<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, for the Quarterly Period ended September 30, 1997.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, for the Transition Period from ___ to___.
Commission File Number 0-22253
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BROOKDALE LIVING COMMUNITIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-4103821
- --------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
77 W. Wacker Drive
Chicago, IL 60601
- ------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
(312) 977-3700
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address, or former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of November 14, 1997, 7,175,000 shares of the Registrant's Common Stock,
$0.01 par value per share, were outstanding.
<PAGE>
Brookdale Living Communities, Inc.
Form 10-Q
INDEX
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<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION Page
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<S> <C>
Item 1. Financial Statements. 3
Consolidated Balance Sheet of Brookdale Living Communities, Inc. as of
September 30, 1997, and Combined Balance Sheet of Predecessor
Properties (predecessor to Brookdale Living Communities, Inc.) as of
December 31, 1996 (Unaudited) 4
Consolidated Statement of Operations of Brookdale Living Communities,
Inc. for the period from July 1, 1997 through September 30, 1997 and
Combined Statement of Operations of Predecessor Properties
(predecessor to Brookdale Living Communities, Inc.) for the period from
July 1, 1996 through September 30, 1996 (Unaudited) 5
Consolidated Statement of Operations of Brookdale Living Communities,
Inc. for the period from May 7, 1997 through September 30, 1997,
Combined Statements of Operations of Predecessor Properties
(predecessor to Brookdale Living Communities, Inc.) for the period from
January 1, 1997 through May 6, 1997 and the nine month period ended
September 30, 1996 and Combined Statements of Operations of Brookdale
Living Communities, Inc. and Predecessor Properties from January 1,
1997 to September 30, 1997 (Unaudited) 6
Consolidated Statement of Cash Flows of Brookdale Living Communities,
Inc. for the period from May 7, 1997 through September 30, 1997 and
Combined Statements of Cash Flows of Predecessor Properties
(predecessor to Brookdale Living Communities, Inc.) for the period from
January 1, 1997 through May 6, 1997 and for the nine month period ended
September 30, 1996 (Unaudited) 7
Notes to consolidated and combined financial statements of Brookdale
Living Communities, Inc. and the Predecessor Properties (predecessor to
Brookdale Living Communities, Inc.) 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. 12
PART II: OTHER INFORMATION 16
Item 1. Legal Proceedings. 16
Item 2. Changes in Securities. 16
Item 3. Defaults Upon Senior Securities. 16
Item 4. Submission of Matters to a Vote of Security Holders. 16
Item 5. Other Information. 16
Item 6. Exhibits and Reports on Form 8-K. 16
Signatures 17
</TABLE>
2
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements.
The information furnished in the accompanying consolidated and combined
balance sheets, statements of operations, and statements of cash flows reflects
all adjustments which are, in the opinion of management, necessary for a fair
presentation of the aforementioned financial statements for the interim period.
Brookdale Living Communities, Inc. (the "Company") was incorporated on
September 4, 1996 and commenced operations upon the completion of its initial
public offering on May 7, 1997. The combined financial statements of Predecessor
Properties (the "Predecessor" to the Company) are presented for comparative
purposes due to common ownership and management. The combined financial
statements of Predecessor Properties combine the balance sheet data and results
of operations of the entities which comprised the Predecessor Properties from
December 27, 1996 through May 6, 1997 and the three partnerships which comprised
the Predecessor Properties prior to December 27, 1996.
The aforementioned financial statements should be read in conjunction with
the notes to the financial statements and Management's Discussion and Analysis
of Financial Condition and Results of Operations.
3
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED BALANCE SHEET OF THE COMPANY AND COMBINED
BALANCE SHEET OF THE PREDECESSOR
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Brookdale Living Predecessor
Communities, Inc. Properties
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,402 $ 4,230
Cash-restricted 3,885 1,089
Accounts receivable 639 165
Prepaid rent - 1,251
Due from affiliates 133 101
------------------ -----------------
Total current assets 9,059 6,836
Property, plant, and equipment 125,845 58,383
Accumulated depreciation (11,126) (9,159)
------------------ -----------------
Property, plant and equipment, net 114,719 49,224
Property under development 4,461 75
Letter of credit deposit 11,702 -
Deferred costs, net 2,709 1,714
Deferred tax asset 3,695 -
Other 2,968 88
------------------ -----------------
Total assets $ 149,313 $ 57,937
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt $ 280 $ -
Current portion of deferred gain on sale of property 806 806
Prepaid rent 127 616
Accrued interest payable 463 182
Accrued real estate taxes 1,110 1,031
Accounts payable and accrued expenses 1,930 443
Tenant security deposits 3,458 2,614
Due to affiliates - 811
Deferred lease liability 992 -
Other 24 383
------------------ -----------------
Total current liabilities 9,190 6,886
Long-term debt, less current portion 95,955 65,000
Deferred gain on sale of property, less current portion 17,124 17,728
------------------ -----------------
Total liabilities 122,269 89,614
Minority Interest - (6,250)
Stockholders' equity and partners' deficit:
Common stock, $.01 par value, 75,000
shares authorized, 7,175 shares issued and
outstanding at September 30, 1997 72 -
Additional paid-in-capital 26,863 -
Accumulated earnings 109 -
Partners' deficit - (25,427)
------------------ -----------------
Total stockholders' equity and partners' deficit 27,044 (25,427)
------------------ -----------------
Total liabilities and stockholders' equity
and partners' deficit $ 149,313 $ 57,937
================== =================
</TABLE>
See accompanying notes to consolidated and combined financial statements.
4
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS OF THE COMPANY AND COMBINED
STATEMENT OF OPERATIONS OF THE PREDECESSOR
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Brookdale Living Predecessor
Communities, Inc. Properties
period from period from
July 1, 1997 July 1, 1996
to to
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Revenue
Resident fees $11,191 $ 5,689
Management fees 50 -
------- -------
Total revenue 11,241 5,689
Expenses
Facility operating 5,732 2,879
General and administrative 660 -
Leasing 2,567 -
Depreciation and amortization 1,170 949
Property management fee-affiliate - 233
------- -------
Total operating expenses 10,129 4,061
------- -------
Income from operations 1,112 1,628
Financing fees 45 -
Interest income (274) (58)
Interest expense 1,158 1,175
------- -------
Income before deferred tax benefit 183 511
Deferred tax benefit 7 -
------- -------
Net income $ 190 $ 511
======= =======
Net income per share $ 0.03 $ -
======= =======
Weighted average common shares outstanding 7,175 -
======= =======
</TABLE>
See accompanying notes to consolidated and combined financial statements.
5
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS OF THE COMPANY AND COMBINED
STATEMENTS OF OPERATIONS OF THE PREDECESSOR AND COMBINED
STATEMENTS OF OPERATIONS OF BROOKDALE LIVING COMMUNITIES, INC.
AND PREDECESSOR PROPERTIES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Combined
Brookdale Living
Brookdale Living Predecessor Communities, Inc. Predecessor
Communities, Inc. Properties and Properties
period from period from Predecessor Properties period from
May 7, 1997 January 1, 1997 period from January 1, 1996
to to January 1, 1997 to
September 30, 1997 May 6, 1997 to September 30, 1997(a) September 30, 1996
------------------ --------------- ------------------------ ------------------
<S> <C> <C> <C> <C>
Revenue
Resident fees $17,732 $10,472 $28,204 $16,827
Management fees 82 - 82 -
------- ------- ------- -------
Total revenue 17,814 10,472 28,286 16,827
Expenses
Facility operating 9,222 5,727 14,949 8,738
General and administrative 1,137 - 1,137 -
Leasing 4,110 3,042 7,152 -
Depreciation and amortization 1,848 858 2,706 3,013
Property management fee - affiliate - 230 230 695
------- ------- ------- -------
Total operating expenses 16,317 9,857 26,174 12,446
------- ------- ------- -------
Income from operations 1,497 615 2,112 4,381
Financing fees 58 - 58 -
Interest income (400) (68) (468) (168)
Interest expense 1,873 830 2,703 3,539
------- ------- ------- -------
(Loss) income before deferred tax benefit (34) (147) (181) 1,010
Deferred tax benefit 143 79 222 -
------- ------- ------- -------
Net income (loss) $ 109 $ (68) $ 41 $ 1,010
======= ======= ======= =======
Net income per share $ 0.02 $ - $ 0.01 $ -
======= ======= ======= =======
Weighted average common
shares outstanding 7,051 - 4,720 -
======= ======= ======= =======
</TABLE>
(a) Pro forma weighted average shares and per share amounts.
See accompanying notes to consolidated and combined financial statements.
6
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS OF THE COMPANY AND COMBINED
STATEMENTS OF CASH FLOWS OF THE PREDECESSOR
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Brookdale Living Predecessor Predecessor
Communities, Inc. Properties Properties
period from period from period from
May 7, 1997 January 1, 1997 January 1, 1996
to to to
September 30, 1997 May 6, 1997 September 30, 1996
------------------- ---------------- ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 109 $ (68) $ 1,010
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization 1,848 858 3,013
Deferred gain on sale of property (323) (281) -
Increase in accounts receivable (413) (61) (10)
(Increase) decrease in due from affiliate (133) 101 (22)
Decrease in prepaid rent asset 396 855 -
Increase in deferred tax asset (3,695) - -
Decrease (increase) in other assets 2,348 (297) 36
(Decrease) increase in prepaid rent liability (1,810) 767 -
Increase in accrued interest payable 94 111 175
(Decrease) increase in accrued real estate taxes (519) 54 (246)
Increase in accounts payable and accrued expenses 881 606 123
(Decrease) increase in tenant security deposits (15) 36 27
Increase (decrease) in due to affiliate 32 (100) 210
Decrease in other liabilities (16) (342) (119)
-------- ------- -------
Net cash (used in) provided by operating activities (1,216) 2,239 4,197
Cash flows from investing activities:
Cash paid for acquisitions of facilities (40,176) - -
Cash paid for escrow deposits (1,198) - -
Cash paid for property under development (4,308) (2) (6)
Property, plant, and equipment additions (1,107) (149) (254)
-------- ------- -------
Cash used in investing activities (46,789) (151) (260)
Cash flows from financing activities:
Principal repayment on mortgage notes payable (110) - (220)
(Increase) decrease in cash-restricted (579) (1,180) 510
Increase in letter of credit deposit (702) - -
Increase in deferred lease liability 560 432 -
Increase in deferred costs (69) (258) (625)
Net proceeds from equity offering 51,392 -
Advances to general partner - - (4,059)
Contributions from partners - - 38
Distributions to predecessor partners (2,155) (1,242) (1,896)
-------- ------- -------
Net cash provided by (used in) financing activities 48,337 (2,248) (6,252)
-------- ------- -------
Net increase (decrease) in cash and
cash equivalents 332 (160) (2,315)
Cash and cash equivalents at beginning of period 4,070 4,230 4,201
-------- ------- -------
Cash and cash equivalents at end of period $ 4,402 $ 4,070 $ 1,886
======== ======= =======
</TABLE>
7
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS OF THE COMPANY AND COMBINED
STATEMENTS OF CASH FLOWS OF THE PREDECESSOR
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Brookdale Living Predecessor Predecessor
Communities, Inc. Properties Properties
period from period from period from
May 7, 1997 January 1, 1997 January 1, 1996
to to to
September 30, 1997 May 6, 1997 September 30, 1996
------------------ ---------------- ------------------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ 1,766 $ 769 $ 1,692
================== ================ ==================
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
In connection with acquisitions, assets
acquired and liabilities assumed were
as follows:
Fair value of assets acquired
and minority interest assumed $ 81,028 $ - $ -
Less: Consideration given
Cash paid 41,096 - -
Cash paid in settlement
of liabilities assumed 278 - -
------------------ ---------------- ------------------
Liabilities and minority interest assumed $ 39,654 $ - $ -
================== ================ ==================
</TABLE>
See accompanying notes to consolidated and combined financial statements.
8
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)
1. Organization
Brookdale Living Communities, Inc. (the "Company") was incorporated in
Delaware on September 4, 1996. The Company was formed in order to create a
company focused on senior and assisted living, which would include such property
ownership interests and operations of The Prime Group, Inc. and certain of its
affiliates (collectively, "PGI"). In connection with an initial public offering
(the "IPO") more fully described in the Registration Statement and the
Prospectus, in the form it became effective on May 1, 1997, the Company sold
4,500,000 shares of its common stock to the public and PGI contributed its
senior and assisted living property ownership interests and operations in
exchange for 2,000,000 shares of common stock of the Company. PGI purchased
2,500,000 of the 4,500,000 shares of common stock. Net of underwriting
discounts and offering expenses, the Company received approximately $44.2
million in net proceeds from the IPO.
Upon consummation of the IPO, the Company had 6,500,000 shares of common
stock outstanding. Of these shares, the 4,500,000 shares sold in the IPO
are freely tradable without restriction or limitation, except for any shares
(including the 2,500,000 shares purchased by PGI) purchased by "affiliates" of
the Company. The remaining 2,000,000 shares are "restricted securities" and are
held by PGI and management of the Company. The Company used the proceeds from
the IPO primarily to pay the cash portion of the purchase price for the
Acquired Facilities (as defined below), to acquire the third party interests in
two properties in which PGI also had interests, to pay certain amounts to or on
behalf of PGI and various parties in connection with the Formation (as defined
in the Prospectus), to finance a portion of future acquisitions and developments
and for working capital and other general corporate purposes.
Upon consummation of the IPO, PGI contributed its interests in the
Predecessor Properties (described below) to the Company. In addition, the
Company acquired a third party's interest in The Devonshire and The Heritage
Facilities. The Company acquired the Edina Park Plaza and the Hawthorn Lakes
Facilities from an unaffiliated third party, and the Company entered into an
agreement to lease the Park Place Facilities ("Park Place") from an unaffiliated
third party (collectively, the "Acquired Facilities").
In connection with the IPO, the Company granted the Underwriters an
option to purchase up to 675,000 additional shares of common stock for the
purpose of covering over-allotments. The underwriters elected the over-
allotment option and, on June 3, 1997, the Company sold 675,000 shares in
connection with the over-allotment option and received approximately $7.2
million in net proceeds.
The combined financial statements of the properties owned by the Senior
Housing Division of The Prime Group, Inc. at December 31, 1996 and for the
period from January 1, 1997 through May 6, 1997 consist of five properties,
including three leased properties (collectively, the "Predecessor Properties" as
defined in the table below). As the Springs of East Mesa and The Gables at
Brighton Facilities were not included in the Predecessor Properties until
December 27, 1996, the periods prior to December 27, 1996 represent interests in
the three partnerships that owned, operated and managed The Devonshire, The
Heritage and The Hallmark Facilities (the "Original Facilities"). The interests
in the Predecessor Properties and the Acquired Facilities represent the
interests of the Company at September 30, 1997. The following tables set forth
the Predecessor Properties and the Acquired Facilities (collectively, the
"Properties").
Senior Housing Division of The Prime Group, Inc. (the "Predecessor Properties"):
The Hallmark (2),(3)
The Heritage (3)
The Devonshire (3)
Springs of East Mesa (1),(2),(4)
The Gables at Brighton (1),(2)
Acquired Facilities:
Hawthorn Lakes (1),(4)
Edina Park Plaza (1),(4)
Park Place (1),(2)
(1) Collectively referred to as the "New Facilities".
(2) Collectively referred to as the "Leased Facilities".
(3) Collectively referred to as the "Original Facilities".
(4) Collectively referred to as the "Activelife Facilities".
9
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments consisting only of
recurring accruals considered necessary for a fair presentation have been
included. Operating results for such interim periods are not necessarily
indicative of the results that may be expected for a full fiscal year. For
further information regarding significant accounting policies please refer to
the financial statements and footnotes thereto included in the Brookdale Living
Communities, Inc. Prospectus dated May 1, 1997. Significant intercompany
accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated and combined financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect amounts reported in the consolidated
and combined financial statements and accompanying notes. Actual results could
differ from those estimates.
Reclassifications
Certain prior period amounts have been reclassified to conform with the
current financial statement presentation.
3. Acquisitions
In conjunction with the Offering, the Company purchased a third party's
interest in two of the Predecessor Properties (the Heritage and the Devonshire
Facilities), purchased two facilities (the Hawthorn Lakes and Edina Park Plaza
Facilities) from an unaffiliated third party and entered into an agreement to
lease a third facility (the Park Place Facilities). The total consideration
(including acquisition costs) for these acquisitions and earnest money deposits
on pending acquisitions was $81,028,000, consisting of $41,096,000 in cash,
$31,345,000 in long-term obligations and the assumption of liabilities totaling
$8,587,000.
4. Development Projects
On September 3, 1997, the Company purchased land in Austin, Texas for the
purpose of developing a Brookdale prototype senior and assisted living facility.
The Company acquired the land for a total consideration of $2,889,000.
5. Commitments
On September 25, 1997, the Company entered into a five year lease commitment,
commencing October 1, 1997, for its corporate office with 77 West Wacker Limited
Partnership (the "Landlord"), an affiliate of PGI. The corporate office is
located at 77 West Wacker, Suite 4800, Chicago, Illinois 60601. The office space
is 13,464 square feet, with base rent of $18.50 per square foot escalating at
$0.75 per square foot at each anniversary of the commencement date. In
conjunction with the signing of the lease, the Company received a $404,000
cash payment from the Landlord on October 2, 1997.
6. Recently Issued Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
128") effective for financial statements for both interim and annual periods
ending after December 15, 1997. FAS 128 establishes standards for computing and
presenting earnings per share and supersedes APB Opinion No. 15, "Earnings per
Share." FAS 128 replaces primary earnings per share with basic earnings per
share and requires dual presentation of basic and diluted earnings per share on
the face of the income statement. The Company will adopt the Standard in the
fourth quarter of 1997 and does not expect the adoption of FAS 128 to have a
material impact.
10
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited) (Continued)
In February 1997, the FASB issued Statement of Accounting Standards No. 129,
"Disclosure of Information About Capital Structure" ("FAS 129") effective for
financial statements for periods ending after December 15, 1997. FAS 129
requires additional disclosures regarding the Company's capital structure. The
Company will adopt the Standard in the fourth quarter of 1997 and does not
expect the adoption of FAS 129 to have a material impact.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("FAS 130"). The statement establishes
standards for the reporting and display of comprehensive income and its
components. Comprehensive income is defined as the change in equity of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity during
a period except those resulting from investments by owners and distribution to
owners. FAS No. 130 will be effective for the Company's fiscal year ending
December 31, 1998. Adoption of FAS 130 is not expected to significantly impact
the Company's financial position or results of operations, including the
required comparative presentation for prior periods.
7. Subsequent Events
On October 1, 1997, the Company entered into a purchase agreement to acquire
the Brendenwood Retirement Community property for $15.75 million in cash. The
closing of the purchase of this property is subject to the customary closing
contingencies and there can be no assurance that such closing contingencies will
be satisfied in a timely manner, if at all. The Brendenwood Retirement Community
is a 149-unit senior and assisted living community located in Voorhees, New
Jersey.
On October 6, 1997, the Company purchased land in Southfield, Michigan for the
purposes of developing a Brookdale prototype senior and assisted living
facility. The Company acquired the land for a total consideration of
approximately $1,775,000 in cash.
On October 11, 1997, the Company entered into a purchase agreement to acquire
land in Raleigh, North Carolina for approximately $2.1 million for the purpose
of developing a Brookdale prototype senior and assisted living facility. The
closing of this property is subject to customary closing contingencies and there
can be no assurance that such closing contingencies will be satisfied in a
timely manner, if at all.
On October 22, 1997, the Company obtained a $10 million interim credit
facility from LaSalle National Bank to be used for working capital and
acquisition needs. The loan is unsecured, bears interest at prime plus one
percent, and principal and accrued but unpaid interest is repayable in April
1998 with accrued interest payable monthly. As of November 13, 1997, the Company
has drawn $1.2 million on the loan.
8. Pro Forma Information
The following pro forma condensed consolidated and combined statements of
operations of the Company for the nine months ended September 30, 1997 and
September 30, 1996 are presented as if, at January 1, 1997 and January 1, 1996,
the Company had sold 4,500,000 shares of its common stock (including PGI's
purchase of 2,500,000 shares) at a sale price of $11.50 per share, issued
2,000,000 shares of its common stock to PGI and management and sold 675,000
shares of its common stock in accordance with an over-allotment option,
purchased or leased the Original Facilities, the Activelife Facilities, the
Gables at Brighton Facility, and the Park Place Facilities. The pro forma
condensed consolidated and combined statements of operations of the Company
should be read in conjunction with the historical financial statements included
herein and in the Company's Prospectus dated May 1, 1997.
These pro forma condensed consolidated and combined statements of operations
are not necessarily indicative of what the actual results of operations of the
Company would have been assuming the IPO had been consummated at the
beginning of each period presented, nor do they purport to represent the results
of operations of the Company for future periods.
11
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
January 1, 1997 to January 1, 1996 to
September 30, 1997 September 30, 1996
------------------- -------------------
<S> <C> <C>
Revenue $32,809 $29,962
Net loss $ (580) $(1,030)
Loss per share $ (0.08) $ (0.14)
Weighted average shares used for computing loss per share 7,175 7,175
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion is based primarily on the statements of operations
for combined "Brookdale Living Communities, Inc. and Predecessor Properties"
from January 1, 1997 and July 1, 1997 to September 30, 1997 and the statements
of operations of Predecessor Properties from January 1, 1996 and July 1, 1996 to
September 30, 1996 and also the balance sheet of Brookdale Living Communities,
Inc. (the "Company") as of September 30, 1997 and the balance sheet of the
Predecessor Properties as of December 31, 1996. The financial statements of the
Predecessor Properties combine the balance sheet data and results of operations
of five properties which were contributed by PGI to the Company simultaneously
with the consummation of its initial public offering (the "IPO") and are now
consolidated in the Company's financial statements. Historical results and any
apparent percentage relationships with respect thereto are not necessarily
indicative of future operations.
Cautionary Statements
This quarterly report on Form 10-Q contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. When
used in this report, the words "believes," "expects," "anticipates," "estimates"
and similar words and expressions are generally intended to identify forward-
looking statements. Statements that describe the Company's future strategic
plans, goals or objectives are also forward-looking statements. Readers of this
report are cautioned that any forward-looking statements, including those
regarding the intent, belief, or current expectations of the Company or
management, are not guarantees of future performance, results or events and
involve risks and uncertainties, and that actual results and events may differ
materially from those in the forward-looking statements as a result of various
factors including, but not limited to (i) general economic conditions in the
markets in which the Company operates, (ii) competitive pressures within the
industry and/or the markets in which the Company operates (iii) the effect of
future legislation or regulatory changes on the Company's operations and (iv)
other factors described from time to time in the Company's filings with the
Securities and Exchange Commission. The forward-looking statements included in
this report are made only as of the date hereof. The Company undertakes no
obligation to update such forward-looking statements to reflect subsequent
events or circumstances.
Overview
The Company operates ten senior and assisted living facilities containing a
total of 2,168 units. Four of such facilities are owned by the Company, four
facilities are leased by the Company from a third party under a long-term net
lease and two facilities (one of which is owned by PGI) are managed by the
Company pursuant to management contracts. The Company's senior and assisted
living facilities offer residents a supportive, "home-like" setting and
assistance with certain activities of daily living. By providing residents a
range of service options as their needs change, the Company seeks to achieve
greater continuity of care, enabling seniors to age in place and thereby
maintain their residency for a longer time period. The ability to allow
residents to age in place is beneficial to the Company's residents as well as
their families who are burdened with care option decisions for their elderly
relatives.
The Company currently plans to acquire or lease approximately three to five
facilities per year containing an aggregate of approximately 800 to 1,000 units,
and to commence development of at least two new facilities per year containing
approximately 200 units each in urban and suburban areas of major metropolitan
markets. The Company
12
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND PREDECESSOR
PROPERTIES (THE "PREDECESSOR" TO THE COMPANY) NOTES TO CONSOLIDATED
AND COMBINED FINANCIAL STATEMENTS (Unaudited)(Continued)
anticipates that it will use a combination of net proceeds from additional debt
financing, lease transactions, equity financing and cash generated from
operations to fund its acquisition and development activity. In order to achieve
its growth plans, the Company will be required to obtain a substantial amount of
additional financing. To the extent available, the Company may use long-term,
tax-exempt bonds to finance the acquisition of existing facilities and the
development of new facilities. There can be no assurance that future financing
or lease transactions will be available as needed or on terms acceptable to the
Company. A lack of funds would require the Company to delay all or some of its
acquisition plans and development projects.
The Company derives its revenues from resident fees and management fees.
Resident fees typically are paid monthly by residents, their families or other
responsible parties. The Company also derives management fees from the two
facilities that it manages. Resident fees and management fees are recognized as
revenues when services are provided.
Comparison of nine months ended September 30, 1997 to nine months ended
September 30, 1996
The following discussion is based on the comparison of the Statement of
Operations for combined "Brookdale Living Communities, Inc. and Predecessor
Properties" for the period from January 1, 1997 to September 30, 1997 to the
Statement of Operations of Predecessor Properties for the period from January 1,
1996 to September 30, 1996. The results of the Predecessor Properties for the
respective 1996 period are not necessarily indicative of the results that would
have been attained had the Predecessor Properties been a part of the Company for
such period.
For the nine months ended September 30, 1997, net income decreased
approximately $969,000, or 95.9%, to net income of $41,000 when compared to the
same period in 1996. This decrease was primarily due to an increase in total
expenses partially offset by an increase in total revenue of the Company. The
factors noted above are discussed in the following paragraphs in greater detail.
Total revenue increased by $11.5 million, or 68.1%, to $28.3 million for
the nine months ended September 30, 1997 when compared to the same period in
1996. Of this increase, approximately $1.4 million (or an increase of 8.2%)
relates to increased resident fees at the properties that have been operated for
both respective periods which were the Original Facilities. The remainder of the
increase, or approximately $10.1 million, relates to revenue of the New
Facilities.
Total operating expenses increased $13.7 million, or 110.3%, to $26.2
million for the nine months ended September 30, 1997 when compared to the same
period in 1996. Facility operating expenses increased $6.2 million, or 71.1%, to
$15.0 million primarily due to the inclusion of the New Facilities. The Company
incurred general and administrative expenses of approximately $1,137,000 from
the commencement of operations on May 7, 1997 through September 30, 1997 in lieu
of property management fees. Lease expense increased $7.2 million due to the
inclusion of the Leased Facilities. Depreciation and amortization decreased
approximately $307,000 or 10.2%, to $2.7 million primarily due to the sale and
lease-back of The Hallmark Facility on December 27, 1996. Prior to such date,
the Company owned and, accordingly, recorded depreciation relating to such
facility. The decrease in depreciation and amortization due to the sale and
lease-back of The Hallmark Facility was slightly offset by an increase in
depreciation associated with the purchase of the Acquired Facilities on May 7,
1997. Interest and financing fees decreased approximately $778,000, or 22.0%, to
$2.8 million primarily due to the sale and lease-back of The Hallmark Facility.
As a result of the sale and lease-back of such facility on December 27, 1996, it
was no longer encumbered by the debt. This decrease was slightly offset by the
assumption of debt of certain of the Acquired Facilities in connection with the
purchase of these properties. Interest income increased approximately $300,000,
or 178.6%, to $468,000 due to an increase in average cash balances. Property
management fee-affiliate decreased approximately $465,000, or 66.9%, to $230,000
due to the elimination of all management fees charged to the Predecessor
Properties once the Company commenced operations on May 7, 1997.
Comparison of three months ended September 30, 1997 to three months ended
September 30, 1996
The following discussion is based on the comparison of the Statement of
Operations for "Brookdale Living Communities, Inc. for the period from July 1,
1997 to September 30, 1997 to the Statement of Operations of Predecessor
Properties for the period from July 1, 1996 to September 30, 1996. The results
of the Predecessor Properties for the respective 1996 period are not necessarily
indicative of the results that would have been attained had the Predecessor
Properties been a part of the Company for such period.
13
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited) (Continued)
For the quarter ended September 30, 1997, net income decreased approximately
$321,000, or 62.8%, to net income of $190,000 when compared to the same period
in 1996. This decrease was primarily due to an increase in total expenses
partially offset by an increase in total revenue of the Company. The factors
noted above are discussed in the following paragraphs in greater detail.
Total revenues increased by $5.6 million, or 97.6%, to $11.2 million for the
quarter ended September 30, 1997 when compared to the same period in 1996. Of
this increase, approximately $628,000 (or an increase of 11.0%) relates to
increased resident fees at the properties that have been operated for both
respective periods which were the Original Facilities. The remainder of the
increase, $5.0 million, relates to revenues of the New Facilities.
Total operating expenses increased $6.1 million, or 149.4%, to $10.1 million
for the quarter ended September 30, 1997 when compared to the same period in
1996. Facility operating expenses increased $2.9 million, or 99.1%, to $5.7
million primarily due to the inclusion of the New Facilities and a slight
increase in expenses at the Original Facilities. The Company incurred general
and administrative expenses of approximately $660,000 from July 1, 1997 through
September 30, 1997 in lieu of property management fees. Lease expense increased
$2.6 million, due to the inclusion of the Leased Facilities. Depreciation and
amortization increased $221,000, or 23.3%, due to an increase in depreciation
associated with the purchase of the Acquired Facilities, partially offset by the
decrease in depreciation and amortization due to the sale and lease-back of The
Hallmark Facility on December 27, 1996. Interest income increased approximately
$216,000, or 372.4%, to $274,000 due to an increase in average cash balances.
Property management fee - affiliate decreased approximately $233,000, or 100.0%
due to the elimination of all management fees charged to the Predecessor
Properties once the commenced operations on May 7, 1997.
Liquidity and Capital Resources:
On May 7, 1997, the Company completed the IPO of 4,500,000 shares of Common
Stock, $.01 par value per share, at $11.50 per share. The proceeds from such
IPO, net of related underwriting and offering costs, totaled approximately $44.2
million.
Simultaneously with the completion of the IPO, the Company used
approximately $41.7 million of such net proceeds from the IPO to fund various
transactions or deposits completed or made in connection with the IPO.
The underwriters of the IPO exercised their over-allotment option and on
June 3, 1997, the Company sold an additional 675,000 shares of the Company's
Common Stock at $11.50 per share, less underwriting discounts and commissions.
The Company received net proceeds from the over-allotment option of
approximately $7.2 million from the sale of these additional shares. These
funds, along with the remaining net proceeds from the IPO have been or will be
used to finance a portion of future acquisitions and developments of senior and
assisted living facilities and for working capital and general corporate
purposes. Pending such uses, the Company intends to invest available cash in
short-term, interest bearing securities or certificates of deposit.
Comparison of nine months ended September 30, 1997 to nine months ended
September 30, 1996
Cash and cash equivalents (which excludes cash-restricted of $3.9 million
and the letter of credit deposit of $11.7 million) increased $2.5 million to
$4.4 million at September 30, 1997 compared to September 30, 1996 primarily due
to cash remaining after the use of the Offering proceeds. The increases in net
cash provided by operating and financing activities were partially offset by an
increase in net cash used in investing activities.
Net cash (used in) provided by operating activities decreased $3.2 million
to $1.0 million for the nine months ended September 30, 1997 compared to the
same period in 1996. The primary reasons for the net decrease in cash (used in)
provided by operating activities were the overall decrease in net income as
compared to the Predecessor Properties, the increase in the deferred tax asset
related to the
14
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited) (Continued)
book-tax difference in the carryover basis of the Heritage and the Devonshire
Facilities, partially offset by the decrease in the prepaid rent asset due to
prepayment at lease inception on December 27, 1996.
Cash used in investing activities increased $46.7 million to $46.9
million for the nine months ended September 30, 1997 compared to the same period
in 1996. The increase was primarily attributable to cash used in the acquisition
of the Hawthorn Lakes and Edina Park Plaza Facilities and cash used to acquire
a third party's interest in the Heritage and Devonshire Facilities.
Net cash provided by financing activities increased $52.3 million to $46.1
million for the nine months ended September 30, 1997 compared to the same period
in 1996. The increase was primarily due to proceeds received from the IPO
and the exercise of the underwriter's over-allotment option. These increases
were partially offset by an initial deposit required in accordance with the cash
collateral pledge agreement related to The Heritage and Devonshire Facilities.
Impact of Inflation
Resident fees from senior and assisted living facilities owned or leased by
the Company and management fees from facilities operated by the Company are its
primary sources of revenue. These revenues are affected by monthly resident fee
rates and facility occupancy rates. The rates charged for senior and assisted
living services are highly dependent upon local market conditions and the
competitive environment in which the facilities operate. Substantially all of
the Company's resident agreements have terms of approximately one year and
allow, at the time of renewal, for adjustments in the monthly fees payable
thereunder, thereby enabling the Company to seek increases in monthly fees due
to inflation or other factors. Any such increase would be subject to market and
competitive conditions and could result in a decrease in occupancy at the
Company's facilities. The Company believes, however, that the short-term nature
of its resident agreements generally serves to reduce the risk to the Company of
the adverse effect of inflation. In addition, employee compensation expense is
a principal cost element of facility operations and is also dependent upon local
market conditions. There can be no assurance that resident fees will increase or
that costs will not increase due to inflation or other causes. In addition,
approximately $65.0 million in principal amount of the Company's indebtedness
bears interest at floating rates and future indebtedness may bear floating rate
interest. Inflation, and its impact on floating interest rates, could materially
affect the amount of interest payments due on such indebtedness.
15
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited) (Continued)
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
No material developments with respect to legal proceedings
occurred during the period covered by this quarterly report.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number: Description
------- -----------
<C> <S>
10.1 Real Estate Purchase and Sale Agreement dated as of July 29,
1997 by and between the Company and The Classic at West Palm
Beach Limited Partnership
10.2 Lease Agreement dated as of September 25, 1997 by and between
the Company and 77 West Wacker Limited Partnership
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
The Registrant filed no reports on Form 8-K during the quarter ended
September 30, 1997.
16
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC. (THE "COMPANY") AND
PREDECESSOR PROPERTIES (THE "PREDECESSOR" TO THE COMPANY)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Unaudited)(Continued)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROOKDALE LIVING COMMUNITIES, INC.
----------------------------------
Registrant
Date: November 14, 1997 /s/ Mark J. Schulte
----------------- ----------------------------------
Mark J. Schulte
President and
Chief Executive Officer
Date: November 14, 1997 /s/ Craig G. Walczyk
----------------- ----------------------------------
Craig G. Walczyk
Vice President -
Chief Financial Officer
17
<PAGE>
REAL ESTATE
PURCHASE AND SALE
AGREEMENT
between
THE CLASSIC AT WEST PALM BEACH LIMITED PARTNERSHIP,
a Florida limited partnership, as Seller
and
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation, as
Purchaser
for
The Classic at West Palm Beach
6100 Common Circle
West Palm Beach, Florida
<PAGE>
LISTS OF EXHIBITS AND SCHEDULES
- -------------------------------
EXHIBIT A - LEGAL DESCRIPTION OF REAL PROPERTY
EXHIBIT B - RENT ROLL
EXHIBIT C - LICENSES AND PERMITS
EXHIBIT D - SERVICE CONTRACTS
EXHIBIT E - ESCROW AGREEMENT
EXHIBIT F - DUE DILIGENCE MATERIALS
EXHIBIT G - WARRANTY DEED
EXHIBIT H - BILL OF SALE
EXHIBIT I - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT J - MORTGAGEE'S ESTOPPEL CERTIFICATE
EXHIBIT K - LEASING STANDARDS
<PAGE>
TABLE OF CONTENTS
- -----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C>
1. Definitions, and Agreement of Sale and Purchase.................
2. Purchase Price and Earnest Money................................
3. Purchaser's Pre-Closing Activities and Obligations..............
4. Feasibility Period..............................................
5. Conditions Precedent and Closing................................
6. Documents.......................................................
7. Brokerage and Other Commissions.................................
8. Prorations, Credits and Adjustments.............................
9. Possession and Loss by Fire or Other Casualty...................
10. Title Insurance and Survey......................................
11. Taking or Condemnation..........................................
12. Seller's Covenants..............................................
13. Remedies........................................................
14. Representations and Warranties of Purchaser.....................
15. Representations and Warranties of Seller........................
16. Notices.........................................................
17. No Assignment...................................................
18. Miscellaneous...................................................
</TABLE>
<PAGE>
REAL ESTATE PURCHASE
AND SALE AGREEMENT
------------------
THIS REAL ESTATE PURCHASE AND SALE AGREEMENT is made as of the _____ day of
July, 1997 by and between THE CLASSIC AT WEST PALM BEACH LIMITED PARTNERSHIP, a
Florida limited partnership (said limited partnership being herein referred to
as "Seller") and BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation
(said corporation being herein referred to as "Purchaser"), in consideration of,
subject to and in accordance with the following terms, covenants and conditions.
1. Definitions, and Agreement of Sale and Purchase.
1.01 Any initially capitalized term herein used, exclusive of proper names,
shall have the meaning assigned to such term in this Agreement, unless the
context otherwise expressly states.
1.02 In addition to the terms which may be elsewhere defined in this Agreement,
each of the following terms, whenever in this Agreement used, shall have the
meaning set forth in this Section 1.02:
"Agreement" means this Agreement and all the Exhibits and Schedules
attached to and made a part of this Agreement;
"Agreement Date" means the later of the dates upon which Seller and
Purchaser have caused this Agreement to be executed as evidenced by the
dates set forth below their signatures on the last page of this Agreement;
"Authorities" means any governmental or quasi-governmental body or agency
having jurisdiction over the Property and/or Seller including, without
limitation, the United States, the State of Florida, the City of West Palm
Beach and the County of Palm Beach;
"Appurtenances" means all rights, privileges and easements appurtenant to
the Land, including, without limitation, all minerals and oil, gas and
other hydrocarbon substances on and under the Land; development rights; air
rights; easements; rights of way; sidewalks; and all other appurtenances
used in connection with the beneficial use and enjoyment of the Land; and
all licenses, consents, easements, rights of way and approvals required
from private parties to make use of utilities and to insure vehicular and
pedestrian ingress and egress to the Real Property;
"Business Day" means each day other than Saturday, Sunday and legal
holidays in the State of Florida or Illinois;
2
<PAGE>
"Claim Period" means the period of time commencing on the Closing Date and
terminating on the first anniversary of the Closing Date at 5:00 p.m. (West
Palm Beach, Florida time);
"Closing" means the consummation of the transaction contemplated by this
Agreement;
"Closing Date" means (a) the date thirty (30) days after the expiration of
the Feasibility Period, or (b) such other date to which Seller and
Purchaser may hereafter mutually agree in writing; provided, however, that
if any or all of Sections 13.01 or 13.02 hereafter become operative, the
Closing Date shall be determined in accordance with the provisions of
whichever of said Sections is operative or, if more than one said Sections
are operative, the provisions of the Section which renders the latest date;
"Feasibility Period" means a period commencing on July 11, 1997 and ending
at 5:00 p.m. (West Palm Beach, Florida time) on August 25, 1997, as may be
extended pursuant to Section 4.02;
"Governmental Regulations" means any applicable laws, ordinances, rules,
and regulations (including, without limitation, those relating to land use,
subdivision, zoning, environmental, toxic or hazardous wastes, the
Americans with Disabilities Act, occupational health and safety, and
building and fire codes) of any of the Authorities bearing on the
construction, alteration, rehabilitation, maintenance, use, operation, or
development of the Property;
"HUD" means the U.S. Department of Housing and Urban Development, which has
co-insured the Mortgage;
"Improvements" means all buildings, fixtures, structures, parking areas,
landscaping and other improvements constructed and located on the Real
Property;
"Intangible Property" means all of Seller's interest in the assignable
intangible property, to the extent assignable, consisting of: (a) any and
all Licenses and Permits and other approvals in effect on the Closing Date
and necessary for the current use and operation of the Real Property; (b)
any and all warranties, contractual rights, rebates and indemnities or
other rights used or owned in connection with the ownership or operation of
the Real Property; and (c) telephone numbers, trade names, including the
name "The Classic at West Palm Beach", and other intangible property owned
or used in connection with the ownership or use of the Real Property;
"Land" means the parcel or parcels of land legally described on Exhibit A
attached hereto and made a part hereof;
"Leases" means those leases, residency, occupancy and ancillary agreements
listed on Exhibit B attached to and made a part of this Agreement and any
such agreements entered
3
<PAGE>
into by Seller in respect of the Property after the date of this Agreement
and prior to the Closing Date pursuant to Section 12.01;
"Licenses and Permits" means all licenses, permits, certificates of
occupancy, approvals, dedications, subdivision maps and entitlements
issued, approved or granted by Authorities to Seller in connection with the
ownership, use and operation of the Real Property including, without
limitation, those Licenses and Permits listed on Exhibit C attached hereto
and made a part hereof;
"Loan" means that certain loan made by Mortgagee to Seller evidenced by the
Note and other Loan Documents;
"Loan Documents" mean, collectively, the Note, the Mortgage and all other
documents and instruments evidencing, securing or made in connection with
the Loan;
"Mortgage" means that Mortgage made by Seller in favor of PW Funding, Inc.,
dated January 13, 1989, securing the Note, and evidencing a first mortgage
lien on the Real Property;
"Mortgagee" means Whitehall Funding Inc., as holder of the Note and
Mortgage;
"Note" means that certain Promissory Note made by Seller in favor of the
Mortgagee dated January 13, 1989, in the original principal amount of
$22,643,400.00, as amended, and on or about the Agreement Date the current
principal balance of which is approximately $22,157,520.00;
"Person", which may be expressed in the singular or plural form, means (a)
any individual, corporation, association, limited liability company,
cooperative business trust, estate, trust or partnership, (b) any two or
more of the entities described in clause (a) having a joint or common
interest or enterprise, (c) any governmental or quasi-governmental body,
authority or agency, or (d) any other legal entity;
"Personal Property" means all furniture, furnishings, equipment, signage
and other tangible personal property owned by Seller that is located at the
Real Property and used in connection with the management, operation or
repair of the Real Property, including, without limitation, those items of
personal property listed on an inventory to be jointly prepared by Seller
and Purchaser during the Feasibility Period;
"Permitted Exceptions" means all (a) exceptions to title to the Real
Property which are accepted by Purchaser pursuant to Section 10.02, (b)
exceptions to title to the Real Property created prior to the Closing Date
with the prior written consent of Purchaser, (c) the Leases, (d) acts done
or suffered by, and judgments against, Purchaser or any Person claiming or
to claim by, through or under any of Purchaser, (e) those Unpermitted
4
<PAGE>
Exceptions which are accepted by Purchaser pursuant to Section 10.05, (f)
those Unpermitted Exceptions which are discharged or satisfied, cured or
corrected, or insured or endorsed over pursuant to Sections 10.03 and
10.04, and (g) those exceptions to title occurring or arising pursuant to
Section 11.02;
"Property" means, collectively or severally, as the context requires, the
Real Property, the Personal Property, the Intangible Property, the Service
Contracts and the Records and Plans;
"Purchaser's Affiliates" means any Person controlling, controlled by or
under common control with Purchaser, it being agreed that, for the
purposes hereof, the concept of control shall mean, in the case of an
individual, any relationship based on marriage or blood and, in all cases,
any relationship based on ownership or voting rights in excess of ten
percent (10%) of the equity of the Person or on the ability to direct, by
affirmative or negative action or by omission, the business and affairs of
the Person;
"Purchaser's Default", which may be expressed in the singular or plural
form, means any failure in the payment, performance or observance of or in
compliance with any of the covenants, agreements, representations,
warranties and obligations of Purchaser under this Agreement in any
material respect;
"Purchaser's Group" means Purchaser and all the directors, officers,
employees, agents and independent contractors of Purchaser;
"Real Property" means the Land, together with the Improvements and the
Appurtenances;
"Records and Plans" means, to the extent in the possession or control of
Seller or any of Seller's Group, (a) all rent rolls, all financial and
other books, reports and records maintained by Seller in connection with
the ownership, operation and maintenance of the Property, (b) all
preliminary, final and proposed building plans and specifications
(including "as-built" drawings) respecting the Improvements, and (c) all
structural reviews, architectural drawings and engineering, environmental,
soils, seismic, geologic and architectural reports, studies and
certificates and other similar documents pertaining to the Property;
"Seller's Default", which may be expressed in the singular or plural form,
means any failure in the payment, performance or observance of or in
compliance with any of the covenants, agreements, representations,
warranties and obligations of Seller under this Agreement in any material
respect;
"Seller's Group" means collectively Seller and all the partners, members,
directors, officers, employees, agents, and independent contractors of
Seller at any time and from time to time;
5
<PAGE>
"Service Contracts" means those assignable design contracts, space planning
contracts, construction contacts, subcontracts and purchase orders, utility
contracts, water and sewer service contracts, maintenance contracts,
management contracts and equipment leases, to which Seller or Seller's
managing agent is a party and which relate to the Property and which are
listed on Exhibit D;
"Title Insurer" means Attorney's Title Insurance Fund, Inc., of Orlando;
and
"Unpermitted Exceptions" means the exceptions to title to the Real
Property, other than Permitted Exceptions.
1.03 Seller hereby agrees to sell and to convey, assign and transfer or cause
to be conveyed, assigned and transferred to Purchaser, and Purchaser hereby
agrees to purchase from Seller, the Property, subject to and in accordance with
the terms and conditions, representations, warranties and agreements set forth
in this Agreement.
2. Purchase Price and Earnest Money.
2.01 Purchaser agrees to pay or cause to be paid to Seller, as the purchase
price (the "Purchase Price") for the Property, the sum of Twenty-Eight Million
and No/100 Dollars ($28,000,000.00) which shall be paid and satisfied at the
Closing as follows:
(i) the assumption of the Loan; and
(ii) the balance of the Purchase Price, plus or minus net prorations,
adjustments and credits as herein provided, in cash by wire transfer
or other immediately available funds.
2.02 Purchaser shall, within five (5) Business Days following the Agreement
Date, deliver to the Title Insurer the sum of One Hundred Thousand and No/100
Dollars ($100,000.00) as earnest money to be held by the Title Insurer in escrow
pursuant to the terms of an Escrow Agreement substantially in the form attached
herein as Exhibit E and made part hereof, which shall be increased by an
additional Five Hundred Thousand and No/100 Dollars ($500,000.00) at the
expiration of the Feasibility Period (the sum on deposit at any time with the
Title Insurer pursuant to this Section 2.02, together with the earnings thereon
is herein referred to as the "Earnest Money").
2.03 The Earnest Money shall be invested and, together with any earnings
thereon, shall be, if necessary, reinvested, by the Title Insurer in a money
market account, or such other investments designated by Purchaser. Unless
otherwise expressly herein provided, the Earnest Money shall, at the Closing, be
paid to Purchaser.
6
<PAGE>
3. Purchaser's Pre-Closing Activities and Obligations.
3.01 From and July 11, 1997 until the Closing or earlier termination of this
Agreement, Purchaser's Group or any of them, shall have the right and license to
enter on the Real Property at any time, and from time to time, after reasonable
notice to Seller, for the purpose of conducting (a) surveys (topographical,
boundary and geological), (b) soil borings and tests, (c) traffic, engineering,
hydrological and drainage studies, (d) environmental studies, and (e)
engineering, structural and other studies of the Improvements (f) an appraisal,
and (g) such other tests, studies, inspections and evaluations as Purchaser
shall require (all of the foregoing together with such other activities
described in Section 4 being herein collectively referred to as "Purchaser's
Pre-Closing Activities").
3.02 Purchaser's Pre-Closing Activities shall be exercised and conducted, in all
respects, in a commercially reasonable manner by Purchaser's Group in compliance
with all Governmental Regulations.
3.03 (i) Purchaser shall, at Purchaser's expense, promptly cause (a) all
borings resulting from Purchaser's Pre-Closing Activities to be plugged or
capped in a safe manner, (b) all Property, if any, damaged or destroyed by
Purchaser's Group, or any of them, to be repaired, restored or replaced and
(c) all debris, if any, resulting from or in connection with Purchaser's
Pre-Closing Activities to be removed from the Property.
(ii) Purchaser's Group shall exercise the rights of entry herein
granted to Purchaser's Group in a manner so as not to (a) unreasonably
disturb or interfere with any of the tenants or occupants under the Leases
("Tenants") or (b) breach or violate, any of the terms, covenants and
conditions of the Leases.
(iii) Purchaser shall not take any actions or do anything, and shall
not permit or cause any of Purchaser's Group to take any action or do
anything, which would cause any change in or constitute any breach or
violation of any of the License and Permits.
3.04 Purchaser hereby agrees to pay, and to indemnify, protect, save, defend
and hold forever harmless, Seller from and against all liabilities, obligations,
claims, damages, judgments, awards, penalties, costs and expenses, including,
without limitation, court costs, expert witness fees and reasonable attorneys'
fees and expenses at trial and on appeal, which Seller may incur, suffer or
sustain, or for which Seller may become obligated or liable by reason of:
(i) any breach or violation by Purchaser's Group, or any of them, of
the provisions of Sections 3.02 or 3.03;
(ii) any injury to or death of persons or loss of or damage to
property in connection with, or as a result of, any entry or entries upon,
or use of, the Property by Purchaser's Group, or any of them; and
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(iii) any labor or services performed or any materials furnished by or
for the account or benefit, or at the sufferance, of Purchaser in respect
of the Property.
4. Feasibility Period.
4.01 This Agreement and the obligations of Purchaser hereunder are subject to
and conditioned upon Purchaser, at its own expense, being satisfied, in its sole
discretion, with its "Feasibility Review" (as such term is defined below) during
the Feasibility Period.
4.02 On or before July 18, 1997, Seller shall make available to Purchaser at
the office of the Purchaser in Chicago, Illinois, or the location of the
Property as designated by Purchaser in writing each of the following items and
within five (5) Business Days following any subsequent written request such
other items as Purchaser may subsequently request, provided any such subsequent
request must be made no later than five (5) Business Days prior to the
expiration of the Feasibility Period (individually or collectively, as the
context may require, the "Feasibility Materials") in respect of the Property for
review by Purchaser and its consultants and independent contractors
("Feasibility Review"):
(i) copies of all Leases, together with a current copy the rent roll
attached hereto as Exhibit B;
(ii) copies of Service Contracts listed on Exhibit D.
(iii) copies of the most recent tax bills and value renditions with
respect to the Property and copies of all notices and documents for any
assessments relating to the Property;
(iv) existing survey of the Property;
(v) copies of all existing title policies insuring title to the
Property;
(vi) copies of monthly operating statements for the calendar years
1995 and 1996, and corresponding year-to-date information for calendar year
1997, showing current income and expense items, itemization of all capital
expenditures made during the respective periods and a schedule of all
employees employed by Seller in the operation of the Property, setting
forth the terms of any contract with them;
(vii) a list and copies of all Records and Plans;
(viii) a list and copies of the Licenses and Permits and a copy of any
notice of any statute or code violation pertaining to the Property,
including and any documents pertaining to the resolution thereof;
(ix) copies of all Loan Documents;
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(x) such additional items specified on Exhibit F attached hereto and
made a part hereof; and
(xi) the Commitment and Survey pursuant to Section 10.01 (which shall
be delivered on or before the date specified in such Section).
If Seller fails to deliver any of the Feasibility Materials by said date
specified above, then Purchaser may extend the Feasibility Period one Business
Day for each Business Day beyond said specified date that Seller fails to
deliver the Feasibility Materials, and Purchaser shall give written notice to
Seller of its election to so extend.
4.03 If, at any time during the Feasibility Period, Purchaser is not satisfied
with its Feasibility Review, Purchaser shall give written notice to Seller, on
or before the expiration of the Feasibility Period, of its election to terminate
this Agreement. If Purchaser fails to give notice as required in this Section
4.03 on or before the expiration of the Feasibility Period, then Purchaser shall
be deemed to have elected to waive such condition.
4.04 If Purchaser elects to terminate this Agreement in accordance with Section
4.03, Seller shall cause the Earnest Money to be returned to Purchaser and
Seller and Purchaser shall be released from their respective obligations and
liabilities under this Agreement, subject to Section 18.14 hereof.
5. Conditions Precedent and Closing.
5.01 The following shall be additional conditions precedent to Purchaser's
obligation to perform under this Agreement:
(i) At or prior to the Closing Date, Purchaser shall have received
from the State of Florida Agency for Health Care Administration (the
"Agency") approval of the assignment of the Assisted Living Facility
License by Seller to Purchaser or the issuance of a new license by the
Agency to Purchaser for the operation of the Property as an Assisted Living
Facility under Chapter 400, Part III, Florida Statutes;
(ii) At or prior to the Closing Date, Purchaser shall have received
from each of HUD and the Mortgagee a consent to the assumption of the Loan
by Purchaser which consent shall not impose upon Purchaser any additional
or further terms or conditions not presently set forth in the Loan
Documents and which shall not impose any fees or expenses other than the
standard processing fee of $1.50 per $1,000 of the original mortgage amount
and reasonable attorney's fees incurred by HUD and/or the Mortgagee in
connection with processing the application for transfer;
(iii) Intentionally Omitted;
(iv) At the Closing, the Title Insurer shall be ready, willing and
able to issue the owner's policy of the title insurance described in
Section 10.02 hereof;
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(v) Purchaser's receipt at Closing of the Mortgagee Estoppel
Certificate required pursuant to Section 6.01(viii) hereof;
(vi) There shall be no existing Seller's Defaults not previously
waived in writing by Purchaser; and
(vii) All of Seller's representations and warranties contained herein
and in any other written documents delivered by or on behalf of Seller
pursuant to the terms of this Agreement are true and correct in all
material respects when made and being true and correct as of the Closing
Date.
Purchaser shall diligently pursue and Seller shall use all commercially
reasonable efforts in cooperating with Purchaser in order to fulfill the
conditions precedent set forth in clauses (i), (ii) and (v) above by completing
such requests and applications necessary to obtain such approvals and consents
and the Mortgagee Estoppel Certificate. If the conditions precedent set forth
in clauses (i), (ii) and (v) above are not timely satisfied the Closing Date may
be extended, at Purchaser's option, by written notice to Seller, a reasonable
period of time but not to exceed an additional thirty (30) days, if required to
allow the foregoing conditions to be satisfied to Purchaser's satisfaction,
subject to Purchaser's further rights to terminate this Agreement upon the
expiration of the period of any such extension if all such conditions have not
then been satisfied. If any of the foregoing conditions are not satisfied on or
before the date specified, Purchaser shall give written notice to Seller, on or
before the date specified, of its election to terminate this Agreement. If
Purchaser fails to give notice on or before the date specified, then the
conditions hereunder shall be deemed satisfied or waived and this Agreement
shall continue in full force and effect and the Closing shall take place on the
then scheduled Closing Date. If Purchaser elects to terminate this Agreement as
provided in this Section 5.01 then this Agreement shall automatically terminate
without further liability of either party, except as otherwise provided in
Article 13 or Section 18.14 hereof. Upon terminating under this Section 5.01,
Purchaser shall be entitled to immediate refund of the Earnest Money and each
party shall bear its own expenses incurred in connection with this Agreement.
5.02 The obligations of Seller to perform under this Agreement are
subject to and conditioned upon the absence of any existing Purchaser's Defaults
not previously waived in writing by Seller. Seller may, at Seller's sole
option, elect to waive this condition precedent to performance of its
obligations hereunder by giving written notice to Purchaser of such election at
any time on or before the Closing Date. If Seller elects to waive any such
conditions precedent, this Agreement shall continue in full force and effect.
5.03 The Closing shall occur on the Closing Date at the offices of the
Title Insurer in West Palm Beach, Florida.
6. Documents.
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6.01 Unless otherwise herein expressly provided, Seller shall, at Closing,
deliver or cause to be delivered, to the Title Insurer (with copies to Purchaser
or counsel to Purchaser) the originals of the following documents:
(i) Warranty Deed, in the form attached to and made a part of this
Agreement as Exhibit G ("Deed"), executed by Seller, conveying to Purchaser
fee simple title to the Real Property subject only to the Permitted
Exceptions;
(ii) Bill of Sale, in the form attached to and made a part of this
Agreement as Exhibit H, executed by Seller, conveying title to the Personal
Property to Purchaser;
(iii) Affidavit, in the customary form of the Title Insurer executed
by Seller, as to matters pertaining to parties in possession and mechanic's
liens;
(iv) Assignment and Assumption Agreement, in the form attached to and
made a part of this Agreement as Exhibit I ("Assignment and Assumption
Agreement"), executed by Seller, assigning and transferring to Purchaser,
all the right, title and interest of Seller in and to the Leases, the
Intangible Property, the Service Contracts and the Records and Plans;
(v) Completed declarations or statements, executed by or on behalf of
Seller, in the form prescribed by governmental authority to be filed in
connection with the payment of the documentary stamp or transfer tax
imposed on the transfer of title to the Property;
(vi) The originals or, if originals are not available, true and
correct copies thereof as certified by Seller, of all Leases together with
notices addressed to each and all of the Tenants of the change in ownership
of the Property and place of payment of rent;
(vii) Estoppel certificate in the form attached hereto as Exhibit J
(the "Mortgagee Estoppel Certificate"), dated not more than three (3)
Business Days prior to the Closing Date, from the Mortgagee;
(viii) Non-foreign affidavit, in form sufficient to evidence the non-
foreign exemption provided under Section 1445(f)(3) of the Internal Revenue
Code, executed by an officer of Seller; and
(ix) Counterpart of the "Closing Statement" (as such term is defined
in Section 8.09) executed by Seller or its counsel.
6.02 Unless otherwise herein expressly provided, Purchaser shall, at the
Closing, deliver or cause to be delivered to the Title Insurer (with copies to
Seller or counsel to Seller) the originals of the following documents:
(i) The cash portion of the Purchase Price;
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(ii) Affidavit, in customary form of the Title Insurer, executed by
Purchaser as to matters pertaining to parties in possession and mechanics'
liens;
(iii) Counterpart of the Assignment and Assumption Agreement executed
by Purchaser;
(iv) Counterpart of the Closing Statement executed by Purchaser or its
counsel; and
(v) Completed declarations or statements, executed by or on behalf of
Purchaser in the form prescribed by governmental authority to be filed in
connection with the payment of the documentary stamp or transfer tax
imposed on the transfer of title to the Property.
6.03 Seller shall deliver to Purchaser on or before the Closing:
(i) Building supplies, keys and card keys appropriately tagged for
identification with an accounting of keys known by Seller to be in the
possession of others, and other items comprising the Personal Property;
(ii) Originals of all Service Contracts and any warranties or
guaranties received by Seller from any contractors, subcontractors,
suppliers or materialmen in connection with any construction, repair or
alternation of the Improvements;
(iii) Originals or if originals are not available, certified copies of
the Records and Plans;
(iv) Originals of all Licenses and Permits;
(v) Originals of all Leases;
(vi) All books and records (or copies thereof) relating to the
operation and maintenance of the Property prior to the Closing Date;
(vii) Originals or true and correct copies of all the Loan Documents;
(viii) A rent roll certified by the general partner of Seller dated as
of the Closing Date; and
(ix) A statement certified by the general partner of Seller of all
delinquent rents under the Leases dated as of the Closing Date.
7. Brokerage and Other Commissions.
7.01 Seller hereby warrants to Purchaser that none of Seller's Group has dealt
with any Person, other than Senior Housing Property Group, Inc. (the "Broker"),
who would be entitled to the payment of a brokerage commission, finder's fee or
other similar compensation in connection with the transaction hereby
contemplated on account of the acts or omissions of Seller's Group or any of
them. Seller agrees to pay, and to indemnify, defend, protect and hold forever
harmless Purchaser from and against, any and all losses, costs, damages,
expenses and liabilities, including,
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without limitation, court costs, expert witness fees and reasonable attorneys'
fees and expenses at trial and on appeal, which Purchaser may incur, suffer or
sustain, or for which Purchaser may become liable or obligated, by reason of or
in connection with any right, claim, demand or damage made or asserted by any
Person or Persons for the payment of a brokerage commission, finder's fee or
other similar compensation on account of the acts or omissions of Seller's
Group, or any of them, in connection with the transaction hereby contemplated.
Purchaser agrees to pay the Broker a commission pursuant to a separate agreement
between Purchaser and Broker. The provisions of this Section 7.01 shall survive
Closing or the termination of this Agreement indefinitely
7.02 Purchaser hereby warrants to Seller that none of Purchaser's Group has
dealt with any Person, other than the Broker, who would be entitled to the
payment of a brokerage commission, finder's fee or other similar compensation in
connection with the transaction hereby contemplated on account of acts or
omissions of Purchaser's Group, or any of them. Purchaser agrees to pay, and to
indemnify, defend, protect and hold forever harmless Seller's Group from and
against, any and all losses, costs, damages, expenses and liabilities,
including, without limitation, court costs, expert witness and reasonable
attorneys' fees and expenses at trial or on appeal, which Seller's Group, or any
of them, may incur, suffer or sustain, or for which Seller's Group, or any of
them, may become liable or obligated, by reason of or in connection with any
right, claim, demand or damage made or asserted by any Person or Persons,
including, without limitation, the Broker, for the payment of a brokerage
commission, finder's fee or other similar compensation on account of the acts or
omissions of Purchaser's Group, or any of them, in connection with the
transaction hereby contemplated.
8. Prorations, Credits and Adjustments.
8.01 The following items in respect of the Property shall be prorated as of
11:59 p.m. of the day immediately preceding the Closing Date and adjusted at the
Closing:
(i) Subject to the provisions of Section 8.02, general real estate
taxes;
(ii) Subject to the provisions of Section 8.03, prepaid rents under
the Leases;
(iii) Security deposits and all other sums in escrow or reserve
accounts (such as utility or tax reserves) held under the Leases shall be
credited to Purchaser;
(iv) Interest on the Note;
(v) All sums held in escrows by the Mortgagee for real estate taxes,
insurance premiums, replacement reserves or other escrows required under
the Loan Documents or by Mortgagee shall be credited to Seller;
(vi) All sums paid or payable under the Service Contracts for periods
including the Closing Date;
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(vii) Any other items required under this Agreement to be prorated and
adjusted at the Closing; and
(viii) All other items of revenue and expense which, by local custom
and practice, are prorated or adjusted between sellers and purchasers of
real property similar in kind to the Property.
8.02 If, at the Closing Date, general real estate taxes for the current year
are not fixed, but the assessed value of the Property is available for the
current year, then general real estate taxes will be prorated based upon such
assessment and one hundred ten percent (110%) of the prior year's tax rate. If,
at the Closing Date, the current year's assessed valuation is not available,
then general real estate taxes will be prorated on the basis of one hundred ten
percent (110%) of the prior year's taxes discounted as if paid in November of
such prior year. Purchaser and Seller shall reprorate general real estate taxes
upon receipt of the tax bills for the year in which Closing occurs. This
provision shall survive Closing for a period expiring ninety (90) days following
receipt of such applicable tax bills.
8.03 As used in this Agreement, the term "rents" includes all rentals,
additional rentals and any other sums and charges payable to Seller under the
Leases or in the normal course by Tenants for services rendered in connection
with their occupancy of the Property. Delinquent rents for the period prior to
the Closing Date shall remain the property of Seller. Purchaser shall deliver
to Seller any rents, net of the costs of collection, received by Purchaser which
are properly allocable to rental periods occurring before the Closing Date.
Without being obligated to do so, in the event Purchaser brings an action
against a Tenant to collect any delinquent rents, it shall also make a claim in
such action for such delinquencies relating to periods prior to the Closing
Date. It shall be conclusively presumed between Purchaser and Seller that all
rents received after the Closing Date from Tenants with rental delinquencies on
the Closing Date shall be applied as follows: (i) first, to rent then due and
payable to Purchaser (including any previously unpaid rent then due and payable
to Purchaser), (ii) second, to the delinquent rents of such Tenant attributable
to the calendar months prior to the Closing Date, and (iii) third, to future
rent due and payable to Purchaser.
8.04 (i) Seller shall pay (a) the title insurance premium charged by the
Title Insurer to issue its owner's policy of title insurance pursuant to
Section 10.02 and the costs of any reinsurance, (b) the cost of the Survey,
and (c) one-half (1/2) of the charges of the Title Insurer for its service
as escrow agent.
(ii) Purchaser shall pay (a) the cost of recording and filing of the
Deed, (b) all intangible, documentary stamp, transfer, recordation or other
taxes imposed on or in connection with the Deed, (c) one-half (1/2) of the
charges of the Title Insurer for its service as escrow agent, and (d) all
costs and fees imposed by Mortgagee in connection with the assumption of
the Loan.
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(iii) Except as otherwise expressly provided, each of Seller and
Purchaser shall pay its costs, fees and expenses incurred or sustained in
connection with the negotiation and consummation of this Agreement and the
transaction hereby contemplated.
8.05 Seller shall prepare a statement showing all prorations, adjustments and
credits made and determined as provided in this Agreement and deliver the same
to Purchaser at least three (3) Business Days prior to the Closing Date. Such
statement, after review and approval by Purchaser ("Closing Statement") shall,
at the Closing, be executed and delivered by or on behalf of Seller and
Purchaser.
9. Possession and Loss by Fire or Other Casualty.
9.01 Seller shall, concurrently with the Closing, deliver or cause to be
delivered to Purchaser possession of the Property subject only to the rights of
the Tenants under the Leases.
9.02 If, at any time from and after the date of this Agreement and prior to the
Closing, the Property or any part thereof shall be damaged or destroyed by fire
or other casualty ("Casualty"), then in such event, Seller shall forthwith give
to Purchaser written notice thereof.
9.03 If any such Casualty shall occur, then, unless this Agreement is
terminated pursuant to Section 9.04, this Agreement shall remain in full force
and effect and Purchaser shall consummate the transaction hereby contemplated
upon the terms and conditions herein contained; provided, however, that Seller
shall only be obligated to convey to Purchaser, and Purchaser shall accept the
Property in its "AS IS" condition and further provided that:
(i) If the proceeds of the insurance, including casualty and rent loss
or business interruption coverages, have not then been paid to or for the
benefit or account of, and received by Seller, then Seller shall assign and
transfer or cause to be assigned and transferred, at the Closing, to
Purchaser all rights and interests of Seller to such proceeds and Purchaser
shall thereafter, at Purchaser's expense, bear all responsibility for the
negotiation, settlement and collection thereof and Purchaser shall receive
a credit against the Purchase Price for the deductible under any such
policy or policies of insurance; provided however the proceeds of any rent
loss or business interruption insurance shall be prorated for the period to
which such proceeds relate as of the Closing Date; or
(ii) If such insurance proceeds, or any part thereof, have been so
paid and received by Seller, then Seller shall, at the Closing, pay to
Purchaser, or give to Purchaser as a credit against the Purchase Price, an
amount equal to such award so paid and received plus the amount of the
deductible under any such policy or policies of insurance; provided however
the proceeds of any rent loss or business interruption insurance shall be
prorated for the period to which such proceeds relate as of the Closing
Date.
9.04 In the event that at any time from and after the date of this Agreement
and prior to Closing, any Casualty occurs and by reason thereof, all the
Property or a material part thereof (the
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term "material" as here used shall be deemed to refer to a Casualty (i)
affecting any area of the Property not occupied as living quarters by Tenants
and requiring in excess of Fifty Thousand and No/100 Dollars ($50,000.00) to
repair or replace or (ii) affecting any other area and requiring in excess of
Two Hundred Thousand and No/100 Dollars ($200,000.00) to repair or replace),
then Purchaser may, at its election and upon written notice thereof given to
Seller within thirty (30) days after the date of the notice from Seller
terminate this Agreement, in which case Seller and Purchaser shall be released
and discharged of and from their respective obligations under this Agreement,
subject to Section 18.14 hereof, and except that (i) the Earnest Money shall be
forthwith returned to Purchaser, and (ii) Purchaser shall have no claim or right
in and to the proceeds of insurance resulting from any such Casualty.
10. Title Insurance and Survey.
10.01 Seller shall deliver to Purchaser or counsel to Purchaser on or before
August 11, 1997, the following:
(i) a preliminary title report ("Commitment") committing the Title
Insurer to issue its owner's policy of title insurance covering title to
the Real Property with an ALTA 3.1 zoning endorsement, if available, and
such other endorsements as Purchaser may reasonably require together with
copies of all documents referred to therein; and
(ii) a current plat of survey ("Survey") of the Real Property prepared
by a licensed Florida land surveyor, certified to and for the benefit of
Seller, Purchaser and the Title Insurer as being prepared in accordance
with the Minimum Standard Detail Requirements for ALTA/ACSM Land Surveys
adopted in 1992, for an Urban Survey, with such Table A requirements as
Purchaser may reasonably require.
The Commitment shall be conclusive evidence of good and indefeasible title as
therein shown as to all matters to be insured by the policy of title insurance,
subject only to the exceptions, qualifications and limitations as therein
stated. Within ten (10) Business Days following receipt of the last to be
delivered of the Commitment and the Survey, Purchaser shall give notice to
Seller of those exceptions contained in the Commitment which Purchaser finds
acceptable and such exceptions shall be deemed "Permitted Exceptions" as defined
in Section 1.02.
10.02 The obligation of Purchaser to close the transaction hereby contemplated
shall, in addition to other conditions herein stated, be subject to the
condition that, at the Closing, the Title Insurer be prepared to issue its
owner's policy of title insurance pursuant to the Commitment (and the Title
Insurer shall issue a new Commitment or update the existing Commitment to the
date of Closing to so insure), insuring title to the Real Property in Purchaser,
in an amount equal to the Purchase Price, subject only to the Permitted
Exceptions with the deletion of or endorsement over the standard exceptions
customarily contained in a commitment for an owner's policy of title insurance
issued by the Title Insurer and with such endorsements as Purchaser may
reasonably require. The Title Insurer shall obtain ALTA facultative reinsurance
agreements for all amounts above Five Million and No/100 Dollars ($5,000,000.00)
providing for direct access by the insured.
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10.03 If the Commitment shall disclose any Unpermitted Exceptions which
constitute interests, encumbrances or liens of definite or liquidated amounts
and such Unpermitted Exceptions may be discharged or satisfied by the payment of
money, then to the extent such Unpermitted Exceptions do not exceed, in the
aggregate, the cash portion of the Purchase Price, Seller shall discharge or
satisfy the same (i) prior to the Closing, by using its own funds or (ii) at the
Closing, by using the Purchase Price so long as all conditions to the payment of
the Purchase Price to Seller have been satisfied or waived; provided, however,
that if any Unpermitted Exceptions constitute mechanics' or materialmen's liens,
then Seller may, at its election, provide, in lieu of the discharge or
satisfaction thereof, a bond in accordance with law and, otherwise, in form and
amount as may be required by the Title Insurer to delete such Unpermitted
Exceptions.
10.04 If the Commitment shall disclose any Unpermitted Exceptions which do not
constitute interests, encumbrances or liens of definite or liquidated amounts,
then Seller shall have a period ending on the date five (5) days before the
expiration of the Feasibility Period to cure or correct such Unpermitted
Exceptions or, if Seller, after exercising reasonable diligence, is unable to
cure or correct any such Unpermitted Exceptions, then, if available, to cause
the Title Insurer to commit to insure Purchaser and all subsequent owners and
lenders of all or any part of the Property affected by any such Unpermitted
Exceptions, by affirmative endorsement reasonably satisfactory to Purchaser,
against any loss or damage resulting from any such Unpermitted Exceptions, all
at Seller's expense.
10.05 In the event that any Unpermitted Exceptions are not discharged or
satisfied as provided in Section 10.03 or cured or corrected or insured over as
provided in Section 10.04, then Seller shall give notice thereof to Purchaser at
or prior to the expiration of the period specified in Section 10.04 and
Purchaser may, upon notice thereof given to Seller on or before the Closing
Date, elect to (i) accept title to the Property, subject to the then
undischarged or unsatisfied, uncured or uncorrected, or uninsured Unpermitted
Exceptions in which case such Unpermitted Exceptions shall be deemed Permitted
Exceptions and the transaction hereby contemplated shall be consummated at the
Closing, without adjustment of the Purchase Price or payment of consideration of
any kind to Purchaser on account of such Unpermitted Exceptions, or (ii)
terminate this Agreement in which case Seller and Purchaser shall be released
and discharged of and from their respective obligations under this Agreement to
sell and purchase the Property and the provisions of Section 13.02(iii) shall be
operative and binding on Seller and Purchaser.
11. Taking or Condemnation.
11.01 If, at any time from and after the Agreement Date and prior to the
Closing, Seller shall receive notice the Property or any part thereof shall be
taken or condemned under or pursuant to eminent domain proceedings ("Taking"),
then in such event, Seller shall forthwith give to Purchaser written notice
thereof.
11.02 If any such eminent domain proceedings shall be instituted or threatened,
then, unless this Agreement is terminated pursuant to Section 11.03, this
Agreement shall remain in full force and effect and Purchaser shall consummate
the transaction hereby contemplated upon the terms and
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conditions herein contained; provided, however, that Seller shall only be
obligated to convey to Purchaser, and Purchaser shall accept (a) the Property
less that portion so taken or condemned, and (b) title to the Property subject,
in addition to other Permitted Exceptions, to such exceptions thereto as may
occur or arise by reason of such Taking, and provided, further, that:
(i) If the condemnation award has not then been paid to or for the
benefit or account of, and received by Seller, then Seller shall assign and
transfer or cause to be assigned and transferred, at the Closing, to
Purchaser all rights and interests of Seller in the Property so taken or
condemned and in such award and Purchaser shall thereafter, at Purchaser's
expense, bear all responsibility for the negotiation, settlement and
collection thereof from the condemning authority; or
(ii) If the condemnation award, or any part thereof, has been so paid
and received by Seller, then Seller shall, at the Closing, pay to
Purchaser, or give to Purchaser as a credit against the Purchase Price, an
amount equal to such award so paid and received.
11.03 In the event that at any time from and after the date of this Agreement
and prior to the Closing, any eminent domain proceedings shall be instituted by
any public or quasi-public authority or utility company, then Purchaser may, at
its election and upon written notice thereof given to Seller within thirty (30)
days after receipt of Seller's notice pursuant to Section 11.01 terminate this
Agreement, in which case Seller and Purchaser shall be released and discharged
of and from their respective obligations under this Agreement, subject to
Section 18.14 hereof, and except that (i) the Earnest Money shall be forthwith
returned to Purchaser, and (ii) Purchaser shall have no claim or right in and to
the award or other proceeds resulting from any such eminent domain proceedings.
12. Seller's Covenants.
12.01 Seller covenants and agrees with Purchaser as follows:
(i) Seller shall not, without the prior written consent of Purchaser
in each instance, (a) modify, amend or terminate (except for material
breach or nonpayment of rent or other sums due) in any manner whatsoever,
any of the Leases, (b) consent to the assignment or subletting of any of
the Leases, or (c) enter into any new lease of the Property or any portion
thereof or renew or extend any Lease which is not on the standard form of
lease currently in use for the Property and which does not comply with the
Leasing Standards set forth in Exhibit K attached hereto and made a part
hereof (all such permitted leases shall be deemed to be included within the
term "Leases"). If Seller desires to take any of the actions described in
clauses (a), (b) or (c) of this Section 12.01(i), Seller shall so notify
Purchaser. Purchaser shall have five (5) Business Days from receipt of
Seller's notice to object in writing to any proposed action described in
Seller's notice. If Purchaser fails to notify Seller on a timely basis of
any objections, it shall be conclusively presumed that Purchaser consented
to all of the actions described in Seller's notice and Seller may
immediately implement such actions. If Purchaser notifies Seller of any
objections to the actions proposed in Seller's notice and thereafter Seller
and Purchaser cannot agree on a
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course of action within fifteen (15) Business Days of the date of
Purchaser's notice of objections, Seller shall not take any action to which
Purchaser has objected.
(ii) Seller shall not, without the prior written consent of Purchaser
in each instance, enter into any new commitments, contracts, licenses,
options or other agreements of any kind affecting or relating to the
Property except for agreements that are terminable on or before Closing
Date and Leases that are governed by Section 12.01(i).
(iii) If Seller removes any item of Personal Property prior to the
Closing Date, Seller shall substitute therefor an item of like kind and
comparable value.
(iv) Subject to the provisions of Articles 9 and 11 hereof, Seller
shall, between the Execution Date and the Closing Date, at Seller's sole
cost and expense, maintain the Property in good order, condition and
repair, reasonable wear and tear excepted, shall perform all work required
to be done by the landlord under the terms of the Leases, and shall make
all repairs, maintenance and replacements of the Improvements and any
Personal Property and otherwise operate the Property in the same manner as
before the making of this Agreement and as though Seller were retaining the
Property. Seller shall not make any alterations to the Property except as
required under the Leases. Seller shall not, after the Agreement Date,
without in each case obtaining Purchaser's prior written consent thereto,
enter into, amend, extend (including by exercise of option), terminate or
permit the early termination of any Service Contract or waive any rights of
Seller thereunder. The foregoing notwithstanding, Purchaser's consent shall
not be required for Seller to enter into or extend (including by exercise
of option) any Service Contract, provided the term of such Service Contract
does not extend more than thirty (30) days beyond the Closing Date.
(v) At all times prior the Closing Date, Seller shall maintain and
pay for fire and extended coverage insurance for the full replacement cost
of the Improvements and Personal Property and other casualty coverage and
public liability insurance in amounts no event less than the coverage in
effect on the date of this Agreement and/or as may be required under the
Leases.
(vi) Seller shall immediately notify Purchaser of any fact or other
circumstance which, if known by Seller on the Agreement Date or the Closing
Date, would render any representation or warranty of Seller incorrect or
incomplete.
(vii) Without Purchaser's consent, Seller shall not (a) voluntarily
subject any right, title or interest in or to this Property to any
mortgage, pledge, lien or other hypothecation or encumbrance, or (b)
transfer, convey or assign any right, title or interest in or to all or any
portion of the Property.
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12.02 Seller will at all times after the Agreement Date to and including the
Closing Date operate the Property in a manner consistent with the operation of
the Property on the date hereof and shall maintain in full force and effect all
of the Licenses and Permits.
13. Remedies.
13.01 (i) If, prior to or at the Closing Date as determined without regard
to the provisions of Section 13.01(ii), a Purchaser's Default shall occur
or exist, then Purchaser shall have a period ("Purchaser's Curative
Period") expiring the earlier of the Closing Date or the fifth (5th)
Business Day after the date of such Purchaser's Default, to correct or cure
such Purchaser's Default.
(ii) In the event that Purchaser's Default is corrected or cured
within Purchaser's Curative Period, the Closing Date shall be the later of
(1) the date determined in Section 1.02 or (2) the tenth (10th) Business
Day following the date such Purchaser's Default has been cured or
corrected, or on such other date to which Seller and Purchaser shall
mutually agree in writing, provided that there are not other Purchaser's
Defaults then pending and all other conditions precedent to the performance
by Seller of its obligations under this Agreement have been satisfied or
waived.
(iii) If, within Purchaser's Curative Period, such Purchaser's
Default is not cured or corrected then at the election of Seller and
effective upon notice thereof given to Purchaser prior to or at 5:00 p.m.
(West Palm Beach, Florida time) on the second (2nd) Business Day next
following the date of expiration of Purchaser's Curative Period, this
Agreement shall terminate and the parties hereto shall be released and
discharged of and from all further obligation and liability under this
Agreement, subject to Section 18.14, and except that exclusive of and in
addition to the liability, if any, of Purchaser accruing as a result of
Purchaser's breach of any of the representations, warranties and covenants
deemed by Section 18.14 to survive any termination of this Agreement, or by
reason of its failure to comply with the provisions of Section
13.01(iii)(a), the Title Insurer shall deliver the Earnest Money to Seller
in full settlement and liquidation of all damages sustained by Seller, it
being acknowledged and agreed that the damages sustained by Seller as a
result of a material default by Purchaser hereunder, exclusive of and in
addition to the liability of Purchaser accruing as a result of Seller's
breach of any of the representations, warranties and covenants deemed by
Section 18.14 to survive any termination of this Agreement, or by reason of
its failure to comply with the provisions of Section 13.01(iii)(a), would
be substantial but difficult to ascertain.
(iv) Seller shall not be entitled, and hereby expressly waives its
right, to exercise any and all rights, powers and remedies at law or in
equity, other than such remedies as may be required to enforce the rights
of Seller as specifically provided in Section 13.01(iii).
13.02 (i) If, prior to or at the Closing Date (as determined without regard to
the provisions of Section 13.02(ii)), a Seller's Default shall occur or
exist, then Seller shall have a period
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("Seller's Curative Period") expiring the later of the (2nd) business day
immediately preceding the Closing Date or the fifth (5th) business day
after the date of Seller's Default, to correct or cure such Seller's
Default.
(ii) In the event that Seller's Default is corrected or cured within
Seller's Curative Period, the Closing Date shall be the later of (1) the
date determined in Section 1.02 or (2) the tenth (10th) Business Day
following the date such Seller's Default has been cured or corrected, or on
such other date to which Seller and Purchaser shall mutually agree in
writing, provided that there are no other Seller's Defaults then pending
and all other conditions precedent to the performance by Purchaser of its
obligations under this Agreement have been satisfied or waived.
(iii) If, within Seller's Curative Period, such Seller's Default is
not cured or corrected then at the election of Purchaser and effective upon
notice thereof given to Seller prior to or at 5:00 p.m. (West Palm Beach,
Florida time) on the second (2nd) Business Day following the date of
expiration of Seller's Curative Period, this Agreement shall terminate and
the parties hereto shall be released and discharged of and from all further
obligation and liability under this Agreement, subject to Section 18.14
hereof, and except that:
(a) the Earnest Money shall be forthwith returned to Purchaser
by the Title Insurer; and
(b) exclusive of and in addition to the liability, if any, of
Seller accruing as a result of Seller's breach of any of the
representations, warranties and covenants deemed by Section 18.14 to
survive any termination of this Agreement, (i) if such breach arises
out of a willful act or omission of Seller, then Purchaser shall have
all rights and remedies available at law or in equity on account
thereof, including, to the extent permitted by law, consequential and
punitive damages or specific performance of this Agreement, and (2) if
such breach is not a result of a willful act or omission of Seller
then Purchaser shall have the right to either obtain specific
performance of this Agreement or recover its actual damages, but shall
not be entitled to consequential or punitive damages.
(iv) In the event that any representation or warranty made by Seller in
this Agreement becomes untrue after the Agreement Date and prior to the
Closing Date, Seller shall promptly notify Purchaser. Seller shall
thereafter use commercially reasonable efforts so that such representation
and warranty can be remade as of the Closing Date. If after using such
commercially reasonable efforts such representation or warranty cannot be
remade by Seller then, Purchasers remedy shall be to terminate this
Agreement or to proceed with the consummation of the transaction
contemplated hereby and unless such representation or warranty is untrue
solely on account of the wilful act or omission of the Seller, Purchaser
shall not have the remedy set forth in Section 13.02 (iii) (b).
13.03 (i) Except for any claims arising out of the fraud of Seller, Purchaser
hereby agrees not to assert or to allow or cause the assertion of any claim
against Seller after the expiration of the
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Claim Period or such other period specified in this Agreement and hereby waives
as to Seller any and all claims against Seller which claims arise, but are not
asserted, within the Claim Period or such other period or arise at or after the
Claim Period or such other period, on account of a breach or violation of the
covenants, agreements, representations and warranties of Seller under this
Agreement which expressly survive the Closing as provided in Section 18.14.
(ii) In the event that any claim(s) shall be asserted by or on behalf
of Purchaser against Seller prior to the expiration of the Claim Period or such
other applicable period, then unless and until such claims (other than a claim
based on a breach of Section 7.01 or on the fraud of Seller) exceed, in the
aggregate, One Hundred Thousand and No/100 Dollars ($100,000.00), Purchaser
shall not assert any such claims. However, if such claims exceed, in the
aggregate, such amount, Seller shall be liable for any and all claims which
Purchaser shall have hereunder.
(iii) Except as expressly limited in this Agreement, the parties
hereto shall be entitled to exercise, singly, successively or cumulatively and
in any order, any and all rights, powers and remedies available at law or in
equity on account of any breach or violation of any of the covenants,
agreements, conditions, representations, warranties and obligations which
survive the Closing.
13.04 In any suit, action or proceeding under this Agreement, the party hereto
prevailing therein shall be entitled to reimbursement from the other party of
all reasonable costs and expenses, including, without limitation, court costs,
expert witness fees and reasonable attorneys' fees and expenses at trial and on
appeal, incurred or sustained by the prevailing party in connection with such
suit, action or proceeding, and all such costs and expenses shall be included in
any order, judgment or decree issued or rendered therein.
14. Representations and Warranties of Purchaser. As of the Agreement Date and
as of the Closing Date, Purchaser represents and warrants to and covenants with
Seller that:
14.01 Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to own its property and carry on its business as now being conducted.
14.02 Purchaser has all necessary power and authority to enter into this
Agreement and to perform all of the obligations to be performed by Purchaser
hereunder.
14.03 This Agreement has been duly and validly executed and delivered by
Purchaser, and this Agreement constitutes the valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought.
14.04 This Agreement and its consummation have been duly authorized and
approved on behalf of Purchaser by all requisite action. Neither the execution
and delivery by Purchaser of this
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Agreement nor the consummation by Purchaser of the acquisition of the Property
will conflict with, result in the breach of, constitute a default under, or
accelerate the performance provided by the terms of (i) any law, ordinance, rule
or regulation of any governmental body, authority or agency, (ii) any judgment,
order or decree of any court or any governmental authority or agency to which
Purchaser may be subject, (iii) any material contract, material agreement or
material instrument to which Purchaser is a party or by which Purchaser is bound
or committed or (iv) Purchaser's Articles of Incorporation or By-Laws.
15. Representations and Warranties of Seller. As of the Agreement Date and as
of the Closing Date, Seller represents and warrants to and covenants with
Purchaser that:
15.01 Seller is a limited partnership, duly organized, validly existing and in
good standing under the laws of the State of Florida and has all requisite power
and authority to own its property and carry on its business as now being
conducted.
15.02 Seller has all necessary power and authority to enter into this Agreement
and to perform all of the obligations to be performed by Seller hereunder.
15.03 This Agreement has been duly and validly executed and delivered by
Seller, and this Agreement constitutes the valid and legally binding obligation
of Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought.
15.04 The consummation by Seller of the sale of the Property will not conflict
with, result in the breach of, constitute a default under, or accelerate the
performance provided by the terms of any law, any rule or regulation of any
governmental or agency of any government or any judgment, order, or decree of
any court or other agency of any government to which Seller may be subject, any
material contract, material agreement, or material instrument to which Seller is
a party or by which Seller is bound or committed.
15.05 Neither the execution and delivery of this Agreement, nor the
consummation of the transaction with Purchaser will constitute an event which,
with the lapse of time or action by a third party, could result in the creation
of any lien, charge, or encumbrance upon the Property.
15.06 There are no actions, suits or proceedings pending or, to the knowledge
of Seller, threatened against or affecting Seller, at law or in equity, or
before any federal, state, municipal or governmental department, commission,
board, bureau, agency or instrumentality which involve the possibility of any
judgment or liability, not covered by insurance, and which may result in any
material adverse change in the operation of the Property or in the condition,
financial or other, of the Property, or which could prevent Seller's closing of
this Agreement.
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15.07 Seller has not received any written notice of any pending or proceedings
or other actions by any Governmental Authority to rezone, condemn or impose any
assessment, charge or encumbrance on the Property and Seller has received no
notice of any pending nor has any actual knowledge of any threatened proceeding
or action by any Governmental Authority to condemn the Property.
15.08 Seller has not entered into any agreement, contract or other document to
sell, assign, transfer, convey, encumber or dispose of the Property or any part
thereof or interest therein other than this Agreement.
15.09 Seller has received no written notice of failure by Seller to comply with
any applicable Governmental Regulations.
15.10 To Seller's knowledge, (a) the Feasibility Materials are, and at the
Closing Date will be, true and correct copies thereof, (b) the Service Contracts
are, and at the Closing Date will be (subject to expiration of the term thereof
or breach by the other party thereto), in full force and effect, and all such
Service Contracts have been, or will be delivered to Purchaser pursuant to this
Agreement, and (c) there is no default by Seller, nor any state of facts which
with the passage of time or giving of notice or both, would constitute a default
by Seller under any of the Service Contracts.
15.11 Seller (a) is not party to, or otherwise bound by, any collective
bargaining agreement or multi-employer pension fund covering employees who
service the Property, (b) has not entered into any oral or written agreements
which would bind or obligate Purchaser to engage the services of any person as
employee or independent contractor relating to the Property, and (c) is not
involved in any current labor dispute with any maintenance or other personnel or
employees of Seller.
15.12 Seller knows of no facts, nor has Seller failed to disclose to Purchaser
any fact known to Seller, which would prevent Purchaser from using and
operating the Property after the Closing Date in the manner in which the
Property has been used and operated prior to the Agreement Date.
15.13 To Seller's knowledge (a) other than amounts disclosed by the tax bills
delivered to Purchaser by Seller, no other real property taxes have been
assessed against the Property for the current year, (b) other than as disclosed
in the public records, there are not any special assessments or charges which
have been levied against the Property, and (c) there are no intended public
improvements which will result in any charge being levied against or in the
creation of any lien upon the Property or any portion thereof.
15.14 The statements of Seller contained herein are true and correct in all
material respects as of the date thereof and will be true and correct as of the
Closing Date, and this Agreement and statements contained in the Feasibility
Materials, considered in the aggregate, do not as of the date thereof and will
not as of the Closing Date, omit any material fact necessary to make the
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statements of Seller contained herein or therein, in light of the circumstances
under which they were made, not misleading.
15.15 To Seller's knowledge and except to the extent disclosed in the
Feasibility Materials, as of the Agreement Date (a) the Property is not in
violation of any applicable environmental law or regulation promulgated by any
Authority (collectively, "Environmental Laws"); (b) neither Seller nor any prior
owner or occupant of the Real Property has engaged in or permitted any release,
dumping, discharge, disposal, spillage or leakage (whether legal or illegal,
accidental or intentional) of substances or materials regulated under or
defined as being a "hazardous material" or a "hazardous substance" under any
Environmental Law ("Hazardous Materials") on the Property; and (c) there is no
friable asbestos present upon the Property. Seller has received no written
notice of any proceeding or inquiry by any Authority with respect to the
presence of any Hazardous Substances on the Property or the migration thereof
from or to other property.
15.16 Seller has received no written notice from any insurer that the
condition, use or operation of the Property violates the terms of any insurance
coverage applicable to the Property, and, to Seller's knowledge, the current
condition, use or operation of the Property does not violate the terms of such
insurance.
15.17 The copies of the Leases delivered or to be delivered by Seller to
Purchaser are true and correct copies of such Leases and are in full force and
effect, and include all modifications and amendments thereto in effect as of the
date of such delivery; and the information set forth in the Rent Roll is true
and complete as of the date such Rent Roll was made available to Purchaser and
there are no leases of space in the Improvements and no material defaults under
any of the Leases, except as set forth in the Rent Roll.
15.18 The annual audited statements for the Property delivered to Purchaser
are true and correct and accurately reflect the financial condition of the
Property for the periods to which such statements relate. The monthly operating
statements for the Property delivered to Purchaser are true and correct in all
material respects.
15.19 To Seller's best knowledge, the Licenses and Permits constitute all of
the licenses and permits required for the normal use and operation of the
Property. Seller has materially complied with all the terms of the Licenses
and Permits designated on Exhibit C as the "Material Operational Licenses and
Permits" and has not received any written notice that any of the Licenses or
Permits will not be renewed upon expiration, or of any material conditions which
will be imposed in order to receive any such renewal.
15.20 The Loan Documents are in full force and effect, the outstanding
principal balance of the Loan on or about the Agreement Date is approximately
$22,157,520.00, Seller is not in default thereunder and no event has occurred
which, with the giving of notice or passage of time or both would constitute a
default under any of the Loan Documents.
16. Notices.
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16.01 All notices, requests, demands and other communications required or
desired to be given hereunder shall be in writing signed by Seller or Purchaser,
or their respective authorized agents or attorneys, as the case may be, and
shall be deemed to have been properly given if (i) served in person, (ii)
mailed, by United States registered or certified mail, full postage prepaid,
return receipt requested (iii) sent by special courier service (e.g. Federal
Express) or (iv) sent by telecopy, provided that in confirmation thereof, an
executed original of such notice, request, demand or other communication is
concurrently given by means of any other mode of delivery permitted hereunder,
addressed as follows:
If to Seller: Greystone & Company
1520 West 57th Street
60th Floor
New York, New York 10019
Attn: Ms. Connie Bagley
Telephone No.: (212) 956-2600
Telecopier No.: (212) 956-2244
With a copy thereof
to counsel to Seller: Greenberg Traurig
One Commerce Square
2005 Market Street
Suite 2050
Philadelphia, PA 19103
Attn: Rachel Kipnes
Telephone No.: (215) 988-7800
Telecopier No.: (215) 988-7801
If to Purchaser: Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attn: Matthew F. Whitlock
Telephone No.: (312) 917-4288
Telecopier No.: (312) 917-0460
and
Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Telephone No.: (312) 917-4234
Telecopier No.: (312) 917-1684
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With a copy thereof to Burke, Warren, MacKay & Serritella, P.C.
counsel to Purchaser: 330 N. Wabash Avenue, 22nd Floor
Chicago, Illinois 606011
Attn: Douglas E. Wambach
Telephone No.: (312) 840-7019
Telecopier No.: (312) 840-7900
or to such other address in the United States of America as may from time to
time be designated by the party to be addressed by notice to the other in the
manner hereinabove provided.
16.02 Any notice, request, demand or other communication served as provided in
Section 16.01(i) shall be deemed to have been given and received on the date of
actual receipt of such notice, request, demand or other communication. Any
notice, request, demand or other communication mailed as provided in Section
16.01(ii) or sent as provided in Section 16.01(iii) shall be deemed to have been
given and received on the earlier of (a) the date of actual receipt of such
notice, request, demand or other communication, regardless of mode of delivery,
or (b) the second Business Day next following the date of mailing by U.S.
registered or certified mail or (c) the date of delivery to such special courier
service of such notice, request, demand or other communication. Any notice,
request, demand or other communication delivered as provided in Section
16.01(iv), shall be deemed to be given and received on the date the confirmation
thereof is deemed received pursuant to the other provisions of this Section
16.02.
16.03 The delivery to or receipt by parties, other than and in addition to
Seller or Purchaser, of copies of any notice, request, demand or other
communication hereunder is merely an accommodation and is not necessary or
required to make effective the actual giving or receipt by Seller or Purchaser
of any notice, request, demand or other communication.
17. No Assignment.
17.01 Except as provided in Section 17.02, Purchaser shall not have the right
to transfer or assign this Agreement or any right or interest herein without the
prior written consent of Seller, and any purported assignment or transfer
thereof by Purchaser, without the prior written consent of Seller, shall not
vest in the transferee or assignee any right, title or interest herein or in the
Property.
17.02 Notwithstanding the provisions of Section 17.01, Purchaser may assign
this Agreement (i) at any time, to a Purchaser's Affiliate, or (ii) as part of
sale and leaseback transaction, which, in either case, Purchaser shall give
notice thereof to Seller.
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17.03 In the event that, with the prior written consent of Seller or pursuant
to Section 17.02, Purchaser shall assign or transfer this Agreement or any right
or interest herein, the transferee or assignee shall, by instrument reasonably
satisfactory to Seller assume and agree to pay, perform and observe all the
covenants, agreements and obligations of Purchaser under this Agreement.
18. Miscellaneous. It is further understood and agreed that:
18.01 Time is of the essence of each and every covenant, condition and
obligation of this Agreement. Except as herein expressly permitted, neither
party hereto shall have the right to extend the Closing, the Closing Date, the
date of expiration of any period of time or the date for the performance of any
act or the satisfaction of any condition without the written consent of the both
parties. Failure by a party hereto to perform timely its covenants, agreements
and obligations hereunder, unless waived in writing by the other party hereto,
shall be a material default under this Agreement.
18.02 The Section headings of this Agreement and the captions of the Exhibits
and Schedules attached hereto are for convenience only and are not intended, and
shall not be construed, to alter, limit or enlarge in any way the scope or
meaning of the language contained in this Agreement and the Exhibits and
Schedules attached hereto.
18.03 If any act hereunder by one party requires reasonably the execution of
any documents or papers by the other party, then the other party shall cooperate
to that end and execute all such documents and papers, subject to and in
accordance with this Agreement.
18.04 Except as otherwise provided herein, this Agreement, including, without
limitation, all the Exhibits and Schedules attached hereto, contains the whole
agreement between Seller and Purchaser, and there are no other terms, promises,
obligations, covenants, warranties, representations, statements or conditions,
express or implied, of any kind, and any and all prior negotiations and
agreements are hereby superseded by and merged into this Agreement.
18.05 None of the covenants, terms or conditions of this Agreement to be paid,
observed and performed by either party shall in any manner be altered, waived,
modified, changed or abandoned except by a written instrument, duly signed,
acknowledged and delivered by the parties hereto.
18.06 This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
and be taken as one and the same instrument.
18.07 This Agreement shall be governed by, construed and enforced in accordance
with the laws of the State of Florida.
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18.08 (i) All the covenants, agreements and provisions contained in the
Exhibits and Schedules attached hereto shall, by this reference, be
incorporated into and made a part of this Agreement.
(ii) Any reference to this Agreement herein or in any other documents
shall, unless the context otherwise requires, or there is any express
statement to the contrary, be deemed and construed to encompass this
Agreement and all the Exhibits and Schedules attached hereto.
18.09 (i) This Agreement and all the provisions hereof shall extend to and
be binding upon Purchaser, its successors and assigns, but the privileges,
rights and benefits herein accruing to Purchaser shall extend and inure
only to such successors and assigns of Purchaser permitted as provided in
Article 17.
(ii) This Agreement and all the provisions hereof shall extend to, be
binding upon and inure to the benefit of Seller, its successors and
assigns.
18.10 This Agreement is intended for the benefit of the parties hereto and
their respective heirs, legal representatives, successors and permitted assigns
(pursuant to Article 17 in the case of Purchaser) and no third party shall have
any legal or equitable rights, interests, remedies or claims under any
provisions of this Agreement or as a result of any action or inaction of any of
the parties hereto in connection therewith.
18.11 If the consent or approval of either Seller or Purchaser is required
under this Agreement, then unless otherwise herein expressly stated to the
contrary, such consent or approval shall not be unreasonably withheld or
delayed.
18.12 If the Closing Date, the date of expiration of any period of time or the
date for the performance of any act or the satisfaction of any condition,
whether specified or determined by formula or calculation, under this Agreement
occurs on a Saturday, Sunday or legal holiday in the State of Florida or
Illinois, then the Closing Date or such date shall automatically be extended to
the next following Business Day in said State.
18.13 All payments made or to be made under or pursuant to this Agreement shall
be in the lawful money of the United States of America for the payment of public
and private debts and no other money or currency.
18.14 Except for the representations, warranties and covenants of Seller
contained in Sections 7.01, 8.02, 13.02, 13.03 and 15, which shall survive the
Closing or termination of this Agreement for the period specified in said
Section or if not so specified for the Claim Period, and the provisions of
Section 13.02 and 13.03 which shall survive the termination of this Agreement
for the Claim Period, the representations, warranties or covenants of Seller
contained in this Agreement shall not survive the Closing and/or termination of
this Agreement. Except for the representations, warranties and covenants of
Purchaser contained in Sections 3.03, 3.04, 7.02, 8.02, 13.01 and 14, the
representations, warranties or covenants
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of Purchaser contained in this Agreement shall not survive the Closing and/or
termination of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered, or
caused to be executed and delivered on their behalf by their duly authorized and
empowered officers (and such officers represent that they are so authorized and
empowered), this Agreement as of the day and year written below.
SELLER: PURCHASER:
THE CLASSIC AT WEST PALM BEACH BROOKDALE LIVING COMMUNITIES,
LIMITED PARTNERSHIP, a Florida INC., a Delaware corporation
limited partnership
By:
-----------------------------
By: __________________________, a
Name:
-----------------------------
- ------------------------------
Its: Sole General Partner Title:
-----------------------------
By:
----------------------------- DATED: _____________________, 1997
Name:
-----------------------------
Title:
-----------------------------
DATED: ____________________, 1997
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
-----------------
<PAGE>
EXHIBIT B
RENT ROLL
---------
<PAGE>
EXHIBIT C
LICENSES AND PERMITS
--------------------
<PAGE>
EXHIBIT D
SERVICE CONTRACTS
-----------------
<PAGE>
EXHIBIT E
ESCROW AGREEMENT
----------------
July __, 1997
Attorney's Title Insurance Fund, Inc.
1770 N.W. 64th Street
Suite 600
Ft. Lauderdale, FL 33309
Attn: James W. Bray
Gentlemen:
Reference is made to the Real Estate Purchase and Sale Agreement dated
as of July __, 1997 (the "Agreement"), between the undersigned Seller and
Purchaser relating to the sale of certain real estate located in Palm Beach
County, Florida, as described in the Agreement. Purchaser this day has deposited
with you the sum of One Hundred Thousand and 00/100 Dollars ($100,000.00) and
may, on or about August 25, 1997, deposit the additional sum of Five Hundred
Thousand and 00/100 Dollars ($500,000.00)(the sum held by you hereunder at any
time and from time to time is herein referred to as the "Deposit"). The Deposit
referred to herein is the Earnest Money required pursuant to Section 2.02 of the
Agreement. All terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
You shall hold the Deposit subject to the following terms and conditions:
1. INVESTMENT.
(i) You shall invest the Deposit in such investments as shall be
indicated by Purchaser, or in the absence of such direction, in a money market
account with a state or federal bank or such other institution as is acceptable
to the Purchaser at a location in Palm Beach County, Florida.
(ii) The Deposit, plus any interest earned from the investment thereof
in accordance with the terms of this Escrow Agreement and less any and all
transaction or account fees or charges of the depository institution
attributable to such investment (such net interest being hereinafter referred to
as the "Net Interest" and such total sum being hereinafter referred to as the
"Net Sum"), shall be delivered by you to Seller, to Purchaser, or to a court
having appropriate jurisdiction in accordance with the terms of this Escrow
Agreement.
<PAGE>
2. DELIVERY.
(i) You shall deliver the Net Sum in accordance with written
instruction signed by both Seller and Purchaser, given at least two (2) business
days prior to the time of delivery, specifying the party or parties to whom the
same is to be delivered and the time and place where the Net Sum is to be
delivered.
(ii) Except as provided above, if you shall receive written
instructions signed by either Seller or Purchaser specifying that it is entitled
to receive the Net Sum in accordance with the Agreement and specifying a place
where the Net Sum is to be delivered to such party, you shall deliver the same
to the designated party against a signed receipt therefor from the receiving
party; provided, however, that: (a) you shall have sent a copy of said written
instructions to the other party and (b) you shall have received confirmatory
instructions from the other party. In the event you shall receive contradictory
instructions from the other party, you shall hold the Net Sum in accordance with
Paragraph 3 hereof. A failure of the other party to respond to such notice shall
be deemed to be contradictory instructions.
(iii) Upon the delivery of the Net Sum in accordance with this
Paragraph 2, you shall thereupon be discharged and released from any and all
liability hereunder with respect to the Net Sum.
3. CONTRADICTORY INSTRUCTIONS OR DISPUTES. In the event: (i) you
shall receive or be deemed to have received contradictory instructions from the
parties hereto; (ii) there is any dispute between Seller and Purchaser with
respect to any matter arising under this Escrow Agreement; or (iii) there shall
be any uncertainty as to the meaning or the applicability of any of the
provisions hereof or any written instructions received by you pursuant hereto,
at your option and at any time thereafter, you may deposit the Net Sum with the
Circuit Court of Palm Beach County, Florida. Upon making such deposit, you
shall thereupon be discharged and released from any and all liability hereunder
and with respect to the Deposit.
4. NOMINEE. The parties agrees that you are to act as the parties'
nominee in investing the funds escrowed pursuant to this Escrow Agreement and in
collecting the interest earned on the invested funds on behalf of the parties.
5. ACTS OR OMISSIONS. The undersigned recognize and acknowledge that
you are serving as escrow agent hereunder solely as an accommodation to them,
and they each agree that you shall not be liable to either of them for any act
or omission hereunder or any matter or thing arising out of your conduct
hereunder, except for your willful misfeasance or negligence.
6. NOTICES. All notices, requests, demands and other communications
required or desired to be given hereunder shall be in writing signed by Seller
or Purchaser, or their respective authorized agents or attorneys, as the case
may be, and shall be deemed to have been properly given if (i) served in person,
(ii) mailed, by United States registered or certified mail, full postage
prepaid, return receipt requested (iii) sent by special courier service
<PAGE>
(e.g. Federal Express) or (iv) sent by telecopy, provided that in confirmation
thereof, an executed original of such notices, requests, demands or other
communications are concurrently given by means of any other mode of delivery
permitted hereunder, addressed as follows:
If intended for Seller: Greystone & Company
1520 West 57th Street
60th Floor
New York, New York 10019
Attn: Ms. Connie Bagley
Telephone No.: (212) 956-2600
Telecopier No.: (212) 956-2244
With a copy thereof to Greenberg Traurig
counsel to Seller: One Commerce Square
2005 Market Street
Suite 2050
Philadelphia, PA 19103
Attn: Rachel Kipnes
Telephone No.: (215) 988-7800
Telecopier No.: (215) 988-7801
If intended for Brookdale Living Communities, Inc.
Purchaser: 77 West Wacker Drive
Chicago, Illinois 60601
Attn: Matthew F. Whitlock
Telephone No.: (312) 917-4288
Telecopier No.: (312) 917-0460
and
Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Telephone No.: (312) 917-4234
Telecopier No.: (312) 917-1684
With a copy thereof to Burke, Warren, MacKay & Serritella, P.C.
Purchaser's counsel: 330 N. Wabash Avenue
Chicago, Illinois 60611-3607
Attn: Douglas E. Wambach
Facsimile No.: (312) 840-7900
<PAGE>
If intended for escrow Attorney's Title Insurance Fund, Inc.
agent: 1770 N.W. 64th Street
Suite 600
Ft. Lauderdale, FL 33309
Attn: James W. Bray
Facsimile No.: (954) 493-8926
or to such other address in the United States of America as may from time to
time be designated by the party to be addressed by notice to the other in the
manner hereinabove provided.
Any notice, request, demand or other communication served (a) as
provided in clause 6(1), shall be deemed to have been given and received on the
date of actual receipt, (b) as provided in clause 6(ii) or shall be deemed to
have been given and received on the earlier of (i) the date of actual receipt,
or (2) the third (3rd) business day next following the date of mailing by U.S.
registered or certified mail, (iii) as provided in clause 6(iii) on the first
(1st) business day following the date of delivery to such special courier, or
(iv) as provided in clause 6(iv), shall be deemed to have been given and
received on the first (1st) business day following transmission.
The delivery to or receipt by parties, other than and in addition to
Seller or Purchaser, of copies of any notice, request, demand or other
communication hereunder is merely an accommodation and is not necessary or
required to make effective the actual giving or receipt by Seller or Purchaser
of any notice, request, demand or other communication.
7. BINDING EFFECT. This Escrow Agreement shall be binding on all
parties and may not be modified or amended orally, but only in writing signed by
all parties hereto.
8. WIRE TRANSFER. Delivery of the Deposit or any portion thereof by you
may be made by wire transfer.
9. AUTHORIZED PERSONS. Either Connie Bagley or Rachel Kipnes is
authorized to act on behalf of Seller with respect to all actions hereunder and
with respect to all documents to be executed by Seller hereunder. Either of
Matthew J. Whitlock or Robert J. Rudnik is authorized to act on behalf of
Purchaser with respect to all actions hereunder and with respect to all
documents to be executed by Purchaser hereunder.
10. APPLICABLE LAW. The Escrow Agreement shall be governed by the
applicable laws of the State of Florida. Purchaser and Seller hereby submit to
personal jurisdiction in the State of Florida for all matters, if any, which
shall arise with the respect to this Escrow Agreement, and waive any and all
rights under the laws of any other state to object to jurisdiction within the
State of Florida or to institute a claim of forum non conveniens with respect to
the Circuit Court of Palm Beach County, Florida for the purposes of litigation
with respect to this Escrow Agreement.
<PAGE>
SELLER:
THE CLASSIC AT WEST PALM BEACH
LIMITED PARTNERSHIP, a
By:
-------------------------------------
Its: Sole General Partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PURCHASER:
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Accepted For the Purpose of Being
Bound Hereby:
Attorney's Title Insurance Fund,
Inc.
By:
-----------------------------
Its:
-------------------------
EXHIBIT F
DUE DILIGENCE MATERIALS
-----------------------
<PAGE>
Building and Zoning Information
. Zoning and Compliance Letter;
. Final occupancy certificates;
. Original building permits;
. Copies of any subsequent building permits (assisted living conversion
permits);
. A letter from local authority stating Property is in no violation or has been
issued no citations for code violations;
. Area crime report, if available;
. All utility information including availability, account numbers deposits on
file; and
. Final PUD plan or site plan for the Property.
Operating Information
. All business and/or operating licenses;
. All insurance certificates;
. All property tax bills with valuations (past three years);
. Current rent roll;
. Current budget and scheduled turnover information;
. Unit mix breakdown with square footage information for each unit type;
. List and copies of all existing service contracts;
. Detailed FF&E schedule;
. List of all employees with job titles, descriptions, salaries and benefits
packages;
. List of all member associations and schedule of advertising;
. Termite report;
. All floor plans and three copies of project brochure;
. Staffing plans; and
. Management plans.
Financial
. Monthly or quarterly financial statements for year end 1995, 1996 and month-
to-month statements 1997;
. Current and next year operating, capital improvements, and capital expense
budgets; and
. All appraisals of the Property.
Architectural
. Geotech report;
. As-build architectural and MEP, if available;
. Termite pest inspection and certificate; and
. All maintenance logs.
<PAGE>
Environmental Audit
. Phase One Environmental report, if available; and
. Preliminary engineering report, if available.
Collateral Materials
. Three copies of all brochures and marketing materials;
. Three copies of all standard articles of business stationary;
. Three copies of existing residential leases (both independent and assisted
living);
. All applications for residents, credit check forms, move-in packet,
promotional giveaways, and other collateral material;
. Samples of all mailers and advertisements;
. Schedule and marketing plan; and
. Outline of current advertising program.
<PAGE>
EXHIBIT G
WARRANTY DEED This Document Was Prepared By:
- ------------- ------------------------------
_____________________________
_____________________________
_____________________________
_____________________________
After Recording This Document
Should Be Returned To:
-----------------------------
_____________________________
_____________________________
_____________________________
_____________________________
THIS WARRANTY DEED made the _____ day of __________, A.D. 199____, by
[___________________________________]
hereinafter called grantor, to:
[___________________________________]
whose post office address is: ______________________________
______________________________
and whose federal tax identification number is: _______________________
hereinafter called grantee:
(Wherever used herein the terms "grantor" and "grantee" include all
the parties to this instrument and the heirs, legal representatives
and assigns of individuals, and the successors and assigns of
corporations.)
WITNESSETH: That grantor, for and in consideration of the sum of TEN
DOLLARS ($10.00) and other valuable considerations, receipt whereof is hereby
acknowledged, hereby grants, bargains, sells, aliens, remises, releases, conveys
and confirms unto grantee, all that certain land situated in Palm Beach County,
Florida, viz:
THE LAND IS DESCRIBED ON EXHIBIT A ATTACHED TO AND MADE A
PART OF THIS DEED
Property Appraiser Parcel Identification Number: ______________________________
<PAGE>
hereinafter called the Land,
TOGETHER with (a) all the tenements, hereditaments and appurtenances
thereto belonging or in anyway appertaining to the Land, (ii) all easements,
rights, interest, claims, reversions and appurtenances belonging to or in any
way appertaining to the Land and (iii) all right, title and interest of grantor
in and to all real property lying within streets, alleys and other public ways
(before or after vacation thereof) contiguous to the Land, but only to the
center line of said streets, alleys and other public ways.
SUBJECT TO the exceptions set forth on Exhibit B attached to and made
a part of this Deed,
TO HAVE AND TO HOLD, the same in fee simple forever,
AND, except for the exceptions herein set forth, grantor hereby fully
warrants title to the Land, and will defend the same against all lawful claims
of all persons whomsoever.
IN WITNESS WHEREOF, grantor has hereunto set its hand and seal the day
and year first above written.
Signed, sealed and delivered
in our presence:
______________________________ By:________________________________
Name:_________________________ Name:______________________________
Title:_____________________________
______________________________
Name:_________________________
<PAGE>
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day of
______________, 1997 by ________________________ on behalf of
______________________________. He/she is personally known to me to be the
person whose name is subscribed to the foregoing instrument.
___________________________________
Notary Public
My Commission Expires:
______________________________ (Seal)
<PAGE>
EXHIBIT H
BILL OF SALE
------------
_________________________________________, a ______________________________
("Seller"), in consideration of Ten Dollars and other good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledge, does
hereby assign, transfer and set over to __________________________________
("Buyer"):
All furniture, furnishings, equipment and other tangible personal
property owned by Seller that is located at the real property described on
attached Exhibit H-1 and used in connection with the management, operation or
repair of such real property, including, without limitation, those items
described on Exhibit H-2 attached hereto (all of the foregoing are herein
collectively called the "Personal Property").
Seller hereby represents to Buyer that Seller is the absolute owner of
the Personal Property, that the Personal Property is free and clear of all
liens, charges and encumbrances, and that Seller has full right, power and
authority to sell the Personal Property and to make this bill of sale. All
warranties of quality, fitness, and merchantability are hereby excluded.
IN WITNESS WHEREOF, Seller has signed and sealed this bill of sale at
__________________________________________ this ______ day of ___________, 1997.
___________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
STATE OF______________)
) SS
COUNTY OF_____________)
I,_________________________________________________, a notary public in and
for said County, in the State aforesaid, DO HEREBY CERTIFY that
___________________________________ personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this
day in person and acknowledged that he signed, sealed and delivered the said
instrument as his free and voluntary act as _________________________________ of
__________________________________, for the uses and purposes therein set forth.
GIVEN under my hand and official seal, this _____ day of __________, 19___.
______________________________
Notary Public
My Commission Expires:
______________________________
<PAGE>
EXHIBIT H-1
-----------
TO BILL OF SALE
---------------
Legal Description
<PAGE>
EXHIBIT H-2
-----------
TO BILL OF SALE
---------------
PERSONAL PROPERTY
-----------------
<PAGE>
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment") is made and
entered into as of the _____ day of ________________, 1997, by and among (i)
________________________________________________________ ("Assignor") and (ii)
__________________________________________________________________ ("Assignee").
1. For and in consideration of the covenants and agreements herein made
by Assignee and of the sum of One Dollar ($1.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignor hereby GRANTS, ASSIGNS, TRANSFERS and SETS OVER to Assignee all of
Assignor's right, title and interest, to the extent assignable, in and to any
and all leases, equipment leases, contracts, documents, privileges, licenses,
permits, trade names, warranties, plans and other rights, described on Exhibit A
attached hereto and made a part hereof (the "Assigned Interests") relating to
the real property described on Exhibit B attached hereto and made a part hereof
(the "Property").
2. Assignor hereby agrees to pay, and shall indemnify, defend, protect,
save and hold forever harmless Assignee from and against, any and all claims,
demands, suits, causes of action, controversies, liabilities, costs, expenses
and losses, including, without limitation, court costs, expert witness fees and
reasonable attorneys' fees and expenses, which Assignee may suffer, incur or
sustain, or for which Assignee may become liable or obligated, by reason of or
in connection with the failure by Assignor to perform and observe, or the breach
or violation by Assignor of, any of the covenants, agreements, conditions and
obligations by the Assignor to be performed and observed under and pursuant to
the Assigned Interests prior to the date hereof.
3. Assignee hereby accepts the assignment made by Assignor pursuant to
Paragraph 1 hereof, subject to the terms and provisions contained in the
Assigned Interests and in consideration of such assignment, hereby agrees with
Assignor as follows:
(a) Assignee hereby assumes and agrees to perform and observe all the
covenants, agreements and obligations on the part of Assignor to be
performed and observed in respect of the Assigned Interests from and after
the date hereof; and
(b) Assignee hereby agrees to pay, and shall indemnify, defend,
protect, save and hold forever harmless Assignor from and against, any and
all claims, demands, suits, causes of action, controversies, liabilities,
costs, expenses and losses, including, without limitation, court costs,
expert witness fees and reasonable attorneys' fees and expenses, which
Assignor may suffer, incur or sustain, or for which Assignor may become
liable or obligated, by reason of or in connection with the failure by
Assignee to perform and observe, or the breach or violation by Assignee of,
any of the covenants, agreements, conditions and obligations by the
Assignee to be performed and observed in respect of the Assigned Interests.
<PAGE>
4. It is further understood and agreed that:
(a) The foregoing Assignment is made by (i) Assignor without
representation, warranty, covenant or inducement of any kind or nature
whatsoever, express or implied, by or on the part of Assignor and is
accepted by Assignee without recourse of any kind or nature against
Assignor, except as expressly provided herein; and (ii) Assignee without
representation, warranty, covenant or inducement of any kind or nature
whatsoever, express or implied, by or on the part of Assignee and is
accepted by Assignor without recourse of any kind or nature against
Assignee, except as expressly provided herein.
(b) This Assignment shall extend to, be binding upon and inure to the
benefit of Assignor and Assignee and their respective successors and
assigns.
(c) This assignment may be executed in two or more counterparts, each
of which shall be deemed an original and all of which together shall
constitute and be taken as one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Assignment as of the day and year first above written.
ASSIGNOR: ASSIGNEE:
____________________________, a BROOKDALE LIVING COMMUNITIES, INC.,
______________________________ a Delaware corporation
By:___________________________ By:_____________________________________
Name:_________________________ Name:___________________________________
Title:________________________ Title:__________________________________
<PAGE>
EXHIBIT J
MORTGAGEE ESTOPPEL CERTIFICATES
-------------------------------
_______________, 19____
Attention:
Re: The Classic at West Palm Beach
(the "Premises")
Gentlemen:
The undersigned ("Lender") acknowledges that it has made a certain loan
("Loan") to _____________ ("Borrower") evidenced by that certain promissory note
("Note") dated _________________ made by Borrower in the original amount of
_______________ Dollars ($____________) secured by a first mortgage ("Mortgage")
of even date therewith on the Premises and recorded on ________________ with the
Recorder of Deeds of Palm Beach County, State of Florida, in Official Record
Book ______ at Page _____, as Document No. ______________.
We understand that you have agreed to purchase the Premises and assume the
Loan. The undersigned hereby represents, warrants, covenants and agrees as
follows:
1. We hereby consent to the conveyance of the Premises to you and your
assumption of the Loan.
2. True and accurate copies of the Note, the Mortgage and all other
documents evidencing and securing the Loan are attached hereto as Exhibits
"A" through "________" (collectively, "Loan Documents").
3. The Loan Documents are held by the undersigned, are unmodified and in
full force and effect.
4. There is no existing default under the Loan Documents and, to the best
of our knowledge, no act or omission which would constitute a default with
the giving of notice, passage of time, or both, under the Loan Documents
exists on the date hereof.
<PAGE>
5. The Loan is current and in good standing. The balance of the principal
owing as the date of this letter is ________________ Dollars
($_______________). Interest will accrue from and after the date of this
letter at the rate of $______________ per day until ________________, 1997.
The next payment of interest and principal is due on ___________, 1997, in
the sum of _______________Dollars ($_______) and the maturity date is
_____________________.
Very truly yours,
By:_____________________
Its:___________________
<PAGE>
EXHIBIT K
LEASING STANDARDS
-----------------
1. All Leases shall be on the standard form of agreement with the tenants and
occupants, which is attached hereto as Exhibit K-1.
2. The rent and other charges shall be at the standard or published rental
rates ____ currently in effect for the Property, a schedule of which is
attached hereto as Exhibit K-2.
3. Each such Lease shall provide for no more than the standard services
currently provided to other tenants and occupants of the Property.
4. No rental shall be paid more than one month in advance of the date due.
<PAGE>
LEASE
Dated as of September 25, 1997
BETWEEN
77 WEST WACKER LIMITED PARTNERSHIP,
an Illinois limited partnership
("Landlord")
AND
BROOKDALE LIVING COMMUNITIES, INC.,
a Delaware corporation
("Tenant")
__________
Location of the Property:
77 West Wacker Drive
Chicago, Illinois
<PAGE>
TABLE OF CONTENTS
Page
----
1. TERM............................................................... 1
2. BASE RENT.......................................................... 1
3. ADDITIONAL RENT.................................................... 2
4. USE OF THE PREMISES................................................ 5
5. POSSESSION......................................................... 6
6. SERVICES........................................................... 6
7. REPAIRS............................................................ 8
8. ADDITIONS AND ALTERATIONS.......................................... 9
9. COVENANT AGAINST LIENS............................................. 9
10. INSURANCE.......................................................... 10
11. FIRE OR CASUALTY................................................... 11
12. WAIVER OF CLAIMS - INDEMNIFICATION................................. 12
13. NONWAIVER.......................................................... 13
14. CONDEMNATION....................................................... 13
15. ASSIGNMENT AND SUBLETTING.......................................... 13
16. SURRENDER OF POSSESSION............................................ 15
17. HOLDING OVER....................................................... 16
18. ESTOPPEL CERTIFICATE............................................... 16
19. OBLIGATIONS TO MORTGAGEES.......................................... 17
i
<PAGE>
20. CERTAIN RIGHTS RESERVED BY LANDLORD............................... 17
21. RULES AND REGULATIONS............................................. 19
22. LANDLORD'S REMEDIES............................................... 19
23. EXPENSES OF ENFORCEMENT........................................... 20
24. COVENANT OF QUIET ENJOYMENT....................................... 21
25. SECURITY DEPOSIT.................................................. 21
26. REAL ESTATE BROKER................................................ 22
27. MISCELLANEOUS..................................................... 22
28. NOTICES........................................................... 25
29. LIMITATION ON LANDLORD'S LIABILITY................................ 25
ii
<PAGE>
LEASE
77 WEST WACKER DRIVE
CHICAGO, ILLINOIS
THIS LEASE (hereinafter referred to as this "Lease"), is made as of the
25th day of September, 1997, between 77 WEST WACKER LIMITED PARTNERSHIP, an
Illinois limited partnership (hereinafter referred to as "Landlord"), and
BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation, whose present
address is 77 West Wacker Drive, 39th Floor, Chicago, Illinois 60601
(hereinafter referred to as "Tenant");
W I T N E S S E T H
- - - - - - - - - -
Landlord hereby agrees to lease to Tenant, and Tenant hereby agrees to
accept, the premises (hereinafter referred to as the "Premises") designated on
the plan attached hereto as Exhibit A containing 13,464 square feet of "Rentable
Area" on the 48th floor of the building known as 77 West Wacker Drive
(hereinafter referred to as the "Building") located on a parcel of land at the
southeast corner of Wacker Drive and Clark Street, in the City of Chicago, Cook
County, Illinois (hereinafter referred to, together with all present and future
easements, additions, improvements and other rights appurtenant thereto, as the
"Land"), subject to the terms and conditions of this Lease.
In consideration thereof, Landlord hereby agrees to pay Tenant the sum of
Thirty and no/100 Dollars ($30.00) per square foot of Rentable Area upon the
execution and delivery of this Lease by Landlord and Tenant, and Landlord and
Tenant further covenant and agree as follows:
1. TERM.
----
The term of this Lease (hereinafter referred to as the "Term") shall
commence on October 1, 1997 (hereinafter referred to as the "Commencement
Date"), and shall end on September 30, 2002 (hereinafter referred to as the
"Termination Date"), unless sooner terminated as provided herein. Each one-year
period commencing on the Commencement Date and on each anniversary of the
Commencement Date is herein called "Lease Year".
2. BASE RENT.
---------
Tenant shall pay to Landlord or Landlord's agent at 77 West Wacker Drive,
Chicago, Illinois 60601, or at such other place as Landlord may from time to
time designate in writing, in currency which, at the time of payment, is legal
tender for private or public debts in the United States of America, base rent at
the annual rate of Eighteen and 50/100 Dollars ($18.50) per square
<PAGE>
foot of Rentable Area in the Premises (hereinafter referred to as the "Base
Rent"). The annual Base Rent rate shall be escalated on each anniversary of the
Commencement Date by seventy-five cents ($.75) over the prior year's Base Rent
rate. Based on 13,464 rentable square feet, the Base Rent (subject to the
escalations set forth above) shall be Two Hundred Forty-Nine Thousand Eighty-
Four and no/100 Dollars ($249,084.00) per annum payable in equal monthly
installments of Twenty Thousand Seven Hundred Fifty-Seven and no/100 Dollars
($20,757.00) on or before the first day of each and every month during the Term,
without demand and without any set-off or deduction whatsoever.
3. ADDITIONAL RENT.
---------------
In addition to paying the Base Rent specified in Section 2 hereof, Tenant
shall pay as "Additional Rent" the amounts described in this Section 3. Such
Additional Rent paid by Tenant and other tenants in the Building shall reimburse
Landlord for all expenses of owning, operating and maintaining the Land and the
Building, except as expressly excluded below, and shall permit Landlord to
receive the Base Rent as "net" rent. The Base Rent and the Additional Rent are
sometimes herein collectively referred to as the "Rent." All Additional Rent
shall be payable for the same periods and in the same manner, time and place as
the Base Rent. Without limitation on other obligations of Tenant which shall
survive the expiration of the Term, the obligations of Tenant to pay Additional
Rent accrued prior to the Termination Date shall survive the expiration of the
Term. For any partial Calendar Year, Tenant shall be obligated to pay only a pro
rata share of the Additional Rent for such Calendar Year, based on the number of
days of the Term falling within such Calendar Year.
A. Definitions. As used in this Section 3, the terms:
-----------
(i) "Calendar Year" shall mean each calendar year in which any
part of the Term falls, through and including the year in which the
Term expires.
(ii) "Tenant's Proportionate Share" for purposes of determining
the Expense Adjustment Amount (as hereinafter defined) shall mean
1.43%, being the percentage calculated by dividing 13,464 rentable
square feet by 939,737 rentable square feet (being 100% of the
Rentable Area of the Building, excluding the retail area of the
Building). "Tenant's Proportionate Share" for purposes of determining
the Tax Adjustment Amount (as hereinafter defined) shall mean 1.43%,
being the percentage calculated by dividing 13,464 rentable square
feet by 944,556 rentable square feet (being 100% of the Rentable Area
of the Building).
(iii) "Taxes" shall mean taxes levied, assessed or imposed
against Landlord in connection with the Land, the Building, the
operation thereof or any right or responsibilities related thereto.
"Taxes" shall include without limitation: (a) real estate taxes and
assessments, special or otherwise, levied or assessed upon the Land or
Building; (b) ad valorem taxes for any personal property owned or
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leased by Landlord and used in connection with the Land or Building;
(c) any income tax, franchise tax or other tax, assessment, charge or
fee which is imposed in substitution for, or in lieu of an increase
in, such real estate taxes or ad valorem personal property taxes; and
(d) any tax on rents or leases. Taxes shall also include, in the year
paid, all fees for consultants and attorneys and all other costs
incurred by Landlord in seeking to obtain a reduction of, or a limit
on the increase in, any Taxes, regardless of whether any reduction or
limitation is obtained. Taxes shall not include any inheritance,
estate, succession, transfer, gift, franchise, or capital stock tax or
any income taxes other than those described above. With respect to any
assessments included within the term Taxes, where such assessments are
or may by election be payable in installments over more than one
Calendar Year, such assessments and interest payable thereon to the
taxing authority shall be allocated over the maximum period available
under such election, irrespective of whether or over what period
Landlord may in fact elect to pay such installments. With respect to
any Taxes which include assessments against income or property not
related to the Land or Building, Taxes shall include only that portion
of such Taxes which would be payable if the Land and Building and all
rights related thereto were the only assets of Landlord. If at any
time during the Term less than one hundred percent (100%) of the then
current Rentable Area of the Building is occupied by tenants and if
Taxes for the Building are based, in whole or in part, on the level of
such partial occupancy, Landlord, at Landlord's option, may make a
reasonable and equitable adjustment in computing Taxes for the year so
that the amount of Taxes which are based on such occupancy are removed
from general Taxes and allocated to the occupied portions of the
Building.
(iv) "Operating Expenses" shall mean all reasonable, bona fide
expenses, costs and disbursements (other than Taxes) of every kind and
nature (determined for the applicable Calendar Year on an accrual
basis) paid (to the extent not accrued and included in Operating
Expenses in a prior year) or incurred by Landlord in connection with
the ownership, management, operation, maintenance and repair of the
Land and Building (excluding the retail area of the Building), except
the following:
(a) Costs of capital improvements to any tenant's premises;
(b) Principal or interest payments on loans or other debt
for borrowed money, whether or not secured by mortgages or trust
deeds on the Building or Land or rent payable on any ground lease
of the Land;
(c) Costs of capital improvements to the Building, except
that Operating Expenses shall include (1) the cost of any capital
improvement completed after the date hereof which is intended to
reduce (or limit increases in) any components of Operating
Expenses, as evenly amortized
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over the useful life of each such capital improvement with
interest on the unamortized amount at the greater of (A) 10% per
annum; or (B) 4% per annum above the alternate base rate II rate
of interest announced from time to time by Citibank, N.A.
("Citibank") or other bank designated by Landlord if Citibank is
not at any time announcing its alternate base rate II rate (but
in no event at a rate which is more than the highest lawful rate
allowable in the State of Illinois) ("Prime Rate"); and (2) the
cost of any capital improvement which is made by Landlord to keep
the Land or Building in compliance with all governmental rules
and regulations applicable from time to time thereto.
(d) All expenses for which Landlord is entitled to or has
received any reimbursement, other than indirect reimbursement by
the payment by any tenant of base rent or its share of Operating
Expenses;
(e) Attorneys' fees, costs and disbursements and other
expenses incurred in connection with tenant leases, including,
without limitation, negotiations with prospective tenants or
disputes with any tenant, except that Operating Expenses shall
include any expenses incurred in the preparation of the
statements described in Sections 3C and 3D;
(f) Expenses for repairs or other work occasioned by a
casualty, except that Operating Expenses shall include the cost
of repairs or other work occasioned by a casualty to the extent
that such cost is not covered by Landlord's insurance because of
reasonable and customary deductibles thereunder;
(g) Depreciation or amortization (except as permitted
pursuant to Section 3A(iv)(c));
(h) Real estate brokers' commissions or compensation and
other expenses (including, without limitation, architectural,
space planning or engineering services, tenant allowances,
advertising and promotional expenses, legal fees for the
preparation of leases, rent abatements, lease takeover payments
and rent payable with respect to any leasing office) incurred in
leasing or procuring tenants;
(i) The cost of any electric current furnished for lighting
and equipment (other than for the operation of mechanical
equipment, telephone closets and other elements of the Building's
shared systems) located in the Premises or in premises occupied
by any other tenant in the Building or in any space occupied by
Landlord or any other person that is leased, licensed or utilized
for a business purpose or is not part of the public or common
area space, including, without limitation, any parking garage and
retail areas;
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(j) The cost of correcting defects in the construction of
the Building or in the Building equipment during the warranty
period applicable to such construction or equipment provided that
this shall not exclude the cost of normal repair, maintenance and
replacement (other than capital improvements, the cost of which
shall be included only as set forth in Section 3A(iv)(c) above)
expected with the construction materials and equipment installed
in the Building in light of their specifications;
(k) The cost of any repair, alteration or replacement made
by Landlord pursuant to or as a result of condemnation to the
extent that Landlord is entitled to or has received an award as a
result of such condemnation;
(l) The cost of installing, operating and maintaining any
specialty facility, such as an observatory, broadcasting and
telecommunications facilities, luncheon club, athletic or
recreational club, cafeteria or dining facility, except for
broadcasting and telecommunications facilities which are
available generally to tenants of the Building;
(m) Executive salaries above the grade of "building
manager";
(n) Expenses incurred in connection with services or other
benefits of a type that are not provided to Tenant, and are not
made available to Tenant, and are not customarily provided to
tenants without charge but that are provided to another tenant or
occupant of the Building;
(o) Any penalty or late charges incurred by Landlord due to
the violation of any law, rule or regulation;
(p) Any compensation paid to clerks, attendants or other
persons in commercial concessions operated by Landlord;
(q) Advertising and promotional expenditures;
(r) Costs for sculptures, paintings and other objects of art
located within the Building or the plaza area, except only for
the costs of maintaining such objects in the public areas of the
Building;
(s) Expenses incurred by Landlord, if any, in connection
with the operation, cleaning, repair, safety, management,
security, maintenance or other services of any kind provided to
any parking garage and/or retail areas;
(t) Costs, expenses and fees of land trusts, partnerships,
title insurance, surveys and corporations involved in the
ownership or operation or management of the Building and Land;
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(u) The amount of any judgments against, and indemnification
obligations of, Landlord; and
(v) Any taxes, assessments, fees or charges excluded from
the definition of Taxes pursuant to Section 3A(iii) hereof.
In no event shall Landlord collect any amounts with respect to any
individual item of Operating Expenses to the extent that such amounts would,
when taken together with those amounts collected by Landlord from other tenants
in the Building (and in the event the Building is less than 100% occupied, paid
by Landlord directly), exceed 100% of the actual Operating Expenses incurred by
Landlord with respect to such items. All Operating Expenses shall be net of
rebates, credits, and similar items of which Landlord receives the benefit,
irrespective of when received. Any permitted costs or expenses shall be included
in Operating Expenses for any Calendar Year no more than once, notwithstanding
that such costs or expenses may fall under more than one of the permitted
categories of Operating Expenses. Landlord may use related or affiliated
entities to provide services or furnish materials for the Building provided that
to the extent that the rates or fees charged by such entities are not
competitive with those charged by unrelated or unaffiliated entities in Chicago,
Illinois for the same services or materials, the amount by which such fees or
charges exceed competitive rates shall be excluded from Operating Expenses.
B. Allocation of Operating Expenses. If at any time during the Term
less than one hundred percent (100%) of the then current Rentable Area of
the Building is occupied by tenants, at Landlord's option, those components
of Operating Expenses which vary with occupancy shall be removed from
general Operating Expenses and allocated to the portion of the Building
which is actually occupied by tenants and generating such components of
Operating Expenses. Such special allocation shall be made on a pro rata
basis over the occupied Rentable Area in the Building, based on both the
comparative Rentable Areas of the occupied premises and the portion of such
Calendar Year during which such premises were occupied. Operating Expenses
which do not vary with occupancy, such as public liability insurance and
lobby maintenance, will continue to be allocated on a pro rata basis over
the Rentable Area of the Building whether or not then occupied and Tenant
shall only be responsible for its Proportionate Share of such Operating
Expenses.
C. Expense Adjustment. Tenant shall pay to Landlord or Landlord's
agent as Additional Rent, an amount ("Expense Adjustment Amount") equal to
Tenant's Proportionate Share of the amount of Operating Expenses incurred
with respect to each Calendar Year plus Tenant's pro rata share of the
special allocation of Operating Expenses to occupied premises if Section 3B
is applicable for such Calendar Year. The Expense Adjustment Amount with
respect to each Calendar Year shall be paid in monthly installments during
such Calendar Year in an amount reasonably estimated from time to time by
Landlord and communicated by written notice to Tenant. Landlord shall cause
to be kept books and records showing Operating Expenses in accordance with
an appropriate system of accounts and accounting practices consistently
maintained. Following the close of each Calendar Year, Landlord shall cause
the amount of the Expense Adjustment
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Amount for such Calendar Year to be computed based on Operating Expenses
for such Calendar Year and shall deliver to Tenant a statement of such
amount plus a statement of all estimated installments paid by Tenant with
respect to such Calendar Year. Tenant shall pay to Landlord any deficiency
shown by such statement within thirty (30) days after receipt of such
statement. If the installments paid exceed the amount due (such excess is
sometimes referred to herein as the "Expense Credit Amount"), Landlord
shall credit the Expense Credit Amount against payments next due to
Landlord from Tenant hereunder; provided that, if the Expense Credit Amount
exceeds the amount of payments next due to Landlord from Tenant hereunder,
Landlord shall promptly pay Tenant the amount by which the Expense Credit
Amount exceeds the amount of payments next due to Landlord from Tenant
hereunder. Delay in computation of the Expense Adjustment Amount shall not
be deemed a default hereunder or a waiver of Landlord's right to collect
the Expense Adjustment Amount.
D. Tax Adjustment. Tenant shall pay to Landlord or Landlord's agent as
Additional Rent, an amount ("Tax Adjustment Amount") equal to Tenant's
Proportionate Share of the amount of Taxes incurred with respect to each
Calendar Year plus Tenant's pro rata share of the special allocation of
Taxes to occupied premises if the last sentence of Section 3A(iii) is
applicable for such Calendar Year. The Tax Adjustment Amount with respect
to each Calendar Year shall be paid in monthly installments during such
Calendar Year in an amount estimated from time to time by Landlord and
communicated by written notice to Tenant. If Taxes for any Calendar Year
are payable in whole or in part before the end of such Calendar Year,
Tenant shall, within thirty (30) days after the written request of
Landlord, promptly pay its Proportionate Share of such payment as a special
installment, after deducting installments previously paid by Tenant under
this Section 3D for such Calendar Year. Following the final payment of
Taxes for each Calendar Year, Landlord shall cause the amount of the Tax
Adjustment Amount for such Calendar Year to be computed and delivered to
Tenant a statement of such amount plus a statement of all estimated
installments paid by Tenant for such Calendar Year. Tenant shall pay to
Landlord any deficiency shown by such statements within thirty (30) days
after receipt of such statement. If the installments paid exceed the actual
amount due (such excess is sometimes referred to herein as the "Taxes
Credit Amount"), Landlord shall credit the Taxes Credit Amount against
payments next due to Landlord from Tenant hereunder; provided that, if the
Taxes Credit Amount exceeds the amount of payments next due to Landlord
from Tenant hereunder, Landlord shall promptly pay Tenant the amount by
which the Taxes Credit Amount exceeds the amount of payments next due to
Landlord from Tenant hereunder. The amount of any refund of Taxes received
by Landlord shall be credited against Taxes for the year in which such
refund is received. In determining the amount of Taxes for any year, the
amount of special assessments to be included shall be limited to the amount
of the installment (plus any interest payable thereon) of such special
assessment required to be paid during such year as if the Landlord had
elected to have such special assessment paid over the maximum period of
time permitted by law. All references to Taxes "for" a particular year
shall be deemed to refer to Taxes due and
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payable during such year without regard to when such Taxes are levied or
assessed. Delay in computation of the Tax Adjustment Amount shall not be
deemed a default hereunder or a waiver of Landlord's right to collect the
Tax Adjustment Amount. In no event shall Landlord collect any amounts with
respect to Taxes which would, when taken together with those amounts
collected by Landlord from other tenants in the Building (and in the event
the Building is less than 100% occupied, paid directly by Landlord), exceed
100% of the actual Taxes for any Calendar Year.
E. Contest of Additional Rent. Every statement given by Landlord
pursuant to Section 3C and Section 3D shall be prepared in reasonable
detail so as to reflect the amounts of the various components of Operating
Expenses and Taxes and Landlord's computation of Tenant's Expense
Adjustment Amount and Tax Adjustment Amount. Every such statement shall be
conclusive and binding, absent fraud, upon Tenant and Landlord unless
within one hundred eighty (180) days after the receipt of such statement
Tenant shall notify Landlord that it disputes the correctness of such
statement, specifying the particular respects in which the statement is
claimed to be incorrect. If the dispute shall be determined in Tenant's
favor, Landlord shall, on demand, pay Tenant the amount of Tenant's
overpayment of Tenant's Expense Adjustment Amount, or Tax Adjustment
Amount, as applicable. During such 180 day period and during the period of
any dispute, Landlord agrees to grant Tenant reasonable access to
Landlord's books and records, during normal business hours, at Landlord's
office, for the purpose of verifying Operating Expenses and Taxes incurred
by Landlord, and to make copies of any and all bills and vouchers relating
thereto, subject to reimbursement by Tenant for the cost of such copies. In
the event that a review of Landlord's books and records pursuant to this
Section 3 reveals that Landlord has overstated its Operating Expenses or
Taxes for the applicable Calendar Year by in excess of five percent (5%) of
the actual Operating Expenses or Taxes incurred for such Calendar Year,
Landlord shall also reimburse Tenant for the reasonable expenses incurred
by Tenant in conducting such review of Landlord's books and records and for
the amounts paid by Tenant in connection with the resolution of any such
dispute, including without limitation, reasonable attorneys' fees and court
costs.
4. USE OF THE PREMISES.
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A. Reserved Area. This Lease does not give Tenant any right to use,
and Landlord hereby excludes and reserves for its sole and exclusive use,
the following areas in and about the Premises: janitor closets, stairways
and stairwells, fan, mechanical, electrical, telephone and similar rooms
(other than those installed for Tenant's exclusive use); elevator, pipe and
other vertical shafts, flues and ducts; all areas above the acoustical
ceiling and below the finished floor covering installed in the Premises;
all other structural or mechanical elements serving other areas of the
Building; and all subterranean, mineral, air, light and view rights.
B. Permitted Use. Tenant shall use and occupy the Premises solely for
general office purposes. In addition, Tenant may, if Tenant so elects,
install, equip and operate food and beverage vending machines for the
exclusive use of Tenant and Tenant's employees and
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invitees (but not the general public), provided the same are maintained in
a neat and sanitary condition and are in compliance with all applicable
laws, codes and ordinances.
C. Compliance with Laws. Tenant shall not use or permit the use of any
part of the Premises for any purpose prohibited by law. Tenant shall, at
its sole expense, comply with and conform to all of the requirements of all
governmental authorities having jurisdiction over the Building which relate
in any way to the condition, use and occupancy of the Premises throughout
the entire Term of this Lease. Notwithstanding the foregoing, Landlord
shall make, at its sole cost and expense (subject to reimbursement as an
Operating Expense if permitted by and subject to the limitations contained
in Section 3 hereof), any capital improvements to the Building or Premises
as a result of such requirements except that Tenant will make capital
improvements to the extent the same are due to Tenant's particular use or
occupancy of the Premises.
5. POSSESSION.
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A. Possession of the Premises shall be tendered to Tenant by Landlord
on or before October 1, 1997 in "as-is" condition.
B. If Landlord and Tenant agree, without in any way being bound to so
agree, Tenant may take possession of the Premises or part thereof prior to
the Commencement Date. In such event, all of the covenants and conditions
of this Lease shall be binding upon the parties hereto with respect to such
whole or part of the Premises as of the date when Tenant took possession.
C. The Tenant's taking possession of any portion of the Premises shall
be conclusive evidence that such portion of the Premises was in good order
and satisfactory condition when the Tenant took possession, except as to
defects contained in a notice from Tenant to Landlord based on an
inspection made within fourteen (14) days after the Commencement Date. No
promise of the Landlord to construct, alter, remodel or improve the
Premises or the Building and no representation by Landlord or its agents
respecting the condition of the Premises or the Building have been made to
Tenant or relied upon by Tenant other than as may be contained in this
Lease.
6. SERVICES.
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A. List of Services. Landlord shall provide the following services on
all days during the Term, except Saturdays, Sundays and holidays, unless
otherwise stated:
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(i) Heating and air conditioning when necessary for normal
comfort in the Premises, from Monday through Friday, during the period
from 8 a.m. to 6 p.m. and on Saturday during the period from 8 a.m. to
1 p.m. Tenant will pay for all heating and air conditioning requested
and furnished prior to or following such hours at rates to be
established from time to time by Landlord, which shall not exceed
Landlord's costs of providing such service. Landlord's obligations
with respect to heating and air conditioning are subject to all
governmental rules, regulations and guidelines applicable thereto.
(ii) Adequate electrical service for standard building lighting
and for Tenant's incidental uses. With respect to such incidental
uses, adequate electrical service will be furnished by Landlord to the
electrical supply panel servicing the Premises, provided that: (a) the
connected electrical load of the incidental use equipment does not
exceed an average of two watts per square foot of the Premises with a
total of five watts per square foot for lighting, equipment and
incidentals; (b) the electricity so furnished for incidental uses will
be at a nominal 120 volts and no electrical circuit for the supply of
such incidental use will have a current capacity exceeding 20 amperes;
and (c) such electricity will be used only for equipment and
accessories normal to office usage. If Tenant's requirements for
electricity for incidental uses are in excess of those set forth in
the preceding sentence, the Landlord reserves the right to require
Tenant to install the conduit, wiring and other equipment necessary to
supply electricity for such excess incidental use requirements at the
Tenant's expense by arrangement with Commonwealth Edison Company or
another approved local utility. Tenant shall bear the cost of
replacement of all lamps, tubes, ballasts and starters for lighting
fixtures.
(iii) City water from the regular Building outlets for drinking,
lavatory and toilet purposes.
(iv) Janitorial services as specified in Exhibit B attached
hereto and made a part hereof.
(v) Window washing of the inside and outside of those windows in
the Building's perimeter walls which are situated in the Premises at
intervals to be determined by Landlord, but not less than four (4)
times per year.
(vi) Adequate automatic passenger elevator service at all times.
(vii) Freight elevator services for normal office deliveries
subject to scheduling by Landlord.
(viii) Two (2) spaces for entries on the Building directory
listing for Tenant.
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B. Billing for Electricity.
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(i) Separate Metering. Tenant shall pay for the use of all
electrical service to the Premises (other than the electrical service
necessary for Landlord to fulfill its obligation to provide heating
and air conditioning as provided in Subparagraph 6A(i) hereof)
provided that Landlord can make satisfactory arrangements with the
utility company supplying electricity to the Premises for separate
metering and billing. Tenant shall be billed directly by such
utility company and Tenant agrees to pay each bill promptly in
accordance with its terms. In the event that for any reason Tenant
cannot be billed directly, Landlord shall forward each bill received
by it with respect to the Premises to Tenant and Tenant shall pay it
promptly in accordance with its terms.
(ii) Lack of Separate Metering. If the Premises cannot be
separately metered for any reason, Tenant shall pay Landlord as
Additional Rent, in monthly installments at the time prescribed for
monthly installments of Rent, an amount, as estimated by Landlord from
time to time, which Tenant would pay for such electricity if the same
were separately metered to the Premises by the local electric utility
company and billed to Tenant at such utility company's then current
rates.
C. Interruption of Services. Except for the limited abatement of
Rent upon a fire or casualty described in Section 11 and except as
hereinafter provided in this subsection, Tenant agrees that Landlord shall
not be liable in damages, by abatement of Rent or otherwise, for failure to
furnish or delay in furnishing any service, or for any diminution in the
quality or quantity thereof, when such failure or delay or diminution is
beyond Landlord's reasonable control. Such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance
of Tenant's use and possession of the Premises or relieve Tenant from
paying Rent or performing any of its obligations under this Lease.
Notwithstanding the foregoing, in the event such failures, delays or
diminutions prohibit Tenant's use or occupancy of the Premises for a period
of more than five (5) consecutive business days, then Rent under this Lease
shall abate from and after such five (5) day period until such services are
restored and, in addition, in the event that such failures, delays or
diminutions prohibit Tenant's use or occupancy of: (i) more than two-
thirds (2/3) of the Rentable Area for a period of ninety (90) consecutive
days or more, or (ii) more than one-third (1/3) of the Rentable Area for a
period of one hundred fifty (150) consecutive days or more, then Tenant
shall have the right to terminate this Lease by giving written notice
thereof to Landlord within ten (10) days after such 90 day period or 150
day period, as applicable; provided, however, that Tenant shall not have
the right to terminate this Lease in the event Landlord provides to Tenant
substitute space in the Building for Tenant's use and occupancy until such
time as such services are no longer interrupted.
D. Charges for Services. Charges for any service for which Tenant is
required to pay, from time to time hereunder, including but not limited to
hoisting services or after hours heating or air conditioning shall be due
and payable at the same time as the
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installment of Rent with which they are billed, or if billed
separately, shall be due and payable within ten (10) days after such
billing.
E. Energy Conservation. Notwithstanding anything to the contrary in
this Section 6 or elsewhere in this Lease, Landlord shall have the right to
institute such policies, programs and measures as may be necessary or
desirable, in Landlord's discretion, for the conservation and/or
preservation of energy or energy related services, or as may be required to
comply with any applicable codes, rules and regulations, whether mandatory
or voluntary.
7. REPAIRS.
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Tenant will, at Tenant's own expense, keep the Premises in good order,
repair and condition at all times during the Term, and Tenant shall promptly and
adequately repair all damage to Premises and replace or repair all damaged or
broken fixtures and appurtenances, under the supervision and subject to the
approval of the Landlord, and within any reasonable period of time specified by
the Landlord. If Tenant does not do so, Landlord may, upon not less than thirty
(30) days prior written notice to Tenant, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage no higher than the generally prevailing charges from time to time of
landlords of other first class Chicago Loop office buildings of the costs
thereof sufficient to reimburse Landlord for all overhead, general conditions,
fees and other costs or expenses arising from Landlord's involvement with such
repairs and replacements, forthwith upon being billed for same. Landlord may,
but shall not be required to, enter the Premises at all reasonable times to make
such repairs, alterations, improvements and additions to the Premises or to the
Building or to any equipment located in the Building as Landlord shall desire or
deem necessary or as Landlord may be required to do by governmental authority or
court decree.
8. ADDITIONS AND ALTERATIONS.
-------------------------
A. Tenant shall not, without the prior written consent of Landlord,
make any alterations, improvements or additions to the Premises. Landlord's
refusal to give said consent shall be conclusive, except that Landlord's
consent shall not be unreasonably withheld or delayed with respect to any
alterations, improvements or additions to the Premises that are not visible
from the outside of the Premises or the Building. If Landlord consents to
said alterations, improvement or additions, it may impose such reasonable
conditions with respect thereto as Landlord deems appropriate, including,
without limitation, requiring Tenant to furnish Landlord with security for
the payment of all costs to be incurred in connection with such work,
insurance against liabilities which may arise out of such work, plans and
specifications plus permits necessary for such work and "as built" drawings
or an accurately marked record set of drawings showing the actual location
of said alterations, improvements and additions. The work necessary to make
any alterations, improvements or additions to the Premises shall be done at
Tenant's expense
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by employees of, or contractors hired by, Landlord except to the extent
Landlord gives its prior written consent to Tenant's hiring its own
contractors. Tenant shall promptly pay to Landlord or the Tenant's
contractors, as the case may be, when due, the cost of all such work and of
all decorating required by reason thereof. Tenant shall also pay to
Landlord a percentage no higher than the generally prevailing changes from
time to time of landlords of other first class Chicago Loop office
buildings of the cost of such work sufficient to reimburse Landlord for all
overhead, general conditions, fees and other costs and expenses arising
from Landlord's involvement with such work. After commencement of any such
work, Tenant shall diligently and continuously pursue completion thereof.
Upon competition of such work, Tenant shall deliver to Landlord when
payment is made evidence of payment, contractors' affidavits and waivers of
all liens for labor, services or materials all in form satisfactory to
Landlord. Tenant shall defend and hold Landlord and the Land and Building
harmless from all costs, damages, liens and expenses related to such work.
All work done by Tenant or its contractors pursuant to Section 7 or 8 shall
be done in a first-class workmanlike manner using only good grades of
materials and shall comply with all insurance requirements and all
applicable laws and ordinances and rules and regulations of governmental
departments or agencies.
B. All personal property including moveable partitions, business and
trade fixtures, machinery and equipment, communications and office
equipment, whether or not attached to or built into the Premises, which are
installed in the Premises by or for the account of Tenant and all
furniture, furnishings and other articles of moveable personal property
owned by Tenant and located in the Premises (collectively "Tenant's
Property"), and all interior glass windows (specifically excluding Building
windows and glass installed in demising walls), vertical blinds, cabinets,
Tenant's computer and telephone wiring and Tenant's telephone system
located in the Premises (collectively, "Tenant's Fixtures") shall remain
the property of Tenant and may be removed by Tenant or any person claiming
under Tenant at any time or times during the Term. Upon the expiration of
the Term or earlier termination of this Lease, Tenant shall remove Tenant's
Property from the Premises and shall have the right, but shall not be
required, to remove any or all of Tenant's Fixtures. Tenant shall repair
and restore any damage to the Building or Premises occasioned by the
removal by Tenant or any person claiming under Tenant of any of Tenant's
Property or Tenant's Fixtures from the Premises.
9. COVENANT AGAINST LIENS.
----------------------
Tenant has no authority or power to cause or permit any lien or encumbrance
of any kind whatsoever, whether created by act of Tenant, operation of law or
otherwise, to attach to or be placed upon Landlord's title or interest in the
Land, Building or Premises, and any and all liens and encumbrances created by
Tenant shall attach to Tenant's interest only. Subject to the right to contest
hereafter provided, Tenant covenants and agrees not to suffer or permit any lien
of mechanics or materialmen or others to be placed against the Land, Building or
the Premises with respect to work or services claimed to have been performed for
or materials claimed to have been furnished to Tenant or the Premises, and, in
case of any such lien attaching, or claim thereof being asserted, Tenant
covenants and agrees to cause it to be promptly released and removed of record.
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Tenant shall, however, have the right to contest by court proceedings or
otherwise, at Tenant's expense, any lien claims or charges, provided Tenant
shall first deposit cash collateral with the title insurance company designated
by Landlord in such amounts as may be required by such title insurance company
to issue an endorsement insuring over such lien claim or charge, or shall first
provide to Landlord such other security reasonably requested by Landlord, and
Tenant thereafter shall diligently proceed in good faith to contest the lien
claim or charge. Tenant will promptly pay any sums due and owing as a result of
any settlement or final decree and if Tenant fails to do so within thirty (30)
days after such final decree or settlement, or if Tenant fails to prosecute its
contest with diligence, Landlord, at its sole option, may take all action
necessary to release and remove such lien (without any duty to investigate the
validity thereof) and Tenant shall promptly upon notice reimburse Landlord for
all sums, costs and expenses (including reasonable attorney's fees) incurred by
Landlord in connection with such lien.
10. INSURANCE.
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A. Waiver of Subrogation. To the extent not provided by law,
Landlord and Tenant each hereby waive any and every claim for recovery from
the other for any and all loss of or damage to the Building or Premises or
to the contents thereof, which loss or damage is covered by valid and
collectible physical damage insurance policies, to the extent that such
loss or damage is recoverable under said insurance policies. Inasmuch as
this mutual waiver will preclude the assignment of any such claim by
subrogation (or otherwise) to an insurance company (or any other person),
Landlord and Tenant each agree to give to each insurance company which has
issued, or in the future may issue, to it policies of physical damage
insurance, written notice of the terms of this mutual waiver, and to have
said insurance policies properly endorsed, if necessary, to prevent the
invalidation of said insurance coverage by reason of said waiver.
B. Coverage. Tenant shall purchase and maintain insurance during
the entire Term for the benefit of Tenant and Landlord (as their interests
may appear) with terms, coverages and in companies satisfactory to
Landlord, and with such increases in limits as Landlord may from time to
time reasonably request, but initially Tenant shall maintain the following
coverages in the following amounts:
(i) Comprehensive General Liability Insurance insuring Tenant and
naming Landlord and Landlord's management agent as additional
insureds, covering any liability for bodily injury, personal injury
and property damage arising out of Tenant's operations, assumed
liabilities or use of the Premises, for limits of liability not less
than:
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Bodily Injury Liability $1,000,000 each occurrence
$1,000,000 annual aggregate
Personal Injury Liability $1,000,000 each occurrence
$1,000,000 annual aggregate
Property Damage Liability $1,000,000 each occurrence
$1,000,000 annual aggregate
(ii) Physical Damage Insurance covering all office furniture,
trade fixtures, office equipment, merchandise and all other items of
Tenant's property on the Premises. Such insurance shall be written on
an "all risks" of physical loss or damage basis, for the full
replacement cost value of the covered items and in amounts that meet
any coinsurance clause of the policies of insurance.
(iii) "Host-Liquor Liability" Insurance naming Tenant, Landlord,
and Landlord's management agent covering any liability that might
arise from the provision or use of alcoholic beverages by Tenant on
the Premises, which coverage shall be in an amount reasonably
satisfactory to Landlord from time to time in light of statutory
limits.
(iv) Worker's Compensation Insurance covering all employees,
agents and contractors of Tenant performing work in, on, or with
respect to the Premises, in amounts not less than those required by
law.
Tenant shall, prior to the commencement of the Term, furnish to
Landlord certificates evidencing such coverage, which certificates
shall state that such insurance coverage may not be changed or
canceled without at least thirty (30) days' prior written notice to
Landlord and Tenant.
C. Avoid Action Increasing Rates. Landlord and Tenant shall comply
with all applicable laws and ordinances, all orders and decrees of court
and all requirements of other governmental authorities, and shall not,
directly or indirectly, make any use of the Premises which may thereby be
prohibited or be dangerous to person or property or which may jeopardize
any insurance coverage or may increase the cost of insurance or require
additional insurance coverage. If by reason of the failure of Tenant to
comply with the provisions of this Section 10C, any insurance coverage is
jeopardized or insurance premiums are increased, Landlord shall have the
option (in the case of invalidation of insurance) to terminate this Lease
if the invalidated insurance is not replaced within thirty (30) days
following Tenant's receipt of written request from Landlord to do so, or
(in the case of increased premiums) to require Tenant to make immediate
payment of this increased insurance premium.
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11. FIRE OR CASUALTY.
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A. Section 7 hereof notwithstanding, if the Premises or the Building
(including machinery or equipment used in its operation) shall be damaged
by fire or other casualty and if such damage does not render all or a
substantial portion of the Premises or the common areas of the Building
untenantable, then Landlord shall repair and restore the same to the
condition that existed prior to such casualty with reasonable promptness,
subject to reasonable delays for insurance adjustments and delays caused by
matters beyond Landlord's reasonable control. The term "untenantable" as
used in this Lease shall mean a material adverse effect on the ability of
Tenant to conduct business at the Premises leased or a substantial portion
of the premises is not usable. If any such damage renders all or a
substantial portion of the Premises or common areas of the Building
untenantable, Landlord shall deliver to Tenant within forty-five (45) days
of such damage or destruction an estimate of the duration of the period in
which the Premises or the common areas of the Building will be
substantially untenantable, as reasonably determined by Landlord's
contractor. If such estimated period shall be for more than two hundred
seventy (270) days from the date of such damage or destruction, either
party shall have the right to terminate this Lease as of the date of such
damage (with appropriate prorations of Rent being made for Tenant's
possession subsequent to the date of such damage of those tenantable
portions of the Premises) upon giving written notice to the other party
within thirty (30) days after the date such estimate is delivered to
Tenant. Landlord shall have no liability to Tenant, and, except as
provided herein, Tenant shall not be entitled to terminate this Lease, by
virtue of any delays in completion of such repairs and restoration. Rent,
however, shall abate on those portions of the Premises as are, from time to
time, untenantable as a result of such damage. Furthermore, if such damage
renders: (i) more than two-thirds (2/3) of the Rentable Area of the
Premises untenantable for a period of ninety (90) consecutive days or more;
or (ii) more than one-third (1/3) of the Rentable Area of the Premises
untenantable for a period of one hundred fifty (150) consecutive days or
more, then and in such event Tenant may vacate the Premises and the Rent
shall abate in toto after the expiration of such 90 day period or 150 day
period, as applicable; provided, however, that Rent shall not abate in the
event Landlord provides to Tenant, at no additional cost to Tenant,
substitute space in the Building (in an equivalent square foot amount as to
the untenantable portion of the Premises) for Tenant's use and occupancy
until such time as the Premises are thereafter rendered tenantable.
Finally, if the Premises and the common areas of the Building are not
rendered tenantable within two hundred seventy (270) days after the date of
such damage or destruction, Tenant shall have the right to terminate this
Lease at the expiration of said two hundred seventy (270) day period.
B. Notwithstanding anything to the contrary herein set forth,
Landlord shall have no duty pursuant to this Section 11 to repair or
restore any portion of the alterations, additions or improvements in the
Premises or the decorations thereto except to the extent that such
alterations, additions, improvements and decorations were provided by
Landlord at the beginning of the Term. If Tenant desires any other or
additional repairs or restoration and if Landlord consents thereto, the
same shall be done at Tenant's sole cost and expense subject to all of the
provisions of Sections 7 and 8 hereof. Tenant
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acknowledges that Landlord shall be entitled to the full proceeds of any
insurance coverage, whether carried by Landlord or Tenant, for damage to
alterations, additions, improvements or decorations which Landlord is
required to or elects to repair or restore under this Section 11.
12. WAIVER OF CLAIMS - INDEMNIFICATION.
----------------------------------
To the extent not prohibited by law, neither Landlord nor its partners,
affiliates, officers, agents, servants and employees shall be liable for any
damage either to person, property or business or resulting from the loss of use
thereof sustained by Tenant or by other persons due to the Building or any part
thereof or any appurtenances thereof becoming out of repair, or due to the
happening of any accident or event in or about the Building, including the
Premises, or due to any act or neglect of any tenant or occupant of the Building
or of any other person. This provision shall apply particularly, but not
exclusively, to damage caused by gas, electricity, snow, ice, frost, steam,
sewage, sewer gas or odors, fire, water or by the bursting or leaking of pipes,
faucets, sprinklers, plumbing fixtures and windows, and shall apply without
distinction as the person whose act or neglect was responsible for the damage
and whether the damage was due to any of the causes specifically enumerated
above or to some other cause of an entirely different kind. Tenant further
agrees that all personal property upon the Premises, or upon loading docks,
receiving and holding areas, or freight elevators of the Building, shall be at
the risk of Tenant only, and that Landlord shall not be liable for any loss or
damage thereto or theft thereof. Without limitation of any other provisions
thereof, Tenant agrees to defend, protect, indemnify and save harmless Landlord
and its partners, affiliates, officers, agents, servants and employees from and
against all liability to third parties arising out of the use of the Premises or
acts of Tenant or its servants, agents, employees, contractors, suppliers,
workers or invitees. Notwithstanding the foregoing, Tenant does not release and
shall not be required to indemnify the Indemnitees with respect to damage, loss
or liability resulting from the Indemnitees' negligence or willful misconduct.
Further, Landlord agrees to defend, protect, indemnify and save harmless Tenant
and its partners, affiliates, officers, agents, servants and employees from and
against all liability to third parties arising out of the acts of Landlord or
its partners, affiliates, officers, agents, servants, employees or invitees.
13. NONWAIVER.
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No waiver of any provision of this Lease shall be implied by any failure of
Landlord or Tenant to enforce any remedy on account of the violation of such
provisions, even if such violation be continued or repeated subsequently, and no
express waiver shall affect any provision other than the one specified in such
waiver and that one only for the time and in the manner specifically stated. No
receipt of monies by Landlord from Tenant after the termination of this Lease
shall in any way alter the length of the Term or of Tenant's right of possession
hereunder or after the giving of any notice shall reinstate, continue or extend
the Term or affect any notice given Tenant prior to the receipt of such monies,
it being agreed that after the service of notice or the commencement of a suit
or after final judgment for possession of the Premises, Landlord may receive and
collect any Rent due, and the payment of said Rent shall not waive or affect
said notice, suit or judgment.
14. CONDEMNATION.
------------
If the Land or the Building or any portion thereof shall be taken or
condemned by any competent authority for any public or quasi-public use or
purpose (a "taking"), or if the configuration of any street or alley adjacent to
the Building is changed by any competent authority and such taking or change in
configuration makes it necessary or desirable to remodel or reconstruct the
Building, Landlord and Tenant shall have the right, exercisable at its sole
discretion, to cancel this Lease upon not less than ninety (90) days' notice
prior to the date of cancellation designated in the notice; provided Landlord
may terminate this Lease under this Section 14 only if Landlord has also
terminated the leases of all other similarly situated tenants. No money or other
consideration shall be payable by Landlord to Tenant for the right of
cancellation and Tenant shall have no right to share in the condemnation award
or in any judgment for damages caused by such taking or change in configuration,
except that Tenant shall have the right to receive any award which may be made
by the court and specifically allocated by the court to Tenant for Tenant's
moving expenses and the taking of any personal property owned by Tenant.
15. ASSIGNMENT AND SUBLETTING.
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A. Tenant shall not, without the prior written consent of Landlord
(which consent will not be unreasonably withheld or delayed in the event of
an assignment of this Lease or a subletting but which may otherwise be
withheld arbitrarily except as provided below), (i) assign, convey or
mortgage this Lease or any interest hereunder; (ii) permit to occur or
permit to exist any assignment of this Lease, or any lien upon Tenant's
interest, voluntarily or by operation of law; (iii) sublet the Premises or
any part thereof; or (iv) permit the use or occupancy of the Premises by
any parties other than Tenant, its affiliates and employees of Tenant and
its affiliates or other persons who are necessary or appropriate in
connection with the conduct of business in the Premises. Any such action on
the part of Tenant shall be void and of no effect. There shall be no
partial assignment of Tenant's interest in this Lease. The term "sublease"
and all words derived therefrom, as used in this Section 15, shall include
any subsequent sublease or assignment of such sublease and any other
interest arising under such sublease. Landlord's consent to any
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assignment, subletting or transfer or Landlord's election to accept any
assignee, subtenant or transferee as the tenant hereunder and to collect
rent from such assignee, subtenant or transferee shall not release Tenant
or any subsequent tenant from any and all covenants and obligations under
this Lease. Landlord's consent to any assignment, subletting or transfer
shall not constitute a waiver of Landlord's right to withhold its consent
to any future assignment, subletting, or transfer. Landlord may condition
its consent upon execution by the subtenant or assignee of an instrument
confirming such restrictions on further subleasing or assignment and
joining in the waivers and indemnities made by Tenant hereunder. The terms
"assignment" as used herein shall not be deemed to include an
assignment effected in connection with a merger of Tenant with another
entity provided that any such entity with whom Tenant so merges results in
an entity which is in keeping with the standards of the Building and which
has a resulting financial condition which is not less than Tenant's
financial condition at the time of the proposed assignment and which
otherwise is appropriate to the obligations of Tenant under this Lease.
B. If Tenant desires the consent of Landlord to an assignment or
subletting, Tenant shall submit to Landlord at least thirty (30) days prior
to the proposed effective date of the assignment or sublease a written
notice which includes:
1. all documentation then available related to the proposed
sublease or assignment (copies of final executed documentation to be
supplied on or before the effective date); and
2. sufficient information to permit Landlord to determine the
identity and character of the proposed subtenant or assignee and the
financial condition of the proposed assignee.
C. If Landlord does not terminate this Lease, in whole or in part,
pursuant to Section 15D it may, nevertheless, withhold its consent to such
assignment or subletting if:
1. in the reasonable judgment of Landlord the subtenant or
assignee is of a character or engaged in a business which is not in
keeping with the standards maintained by Landlord in the Building;
2. in the reasonable judgment of Landlord the subtenant or
assignee does not have a financial condition which equal to or greater
than Tenant's financial conditions at the time of the proposed
assignment and which otherwise is appropriate to the obligations under
this Lease (or under its sublease, as appropriate);
3. in the reasonable judgment of Landlord the purpose for which
the subtenant or assignee intends to use the subleased space is in
violation of the terms
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of this Lease or the lease of any other tenant in the Building which
prohibits such use; or
4. the proposed subtenant or assignee is an agency or
instrumentality of any federal, state or local government or
governmental authority.
D. In addition to withholding its consent, Landlord shall have the
right to terminate this Lease as to that portion of the Premises which
Tenant seeks to assign or sublet, whether by requesting Landlord's consent
thereto or otherwise. Landlord may exercise such right to terminate by
giving written notice to Tenant at any time prior to Landlord's written
consent to such assignment or sublease. In the event that Landlord
exercises such right to terminate, Landlord shall be entitled to recover
possession of and Tenant shall surrender such portion of the Premises on
the later of (i) the proposed date for possession by such assignee or
subtenant, or (ii) ninety (90) days after the date of Landlord's notice of
termination to Tenant.
E. In the event that Landlord consents to any assignment or sublease
of any portion of the Premises, as a condition of Landlord's consent, if
Landlord so elects to consent, Tenant shall pay to Landlord any attorneys'
fees and expenses incurred by Landlord in connection with such assignment
or sublease plus fifty percent (50%) of all profit derived by Tenant from
such assignment or sublease, after deducting those costs, expenses,
commissions and concessions paid by Tenant to any third parties in
connection therewith. Tenant shall furnish Landlord with a sworn
statement, certified by an independent certified public accountant, setting
forth in detail the computation of profit (which computation shall be based
upon generally accepted accounting principles), and Landlord, or its
representatives, shall have access to the books, records and papers of
Tenant in relation thereto, and to make copies thereof. Any rent in excess
of that paid by Tenant hereunder realized by reason of such assignment or
sublease shall be deemed an item of such profit. If a part of the
consideration for such assignment shall be payable other than in cash, the
payment to Landlord shall be payable in accordance with the foregoing
percentage of the cash and other non-cash considerations in such form as is
satisfactory to Landlord. Such percentage of Tenant's profits shall be
paid to Landlord promptly by Tenant upon Tenant's receipt from time to time
of periodic payments from such assignee or subtenant or at such other time
as Tenant shall realize its profits from such assignment or sublease. If
such sublease or assignment is part of a larger transaction in which other
assets of Tenant are being transferred, the consideration for the
assignment or sublease shall be the fair market value of such assignment or
the fair market rental for such sublease, as reasonably determined by
Landlord.
16. SURRENDER OF POSSESSION.
-----------------------
Upon the expiration of the Term or upon the termination of Tenant's right
of possession, whether by lapse of time or at the option of Landlord as herein
provided, Tenant shall forthwith
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surrender the Premises (other than those items of Tenant's Property and
Tenant's Fixtures removed prior to the termination of the Lease) to Landlord in
good order, repair and condition, ordinary wear excepted, and shall, if
Landlord so requires, restore the Premises to the condition existing at the
beginning of the Term. Any interest of Tenant in the alterations, improvements
and additions to the Premises made or paid for by Landlord or Tenant (other
than those items of Tenant's Property and Tenant's fixtures removed prior to
the termination of the Lease) shall, without compensation to Tenant, become
Landlord's property at the termination of this Lease by lapse of time or
otherwise and such alterations, improvements and additions shall be
relinquished to Landlord in good condition, ordinary wear excepted. On or
before the termination of the Term or of Tenant's right of possession Tenant
shall remove its office furniture, trade fixtures, office equipment and all
other items of Tenant's movable property on the Premises. Tenant shall repair
and restore any damage to the Premises and to the Building caused by the
removal of Tenant's Property or Tenant's Fixtures. If Tenant shall fail to
repair or restore any such damage, Tenant shall pay to Landlord upon demand the
cost of such repair or restoration.
17. HOLDING OVER.
Tenant shall pay to Landlord an amount as Rent equal to 150% of one-twelfth
of the annual Base Rent and one-twelfth of the annual Additional Rent payable
with respect to the previous Lease Year herein provided during each month or
portion thereof for which Tenant shall retain possession of the Premises or any
part thereof after the expiration or termination of the Term or of Tenant's
right of possession, whether by lapse of time or otherwise, and if an executed
lease with another tenant for all or any portion of the Premises is canceled as
a result of Tenant's holding over, Tenant shall also shall pay all damages
sustained by Landlord on account of such cancellation. The provisions of this
Section 17 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law.
18. ESTOPPEL CERTIFICATE.
Tenant agrees, that, from time to time upon not less than ten (10) business
days' prior request by Landlord, Tenant, or Tenant's duly authorized
representative having knowledge of the following facts, will deliver to
Landlord a statement in writing certifying (i) that this Lease is unmodified
and in full force and effect (or if there have been modifications, a
description of such modifications and that the Lease as modified is in full
force and effect); (ii) the dates to which Rent and other charges have been
paid; (iii) that the Landlord is not in default under any provision of this
Lease, or, if in default, the nature thereof in detail; and (iv) such further
matters as are set forth on the form of estoppel certificate attached hereto as
Exhibit C and made a part hereof, or as may reasonably be requested by
Landlord, it being intended that any such statement may be relied upon by any
mortgagees or prospective mortgagees thereof, or any prospective assignee of
any mortgagee thereof, or any prospective and/or subsequent purchaser or
transferee of all or a part of Landlord's interest in the Land and/or Building.
Tenant shall execute and deliver whatever instruments may be required for such
purposes.
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19. OBLIGATIONS TO MORTGAGEES.
A. Subordination. This Lease is subject and subordinate to all present
and future ground or underlying leases of the Land and to the lien of any
mortgages or trust deeds now and hereafter in force against the Land or
Building and to all renewals, extensions, modifications, consolidations and
replacements thereof, and to all advances made or hereafter to be made upon
the security thereof. Tenant shall at Landlord's request execute such
further instruments or assurances as Landlord may deem necessary to
evidence, confirm or effectuate such subordination of this Lease thereto
or, if requested, to make Tenant's interest in this Lease superior thereto.
If any mortgage shall be foreclosed or property encumbered thereby is
transferred in lieu of foreclosure, or if any ground or underlying lease be
terminated, (i) the liability of the mortgagee or trustee hereunder or
purchaser at such foreclosure sale or the liability of a subsequent owner
designated as Landlord under this Lease shall exist only so long as such
trustee, mortgagee, purchaser or owner is the owner of the Land or Building
and such liability shall not continue or survive after further transfer of
ownership; and (ii) upon the request of the mortgagee, trustee or ground
lessor, Tenant will attorn, as Tenant under this Lease, to the purchaser at
any foreclosure sale under any mortgage or the ground lessor, and will
execute such instruments as may be required by the mortgagee, trustee or
ground lessor. Landlord agrees to use its best, non-financial efforts to
obtain a non-disturbance agreement from each holder of a mortgage or trust
deed hereafter recorded against the Land or Building (specifically
excluding, however, any existing mortgage(s) and trust deed(s) now in force
against the Land or Building and any renewals, extensions, modifications,
consolidations and replacements thereof).
B. Notice to Landlord and Mortgagee. In the event of any act or
omission by Landlord which would give Tenant the right to damages from
Landlord or the right to terminate this Lease, Tenant will not sue for such
damages or exercise any such right to terminate until (i) it shall have
given written notice of the act or omission to Landlord and to the
holder(s) of the indebtedness or other obligations secured by any mortgage
or deed of trust affecting the Premises or of any ground or underlying
lease, if the name and address of such holder(s) have been furnished to
Tenant, and (ii) a reasonable period of time, (not to exceed an additional
fifteen (15) days from the expiration of any applicable cure period, with
respect to monetary defaults, and not to exceed an additional thirty (30)
days from the expiration of any applicable cure period, with respect to no
monetary defaults, unless such non-monetary default is incapable of being
cured within said 30 day period and Landlord and/or such holder(s)
diligently pursue such cure), for remedying the act or omission has elapsed
following the giving of the notice, during which time Landlord and such
holder(s), or either of them, and their agents or employees, will be
entitled to enter upon the Premises and do therein whatever may be
necessary to remedy the act or omission.
20. CERTAIN RIGHTS RESERVED BY LANDLORD.
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Landlord shall have the following rights, each of which Landlord may
exercise without notice to Tenant and without liability to Tenant for damage or
injury to property, person or business on account of the exercise thereof, and
the exercise of any such rights shall not be deemed to constitute an eviction or
disturbance of Tenant's use or possession of the Premises and shall not give
rise to any claim for set-off or abatement of rent or any other claim:
(i) To change the name or street address of the Building.
(ii) To install, affix and maintain any and all signs on the exterior
or interior of the Building.
(iii) To decorate or to make repairs, alterations, additions, or
improvements, whether structural or otherwise, in and about the Building,
or any part thereof, and for such purposes to enter upon the Premises, and
during the continuance of any of said work, to temporarily close doors,
entryways, public space and corridors in the Building and to interrupt or
temporarily suspend services or use of facilities, all without affecting
any of Tenant's obligations hereunder, so long as the Premises are
reasonably accessible and usable.
(iv) To furnish door keys or magnetic cards for the entry door(s) in
the Premises at the commencement of the Lease and to retain at all times,
and to use in appropriate instances, keys to all doors within and into the
Premises. Tenant agrees to purchase only from Landlord additional duplicate
keys as required, to change no locks, and not to affix locks on doors
without the prior written consent of the Landlord. Notwithstanding the
provisions for Landlord's access to the Premises, Tenant relieves and
releases the Landlord of all responsibility arising out of theft, robbery,
pilferage and personal assault except to the extent resulting from
Landlord's negligence or willful misconduct or that of Landlord's agents,
employees or servants. Upon the expiration of the Term or Tenant's right to
possession, Tenant shall return all keys to Landlord and shall disclose to
Landlord the combination of any safes, cabinets or vaults left in the
Premises.
(v) To designate and approve all window coverings used in the
Building.
(vi) To approve the weight, size and location of safes, vaults,
vertical files and other heavy equipment and articles in and about the
Premises and the Building so as not to exceed the legal live load per
square foot designated by the structural engineers for the Building, and to
require all such items and furniture and similar items to be moved into or
out of the Building and Premises only at such times and in such manner as
Landlord shall direct in writing. Tenant shall not install or operate
machinery or any mechanical devices of a nature not directly related to
Tenant's ordinary use of the Premises without the prior written consent of
Landlord. Movements of Tenant's property into or out of the Building or
Premises and within the Building are entirely at the risk and
responsibility of Tenant,
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and Landlord reserves the right to require permits before allowing any
property to be moved into or out of the Building or Premises.
(vii) To establish controls for the purpose of regulating all property
and packages, both personal and otherwise, to be moved into or out of the
Building and Premises and all persons using the Building after normal
office hours.
(viii) To regulate delivery and service of supplies and the usage of the
loading docks, receiving areas and freight elevators.
(ix) To show the Premises to prospective tenants at reasonable times
during the last 12 months of the Term and, if vacated or abandoned, to show
the Premises at any time and to prepare the Premises for re-occupancy.
(x) To enter the Premises at any reasonable time to inspect the
Premises with reasonable prior notice to Tenant except in the event of an
emergency.
(xi) To grant to any person or to reserve unto itself the exclusive
right to conduct any business or render any service in the Building. If
Landlord elects to make available to tenants in the Building any services
or supplies, or arranges a master contract therefor, Tenant agrees to
obtain its requirements, if any, therefor from Landlord or under any such
contract, provided that the charges therefor are reasonable.
21. RULES AND REGULATIONS.
---------------------
Tenant agrees to observe the rules and regulations for the Building
attached hereto as Exhibit D and made a part hereof. Landlord shall have the
right from time to time to prescribe additional rules and regulations which, in
its judgment, may be desirable for the use, entry, operation and management of
the Premises and Building, each of which rules and regulations and any
amendments thereto shall become a part of this Lease. Tenant shall comply with
all such rules and regulations; provided, however, that such rules and
regulations shall not contradict or abrogate any right or privilege herein
expressly granted to Tenant.
22. LANDLORD'S REMEDIES.
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If (i) default shall be made in the payment of the Rent or any installment
thereof or in the payment of any other sum required to be paid by Tenant under
this Lease or under the terms of any other agreement between Landlord and Tenant
and such default shall continue for ten (10) business days after written notice
to Tenant, or (ii) if default shall be made in the observance or performance of
any of the other covenants or conditions in this Lease which Tenant is required
to observe and perform and such default shall continue for thirty (30) days
after written notice to Tenant (plus an additional reasonable period of time if
such default is incapable of being cured within such initial thirty (30) days
period and Tenant diligently pursues such cure), or (iii) if a default involves
a hazardous condition and is not cured by Tenant promptly upon written notice to
Tenant, or (iv) if the interest of Tenant in this Lease shall be levied on under
execution or other legal process and such levy or other legal process is not
released or contested within thirty (30) days, or (v) if any voluntary petition
in bankruptcy or for corporate reorganization or any similar relief shall be
filed by Tenant, or (vi) if any involuntary petition in bankruptcy shall be
filed against Tenant under any federal or state bankruptcy or insolvency act and
shall not have been dismissed within ninety (90) days from the filing thereof,
or (vii) if a receiver shall be appointed for Tenant or any of the property of
Tenant by any court and such receiver shall not have been dismissed within
ninety (90) days from the date of his appointment, or (viii) if Tenant shall
make an assignment for the benefit of creditors, or (ix) if Tenant shall admit
in writing Tenant's inability to meet Tenant's debts generally as they mature,
or (x) if Tenant shall abandon the Premises during the Term for a period greater
than thirty (30) days, then Landlord may treat the occurrence of any one or more
of the foregoing events as a breach of this Lease, and thereupon at its option
may, upon notice to Tenant, have any one or more of the following described
remedies in addition to all other rights and remedies provided at law or in
equity or elsewhere herein:
(i) Landlord may terminate this Lease and the Term created hereby, in
which event Landlord may forthwith repossess the Premises and be entitled
to recover forthwith, in addition to any other sums or damages for which
Tenant may be liable to Landlord, as damages a sum of money equal to the
excess of the present value of the Rent provided to be paid by Tenant for
the balance of the Term, over the present value of the fair market rent for
the Premises, after deduction of all anticipated expenses of reletting, for
said period. Should the present value of the fair market rent for the
Premises, after deduction of all anticipated expenses or reletting, for the
balance of the Term exceed the present value of the Rent provided to be
paid by Tenant for the balance of the Term, Landlord shall have no
obligation to pay to Tenant the excess or any part thereof or to credit
such excess or any part thereof against any other sums or damages for which
Tenant may be liable to Landlord.
(ii) Landlord may terminate Tenant's right of possession and may
repossess the Premises by forcible entry and detainer suit, by taking
peaceful possession or otherwise, without terminating this Lease, in which
event Landlord may, but shall be under no obligation to, relet the same for
the account of Tenant, for such rent and upon such terms as shall be
satisfactory to Landlord. For the purpose of such reletting, Landlord is
authorized to decorate, repair, remodel or alter the Premises. If Landlord
shall fail to relet
25
<PAGE>
the Premises, Tenant shall pay to Landlord as damages a sum equal to the
amount of the Rent reserved in this Lease for the balance of the Term. If
the Premises are relet and a sufficient sum shall not be realized from such
reletting after paying all of the costs and expenses of all decoration,
repairs, remodeling, alterations and additions and the expenses of such
reletting and of the collection of the rent accruing therefrom to satisfy
the Rent provided for in this Lease, Tenant shall satisfy and pay the
deficiency to Landlord upon demand therefor from time to time. Tenant shall
not be entitled to any rents received by Landlord in excess of the Rent
provided for in this Lease. Tenant agrees that Landlord may file suit to
recover any sums falling due under the terms of this Section 22 from time
to time and that no suit or recovery of any portion due Landlord hereunder
shall be any defense to any subsequent action brought for any amount not
theretofore reduced to judgment in favor of Landlord.
23. EXPENSES OF ENFORCEMENT.
-----------------------
Tenant shall pay upon demand all Landlord's reasonable costs, charges and
expenses including the reasonable fees and out-of-pocket expenses of counsel,
agents and others retained by Landlord reasonably incurred in enforcing Tenant's
obligations hereunder or reasonably incurred by Landlord in any litigation,
negotiation or transaction in which Tenant causes Landlord without Landlord's
fault to become involved or concerned. Notwithstanding the foregoing, in the
event of any litigation between Landlord and Tenant with respect to this Lease
or the rights or obligations under this Lease, the prevailing party in such
litigation shall be entitled to reimbursement by the non-prevailing party of all
reasonable costs, charges and expenses incurred by the prevailing party in such
litigation, including the fees and out-of-pocket expenses of counsel, agents and
others retained by the prevailing party.
24. COVENANT OF QUIET ENJOYMENT.
---------------------------
Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Term, peaceably and quietly have, hold and enjoy the Premises subject
to the terms, covenants, conditions, provisions and agreements hereof.
25. REAL ESTATE BROKER.
------------------
Tenant represents that Tenant has dealt with (and only with) Prime Group
Realty, Inc. as broker in connection with this Lease, and that insofar as Tenant
knows, no other broker negotiated this Lease or is entitled to any commission in
connection therewith. Tenant agrees to indemnify, defend and hold Landlord and
its partners, employees, agents, their officers and partners, harmless from and
against any claims made by any broker or finder other than the broker named
above for a commission or fee in connection with this Lease, provided that
Landlord has not in fact retained such broker or finder.
26
<PAGE>
26. MISCELLANEOUS.
A. Rights Cumulative. All rights and remedies of Landlord under this
Lease shall be cumulative and none shall exclude any other rights and
remedies allowed by law.
B. Interest. All payments becoming due under this Lease and
remaining unpaid when due shall bear interest until paid at two percent
(2%) per annum above the Prime Rate (but in no event at a rate which is
more than the highest rate which is at the time lawful in the State of
Illinois).
C. Terms. The necessary grammatical changes required to make the
provisions hereof apply either to corporations or partnerships or
individuals, men or women, as the case may require, shall in all cases be
assumed as though in each case fully expressed.
D. Binding Effect. Each of the provisions of this Lease shall extend
to and shall, as the case may require, bind or inure to the benefit not
only of Landlord and of Tenant, but also for their respective successors or
assigns, provided this clause shall not permit any assignment by Tenant
contrary to the provisions of Section 15 hereof.
E. Lease Contains all Terms. All of the representations and
obligations of Landlord are contained herein and in the Exhibits attached
hereto, and no modification, waiver or amendment of this Lease or of any of
its conditions or provisions shall be binding upon the Landlord unless in
writing signed by Landlord or by a duly authorized agent of Landlord
empowered by a written authority signed by Landlord.
F. Delivery for Examination. Submission of the Lease for examination
shall not bind Landlord in any manner, and no Lease or obligations of the
Landlord shall arise until this instrument is signed by both Landlord and
Tenant and delivery is made to each.
G. No Air Rights. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease.
H. Modification of Lease. If any lender requires, as a condition to
its lending funds the repayment of which is to be secured by a mortgage or
trust deed on the Land and Building or either, that certain modifications
be made to this Lease, which modifications will not require Tenant to pay
any additional amounts or otherwise change materially the rights or
obligations of Tenant hereunder, Tenant shall, upon Landlord's request,
execute appropriate instruments effecting such modifications.
I. Transfer of Landlord's Interest. Tenant acknowledges that
Landlord has the right to transfer its interest in the Land and Building
and in this Lease, and Tenant agrees
27
<PAGE>
that in the event of any such transfer Landlord shall automatically be
released from all liability under this Lease and Tenant agrees to look
solely to such transferee for the performance of Landlord's obligations
hereunder. Tenant further acknowledges that Landlord may assign its
interest in this Lease to a mortgage lender as additional security and
agrees that such an assignment shall not release Landlord from its
obligations hereunder and that Tenant shall continue to look to Landlord
for the performance of its obligations hereunder. Tenant further agrees
that if any such lender shall so require, Tenant shall execute and deliver
estoppel certificates in form and substance as set forth in Exhibit C
attached hereto.
I. Landlord's Title. Landlord's title is and always shall be
paramount to the title of Tenant. Nothing herein contained shall empower
Tenant to commit or engage in any act which can, shall or may encumber the
title of Landlord.
J. Prohibition Against Recording. Neither this Lease, nor any
memorandum, affidavit or other writing with respect thereto, shall be
recorded by Tenant or by anyone acting through, under or on behalf of
Tenant, and the recording thereof in violation of this provision shall make
this Lease null and void at Landlord's election.
K. Captions. The captions of paragraphs and subparagraphs are for
convenience only and shall not be deemed to limit, construe, affect or
alter the meaning of such paragraphs or subparagraphs.
L. Covenants and Conditions. All of the covenants of Tenant
hereunder shall be deemed and construed to be "conditions," if Landlord so
elects, as well as "covenants" as though the words specifically expressing
or importing covenants and conditions were used in each separate instance.
M. Only Landlord/Tenant Relationship. Nothing contained in this Lease
shall be deemed or construed by the parties hereto or by any third party to
create the relationship of principal and agent, partnership, joint venturer
or any association between Landlord and Tenant, it being expressly
understood and agreed that neither the method of computation of Rent nor
any act of the parties hereto shall be deemed to create any relationship
between Landlord and Tenant other than the relationship of landlord and
tenant.
N. Application of Payments. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease (regardless of
Tenant's designation of such payments) to satisfy any obligations of Tenant
hereunder, in such order and amounts, as Landlord in its sole discretion,
may elect.
O. Definition of Landlord. All indemnities, covenants and agreements
of Tenant contained herein which inure to the benefit of Landlord shall be
construed to also
28
<PAGE>
inure to the benefit of (i) Landlord's general and limited partners and (ii) if
title to the Land or Building is at any time held in a land trust, all
beneficiaries of such land trust and their partners, agents and employees.
P. Time of Essence. Time is of the essence of this Lease and each of
its provisions.
Q. Governing Law. Interpretation of this Lease shall be governed by
the laws of the State of Illinois.
R. Partial Invalidity. If any term, provision or condition
contained in this Lease shall, to any extent, be invalid or unenforceable,
the remainder of this Lease (or the application of such term, provision or
condition to persons or circumstances other than those in respect to which
it is invalid or unenforceable) shall not be affected thereby, and each and
every other term, provision and condition of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
T. Parking. Landlord shall make available during the Term of this
Lease to Tenant up to two (2) parking spaces in the Building garage.
Tenant may elect to use one or more of such parking spaces and shall pay
for each parking space used by Tenant the rate generally charged from time
to time by Landlord to other users of parking spaces in the Building
garage.
27. NOTICES.
All notices to be given under this Lease shall be in writing and shall be
deemed given when delivered personally, or two (2) business days after being
deposited in the United States mail, certified or registered mail with return
receipt requested, postage prepaid, addressed as follows:
A. If to Landlord:
77 West Wacker Limited Partnership
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 3900
Chicago, Illinois 60601
Attention: Michael W. Reschke
with a copy to:
The Prime Group, Inc.
77 W. Wacker Drive, Suite 3900
Chicago, Illinois 60601
Attention: Robert J. Rudnik, Esq.
29
<PAGE>
or to such other person or such other address designated by notice sent by
Landlord to Tenant.
B. If to Tenant:
Brookdale Living Communities, Inc.
77 West Wacker Drive, 39th Floor
Chicago, Illinois 60601
Attention: Mark J. Schulte
with a copy to:
Brookdale Living Communities, Inc.
77 West Wacker Drive, 39th Floor
Chicago, Illinois 60601
Attention: Robert J. Rudnik
and, after occupancy of the Premises by Tenant, to Tenant at 77 West Wacker
Drive, 48th Floor, Chicago, Illinois 60601, or to such other address as is
designated by Tenant in a notice to Landlord.
30
<PAGE>
28. LIMITATION ON LANDLORD'S LIABILITY.
----------------------------------
It is expressly understood and agreed by and between the parties hereto,
anything herein to the contrary notwithstanding, that each and all of the
representations, covenants, undertakings and agreements herein made on the part
of the Landlord, while in form purporting to be representations, covenants,
undertakings and agreements of the Landlord are, nevertheless, each and every
one of them, made and intended not as personal representations, covenants,
undertakings and agreements by the Landlord or for the purpose or with the
intention of binding said Landlord personally, but are made and intended for the
purpose of binding only Landlord's interest in the Premises to the terms of this
Lease and for no other purpose whatsoever, and in the event of a default by
Landlord, Tenant shall look solely to the interest of Landlord in the Premises.
No duty shall rest upon Landlord to sequester the Premises or the rents, issues
and profits arising therefrom, or the proceeds arising from any sale or other
disposition thereof. No personal liability or personal responsibility is
assumed by nor shall at any time be asserted or enforceable against Landlord on
account of this Lease or on account of any representation, covenant, undertaking
or agreement of the Landlord in this Lease contained, either expressed or
implied, all such personal liability, if any, being expressly waived and
released by the Tenant herein and to all persons claiming by, through, or under
said Tenant. The foregoing limitation on Landlord's liability shall inure to
and for the benefit of Landlord and its successors and assigns, Landlord's
general and limited partners and their successors and assigns and, if title to
the Land or Building is at any time held in a land trust, all beneficiaries of
such land trust and their partners, agents and employees.
[signature page follows]
31
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Lease as of the day
and year first above written.
LANDLORD:
77 WEST WACKER LIMITED PARTNERSHIP,
an Illinois limited partnership
By: The Prime Group, Inc., an
Illinois corporation and its
managing general partner
By:
-------------------------------------
Its:
-------------------------------
TENANT:
BROOKDALE LIVING COMMUNITIES, INC., a
Delaware corporation
By:
-------------------------------------
Its:
-------------------------------
32
<PAGE>
EXHIBIT A
PLAN OF PREMISES
<PAGE>
EXHIBIT B
---------
JANITORIAL SERVICES
-------------------
I. NIGHTLY - Monday through Friday (Holidays Excluded)
A. Dust mop, using a treated mop, all stone, ceramic tile, terrazzo and
other types of unwaxed flooring.
B. Dust mop, using treated mop, all vinyl, asbestos, asphalt, rubber and
similar types of flooring. This includes removal of gum and other
similar substances using a scraping device.
C. Vacuum all carpeted areas.
D. Dust mop all private and public stairways and vacuum if carpeted.
E. Hand dust and wipe clean with a chemically treated cloth all
furniture, file cabinets, fixtures, window sills (do not disturb
papers on desks).
F. Dust and sanitize using a disinfectant solution, all telephones.
G. Remove finger marks from all painted surfaces near light switches,
entrance doors, etc.
H. Remove all gum and foreign matter on sight.
I. Empty and clean all waste receptacles and remove waste paper and waste
materials to a designated area.
J. Damp dust interiors of all waste disposal receptacles and wash as
necessary.
K. Clean and sanitize using a disinfectant solution, all water fountains
and water coolers.
L. Spot mop floors for spillages, etc.
M. Empty and damp clean all ash trays and screen all sand urns.
N. Remove finger marks and dust doors of elevator hatchways.
0. Clean all low ledges, shelves, bookcases, etc., that are in office
spaces.
<PAGE>
P. Upon completion of work, all slop sinks are to be thoroughly cleaned
and cleaning equipment and supplies stored neatly in locations
designated by Building Manager's Office.
Q. All cleaning operations shall be scheduled so that a minimum of lights
are to be left on at all times. Upon completion of cleaning, all
lights are to be turned off. All entrance doors are to be kept locked
during the cleaning operation.
R. Sweep all steps, sidewalks and plazas.
S. Clean elevator cabs, including floors.
T. Sweep clean loading dock areas.
U. In building lobby, dust and wipe clean mail chutes, mail depository
door glass, metal door knobs, kick plates and directional signs.
II. WEEKLY
A. Hand dust all door louvers and other ventilating louvers within reach.
B. Dust all baseboards.
C. Wipe clean all bright work.
D. Dust all chair rails.
E. Move and vacuum clean once a week underneath all furniture that can be
moved.
F. In high traffic resilient tile areas, damp mop if necessary and apply
spray buffing solution in a fine mist and buff with a synthetic pad.
C. Damp mop all non-carpeted private and public stairways.
H. Wipe clean all interior building metals.
I. Clean building directory glass.
J. Wash all glass entrance doors and side panels inside and out.
K. Hose down loading dock areas.
<PAGE>
L. Wash entrance lobby walls.
M. Sweep clean garage.
III. MONTHLY
A. Dust entrance fixtures and other fittings in public corridors. Replace
bulbs with contractor supplies.
B. Shampoo common area and elevator carpeting. Thoroughly scrub resilient
tile floors in all public areas.
C. When possible, sweep and hose down exterior walks, trucking areas and
shipping platforms.
D. Scrub down loading dock area.
E. Dust all picture frames, charts and venetian blinds which are not
reached in nightly cleaning.
IV. QUARTERLY
A. Dust all vertical surfaces such as walls, partitions, doors and other
surfaces not reached in nightly cleaning.
B. Dust exterior of lighting fixtures.
C. Dust all air conditioning louvers, grills, etc.
D. Wash all baseboards.
E. Strip all resilient flooring using diluted stripping solution. Machine
scrub floor using pad to remove all floor finish. Thoroughly rinse
with clean water and apply two coats of floor finish.
F. Vacuum upholstered furniture.
V. LAVATORIES
A. Nightly -- Monday - Friday
<PAGE>
(1) Clean, sanitize using disinfectant solution and polish all
vitreous fixtures including toilet bowls, urinals and wash
basins.
(2) Clean and polish all chrome and stainless steel fittings.
(3) Clean and sanitize both sides of toilet seats.
(4) Clean and polish all glass and mirrors.
(5) Empty all containers and disposals and insert new liners where
required.
(6) Wash and sanitize, using a disinfectant solution, exteriors of
all containers.
(7) Empty all sanitary containers and sanitize interiors using a
disinfectant solution.
(8) Dust horizontal surfaces on all partitions.
(9) Spot clean all partitions and remove all graffiti.
(10) Spot clean all walls, doors, light switches, etc.
(11) Refill any dispensers to normal limits including napkins, soap,
tissue, towels, etc.
(12) Wet mop and sanitize tile floors.
(13) Vacuum entire carpeted areas.
(14) Remove all rubbish.
(15) Wet mop tile floors.
B. BI-WEEKLY
(1) Machine scrub tile floors as required.
C. MONTHLY
(1) Wash partitions.
D. QUARTERLY
<PAGE>
(1) Dust all HVAC grills and louvers.
(2) Wash ceramic tile walls.
VI. MISCELLANEOUS
A. Cleaning of computer rooms and kitchens will be the sole
responsibility of the tenant.
B. Remove snow and ice from parking entrances, sidewalks and roadways
servicing the property.
C. Sidewalk, entrances including dock and grounds to be kept clean of
paper, leaves and debris.
D. Put out in lobby floor mats during inclement weather and clean floor
mats as necessary.
E. Keep escalators, if any, in clean and polished condition.
F. Keep walls and ceiling clean.
<PAGE>
EXHIBIT C
---------
FORM OF TENANT ESTOPPEL CERTIFICATE
-----------------------------------
DATED: __________________
TO: ________________________
________________________
________________________
Lease Dated: _____________________
Landlord:
Tenant: _____________________
Premises:
Gentlemen:
The undersigned ("Tenant") hereby confirms, as of the date hereof, the
following:
1. Tenant is the tenant under the captioned lease (the "Lease").
2. Tenant is in full and complete possession of the captioned premises
(the "Premises"), such possession having been delivered by the captioned
landlord (the "Landlord"), pursuant to the Lease and having been accepted by
Tenant. If the Landlord named in the Lease is other than Landlord, Tenant has
received notice of the assignment to Landlord of the Landlord's interest in the
Lease and Tenant recognizes Landlord as the landlord under the Lease.
3. To the best of Tenant's knowledge, the improvements and space required
to be furnished by the terms of the Lease have been completed in all respects to
the satisfaction of Tenant and are open for the use of Tenant, its employees,
patients (or customers) and invitees.
4. To the best of Tenant's knowledge, all duties of an inducement nature
required of the Landlord in the Lease have been fulfilled in all material
respects.
<PAGE>
5. The Lease is in full force and effect; to the best of Tenant's
knowledge, there is no existing default on the part of the Landlord under the
Lease in the terms thereof; and said Lease has not been amended, modified,
supplemented or superseded except as follows:
(if none, write none.)
6. No rents have been prepaid except as provided by the Lease; and Tenant
has not asserted and has no actual knowledge of any claim against the Landlord
under the Lease which might be set-off or credited against future accruing
rents.
7. Tenant has received no notice of a prior sale, transfer, assignment,
hypothecation or pledge of the Lease or of the rents secured therein.
8. Tenant understands that the Lease has been collaterally assigned to
you as security for a loan to Landlord, and that rent may not be prepaid more
than thirty (30) days in advance of its due date nor the Lease amended,
modified, supplemented, superseded, surrendered or terminated without your
written approval; provided, however, Tenant retains its right to terminate the
Lease pursuant thereto on account of Landlord's default thereunder if such
default remains uncured after the expiration of the time allowed for cure under
Paragraph 13 hereof.
9. Rents provided in the Lease commenced to accrue on the _____ day of
______________, 19__.
10. No security deposit has been paid to Landlord.
11. The term of the Lease commenced on _____________, 19__.
12. The current monthly rental (Base Rent plus all Additional Rents) due
under the Lease is $_______________.
13. There are no actions, whether voluntary or otherwise, pending against
tenant under the bankruptcy laws of the United States or any state thereof.
14. Tenant acknowledges that you will rely upon this statement in making a
loan to Landlord secured by a mortgage lien upon the property of which the
Premises is a part.
Very truly yours,
______________________________
(Name of Lessee)
By:______________________________
Name: ________________________
Title:________________________
<PAGE>
EXHIBIT D
---------
RULES AND REGULATIONS
---------------------
RULES AND REGULATIONS. Tenant agrees to observe the rights reserved to
Landlord in the Lease and agrees, for itself, its employees, agents, clients,
customers, invitees and guests, to comply with the following rules and
regulations and with such reasonable modifications thereof and additions thereto
as Landlord may make, from time to time, for the Building.
(a) Any sign, lettering, picture, notice or advertisement installed within
Tenant's Premises which is visible to the public from within the Building shall
be installed at Tenant's cost and in such manner, character and style as
Landlord may approve in writing, such approval not to be unreasonably withheld.
No sign, lettering, picture, notice or advertisement shall be placed on any
outside window or in any position so as to be visible from outside the Building
or from any atrium or lobbies of the Building.
(b) Tenant may use the name of the Building or use pictures or
illustrations of the Building in advertising or other publicity, but only with
prior written consent of Landlord. Landlord's consent may be arbitrarily
withheld. Tenant may use the address of the Building as its business address
for any reasonable business purpose.
(c) Tenant, its customers, invitees, licensees, and guests shall not
obstruct sidewalks, entrances, passages, courts, corridors, vestibules, halls,
elevators and stairways in and about the Building. Tenant shall not place
objects against glass partitions or doors or windows or adjacent to any open
common space which would be unsightly from the Building corridors or from the
exterior of the Building, and will promptly remove the same upon notice from
Landlord.
(d) Tenant shall not make excessive noises, cause disturbances, create
excessive vibrations, odors or noxious fumes or use or operate any electrical or
electronic devices or other devices that emit excessive sound waves or are
dangerous to other tenants and occupants of the Building or that would interfere
with the operation of any device or equipment or radio or television
broadcasting or reception from or within the Building or elsewhere.
(e) Tenant shall not make any room-to-room canvass to solicit business from
other tenants in the Building, and shall not exhibit, sell or offer to sell,
use, rent or exchange any item or services in or from the Premises unless
ordinarily embraced within the Tenant's use of the Premises as specified in its
lease.
(f) Tenant shall not waste electricity or water and agrees to cooperate
fully with Landlord to assure the most effective operation of the Building's
heating and air conditioning and shall refrain from attempting to adjust any
controls except for the thermostats within the Premises. Tenant shall keep
public corridor doors closed.
<PAGE>
(g) Two door keys for doors in the Premises will be furnished by Landlord
at the commencement of the Lease. All duplicate keys shall be purchased only
from the Landlord. Tenant shall not alter any lock, or install new or additional
locks or bolts, on any door without the prior written approval of Landlord. In
the event such alteration or installation is approved by Landlord, the Tenant
making such alteration or installation shall supply Landlord with a key for any
such lock or bolt. Each Tenant, upon the expiration or termination of its
tenancy, shall deliver to the Landlord all keys in Tenant's possession for all
locks, bolts, cabinets, safes or vaults, or the means of opening any lockable
device.
(h) Tenant assumes full responsibility for protecting its space from theft,
robbery, and pilferage, which includes keeping doors locked and other means of
entry to the space closed and secure. Landlord shall be in no way responsible
to the Tenants, their agents, employees, or invitees for any loss of property
from the Premises or public areas or for any damages to any property therein
from any cause whatsoever.
(i) Peddlers, solicitors and beggars shall be reported to the office of the
Building or as Landlord otherwise requests.
(j) Tenant shall neither install nor operate machinery or any mechanical
devices of a nature not directly related to Tenant's ordinary use of the
Premises without the written permission of the Landlord.
(k) Tenant shall not:
(1) Use the Premises for lodging or for any immoral or illegal
purposes;
(2) Use the Premises to engage in the manufacture or sale of any
spirituous, fermented, intoxicating or alcoholic beverages;
(3) Use the Premises to engage in the manufacture or sale of, or
permit the use of, any illegal drugs on the Premises.
(4) Bring into or keep in or about the Premises any vehicles,
bicycles, motorcycles or animals of any kind.
(5) Install any radio, microwave or television antennas or any other
device or item on the roof, exterior walls, windows or window
sills of the Building.
(l) In no event shall any person bring into the Building inflammables such
as gasoline, kerosene, naphtha and benzene, or explosives or firearms or any
other articles of intrinsically dangerous nature. If by reason of the failure of
Tenant to comply with the provisions of this paragraph, any insurance premium
payable by Landlord for all or any part of the Building shall at any time be
increased above normal insurance premiums for insurance not covering the items
2
<PAGE>
aforesaid, Landlord shall have the option to require Tenant to make immediate
payment for the whole of the increased insurance premium.
(m) Tenant shall comply with all applicable federal, state and municipal
laws, ordinances and regulations and building rules, and shall not directly or
indirectly make any use of the Premises which may be prohibited thereby or which
shall be dangerous to person or property or shall increase the cost of insurance
or require additional insurance coverage.
(n) No signaling, telegraphic or telephonic instruments or devices, or
other wires, instruments or devices, shall be installed in connection with any
Premises without the prior written approval of Landlord. Such installations, and
the boring or cutting for wires, shall be made at the sole cost and expense of
the Tenant in accordance with plans approved by the Landlord. Landlord may at
any time inspect such installations. Landlord retains in all cases the right to
require (1) the installation and use of such electrical protecting devices that
prevents the transmission of excessive current of electricity into or through
the Building, (2) the changing of wires and of their installation and
arrangement underground or otherwise as Landlord may direct, and (3) compliance
on the parts of all using or seeking access to such wires with such rules as
Landlord may establish relating thereto. All such wires used by Tenant must be
clearly tagged at the distribution boards and junction box and elsewhere in the
Building, with (1) the number of the Premises to which said wires are used, (2)
the purpose for which said wires are used, and (3) the name of the company
operating same.
(o) In order that the Building may be kept in a state of cleanliness, each
Tenant shall, during the term of each respective lease, permit Landlord's
employees (or Landlord's agent's employees) to take care of and clean the
Premises and Tenants shall not employ any person(s) other than Landlord's
employees (or Landlord's agent's employees) for such purpose. No tenant shall
cause any unnecessary labor by reason of such Tenant's carelessness or
indifference in the preservation of good order and cleanliness of the Premises.
Tenants will see that (1) the doors are securely locked, and (2) all water
faucets and other utilities are shut off (so as to prevent waste or damage),
each day before leaving the Premises. In the event Tenant must dispose of
crates, boxes, etc. which will not fit into office waste paper baskets, it will
be the responsibility of Tenant to dispose of same. In no event shall Tenant set
such items in the public hallways or other areas of the building, excepting
Tenant's own Premises, for disposal.
(p) Tenant shall cooperate and participate in all reasonable security
programs affecting the Building.
(q) Tenant, its customers, invitees, licensees, and guests shall not
loiter, eat, drink, sit or lie in the lobby, plaza or other spaces in the
Building or the adjacent property owned by the Landlord which are open to the
public.
(r) Prior written approval, which shall be at Landlord's sole discretion,
must be obtained for installation of any solar screen material, window shades,
blinds, draperies, awnings,
3
<PAGE>
window ventilators, or other similar equipment and any window treatment of any
kind whatsoever other than the Building standard window treatment. Landlord will
control all internal lighting that may be visible from the exterior of the
Building and shall have the right to change any unapproved lighting, without
notice to Tenant, at Tenant's expense.
(s) Tenant, its customers, invitees, licensees, and guests shall not use
the freight or passenger elevators of the Building except in accord with the
reasonable regulations for their use established by Landlord.
(t) In the event Landlord allows one or more tenants in the Building to do
any act prohibited herein, Landlord shall not be precluded from denying any
other tenant the right to do any such act.
(u) No auction, fire, bankruptcy or selling-out sales shall be conducted on
or about the Premises without the prior written consent of Landlord.
(v) Tenant shall give Landlord prompt notice of all accidents to or defects
in air-conditioning equipment, plumbing, electrical facilities or any part of
appurtenances of the Premises.
(w) If the Premises demised to any Tenant becomes infested with vermin,
such Tenant, at its sole cost and expense, shall cause its Premises to be
exterminated from time to time to the satisfaction of the Landlord.
(x) No person or contractor not employed by Landlord shall be used to
perform window washing, cleaning, decorating, repair or other work in the
Premises without the express written consent of Landlord. No hooks, nails, or
screws shall be driven into or inserted in any part of the Building except by
Building maintenance personnel.
(y) Landlord or its agents or employees shall have the right to enter the
Premises to examine the same or to make such repairs, alterations or additions
as Landlord shall deem necessary for the safety, preservation, or improvement of
the Premises and Building.
(z) Tenant shall comply with parking rules and regulations as may be posted
and distributed from time to time.
(aa) Tenant shall not permit picketing or other union activity involving
its employees in the Building except in those locations and subject to time and
other limitations as to which Landlord may give prior written consent.
(bb) In the event of a conflict between the terms of these rules and
regulations and the terms of the Lease, the terms of the Lease shall control.
4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the accompanying financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,287
<SECURITIES> 0
<RECEIVABLES> 639
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,059
<PP&E> 125,845
<DEPRECIATION> 11,126
<TOTAL-ASSETS> 149,313
<CURRENT-LIABILITIES> 9,190
<BONDS> 95,955
0
0
<COMMON> 72
<OTHER-SE> 26,972
<TOTAL-LIABILITY-AND-EQUITY> 149,313
<SALES> 17,732
<TOTAL-REVENUES> 17,814
<CGS> 0
<TOTAL-COSTS> 16,317
<OTHER-EXPENSES> 58
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,873
<INCOME-PRETAX> (34)
<INCOME-TAX> (143)
<INCOME-CONTINUING> 109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
<FN>
NOTE: Brookdale Living Communities, Inc. commenced operations on May 7, 1997. As
such, the actual period covered for the period January 1, 1997 through
September 30, 1997, is May 7, 1997 through September 30, 1997.
</FN>
</TABLE>
