) the exercise of any
governmental power, whether by legal proceedings or otherwise, by
a Condemnor or (ii) a voluntary sale or transfer by Lessor to any
Condemnor, either under threat of Condemnation or while legal
proceedings for Condemnation are pending.
"Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of
Condemnation.
"Consolidated Financial Statements" means for any fiscal
year or other accounting period for Developer and its respective
consolidated Affiliates, including Lessee, audited statements 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 Developer 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
Developer, and prepared in accordance with generally accepted
accounting principles consistently applied, except as noted.
"Consolidated Net Worth" means at any time, the sum of the
following for Developer and its consolidated Affiliates,
including Lessee, on a consolidated basis determined in
accordance with generally accepted accounting principles:
(a) the amount of capital or stated capital (after
deducting the cost of any treasury shares or like
interests), plus
(b) the amount of capital surplus and retained
earnings (or, in the case of a capital surplus or retained
earnings deficit, minus the amount of such deficit), minus
(c) the sum of the following (without duplication of
deductions in respect of items already deducted in arriving
at capital surplus and retained earnings): (i) unamortized
debt discount and expense; (ii) any write-up in book value
of assets resulting from a revaluation thereof subsequent to
the most recent Consolidated Financial Statement prior to
the date thereof, except any net write-up in value of
foreign currency; (iii) any write-up resulting from a
reversal of a reserve for bad debts or depreciation; and
(iv) any write-up resulting from a change in methods of
accounting for inventory.
"Coverage Ratio" means EBITDAR for the Leased Property for
the previous three months, times four divided by the Minimum Rent
due for the next-succeeding twelve-month period.
"Credit Enhancements" means all cash collateral, security
deposits, security interests, letters of credit, pledges, prepaid
rent or other sums, deposits or interests held by Lessee, if any,
to secure obligations with respect to the Leased Property, the
Tenant Leases or the Tenants.
"Date of Taking" means the date the Condemnor has the right
to possession of the property being condemned.
"Development Agreement" has the meaning set forth in Article
I.
"EBITDAR" means, for any period, the sum of (i) the income
(or deficit) from the Leased Property before provision of income
taxes for such period, plus (ii) the interest charges paid or
----
accrued during such period (including imputed interest on capital
lease obligations, but excluding amortization of debt discount
and expense), plus (iii) all amounts in respect of depreciation
----
and amortization for such period, plus (iv) the Minimum Rent for
----
such period.
"Encumbrance" has the meaning set forth in Article XXXII.
"Event of Default" has the meaning set forth in Section
15.1.
"Extended Term" has the meaning set forth in Section XXXIV.
"Facility" means the __________ square foot assisted and
independent living facility and related parking areas to be
operated on the Leased Property.
"Facility Mortgage" has the meaning set forth in Section
12.1.
"Facility Mortgagee" has the meaning set forth in Section
12.1.
"Fair Market Rental Value" means the fair market rental
value of the Leased Property (a) assuming the same is
unencumbered by this Lease, (b) determined in accordance with the
appraisal procedures set forth in Article XXVIII or in such other
manner as shall be mutually acceptable to Lessor and Lessee, and
(c) not taking into account any reduction in value resulting from
an indebtedness to which the Leased Property may be subject.
"Fair Market Value" means the fair market value of the Land
(a) assuming the same is unencumbered by this Lease, (b)
determined in accordance with the appraisal procedures set forth
in Article XXVIII or in such other manner as shall be mutually
acceptable to Lessor and Lessee, and (c) not taking into account
any reduction in value resulting from any Encumbrance which
Lessee or Lessor is otherwise required to remove pursuant to any
provision of this Lease or agrees to remove at or prior to the
closing of the transaction for which such Fair Market Value
determination is being made.
"Fiscal Year" means the twelve-month period from February 1
to January 31.
"Fixtures" has the meaning set forth in Article I.
"Full Replacement Cost" has the meaning set forth in Section
12.2.
"Hazardous Materials" means any substance, including
asbestos or any substance containing asbestos, the group of
organic compounds known as polychlorinated biphenyls, flammable
explosives, radioactive materials, medical waste, chemicals,
pollutants, effluents, contaminants, emissions or any other
related materials and items included in the definition of
hazardous or toxic wastes, materials or substances under any
Hazardous Materials Law.
"Hazardous Materials Law" means any law, regulation or
ordinance relating to environmental conditions, medical waste and
industrial hygiene, including the Resource Conservation and
Recovery Act of 1976 ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of
1986 ("▇▇▇▇"), the Hazardous Materials Transportation Act, the
Federal Water Pollution Control Act, the Clean Air Act, the Clean
Water Act, the Toxic Substances Control Act, the Safe Drinking
Water Act, the Atomic Energy Act and all similar federal, state
and local environmental statutes and ordinances, whether
heretofore or hereafter enacted or effective and all regulations,
orders, or decrees heretofore or hereafter promulgated
thereunder.
"Impositions" means, collectively, all taxes relating to the
Leased Property, including all ad valorem, sales and use, gross
receipts, action, privilege, rent (with respect to the Tenant
Leases) or similar taxes, assessments (including all assessments
for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be
completed within the Term), water, sewer or other rents and
charges, excises, tax levies, fees (including license, permit,
inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property and/or the Rent
(including all interest and penalties thereon due to any failure
in payment by Lessee), which at any time prior to, during or in
respect of the Term hereof may be assessed or imposed on or in
respect of or be a lien upon (a) Lessor or Lessor's interest in
the Leased Property, (b) the Rent, the Leased 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, sales from, or activity conducted on, or in
connection with, the Leased Property or the Tenant Leases or use
of the Leased Property or any part thereof; provided that nothing
contained in this Lease shall be construed to require Lessee to
pay (1) any tax based on net income (whether denominated as a
franchise or capital stock or other tax) imposed on Lessor, (2)
any transfer or net revenue tax of Lessor, (3) any tax imposed
with respect to the sale, exchange or other disposition by Lessor
of any portion of the Leased Property or the proceeds thereof, or
(4) except as expressly provided elsewhere in this Lease, any
principal or interest on any Encumbrance on the Leased Property,
except to the extent that any tax, assessment, tax levy or charge
which Lessee is obligated to pay pursuant to this definition and
which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge
set forth in clause (1), (2) or (3) is levied, assessed or
imposed expressly in lieu thereof.
"Initial Term" has the meaning set forth in Article I.
"Insurance Requirements" means all terms of any insurance
policy required by this Lease and all requirements of the issuer
of any such policy.
"Land" has the meaning set forth in Article I.
"Lease" means this Lease.
"Lease Amendment" has the meaning set forth in Section
9.3(b)(iv).
"Lease Assignment" means that certain Assignment of Rents
and Leases, substantially in the form attached hereto as Exhibit
-------
F, to be dated on or about the date hereof executed by Lessee to
-
Lessor, pursuant to the terms of which Lessee assigns to Lessor
each of the Tenant Leases and Credit Enhancements, if any, as
security for the obligations of Lessee under this Lease, and any
other obligations of Lessee, or any Affiliate of Lessee to
Lessor.
"Leased Improvements" and "Leased Property" have the
meanings set forth in Article I.
"Legal Requirements" means all federal, state, county,
municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions
affecting the Leased Property or the construction, use or
alteration thereof, whether now or hereafter enacted and in
force, including any which may (a) require repairs, modifications
or alterations of or to the Leased Property, or (b) in any way
adversely affect the use and enjoyment thereof, and all permits,
licenses, authorizations and regulations relating thereto, and
all covenants, agreements, actions and encumbrances contained in
any instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee), at
any time in force affecting the Leased Property.
"Lending Institution" means any insurance company, federally
insured commercial or savings bank, national banking association,
savings and loan association, employees' welfare, pension or
retirement fund or system, corporate profit-sharing or pension
plan, college or university, or real estate investment company
including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust having a net worth of
at least $50,000,000.
"Lessee" means GRAND COURT LIFESTYLES, INC., a Delaware
corporation, its successors and assigns.
"Lessor" means CAPSTONE CAPITAL CORPORATION, a Maryland
corporation, and its successors and assigns.
"Minimum Purchase Price" means the greater of (i) the
Replacement Value of the Leased Improvements plus the Fair Market
Value of the Land at the time of any purchase hereunder by Lessee
or (ii) the Option Amount.
"Minimum Rent" has the meaning set forth in Section 2.1(a).
"Officer's Certificate" means a certificate of Lessee signed
by the Chairman of the Board of Directors, the President, any
Vice President or another officer authorized to so sign by the
Board of Directors or By-Laws of Lessee, or any other person
whose power and authority to act has been authorized by
delegation in writing by any of the persons holding the foregoing
offices.
"Option Amount" means the sum of (i) Base Amount plus
(ii) the Base Amount times the Option Factor.
"Option Factor" means .20 on the fourth anniversary of the
Commencement Date, which Option Factor shall decline by .02 on
each anniversary of the Commencement Date thereafter; provided
that the Option Factor shall never fall below .10 throughout the
Term.
"Ordinary Course of Business" means the ordinary course of
business for Lessee consistent with past custom and practice
(including quantity and frequency).
"Overdue Rate" means as of any date, a rate per annum equal
to the Prime Rate as of such date, plus two percent, but in no
event greater than the maximum rate then permitted under
applicable law.
"Payment Date" means any due date for the payment of the
installments of Minimum Rent under this Lease.
"Permitted Exceptions" has the meaning set forth in Article
I.
"Permitted Liens" means (i) liens described on Exhibit D
---------
attached hereto, (ii) pledges or deposits made to secure payments
of worker's compensation insurance (or to participate in any fund
in connection with worker's compensation insurance), unemployment
insurance, pensions or social security programs, (iii) liens
imposed by mandatory provisions of law such as for materialmen,
mechanics, warehousemen and other like liens arising in the
Ordinary Course of Business, securing indebtedness whose payment
is not yet due and payable, (iv) liens for taxes, assessments and
governmental charges or levies if the same are not yet due and
payable or if the same are being contested in good faith and as
to which adequate cash reserves have been provided, (v) liens
arising from good faith deposits in connection with tenders,
leases, real estate bids or contracts (other than contracts
involving the borrowing of money), pledges or deposits to secure
public or statutory obligations and deposits to secure (or in
lieu of) surety, stay, appeal or customs bonds and deposits to
secure the payment of taxes, assessments, duties or other similar
charges, (vi) liens to secure purchase money indebtedness, so
long as the indebtedness incurred to purchase the new asset is
secured only by such asset, or (vii) encumbrances consisting of
zoning restrictions, easements or other restrictions on the use
of real property; provided that such items do not impair the use
of such property for the purposes intended, none of which is
violated by existing or proposed structures or land use.
"Person" means a natural person, corporation, partnership,
trust, association, limited liability company or other entity.
"Personal Property" means the personal property specifically
set forth on Exhibit E attached hereto, together with all
---------
additions, substitutions and replacements thereof, necessary or
appropriate for the use and operation of the Leased Property for
its Primary Intended Use.
"Primary Intended Use" has the meaning set forth in Section
6.2(a).
"Prime Rate" means the annual rate reported by The Wall
Street Journal, Eastern Edition (or, if The Wall Street Journal
shall no longer be published or shall cease to report such rates,
then a publication or journal generally acceptable in the
financial industry as authoritative evidence of prevailing
commercial lending rates) from time to time as being the
prevailing prime rate (or, if more than one such rate shall be
published in any given edition, the arithmetic mean of such
rates). The prime rate is an index rate used by The Wall Street
Journal to report prevailing lending rates and may not
necessarily be its most favorable lending rate available. Any
change in the Prime Rate hereunder shall take effect on the
effective date of such change in the prime rate as reported by
The Wall Street Journal, without notice to Lessee or any other
action by Lessor. Interest shall be computed on the basis that
each year contains 360 days, by multiplying the principal amount
by the per annum rate set forth above, dividing the product so
obtained by 360, and multiplying the quotient thereof by the
actual number of days elapsed.
"Project Amount" means, to the extent not reimbursed by
Lessee, the Purchase Price plus the total additional amount
disbursed by Lessor or one of its Affiliates to Lessee or set
aside pursuant to Article 5 of the Development Agreement for the
construction and development of the Leased Improvements pursuant
to the Development Agreement, as the same may be adjusted
pursuant to Section 5.10 of the Development Agreement, and
Section 5.4 of this Agreement.
"Purchase Price" means the sum of the purchase price Lessor
paid for the Land plus all expenses and fees incurred by Lessor
in connection therewith.
"Rent" means, collectively, the Minimum Rent and the
Additional Charges.
"Replacement Value" means the fair market value of the
Leased Improvements determined solely on the basis of replacement
cost of the Leased Improvements in accordance with the appraisal
procedures set forth in Article XXVIII or in such other manner as
shall be mutually acceptable to Lessor and Lessee.
"Request" has the meaning set forth in Section 9.3(a).
"Taking" means a taking or voluntary conveyance during the
Term hereof of all or part of the Leased Property, or any
interest therein or right accruing thereto or use thereof, as the
result of, or in settlement of any Condemnation or other eminent
domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
"Tenant" means the lessees or tenants under the Tenant
Leases, if any.
"Tenant Leases" means all leases, subleases, assignments and
other rental agreements (written or verbal, now or hereafter in
effect), that grant a possessory interest in and to any of the
Units and all Credit Enhancements, if any, held in connection
therewith.
"Term" means the Initial Term and any Extended Term as to
which Lessee has exercised its options to extend contained in
Article XXXIV hereof unless earlier terminated pursuant to the
provisions hereof.
"Treasury Yield" means as of any date the weekly average
yield on United States Treasury Securities - Constant Maturity
Series issued by the United States Government for a term of ten
years, as most recently published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15(519). If, with respect
to the Treasury Yield, Lessor shall determine that the sale of
Treasury Securities by the United States Government has been
suspended, or Treasury Securities are not being offered for sale,
or the weekly average yield is no longer printed by the Federal
Reserve Board in Federal Reserve Statistical Release H.15(519) or
for any other reason Lessor is not able to obtain a quotation
from the Federal Reserve for the sale of such Treasury
Securities, then Lessor shall forthwith give notice to Lessee and
advise Lessee of a new index for determining the interest rate to
be used in connection with this Agreement, which rate, in the
good faith judgment of Lessor, shall be substantially equivalent
to the Treasury Yield.
"Unavoidable Delays" means delays due to strikes, lockouts,
inability to procure materials after the exercise of reasonable
efforts, power failure, acts of God, governmental restrictions,
enemy action, civil commotion, fire, unavoidable casualty or
other causes beyond the control of the party responsible for
performing an obligation hereunder, provided that lack of funds
shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the
other party hereto to perform any obligations of such other party
under this Lease.
"Unsuitable for Its Primary Intended Use" as used anywhere
in this Lease, shall mean that, by reason of damage or
destruction, or a partial Taking, in the good faith judgment of
Lessee, reasonably exercised, the Facility cannot be profitably
operated for its Primary Intended Use, taking into account, among
other relevant factors, the number of usable Units and the number
of Tenants affected by such damage or destruction or partial
Taking.
"Units" means the individual assisted and independent living
units within the Leased Property.
IN WITNESS WHEREOF, the parties have caused this Lease to be
executed and their respective corporate seals to be hereunto
affixed and attested by their respective officers thereunto duly
authorized as of the date first written above.
LESSOR
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
By____________________________
Its___________________________
LESSEE
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By____________________________
Its___________________________
EXHIBIT A
PROPERTY DESCRIPTION
EXHIBIT B
PERMITTED EXCEPTIONS
EXHIBIT C
SCHEDULE OF CONTRIBUTIONS BY LESSEE
TO CAPITAL REPLACEMENT ACCOUNT
Lessee shall fund the Capital Replacement Account on annual
basis at the rate of $75.00 per Unit per year, such payment to
increase by $25.00 per Unit per year up to a maximum of $250.00
per Unit per year, commencing with the first payment on the first
anniversary of the Commencement Date and continuing on each
anniversary of such date thereafter.
EXHIBIT D
PERMITTED LIENS
NONE
EXHIBIT E
PERSONAL PROPERTY
EXHIBIT F
ASSIGNMENT OF RENTS AND LEASES
STATE OF ALABAMA )
KNOW ALL MEN BY THESE PRESENTS:
JEFFERSON COUNTY )
THIS ASSIGNMENT OF RENTS AND LEASES (this "Assignment") is
entered into as of _________ _____, 1996, by and between GRAND
COURT LIFESTYLES, INC., a delaware corporation ("Assignor" or
"Lessee") whose address for notice hereunder is ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and CAPSTONE CAPITAL
CORPORATION, a Maryland corporation ("Assignee" or "Lessor"),
whose address for notice hereunder is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH
ARTICLE 1.
DEFINITIONS
-----------
As used herein, the following capitalized terms used herein
shall have the following meanings:
"Credit Enhancements" means all security deposits, security
interests, letters of credit, pledges, prepaid rent or other
sums, deposits or interests, if any, held by Lessee with respect
to the Property, the Tenant Leases or the tenants under the
Tenant Leases.
"Engineering Documents" means all site plans, surveys, soil
and substrata studies, architectural drawings, plans and
specifications, engineering plans and studies, floor plans,
landscape plans, and other plans and studies that relate to the
Land, the Improvements or the Fixtures and are in Lessee's
possession or control.
"Fixtures" means all permanently affixed equipment,
machinery, fixtures, and other items of real and/or personal
property, including all components thereof, now and hereafter
located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection
equipment, and built-in vacuum, cable transmission, oxygen and
similar systems, all of which, to the greatest extent permitted
by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding any
of Tenant's trade fixtures or other fixtures that a Tenant is
permitted to remove pursuant to the applicable Tenant Lease.
"Improvements" means all buildings, improvements, structures
and Fixtures now or on the Closing Date located on the Land,
including, without limitation, landscaping, parking lots and
structures, roads, drainage and all above ground and underground
utility structures, equipment systems and other so-called
"infrastructure" improvements.
"Land" means the real property more particularly described
on Exhibit A attached hereto and made a part hereof, together
---------
with all covenants, licenses, privileges and benefits thereto
belonging, and any easements, rights-of-way, rights of ingress or
egress or other interests of Lessee in, on, or to any land,
highway, street, road or avenue, open or proposed, in, on,
across, in front of, abutting or adjoining such real property
including, without limitation, any strips and gores adjacent to
or lying between such real property and any adjacent real
property.
"Lease" means that certain lease agreement of even date
herewith between Lessor and Lessee.
"License" has the meaning set forth in Section 3.1 hereof.
"Obligations" means any and all of the indebtedness,
liabilities, and other obligations made or undertaken by Lessee
to Lessor or others as set forth in the Security Documents
(hereinafter defined), the Lease and any lease, sublease or other
form of conveyance or any other agreement pursuant to which
Lessee is granted a possessory interest in the Property.
"Obligation Documents" means any and all agreements,
assignments and instruments (including any renewals, extensions,
modifications or amendments thereof) evidencing, securing or
pertaining to the Lease.
"Property" means, collectively, the Improvements, the Credit
Enhancements, the Engineering Documents and the Warranties.
"Rents" means the immediate, absolute and continuing right
to collect and receive all of the rents, income, receipts,
revenues, proceeds, security and other types of deposits, issues
and profits now due or which may become due or to which Lessee
may now or shall hereafter (whether upon any applicable
redemption period or otherwise) become entitled or may demand or
claim, arising or issuing from or out of the Tenant Leases, or
from or out of the Property or any part thereof (subject only to
the limited license granted herein by Lessor to Lessee to so
collect and receive the Rents), including, without limiting the
generality of the foregoing, minimum rents, additional rents,
parking maintenance charges or fees, tax and insurance
contributions, proceeds of sale of electricity, gas, chilled and
heated water and other utilities and services, deficiency rents
and liquidated damages following default, premiums payable by any
Tenant upon the exercise of a cancellation privilege provided for
in a Tenant Lease and all proceeds payable under any policy of
insurance covering loss of rents resulting from untenantability
caused by destruction or damage to the Property.
"Security Documents" means this Assignment, and any and all
other documents now or hereafter executed by Lessee, or any other
person or party, to evidence or secure the payment or performance
and discharge of the Obligations, including, without limitation,
the Lease.
"Tenant Leases" means all leases, subleases and other rental
agreements and guaranties thereof (written or verbal, now or
hereafter in effect) that grant a possessory interest in and to
occupy and enjoy all or any portion of the Property (save and
except any and all leases, subleases or other agreements pursuant
to which Lessor or Lessee is granted a possessory interest in the
Land), including, without limitation, those certain tenant lease
agreements and guaranties (herein so called) described on Exhibit
-------
B attached hereto and incorporated herein by reference for all
-
purposes, together with all the rights, power and authority of
Lessee to execute, deliver, perform, enforce, alter, modify or
supplement the terms of such leases and agreements or to
surrender, cancel or terminate such leases and agreements without
the prior written consent of Lessor, and together with any and
all guarantees of any of the tenant's obligations under any of
such leases. Any of the Tenant Leases are hereinafter referred
to individually as a "Tenant Lease" and collectively as the
"Tenant Leases".
"Warranties" means all transferrable warranties,
representations and guaranties with respect to the Property,
whether express or implied, which Lessee now holds or under which
Lessee is the beneficiary, including, without limitation, all of
the representations, warranties and guaranties given and/or
assigned to Lessee under the Tenant Leases.
ARTICLE 2.
ASSIGNMENT
----------
Lessee, in consideration of the sum of $10.00, and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, does hereby grant, sell, convey,
assign, transfer, set over and deliver the Tenant Leases and the
Rents unto this Lessor, to have and to hold the Tenant Leases and
the Rents unto Lessor, and Lessee does hereby bind itself, its
successors and assigns to warrant and defend the title to the
Tenant Leases and the Rents unto Lessor against every person
whomsoever lawfully claiming or to claim the name or any part
thereof, by, through or under Lessee but not otherwise.
ARTICLE 3.
LIMITED LICENSE, CONTINUATION
AND TERMINATION OF ASSIGNMENT
-----------------------------
3.1 Limited License.
---------------
Lessee shall have the right under a limited license (the
"License") which may be revoked by Lessor pursuant to the terms
of Section 7.1, to collect upon, but not prior to accrual, all of
the Rents and Lessee shall receive the Rents and hold the same,
as well as the right and license to receive the Rents, as a trust
fund to be applied, and Lessee hereby covenants to apply the
Rents, to the payment, satisfaction and discharge of the
Obligations then due, including specifically, but without
limitation, to the payment of taxes and assessments upon the
Property before payment of penalty or interest are due thereon,
to the cost of such insurance then due, maintenance and repairs
as may be required by the terms of the Security Documents and in
satisfaction of all obligations under the Tenant Leases then due;
all prior to the application by Lessee of the Rents for any other
purposes. The License shall also include the right of Lessee to
execute, deliver, perform, enforce, alter, modify, change or
supplement the terms of the Tenant Leases and to surrender,
cancel or terminate such Tenant Leases without the prior written
consent of Lessor except for any of the Tenant Leases executed,
modified or supplemented after the date hereof whose term
(including any possible extensions on the part of the applicable
Tenant) extends beyond the Term of the Lease. Thereafter, so
long as there exists no Event of Default hereunder or under any
of the Security Documents, Lessee may use the Rents in any manner
not inconsistent with the Security Documents. Upon the sale and
conveyance by Lessor or its successors or assigns of the title to
the Property, all right, title, interest and power granted under
the License granted herein shall be automatically continued
subject to the terms and conditions of the Lease and any of the
other Security Documents.
3.2 Continuation and Termination of Assignment.
------------------------------------------
Upon final payment, performance and discharge in full of the
Obligations, this Assignment shall become and be void and of no
force or effect. Written demand by Lessor delivered to any
Tenant for payment of the Rents by reason of the occurrence of
any Event of Default claimed by Lessor, and the then existence
thereof, shall be sufficient evidence of each such Tenant's
obligation and authority to make all future payments of the Rents
to Lessor without the necessity for further consent by Lessee.
3.3 Permitted Contests.
------------------
Lessee, after ten days' prior written notice to Lessor, on its
own or on Lessor's behalf (or in Lessor's name), but at Lessee's
expense, may contest, by appropriate legal proceedings conducted
in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any of the Obligations which
is required to be paid or discharged by Lessee pursuant to the
terms of Section 3.1 pursuant to the terms and conditions of
Article XI of the Lease; provided that nothing contained herein
shall be construed to permit Lessee to contest the payment of the
rent or any other sums payable by Lessee to Lessor under the
Lease.
ARTICLE 4.
WARRANTIES AND REPRESENTATIONS
------------------------------
Lessee hereby unconditionally warrants and represents to
Lessor as follows:
4.1 Ownership of Tenant Leases and the Rents.
----------------------------------------
Subject to the terms of the Lease, Lessee has good title to the
Tenant Leases not previously transferred or assigned to Lessor
and the Rents and has all requisite right, power and authority to
assign such Tenant Leases and the Rents to Lessor, and no other
person, firm or corporation has any right, title or interest
therein.
4.2 No Default.
----------
Lessee has duly and punctually performed, all and singular, the
terms, covenants, conditions and warranties of the Tenant Leases
on Lessee's part to be kept, observed and performed; and, to the
best of Lessee's knowledge, the Tenants thereunder are not in
material default of any of the terms or provisions of the
respective Tenant Leases.
4.3 No Modification of the Tenant Leases or Anticipation or
-------------------------------------------------------
Hypothecation of the Rents.
--------------------------
The Tenant Leases are valid and unmodified, except as indicated
herein, and remain in full force and effect; Lessee has not
previously sold, assigned, transferred, or pledged the Tenant
Leases or the Rents, or any part thereof, whether now due or
hereafter to become due, except for the sales, assignments,
transfers, mortgages and pledges for which Lessee has heretofore
obtained a full release; the Rents now due, or to become due, for
any periods subsequent to the date hereof have not been collected
and that payment thereof has not been anticipated, waived or
released, discounted, set off or otherwise discharged or
compromised; and Lessee has not received any funds or deposits
from any Tenant for which credit has not already been made on
account of the accrued Rents.
ARTICLE 5.
AFFIRMATIVE COVENANTS
---------------------
Lessee hereby unconditionally covenants and agrees with
Lessor as follows:
5.1 Performance.
-----------
Lessee shall observe, perform and discharge, duly and punctually,
all and singular, the obligations, terms, covenants, conditions
and warranties of the Tenant Leases to be observed, performed or
discharged by landlord thereunder; and Lessee shall promptly
deliver to Lessor any notices received with respect to the Tenant
Leases alleging any failure on the part of the Lessee to observe,
perform and discharge the same.
5.2 Notification to Tenants.
-----------------------
Upon written request by Lessor, Lessee shall notify and direct,
in writing, such and every present or future Tenant that any
Credit Enhancement delivered to Lessee by such Tenant shall be
retained by Lessee but assigned to Lessor.
5.3 Enforcement.
-----------
Lessee shall enforce or secure in the name of Lessee the
performance of each and every obligation, term, covenant,
condition and agreement in the Tenant Leases by any Tenant to be
performed, and Lessee shall appear in and defend any action or
proceeding arising under, occurring out of or in any manner
connected with the Tenant Leases or the obligations, duties or
liabilities of Lessee and any Tenant thereunder, and upon request
by Lessor, Lessee will do so in the name and on behalf of Lessor,
but at the expense of Lessee, and Lessee shall pay all costs and
expenses of Lessor, including reasonable attorneys' fees and
disbursements, in any action or proceeding in which Lessor may
appear.
5.4 Anticipation or Hypothecation of the Rents.
------------------------------------------
Lessee hereby covenants and agrees (a) upon and after an Event of
Default hereunder or under any of the Security Documents and
while the same shall continue, to give to Lessor duplicate notice
of each default by each Tenant and copies of any and all notices
and communications received from any Tenant promptly upon
delivery or receipt thereof; (b) to comply with the terms and
provisions of each Tenant Lease; (c) not to assign, transfer,
pledge, mortgage or otherwise encumber any Tenant Lease; (d) not
to assign, transfer, pledge, mortgage or otherwise encumber any
Rents; (e) not to collect, accept from any Tenant, or permit any
Tenant to pay any Rents for more than one month in advance
(whether in cash or by evidence of indebtedness); (f) except in
the ordinary course of business and in accordance with past
practice and custom, not to waive, excuse, condone, discount,
set-off, compromise or in any manner release or discharge any
Tenant of and from any obligations, covenants, conditions or
agreements to be kept, observed or performed by such Tenant,
under and in accordance with the terms of the respective Tenant
Lease; and (g) not to enter into any Tenant Lease or amend,
modify, extend or renew any Tenant Lease for a time period
extending beyond the term of the Lease, without prior written
approval of Lessor, which approval shall not be unreasonably
withheld.
5.5 Delivery of the Tenant Leases; Further Acts and
-----------------------------------------------
Assurance.
---------
Until the Obligations secured hereby have been paid in full,
performed and discharged, Lessee shall enter into only leases of
the Property in a form approved in writing by Lessor and shall
upon the written request of Lessor deliver executed copies of all
existing and all other and future Tenant Leases when executed
upon all or any part of the Property and will transfer and assign
such other and future Tenant Leases upon the same terms and
conditions as herein contained, and Lessee hereby covenants and
agrees to make, execute and deliver to Lessor, upon demand and at
any time or times, any and all assignments and other documents
and instruments which Lessor may deem advisable to carry out the
true purpose and intent of this Assignment.
ARTICLE 6.
EVENTS OF DEFAULT
-----------------
The term "Event of Default", as used herein, shall mean the
occurrence or happening, at any time and from time to time, of
any one or more of the following:
6.1 Performance of Obligations. If Lessee shall fail,
--------------------------
refuse or neglect to perform and discharge fully and timely any
of its obligations hereunder and such failure is not cured by
Lessee within a period of 30 days after receipt by Lessee of
written notice thereof from Lessor, unless such failure cannot
with due diligence be cured within a period of 30 days, in which
case such failure shall not be deemed to continue if Lessee
proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof (as soon as reasonably
possible).
6.2 Security Documents. The occurrence of any Event of
------------------
Default under and as defined in the Lease or any other of the
Security Documents.
ARTICLE 7.
REMEDIES
--------
7.1 Remedies. Upon or any time after the occurrence, and
--------
during the continuance thereof, of an Event of Default hereunder,
Lessor, at its option, shall have the complete right, power and
authority hereunder, then or thereafter until the Event of
Default is cured, to exercise and enforce any or all of the
following rights and remedies set out in this Article 7:
(a) To terminate the License and then and thereafter,
without taking possession of the Property, to the extent
permitted by law, in Lessee's own name, to demand, collect,
receive, ▇▇▇ for, attach and levy the Rents and give proper
receipts, releases and acquittances therefor, and after deducting
all necessary and proper costs and expenses of operation and
collection, as determined by Lessor, including reasonable
attorneys' fees, and apply the net proceeds thereof, together
with any funds of Lessee deposited with Lessor, in reduction or
repayment of the Obligations in such order of priority as Lessor
may, in its sole discretion, determine in accordance with
applicable law;
(b) To declare the Lease in default and, at its option,
exercise all of the rights and remedies contained in the Lease or
any other of the Security Documents;
(c) Without regard to the adequacy of the security, with or
without any action or proceeding through any person or by any
agent, or by the trustee under any deed of trust included among
the Security Documents, or by a receiver to be appointed by a
court of competent jurisdiction, and irrespective of Lessee's
possession, then or thereafter to enter upon, take possession of,
manage and operate the Property or any part thereof; make,
modify, enforce, cancel or accept surrender of a Tenant Lease now
in effect or hereafter in effect on the Property or any part
thereof; remove and evict any Tenant (subject to the provisions
of any non-disturbance and attornment agreement entered into by
and between Lessor and any Tenant); increase or decrease the
Rents under a Tenant Lease; decorate, clean and repair, and
otherwise do any act or incur any cost or expense which Lessor
may deem reasonably necessary to protect the status and value of
the Property as fully and to the same extent as Lessee could do
if in possession thereof; and in such event, to apply the Rents
so collected to the operation and management of the Property, but
in such order or priority as Lessor shall deem proper, and
including the payment of reasonable management, brokerage and
attorneys' fees and disbursements, and payment of the Obligations
and to the establishment and maintenance, without interest, of a
reserve for replacements; and
(d) Any other remedy available to Lessor at law or in
equity.
7.2 Exculpation of Lessor. The acceptance by Lessor of
---------------------
this Assignment, with all of the rights, powers, privileges and
authority created hereby, shall not, prior to entry upon and
taking possession of the Property by Lessor, be deemed or
construed to constitute Lessor a "mortgagee in possession", nor
thereafter or at any time or in any event obligate Lessor to take
any action hereunder or to expend any money or incur any expenses
or perform or discharge any obligation, duty or liability under a
Tenant Lease or to assume any obligation or responsibility for
any security deposits or other deposits delivered to Lessee by a
Tenant and not assigned and delivered to Lessor, nor shall Lessor
be liable in any way for any injury or damage to persons or
property sustained by any person, firm or corporation in or about
the Property not attributable to the negligence or fault of
Lessor, its agents or affiliates.
7.3 No Waiver or Election of Remedies.
---------------------------------
(a) Waiver. Neither the collection of the Rents and
------
application as provided for in this Assignment nor the entry upon
and taking possession of the Property by Lessor shall be deemed
to cure or waive any Event of Default or waive, modify or affect
any notice of default under any Security Document or invalidate
any act done pursuant to any such notice. If Lessor shall
thereafter elect to discontinue the exercise of any such right or
remedy hereunder, such right or remedy may be reasserted at any
time and from time to time following any subsequent Event of
Default.
(b) Election of Remedies. The failure of Lessor to assert
--------------------
any of the terms, covenants or conditions of this Assignment for
any period of time or at any time or times shall not be construed
or deemed to be a waiver of any such right, and nothing herein
contained nor anything done or omitted to be done by Lessor
pursuant to this Assignment shall be deemed to be an election of
remedies or a waiver by Lessor of any of its rights and remedies
under any other Security Document or under the law. The right of
the Lessor to collect and enforce the payment and performance of
the Obligations and to enforce any security therefor may be
exercised by the Lessor either prior to or simultaneously with or
subsequent to any action taken hereunder.
7.4 Appointment of Attorney-in-Fact. Upon and following
-------------------------------
the occurrence of an Event of Default remaining uncured, Lessee
hereby constitutes and appoints Lessor the true and lawful
attorney-in-fact, coupled with an interest, of Lessee and in the
name, place and stead of Lessee to demand, ▇▇▇ for, attach, levy,
recover and receive any premium or penalty payable upon the
exercise by a Tenant under a Tenant Lease of a privilege of
cancellation originally provided in such Tenant Lease and to give
proper receipts, releases and acquittances therefor and, after
deducting expenses of collection, to apply the net proceeds as a
credit upon any portion of the Obligations selected by Lessor,
notwithstanding the fact that such portion of the Obligations may
not then be due and payable or that such portion of the
Obligations is otherwise adequately secured; and Lessee does
hereby authorize and direct any such Tenant to deliver such
payment to Lessor in accordance with this Assignment, and Lessee
hereby ratifies and confirms that Lessor, as attorney-in-fact,
shall do or cause to be done by virtue of the powers granted
hereby. Under the circumstances referred to in this Section 7.4,
the foregoing appointment is irrevocable and continuing, and such
rights, powers and privileges shall be exclusive in Lessor, its
successors and assigns, so long as any part of the Obligations
secured hereby remain unpaid and undischarged.
ARTICLE 8.
MISCELLANEOUS
-------------
8.1 Name of Facility. Lessee intends to call and market
----------------
the Facility under the name "Grand Court - [name of the
geographic area]." Lessor agrees that it does not have and never
will have any right, title or interest in such name, or any name
similar thereto, and shall never use the same.
8.2 Performance at Lessee's Expense. The cost and expense
-------------------------------
of performing or complying with any and all of the Obligations
shall be borne solely by Lessee, and no portion of such cost and
expense shall be, in any way and to any extent credited against
any installment on or portion of the Obligations.
8.3 Survival of Obligations. Each and all of the
-----------------------
Obligations shall survive that execution and delivery of the
Security Documents and the consummation of the transaction called
for therein, and shall continue in full force and effect until
the Obligations shall have been paid and performed in full.
8.4 Further Assurances. Lessee, upon the request of
------------------
Lessor, will execute, acknowledge, deliver and record and/or file
such further instruments and do such further acts as may be
necessary, desirable or proper to carry out more effectively the
purpose of the Security Documents and to subject to the liens and
security interests thereof any property intended by the terms
thereof to be covered thereby, including specifically, but
without limitation, any renewals, substitutions, replacements,
modifications or amendments to the Tenant Leases.
8.5 Recording and Filing. Lessee will cause the Security
--------------------
Documents and all amendments and supplements thereto and
substitutions therefor to be recorded, filed, re-recorded and
refiled in such manner and in such places as Lessor shall
reasonably request, and will pay all such recording, filing, re-
recording and refiling taxes, fees and other charges.
8.6 Notices. Any notices, demands, approvals and other
-------
communications provided for in this Assignment shall be in
writing and shall be delivered by telephonic facsimile, overnight
air courier, personal delivery or registered or certified U.S.
Mail with return receipt requested, postage paid, to the
appropriate party at its address as follows:
If to Lessor:
CAPSTONE CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Sirote & Permutt, P. C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee:
GRAND COURT LIFESTYLES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for notice may be changed from time to time by
written notice to all other parties. Any communication given by
mail will be effective (i) upon the earlier of (a) three business
days following deposit in a post office or other official
depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return
receipt; (ii) if given by telephone facsimile, when sent; and
(iii) if given by personal delivery or by overnight air courier,
when delivered to the appropriate address set forth.
8.7 Successors and Assigns. All of the terms of the
----------------------
Security Documents shall apply to, be binding upon and inure to
the benefit of the parties hereto, their successors, assigns,
heirs and legal representatives, and all other persons claiming
by, through or under them.
8.8 No Waiver; Severability. Any failure by Lessor to
-----------------------
insist, or any election by Lessor not to insist, upon strict
performance by Lessee of any of the terms, provisions or
conditions of the Security Documents shall not be deemed to be a
waiver of same or any other terms, provisions or conditions
thereof, and Lessor shall have the right at any time or times
thereafter to insist upon strict performance by Lessee of any and
all such terms, provisions and conditions. The Security
Documents are intended to be performed in accordance with, and
only to the extent permitted by, all applicable legal
requirements. If any provision of any of the Security Documents
or the application thereof to any person or circumstance shall,
for any reason and to any extent, be invalid or unenforceable,
then neither the remainder of the instrument in which such
provision to other persons or circumstances nor the other
instruments referred to herein shall be affected thereby, but
rather, shall be enforced to the greatest extent permitted by
law.
8.9 Entire Agreement and Modification. This Assignment
---------------------------------
contains the entire agreement between the parties relating to the
subject matter hereof and thereof, and all prior agreements
relative thereto which are not contained herein or therein are
terminated. This Assignment may not be amended, revised, waived,
discharged, released or terminated orally, but only by a written
instrument or instruments executed by the party against which
enforcement of the amendment, revision, waiver, discharge,
release or termination is asserted. Any alleged amendment,
revision, waiver, discharge, release or termination which is not
so documented shall not be effective as to any party.
8.10 Counterparts. This Assignment may be executed in any
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number of counterparts, each of which shall be an original, but
all of which together shall constitute but one instrument.
8.11 Applicable Law. The Security Documents shall be
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governed by and construed according to the laws of the State of
Alabama from time to time in effect except to the extent
preempted by United States federal law. It is expressly
stipulated and agreed to be the intent of Lessee and Lessor at
all times to comply with applicable law now or hereafter
governing any interest payable under the Lease, including any
notes evidencing the Obligations or any part thereof. If the
applicable law is ever revised, repealed or judicially
interpreted so as to render usurious any amount called for under
any of the Security Documents, or if Lessor's exercise of the
option to accelerate the maturity of the Obligations or if any
prepayment by Lessee results in Lessee having paid any interest
in excess of that permitted by law, then it is Lessee's and
Lessor's express intent that all excess amounts theretofore
collected by Lessor be credited on the principal balance of the
Obligations (or, if the Obligations have been paid in full,
refunded to Lessee), and the provisions of the Security Documents
immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, so as to comply
with the then applicable law, but so as to permit the recovery of
the fullest amount otherwise called for hereunder or thereunder.
All sums paid or agreed to be paid to Lessor for the use,
forbearance or detention of the Obligations shall, to the extent
permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest on account
of such Obligations does not exceed the usury ceiling from time
to time in effect and applicable to the Obligations so long as
debt is outstanding thereunder.
8.12 Headings. The Article, Paragraph and Subparagraph
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entitlements hereof are inserted for convenience of reference
only and shall in no way alter, modify or define, or be used in
construing, the text of such Articles, Paragraphs or
Subparagraphs.
EXECUTED as of the date first above written, to be effective
as of the date first above written.
LESSOR:
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
LESSEE
GRAND COURT LIFESTYLES, INC.
a Delaware corporation
By____________________________
Its___________________________
STATE OF ALABAMA )
:
JEFFERSON COUNTY )
I, the undersigned authority, a Notary Public in and for
said county in said state, hereby certify that ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
whose name as President of CAPSTONE CAPITAL CORPORATION, a
Maryland corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that,
being informed of the contents of the said instrument, he, as
such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
GIVEN under my hand and seal, this _____ day of
____________________, 1996.
[ NOTARIAL SEAL ] _________________________
Notary Public
My Commission Expires_________
STATE OF __________ )
:
__________ COUNTY )
I, the undersigned authority, a Notary Public in and for
said county in said state, hereby certify that
________________________________, whose name as
________________________ of GRAND COURT LIFESTYLES, INC., a
delaware corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that,
being informed of the contents of the said instrument, he, as
such officer and with full authority, executed the same
voluntarily for and as the act of said company.
GIVEN under my hand and seal, this _____ day of
____________________, 1996.
[ NOTARIAL SEAL ] _________________________
Notary Public
My Commission Expires_________
EXHIBIT A
PROPERTY DESCRIPTION