SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported) September 24, 1997
All-State Properties L.P.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-12895 59-2399204
(Commission File Number) (IRS Employer Identification No.)
5500 NW 69th Avenue Lauderhill, Florida 33313
(Address of principal executive offices)
P.O. Box 5524, Fort Lauderdale, Florida 33310-5524
(Mailing Address)
Item 2. Disposition and Acquisition of Assets
A partnership (Unicom Partnership Ltd.) in which the Company
has a 46% interest in profit distributions to partners has entered
into a lease and an option to purchase agreement to sell its only
asset. The proceeds from this partnership represent the only
source of income to the Company.
On June 25, 1997, Unicom Partnership Ltd. ("Unicom") signed a
Letter of Intent with CareMatrix Corporation (AMEX) which Letter
became effective July 18, 1997. Prior to that date Unicom, through
its partners representing a majority in interest in the partnership
(Stanley Rosenthal, General Partner of the Company, abstaining)
voted to approve the transaction. The documents memorializing the
transaction were executed on August 13, 1997 with an effective date
of July 1, 1997, but dependent upon the completion of due diligence
and the payment of $4,500,000 to Unicom. On September 24, 1997,
CareMatrix made the required payment and the initial phase of the
transaction was completed. Unicom used the proceeds for
transaction costs ($325,000), partnership obligations ($1,400,000),
and distributed $2,650,000 to certain partners to partially repay
funds they invested in Unicom.
The subject asset, Forest Trace, is a 324-unit retirement
facility built on a 78-acre tract which includes a 30-acre lake.
The facility is located in Broward County, Florida and has been in
operation since November, 1989.
The $4,500,000 payment made by CareMatrix to Unicom represents
an option payment, in consideration for which CareMatrix was
granted the option to purchase the facility in three years on June
30, 2000. The purchase price will be 8.75 times the net operating
income before depreciation for the year ended June 30, 2000, plus
the then outstanding mortgage balance and other adjustments, less
the $4,500,000 option payment.
In the interim, CareMatrix is leasing the facility, retaining
the sums of $822,000-the first year; $1,175,000-the second year;
and $1,275,000-the third year out of cash flow each year, after
payment of amounts due in connection with the facility's mortgage
insured by the U.S. Department of Housing and Urban Development
("HUD"). The balance of cash flow will be paid to Unicom as rent
until the net operating income equals $2,300,000 per year. Any
excess will then be divided equally between CareMatrix and Unicom.
The present management team, including Stanley Rosenthal, the
General Partner of the Registrant, which has been managing the
property since August, 1995 with the approval of Unicom and HUD,
will continue to manage the facility for a period of five years at
the HUD-approved rate of 4% of collections. The management team
has been approved by HUD under the name, SRR Management Corp. The
Company's share of Mr. Rosenthal's fee is $75,000 per year.
CareMatrix chose to prepay part of the management fee for the
five-year term to the extent of $2,000,000, discounted to present
value of $1,725,000, into a trust to be paid monthly to SRR
Management Corp., as set forth in a consulting agreement.
CareMatrix in turn is retaining $400,000 per year out of facility
cash flow, which sum is included in the aforementioned annual
figure to be retained by CareMatrix.
In a related transaction, the partners of Unicom formed a new
limited partnership called Newall Assisted Living Ltd. ("Newall"),
which entered into a joint venture as a 50% partner with a company
related to CareMatrix. The new entity, Newall-Chancellor 69th
Avenue Associates, was formed to build a 120-unit assisted living
facility on 4.2 acres of land it will purchase from Unicom at a
price to be agreed upon. Chancellor has agreed to provide all the
necessary financing to erect and open the assisted living facility.
SRR Management Corp. will manage the facility for five years at a
fee equal to the greater of $7,000 per month or 3-1/2% of
collections, to commence six months prior to opening. The facility
will be leased after completion to CareMatrix of Lauderhill II,
Inc. for an initial term of 15 years. As consideration for the
lease, Newall will receive 50% of the net cash flow from the
assisted living facility. The joint venture has agreed to pay
$40,000 plus 5% of the development cost to CareMatrix, and $5,000
per month to Stanley Rosenthal for his services during the approval
period and construction. The above sums are to be paid from
construction loan draws.
Chancellor has agreed to purchase the facility from the joint
venture at the later of 27 months from commencement of the lease or
June 30, 2002, at 8.75 times net operating income before
depreciation for the twelve months prior to the purchase, plus the
then outstanding mortgage balance.
The majority of the partners of Newall, the Company
abstaining, voted to award 5% of the venture to Stanley Rosenthal
for his services and 2% to others.
Item 7. Exhibits
(c) Exhibits:
1. Lease dated as of July 1, 1997 between Unicom Partnership
Ltd. as Landlord and Chancellor of Lauderhill I, Inc. as Tenant;
2. Option to Purchase Agreement effective as of July 1, 1997
between Unicom Partnership Ltd. as Optionor and Chancellor of
Lauderhill I, Inc. as Optionee;
3. Management Agreement dated as of July 1, 1997 between SRR
Management Corp. as Manager and Carematrix of Lauderhill I, Inc. as
Operator;
4. Consulting Agreement entered into as of September 24,
1997 between Chancellor of Lauderhill I, Inc. as Company and SRR
Consulting Corp. as Consultant;
5. Joint Venture Agreement dated as of September 24, 1997
between Newall Assisted Living Ltd. and Chancellor of Lauderhill
II, Inc.;
6. Lease dated September 24, 1997 between Newall-Chancellor
69th Avenue Associates as Landlord and Chancellor of Lauderhill II,
Inc. as Tenant;
7. Option to Purchase Agreement dated as of September 24,
1997 between Newall-Chancellor 69th Avenue Associates as Optionor
and Chancellor of Lauderhill II, Inc. as Optionee;
8. Management Agreement dated September 24, 1997 between SRR
Management Corp. as Manager and Newall-Chancellor 69th Avenue
Associates as Owner.
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 hereunto duly authorized.
ALL-STATE PROPERTIES L.P.
By:/s/STANLEY R. ROSENTHAL
STANLEY R. ROSENTHAL
General Partner
Dated: October 10, 1997
MANAGEMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of
July, 1997, by and between SRR Management Corp., a Florida
corporation, with a principal place of business at 5500 Northwest
69th Avenue, Lauderhill, Florida 33319, hereinafter referred to as
"Manager", and CAREMATRIX OF LAUDERHILL I, INC., a Delaware
corporation with a principal place of business at 197 First Avenue,
Needham, Massachusetts 02194, hereinafter referred to as
"Operator".
WHEREAS, Operator is the sublessee of a 324 unit assisted
living/independent living facility (of which 40 units are assisted
living units, 2 of which are used as an assisted living lounge and
dining room) located in Lauderhill, Florida at 5500 Northwest 69th
Street known as "Forest Trace at Inverrary" (FHA Project No. 066-
940109) (the "Facility") pursuant to a Sublease of even date
herewith between Chancellor of Lauderhill I, Inc. ("Chancellor")
and Operator (the "Sublease");
WHEREAS, Operator has determined that the hiring of a
management company to provide day-to-day management of the Facility
in a manner substantially similar to that occurring prior to the
Sublease is necessary for the efficient operation of the Facility;
WHEREAS, Manager has represented that it is experienced in the
management of this Facility, is knowledgeable as to the state and
federal requirements governing the operation of senior housing
facilities and assisted living facilities and that the owners and
employees of Manager are qualified management professionals;
WHEREAS, based upon Manager's representations set forth
herein, Operator has determined that the hiring of Manager is cost-
effective and consistent with Operator's desire to provide quality
care to the residents at the Facility at the lowest cost;
WHEREAS, Operator has determined that the services provided by
Manager will augment the services provided by it so as to increase
productivity;
WHEREAS, Operator has determined that the hiring of Manager on
the terms and conditions hereinafter set forth will be in the best
interest of the Facility; and
WHEREAS, Manager is willing to manage the day-to-day
operations of the Facility on the terms and conditions hereinafter
set forth.
Now, therefore, the parties agree as follows:
1. Appointment and Acceptance. Operator hereby appoints
Manager as exclusive agent for the management of the Facility, and
Manager accepts the appointment, subject to the terms and
conditions set forth in this Agreement.
2. Definitions. As used in this Agreement:
a. "HUD" means the United States Department of Housing
and Urban Development.
b. "Secretary" means the Secretary of the United States
Department of Housing and Urban Development.
c. "Mortgage" means that certain indenture of mortgage
by and between Unicom Partnership, Ltd. ("Unicom"), as mortgagor,
and the mortgagee with respect to the Facility, which mortgage is
in favor of Governmental National Mortgage Association ("GNMA") as
agent for the United States Department of Housing and Urban
Development, or any duly designated successor thereto, and the
United States Department of Housing and Urban Development ("HUD").
d. "Mortgagee" means GNMA or any duly designated
successor thereto.
e. "Principal Parties" means Operator and Manager.
f. "Pre-Closing Period" means the period between the
Closing under the Agreement to Lease of even date between Operator
and Unicom ("Agreement to Lease") and the Closing under the Option
to Purchase Agreement of even date (the "Option Agreement") between
Chancellor and Unicom.
g. "Post-Closing Period" means the period between the
Closing under the Option Agreement and the expiration of the Term
hereof.
3. Requirements. The Facility is subject to the Mortgage
which is coinsured by HUD/GNMA under Section 221(d)(4) Coinsurance
of the National Housing Act, and Unicom has entered into a
Regulatory Agreement with the Secretary and GNMA, whereby Unicom is
obligated to provide for management of the Facility in a manner
satisfactory to the Secretary and GNMA.
4. Management Input. Manager will advise and assist
Operator with respect to management input as it relates to the
requirements of HUD or the Mortgage or any mortgagee. Manager's
specific tasks will be as follows:
a. Preparation and submission to Operator for
submission to mortgagee of a recommended operating budget for each
operating year of the Facility.
b. Participating in occupancy conferences with
mortgagee officials.
c. Preparation and submission to Operator (for
Operator's signature) and submission to Mortgagee by the twentieth
(20th) day of each month, of monthly Statement of Income and
Expenses (Forms HUD 93479, HUD 93480, HUD 93481, Rent Roll, Balance
Sheet and Operating Statement).
d. Participation in the on-site inspection of the
Facility required by any mortgagee.
e. During the Post-Closing Period, preparation and
submission of such financial and other operating data as may be
required by any mortgagee other than the Mortgagee.
5. Basic Information. Manager is thoroughly familiar with
the character, location, construction, layout, plan and operation
of the Facility, including, without limitation, of the electrical,
heating, plumbing air-conditioning and ventilating systems, the
elevators and all other mechanical equipment.
Notwithstanding anything to the contrary contained in
this Agreement, during the Pre-Closing Period, Manager shall have
the sole and exclusive right to manage the Facility as if Manager
was the sole and exclusive owner thereof, which management shall be
performed in a manner substantially similar to the management
services performed prior to the date hereof pursuant to that
certain Housing Management Agreement dated August 1, 1995 ("Prior
Agreement"). During the Post-Closing Period, Operator shall have
the right to direct the policies and operations of the Facility as
herein provided.
6. Marketing. Manager shall have responsibility for the
marketing of the apartments at the Facility through the end of the
Term. During this period, Manager shall have total and exclusive
responsibility for all marketing activities, which shall include
full responsibility for monitoring and assuring the Facility's
compliance with federal and state fair housing requirements, HUD
affirmative marketing requirements and any other legal or
regulatory requirement that relates to the marketing of the units
or the selection of the tenants. During the Post-Closing Period,
Manager shall also assist Operator in the marketing of the Facility
by reviewing all marketing brochures, mailings, advertisements and
other such material as Operator may from time to time utilize in
its marketing effort. In addition, during the Post-Closing Period,
Manager shall assist Operator in the development and execution of
marketing programs, including, but not limited to, community
outreach and awareness and on-site events such as marketing
brunches and teas. All marketing activities shall be expenses of
the Facility to be incurred by Operator.
7. Rentals. Manager will maintain rental records for the
Facility. Incidental thereto, the following provisions will apply:
a. During the Post-Closing Period, Manager will provide
Operator with an accurate record of any lease concessions that have
been provided to a new tenant at least thirty (30) days prior to
the date that tenant is to move into the Facility.
b. Manager will be responsible for collection of
security deposits in accordance with the terms of each tenant's
lease and will deposit them and disburse them, if required, in
accordance with the lease terms. Security deposits will be
deposited by Manager, as agent for the Operator in an interest-
bearing account, separate from all other accounts and funds, with
a bank or other financial institution whose deposits are insured by
an agency of the United States government, and a pro rata share of
the interest earned will be credited to each tenant's security
deposit if required by state law. This account (which currently
exists) will be carried in its current name for the benefit of
Operator and is currently designated of record, and will remain as
"the Unicom Partnership, Ltd. d/b/a Forest Trace Inverrary Security
Deposit Account".
8. Collection of Rents and Other Receipts. Manager will
supervise the collection when due of all rents, charges and other
amounts receivable on Operator's account in connection with the
management and operation of the Facility. Such receipts (except
for tenants' security deposits, which will be handled as specified
in paragraph 7.b. above) will be deposited in an account separate
from all other accounts and funds with a bank whose deposits are
insured by an agency of the United States Government. This account
(which currently exists) will be carried in its current name for
the benefit of Operator and is currently designated of record as
"the Unicom Partnership, Ltd. d/b/a Forest Trace Operating Account"
("Operating Account").
9. Enforcement of Leases. Manager will use best efforts to
secure full compliance by each tenant with the terms of the
tenant's lease. Voluntary compliance will be emphasized, and
Manager, utilizing the services of a Social Services Director when
available, will counsel tenants and make referrals to community
agencies in cases of financial hardship or under other
circumstances deemed appropriate by Manager, to the end that
involuntary termination of tenancies may be avoided to the maximum
extent consistent with sound management of the Facility.
Nevertheless, Manager may lawfully terminate any tenancy when, in
Manager's judgment, sufficient cause (including, but not limited
to, nonpayment of rent) for such termination occurs under the terms
of the tenant's lease. For this purpose, Manager is authorized to
consult with legal counsel to be designated by Manager to bring
actions for eviction and to execute notices to vacate and judicial
pleadings incident to such actions; provided, however, that, during
the Post-Closing Period Manager will keep Operator informed of such
actions and will follow such instructions as Operator may prescribe
for the conduct of any such action. Attorney's fees and other
necessary costs incurred in connection with such actions will be
paid out of the Operating Account as Facility expenses.
10. Maintenance and Repair. Manager will cause the Facility
to be maintained and repaired in accordance with state and local
codes, and in a condition at all times acceptable to the Secretary
and Mortgagee (or any mortgagee other than HUD during the Post-
Closing Period), including, but not limited to, cleaning, painting,
decorating, plumbing, electrical, HVAC, appliances, carpentry,
grounds care, and such other maintenance and repair work as may be
necessary, subject to any limitations imposed by Operator during
the Post-Closing Period in addition to those contained herein.
Incident thereto, the following provisions will apply:
a. Attention will be given to preventive maintenance,
and to the greatest extent feasible, the services of regular
maintenance employees will be used.
b. Manager will contract in the Facility's name (as an
expense of the Facility) with qualified independent contractors for
the maintenance and repair of air conditioning systems and
elevators, and for extraordinary repairs beyond the capability of
regular maintenance employees.
c. Manager will systematically and promptly receive and
investigate all service requests from tenants, take such action
thereon as may be justified, and will keep records of same.
Emergency requests will be received and services rendered on a
twenty-four (24) hour basis. Complaints of a serious nature will
be reported to Operator after investigation.
d. Manager is authorized to purchase all materials,
equipment, tools, appliances, supplies and services necessary to
proper maintenance and repair as an expense of the Facility.
e. Notwithstanding any of the foregoing provisions,
during the Post-Closing Period the prior approval of Operator will
be required for any expenditure which exceeds Five Thousand
($5,000.00) Dollars in any one instance for labor, materials or
otherwise in connection with the maintenance and repair of the
Facility, except for recurring expenses within the limits of the
operating budget or emergency repairs involving manifest danger to
persons or property, or required to avoid suspension of any
necessary service to the Facility. In the latter event, Manager
will inform Operator of the facts as promptly as possible.
f. Manager will physically inspect each apartment unit
prior to commencement of the occupancy by any tenant and at least
annually thereafter.
g. Manager shall be responsible for maintaining an
adequate inventory for the Facility.
11. Utilities and Services. Manager will make arrangements
for water, electricity, gas, fuel oil, sewage and trash disposal,
vermin extermination, decorating, laundry facilities and telephone
service. During the Post-Closing Period, Manager shall insure such
arrangements are made in accordance with the operating budget.
Manager will make such contracts in Manager's name as may be
necessary to secure such utilities and services. Such contracts
shall be subject to Operator's approval during the Post-Closing
Period, provided during the Pre-Closing Period, Manager agrees not
to enter into any such contracts which exceed 1 year or are not
terminable without penalty on 30 days' notice.
12. Employees. During the Post-Closing Period, Manager shall
be required to obtain Operator's consent to the hiring of
additional employees if the hiring will cause an increase of at
least 5% over the operating budget during such year. All such
personnel will be employees of the then current owner of the
Facility and all compensation (including fringe benefits) payable
to said personnel shall be expenses of the Facility. Such
personnel shall be subject to the following conditions:
a. The General Manager will have duties of the type
usually associated with his/her position, and the Resident Services
Director will be responsible for the conduct of the resident
services program for the Facility. Nevertheless, the General
Manager and Resident Services Director will coordinate the
activities in the interest of good overall management. During the
Post-Closing Period, the General Manager and Resident Services
Director will be subject to the approval of Operator.
b. All local, state and federal taxes and assessments
(including, but not limited to, social security taxes, unemployment
insurance and workers' compensation insurance) incidental to the
employment of such personnel will be expenses of the Facility, and
will not be paid out of Manager's fee.
c. Manager will not discriminate against any employee,
applicant for employment or contractor because of race, color,
religion, sex or national origin.
Notwithstanding anything to the contrary provided in this
Paragraph 12, any salaries payable by the Manager to Stanley
Rosenthal, Bruce Litwer, Diane Pusillo or Arthur Lipson, as
employees of Manager, shall be treated as expenses of the Manager
and not as expenses of the Facility. Such salaries shall be the
only expenses of the Facility to be borne by Manager.
13. Disbursements from Operating Account.
a. From the funds collected and deposited in the
Operating Account pursuant to Paragraph 8 above, Manager will make
the following disbursements promptly when due and payable:
(1) Compensation payable to the employees specified in
Paragraph 12 above, and for the taxes and assessments payable to
local, state and federal governments specified in Paragraph 12.b.
in connection with the employment of such personnel.
(2) The single aggregate payment required to be made
monthly by Unicom to the mortgagee, including the amounts due under
the mortgage for principal amortization, interest, mortgage
insurance premium, ground rents, taxes and assessments, fire and
other hazard insurance premiums, and the amount specified in the
Regulatory Agreement for allocation to the reserve for
replacements.
(3) All sums otherwise due and payable by Operator as
expenses of the Facility authorized to be incurred by Manager under
the terms of this Agreement, including the Management Fee payable
to Manager pursuant to Paragraph 23 hereof for its services
hereunder.
(4) Invest Facility funds that HUD policies require to
be invested and make reasonable effort to invest other Facility
funds, unless Operator (solely during the Post-Closing Period)
specifically directs Manager not to invest those other funds.
(5) During the Pre-Closing Period, such other
disbursements as are required under the Lease, Sublease or other
Exhibits to the Agreement to Lease between Operator and Unicom.
b. Except for the disbursements provided for in Paragraph
13.a. above, funds will be disbursed or transferred from the
Operating Account during the Post Closing Period only as Operator
may from time to time direct in writing and in accordance with HUD
Regulations.
c. In the event the balance in the Operating Account is at
any time insufficient to pay disbursements due and payable under
Paragraph 13 above, Operator will remit sufficient funds to cover
the deficiency, provided, however, during the Pre-Closing Period
such obligation of Operator shall be satisfied solely from
available revenues of the Facility.
14. Budgets. Annual calendar year operating budgets for the
Facility will be approved by Operator (such approval being required
solely during the Post-Closing Period) and a copy submitted to any
mortgagee. Manager will use best efforts to cause such annual
operating budgets to be submitted to HUD (or any other mortgagee
during the Post-Closing Period) not less than thirty (30) days
prior to the beginning of each calendar year. During the Post-
Closing Period, annual disbursements for each type of operating
expense itemized in the budget will not exceed the amount
authorized by the approved budget. During the Post-Closing Period,
Operator will promptly inform Manager of the changes, if any,
incorporated in the approved budget, and Manager will keep Operator
informed of any anticipated deviation from the receipts or
disbursements stated in the approved budget. Manager will also
during the Post-Closing Period:
a. Assure that the Facility expenses are reasonable in
amount and necessary to the operation of the Facility.
b. Exert reasonable effort to maximize Facility income
and to take advantage of discounts and credit the Facility with all
discounts, rebates or commissions (including any sales or property
tax relief granted by the state or local government) received with
respect to purchases, service contracts and other transactions made
on behalf of the Facility.
c. Obtain contracts, materials, supplies and services,
including the preparation of the annual audit, on terms most
advantageous to the Facility and at costs not in excess of amounts
ordinarily paid for such contracts, materials, supplies and
services in the area such services are rendered or supplies and
materials furnished.
d. Solicit verbal or written cost estimates as
necessary to comply with the provisions of this paragraph and
document reasons for accepting other than the lowest bid. Manager
will maintain copies of such documentation and make such
documentation available for inspection during normal business
hours.
15. Records and Reports. In addition to the other provisions
of this Agreement, Manager will have the following responsibilities
with respect to records and reports:
a. Establish and maintain the Facility's accounts,
books and records in accordance with HUD's administrative
requirements (or those of any other mortgagee during the Post-
Closing Period) and generally accepted accounting principles and in
a condition that will facilitate audit.
b. All records related to the operations of the
Facility, regardless of where they are housed, shall be considered
the property of Operator.
c. With respect to each fiscal year ending during the
term of this Agreement, Manager will prepare an annual financial
report in accordance with generally accepted accounting principles
or the directives of the Secretary/Mortgagee. Such report will be
audited in accordance with generally accepted auditing standards by
a certified public accountant or other independent auditor
acceptable to the mortgagee. The financial report including
Manager's certification and the auditor's report will be submitted
to Operator within one hundred twenty (120) days after the end of
the fiscal year for Operator's further certification and submission
to the Secretary and the mortgagee. Compensation for the auditor's
services will be paid out of the Operating Account as an expense of
the Facility.
d. During the Post-Closing Period, Manager will prepare
a monthly report comparing actual and budgeted figures of receipts
and disbursements, and will submit each such report to Operator
within twenty (20) days after the end of the month covered.
e. During the Post-Closing Period, by the twentieth
(20) day of each month, Manager will furnish Operator with an
itemized list of all delinquent accounts, including rental
accounts, as of the fifteenth (15) day of the same month.
f. By the twentieth (20) day of each month, Manager
will furnish Operator with a statement of receipts and
disbursements during the previous month, with a schedule of
accounts receivable and payable, and reconciled bank statements for
the operating account and security deposit account as of the end of
the previous month.
g. If the rental collections fall below operating
expenses for a sustained period of sixty (60) days, Manager will
immediately send written notification of same to Mortgagee.
h. Manager will furnish such information (including
occupancy reports) as may be requested by Operator (solely during
the Post-Closing Period) or the Secretary/Mortgagee from time to
time with respect to the financial, physical and operational
condition of the Facility. Mortgagee, HUD, the General Accounting
Office (GAO) and those agencies' representatives may inspect any
records which relate to the Facility's purchase of goods or
services. This right to inspect extends to records of Operator,
Manager or companies having an identity-of-interest with Operator
or Manager.
16. Business with Identity of Interest Relationships.
Manager agrees that it will purchase goods or services from
individuals or companies having an identity of interest with
Operator or Manager only if the charges levied by those individuals
or companies are not in excess of the costs that would be incurred
in making arms-length purchases on the open market.
a. Manager agrees to provide minorities, women and
socially and economically disadvantaged firms equal opportunity to
participate in the Facility's procurement and contracting
activities.
b. Manager further agrees that the following clause
will be included in any contract entered into with an identity of
interest individual or business for the provision of goods or
services to the Facility: "Upon request of mortgagee or (name of
Operator or Manager), (name of contractor or supplier) will make
available to mortgagee, at a reasonable time and place, its records
and records of identity of interest companies which relate to goods
and services charged to the Facility. Records and information will
be sufficient to permit mortgagee to determine the services
performed, the dates the services were performed, the location at
which the services were performed, the time consumed in providing
the services, the charges made for materials and the per unit and
total charges levied for said services." Manager will request such
records within seven (7) days of receipt of mortgagee's request to
do so.
c. In the event charges levied by an identity of
interest firm exceed charges which were or would have been levied
by non-identity of interest firms for similar services or
materials, Manager, at the request of Mortgagee (or any other
mortgagee during the Post-Closing Period) or HUD, shall refund any
excessive amounts which were paid from the Facility funds. Within
twenty (20) days of receipt of any mortgagee or HUD's letter,
Manager shall refund any amounts found to be excessive.
17. Resident Services Program. Manager will be responsible
to Operator for carrying out the resident services program. The
resident services director will be directly responsible to the
Facility's general manager for the conduct of this program.
18. Tenant-Management Relations. Manager will encourage and
assist residents of the Facility in forming and maintaining
representative organizations to promote their common interests, and
will maintain good faith communication with such organizations to
the end result that problems affecting the Facility and its
residents may be avoided or solved on the basis of mutual self-
interest.
19. On-Site Management Facilities. Manager will maintain its
management office as and where it is currently located within the
Facility.
20. Insurance. Manager will cause necessary and appropriate
insurance to be placed and kept in effect with respect to the
Facility at all times. The insurance coverage as being maintained
by Manager as of the date of execution of this Agreement shall be
deemed sufficient by Operator, provided, however, (i) all such
insurance shall at all times comply with the requirements of HUD,
and (ii) during the Post-Closing Period Manager agrees to maintain
on Operator's behalf such insurance as may be required by any
applicable mortgagee (if other than HUD). All insurance premiums
shall be paid out of the Operating Account, and premiums will be
treated as operating expenses. Fidelity bonds and hazard insurance
policies will name any mortgagee (and HUD if applicable) as
additional loss payees. Manager shall have the right, in its
reasonable discretion, to increase existing coverages or obtain
additional coverages with respect to the Facility.
21. Compliance with Governmental Orders. Manager will take
such actions as may be necessary to comply promptly with any and
all governmental orders or other requirements affecting the
Facility, whether imposed by federal, state, county or municipal
authority, subject, however, during the Post-Closing Period, to the
limitation stated in Paragraph 10.e. with respect to repairs.
Nevertheless, during the Post-Closing Period, Manager shall take no
such action so long as Operator is contesting or has affirmed its
intention to contest, any such order or requirement. Manager will
notify Operator in writing of all notices of such orders or other
requirements within seventy-two (72) hours from the time of their
receipt.
22. Non-Discrimination. In the performance of its
obligations under this Agreement, Manager will comply with
provisions of any federal, state or local law prohibiting
discrimination against persons on grounds of race, color, creed,
sex or national origin, including Title VI of the Civil Rights Act
of 1964, Title VIII of the Civil Rights Acts of 1968, Execute Order
11063 and all regulations implementing those laws.
23. Management Fee.
a. Base Management Fee. As compensation for the
services to be rendered by Manager during the Term (as hereinafter
defined), of this Agreement, Manager shall pay itself, at its
principal office given below (or at such other place as Manager may
from time to time designate in writing), and at the time
hereinafter specified, a monthly management fee (the "Management
Fee") equal to four (4%) percent of Gross Revenues (as hereinafter
defined) less Thirty-Three Thousand Three Hundred Thirty Three
Dollars ($33,333) for the period commencing on the date hereof
through the remainder of the Term. The Management Fee will be paid
in arrears and shall be due and payable on or before the fifteenth
(15th) day of each month following the month in which services were
rendered. If four (4%) percent of Gross Revenues is less than
Thirty-Three Thousand Three Hundred Thirty Three Dollars ($33,333)
in any month, the Management Fee shall be zero ($0) for such month.
"Gross Revenues" as used herein shall mean and include
all revenues actually received by Operator and/or Manager from or
by reason of the operation of the Facility, including, without
limitation, all revenue of the Facility for or on account of any
and all goods provided and services rendered or activities during
the period from the date of this Agreement and thereafter, the
gross dollar amount of all such billings by the Facility to or on
behalf of residents directly or indirectly connected with the
Facility or the provision of all such goods and services.
24. Term of Agreement. This Agreement shall be effective
July 1, 1997 and shall remain in effect from the Closing under the
Agreement to Lease through the 5-year anniversary thereof.
Notwithstanding the foregoing, between the date of execution hereof
and the Closing Date under the Agreement to Lease, the Management
of the Facility shall be by Unicom pursuant to the Prior Agreement.
The Term of this Agreement shall be extended for any period that
the Term is extended under the Sublease due to a casualty.
Notwithstanding the foregoing, the Management Fee shall not
commence to be payable until the date of Closing under the
Agreement to Lease.
a. During the Pre-Closing Period, this Agreement may be
terminated only by the mutual consent of the Principal Parties as
of the end of any calendar month upon ninety (90) days prior
written notice to the other party, provided that at least thirty
(30) days advance written notice thereof is given to Mortgagee and
HUD.
b. It is expressly understood and agreed by and between
the Principal Parties that Mortgagee and HUD shall have the right
to terminate this Agreement with cause on thirty (30) days advance
written notice to each of the Principal Parties, except that in the
event of a default by Unicom under the Mortgage, Note or Regulatory
Agreement, Mortgagee or HUD may terminate this Agreement
immediately upon the issuance of a notice of cancellation to each
of the Principal Parties. In neither such event shall a
termination fee be due or payable. If Mortgagee or HUD exercises
this right, Operator agrees to promptly make arrangements for
providing management that is satisfactory to Manager, Mortgagee and
HUD.
c. Mortgagee and HUD's rights and requirements will
prevail in the event this Agreement conflicts with Mortgagee or
HUD's requirements or restricts Mortgagee or HUD's rights.
d. During the Post-Closing Period, Manager will turn
over to Operator all of the Facility's cash, trust accounts,
investments and financial records within thirty (30) days of the
date this Agreement is terminated.
25. Termination for Cause. During the Post-Closing Period,
either party may terminate this Agreement by delivering thirty (30)
days written notice (a "Termination Notice") to the other party in
the event that any of the following occurs:
a. any illegal act engaged in by any party in the
operation of the Facility;
b. if any party files or has a petition or complaint in
receivership or bankruptcy filed against it which has not been
dismissed within ninety (90) days of such filing; or
c. the breach by any party (the "Breaching Party") of
any other material provision in, or obligation imposed by, this
Agreement which violation shall have not been cured to the
reasonable satisfaction of the other party (the "Claiming Party")
within thirty (30) days following the date on which the Claiming
Party delivers notice to the Breaching Party describing with
specificity both the claimed breach and the actions required to be
taken in order to cure the claimed breach; provided that in the
event that the claimed breach is not reasonably susceptible of
being cured within thirty (30) days, the cure period shall be
extended for such additional time as may be reasonably required
provided such additional time shall not exceed thirty (30) days.
Notwithstanding anything to the contrary contained herein, in
the event the Master Lease (as defined in the Sublease) shall be
terminated by either party thereto, this Management Agreement shall
terminate and Unicom shall have the right to cause the management
of the Facility to be performed by the entity of its choice. If
the Lease is terminated but Operator exercises the purchase option
under the Option Agreement and closes thereunder, this Agreement
shall be in full force and effect effective as of the date of the
Closing under the Option Agreement and shall continue for the
remainder of the Post-Closing Period unless earlier terminated
pursuant to the terms hereof.
26. Interpretive Provisions.
a. At all times, this Agreement will be subject and
subordinate to all rights of the Secretary/GNMA/Mortgagee and any
other mortgagee, and will inure to the benefit of and constitutes
a binding obligation upon the Principal Parties and their
respective successors and assigns. To the extent this Agreement
confers rights upon the Secretary/GNMA/Mortgagee and any other
mortgagee, it will be deemed to inure to their benefit, but without
liability to either, in the same manner and with the same effect as
though the Secretary/GNMA/Mortgagee and any other mortgagee were
primary parties to the Agreement.
b. This Agreement constitutes the entire agreement
between Operator and Manager with respect to the management and
operation of the Facility and no change will be valid unless made
by supplemental written agreement, executed and approved by the
Principal Parties. Manager acknowledges that neither it nor any
affiliate has a current or conditional agreement for the operation
or management of the Facility.
c. This Agreement may be executed in several
counterparts, each of which shall constitute a complete original
Agreement, which may be introduced as evidence or used for any
other purpose without production of any of the other counterparts.
d. No provision hereof is intended to alter the
obligations of the parties in the Sublease (or Master Lease or
Agreement to Lease as referenced therein).
27. Intentionally Omitted.
28. Partners of Operator Not Liable. All obligations of
either party hereunder shall be recourse only to the assets of such
party, and no employee, officer, director or partner of either
party shall have any personal liability whatsoever with respect to
any such obligations.
29. Access to Books and Records. As a subcontractor that may
be subject to Section 1861(v) (1) (i) of the Social Security Act
(the "Act"), Manager shall, upon written request and in accordance
with the above-mentioned section of the Act and regulations
promulgated pursuant thereto, make available to the Comptroller
General, the Secretary of Health and Human Services, and their duly
authorized representatives, a copy of this Agreement and access to
Manager's books, documents, and records necessary to verify the
nature and extent of the costs of services provided to Operator.
Such access will be available until the expiration of four (4)
years after the services to which the costs are related have been
furnished.
30. Amendments. This Agreement shall not be changed
modified, terminated, or discharged, in whole or in part, except by
an instrument in writing signed by Operator and Manager, their
respective successors or assigns, or otherwise as provided herein.
Such modifications shall be in writing and signed by Operator and
Manager.
31. Governing Law. The provisions of this Agreement shall be
governed by, construed, and interpreted in accordance with the laws
of the State of Florida. Any change in any applicable law which
has the effect of rendering any part of this Agreement invalid,
illegal, or unenforceable shall not render the remainder of this
Agreement invalid, illegal, or unenforceable, and the parties
hereto agree that in the event that any part of this Agreement is
rendered invalid, illegal, or unenforceable, that they shall
negotiate in good faith to amend any such part of this Agreement so
as to comply with any such law, as amended, and further the
respective objectives of the parties hereto.
32. Assignment. Neither Operator nor Manager will assign its
interests in this Agreement, without the prior written consent of
the other; provided that Operator may assign its interests
hereunder to a subsidiary or an Affiliate, as defined in the Master
Lease, or permitted assignee in the Master Lease, provided that
such assignee assumes the obligations hereunder and that Operator
shall not be released from the obligations hereunder.
33. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties and to their permitted
respective successors and assigns.
34. Captions. The captions of this Agreement are for
convenience and reference only and in no way define, describe,
extend or limit the scope of intent of this Agreement or the intent
of any provision contained in this Agreement.
35. Notices. Any notice, demand, consent, or other written
instrument to be given or received under this Agreement ("Notice")
required or permitted to be given shall be in writing signed by the
party giving such Notice and/or consent and shall be hand
delivered, sent by a nationally recognized overnight carrier or
sent, postage prepaid, by Certified or Registered Mail, Return
Receipt Requested, to the other party at the addresses listed
below:
As to Manager: SRR Management Corp.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
With a copy to: Bruce Litwer
Unicom Partnership, Ltd.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
As to Operator: CareMatrix of Lauderhill I, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attention: Robert M. Kaufman, President
James M. Clary, III, Esq.
With a copy to: Christopher J. Donovan, Esq.
McDermott, Will & Emery
75 State Street
Suite 1700
Boston, MA 02109-1807
Any party shall have the right to change the place to which such
Notice shall be sent or delivered by similar notice sent in like
manner to all other parties hereto. All notices sent by certified
mail shall be deemed received three (3) days after the date
postmarked. All notices that are hand delivered shall be deemed
received upon delivery or when delivery is refused to the office or
address of the addressee.
36. Contracts. During the Pre-Closing Period, Manager will
use best efforts to keep in good standing all material contracts
with third parties which are to be transferred to Operator at the
closing under the Option Agreement; and will transfer such
contracts to Operator at such closing and will obtain all necessary
consents to such transfer(s).
[SIGNATURES APPEAR ON NEXT PAGE]
IN WITNESS WHEREOF, the Principal Parties have executed this
Agreement as of the date first written below.
Signed, sealed and delivered in
the presence of:
Print Name:
Print Name:
Print Name:
Print Name:
Manager:
SRR MANAGEMENT CORP.
By:
Stanley R. Rosenthal
Its:
Operator:
CAREMATRIX OF LAUDERHILL I,
INC.
By:
Its:
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is entered into as
of this ____ day of ____, 1997, by and between CHANCELLOR OF
LAUDERHILL I, INC., a Delaware corporation (the "Company") and SRR
CONSULTING CORP., a Florida Corporation ("Consultant").
WHEREAS, the Company is in the business of operating an
assisted living/independent living facility (the "Facility") known
as "Forest Trace at Inverrary" located at 5500 NW 69th Avenue,
Lauderhill, Broward County, Florida (the "Facility"); and
WHEREAS, the Company desires to obtain consulting and business
development services from Consultant in connection with the
operation of the Facility; and
WHEREAS, Consultant has extensive knowledge, expertise and
skill in connection with the operation of assisted
living/independent living facilities such as the Facility and the
Company desires to obtain the benefits of such knowledge, expertise
and skill by entering into a consulting agreement with Consultant;
and
WHEREAS, Consultant represents and warrants that Consultant is
under no restriction by reason of any prior contract or otherwise
that would prevent Consultant from performing the obligations to be
performed by Consultant hereunder; and
WHEREAS, Consultant is willing to provide certain consulting
services in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the covenants and promises
set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, mutually covenant and agree
as follows:
ARTICLE I
APPOINTMENT
1.1 Appointment. Subject to the terms hereof, the Company
hereby retains Consultant as a consultant, and Consultant agrees to
perform the consulting services set forth in this Agreement.
ARTICLE II
CONSULTING SERVICES
2.1 Consulting Services. Consultant shall provide, on behalf
of the Company, the specific consulting services set forth on
Exhibit "A" attached hereto and made a part hereof, and such other
consulting services as mutually agreed upon by Consultant and the
Company from time to time, at such times and locations as mutually
agreed upon by Consultant and the Company from time to time
(collectively, the "Consulting Services").
ARTICLE III
STATUS OF CONSULTANT
3.1 Status of Consultant. Consultant is an independent
contractor, and shall not be considered an employee or agent of the
Company. Consultant shall be responsible for the payment of all
taxes, impositions or other charges payable in connection with the
receipt of sums hereunder. Consultant is not an exclusive
independent contractor for the Company in any way, and the Company
reserves the right to appoint any other independent contractors, as
it so chooses in its sole and absolute discretion, to perform any
services or duties whatsoever. Nothing contained herein shall be
construed as establishing a partnership or joint venture
relationship between the parties hereto or any other relationship
or contractual liability other than as set forth in this Agreement.
Consultant shall have no right or authorization, expressed or
implied, to assume or create any obligation on behalf of the
Company.
ARTICLE IV
TERM
4.1 Term. The term of this Agreement shall commence on the
Closing Date (as defined in the Agreement to Lease dated as of July
1, 1997 between Company, Unicom Partnership Ltd. and CareMatrix of
Lauderhill I, Inc. (the "Commencement Date")), and shall expire
fifteen (15) years after the Commencement Date, unless sooner
terminated as provided in this Agreement (the "Term").
ARTICLE V
EXPENSES
5.1 Expenses. Consultant shall pay all of his own expenses
in connection with his provision of the Consulting Services.
Consultant shall only receive reimbursement from Company for any
expenses incurred by Consultant if Consultant obtained the written
approval and authorization of Company for such expenses prior to
incurring such expenses. All expenses properly approved under the
terms hereof and incurred by Consultant in the performance of the
Consulting Services requested by and rendered to Company hereunder
shall be reimbursed by Company as soon as is reasonably possible
after Consultant files an itemized account of such expenses with
Company.
ARTICLE VI
COMPENSATION
6.1 Compensation. In consideration of Consultant's
performance of the Consulting Services during the Term hereunder
and his agreement to the covenants set forth herein, the Company
shall pay to Consultant (the "Compensation") the sum of TWO MILLION
DOLLARS ($2,000,000.00). The Compensation shall be deemed earned by
the Consultant on the date of execution of this Agreement by the
parties and Consultant's commencement of services and shall be paid
by the Company to Consultant in installments in the amounts, on the
dates and pursuant to the terms of Exhibit "B" attached hereto and
made a part hereof.
ARTICLE VII
TERMINATION
7.1 Mutual Agreement. This Agreement may be terminated as
mutually agreed upon by Consultant and the Company.
7.2 Obligations After Termination. Termination of the Term
shall not release or discharge either party from any obligation,
debt or liability which shall have previously accrued and remain to
be performed under this Agreement on or after the date of
termination. The compensation payable hereunder are to initiate
services with the Consultant and shall be payable in all events as
provided herein, irrespective of a termination or default under
this Agreement after the services commence. The compensation
payable hereunder shall not be subject to set-off.
ARTICLE VIII
NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 Custody of Records. Consultant understands and agrees
that during the Term and thereafter all records and files of the
Company or any of the Company's Affiliates (as defined below),
shall belong to and remain the property of the Company or the
Company's Affiliates, as applicable. The term "the Company's
Affiliates" shall mean any and all individuals, corporations,
partnerships, joint ventures, associations, or other entities
directly or indirectly controlling or controlled by or under direct
or indirect common control with the Company, and the successors and
assigns of all such entities. Upon termination of this Agreement,
Consultant shall not be entitled to keep original records or
preserve records of the Company or any of the Company's Affiliates.
8.2 Disclosure of Information. Consultant recognizes and
acknowledges that all records, files, reports, protocols, policies,
manuals, databases, processes, procedures, computer systems,
materials and other documents pertaining to the Consulting Services
rendered by Consultant hereunder, or to the operations of the
Company, belong to and shall remain the property of the Company and
constitute proprietary information and trade secrets of the
Company. Consultant recognizes and acknowledges that the terms of
this Agreement, as well as the Company's proprietary information
and trade secrets as they may exist from time to time, are
valuable, special, and unique assets of the Company's business.
Consultant shall not, during or after the Term, disclose such
proprietary information of the Company or trade secrets of the
Company to any other firm, person, corporation, association or
other entity for any reason or purpose whatsoever, or use such
information for its own benefit, without the prior written consent
of the Company. The foregoing restriction will not apply to any
information which (i) is, or may become, public other than by
breach of this Agreement by the Consultant, or (ii) the Consultant
possessed prior to the date of the execution of this Agreement by
the parties.
ARTICLE IX
STANDARDS AND POLICIES
9.1 Standards and Policies. Consultant shall perform the
Consulting Services hereunder in accordance with any standards of
professional ethics and practices as may from time to time be
applicable to its services during the Term of this Agreement.
Consultant shall also observe and comply with those policies and
procedures adopted by the Company, respecting the provision of the
Consulting Services.
ARTICLE X
LICENSURE AND LAWS
10.1 Licensure and Laws. Consultant agrees that it shall
comply with and obey any now or hereinafter enacted federal, state
and local laws, regulations and ordinances relating to the Company
or the Consulting Services.
ARTICLE XI
RETURN OF INFORMATION
11.1 Return of Information. Subject to Section 12.1 hereof,
after the termination of this Agreement, for any reason whatsoever,
Consultant shall promptly return to the Company all notes,
writings, lists, material, files, reports, correspondence, tapes,
cards, maps, machines, technical data or any other tangible product
or documents that Consultant produced or received related to his
performance of the Consulting Services. The foregoing will not
apply to any information which the Consultant possessed prior to
the date of the execution of this Agreement by the parties.
ARTICLE XII
COPYRIGHTS
12.1 Copyrights. Except as the parties may mutually agree
in writing, all works, materials and writings produced by
Consultant pursuant to this Agreement shall be works made for
hire and shall be the sole property of the Company and the
Company will be entitled to all copyright rights thereto. If
requested, either party agrees to sign any and all documents
reasonably requested by the other party, to reflect such
requesting party's ownership of such works, materials and
writings as provided in this Agreement.
ARTICLE XIII
PUBLICITY AND USE OF TRADEMARKS
13.1 Publicity and Use of Trademarks. Consultant shall not
use the name, logo, trademarks, trade names or any facsimile
thereof of the Company or any of the Company's Affiliates in
publicity releases, promotional materials, advertising, marketing
or business generating efforts, without the prior written consent
of the Company.
ARTICLE XIV
MISCELLANEOUS
14.1 Recitals. The recitals set forth hereinabove are true
and correct and are incorporated herein in their entirety.
14.2 Severability. If any provision of this Agreement shall
be held invalid or unenforceable, the remainder of this Agreement
shall nevertheless remain in full force and effect. If any
provision of this Agreement shall be held invalid or
unenforceable under any particular circumstances, it shall
nevertheless remain in full force and effect in all other
circumstances.
14.3 Assignment. The Company may assign all of its rights
and duties under this Agreement without the consent of
Consultant, but said assignment will not reduce Company's
financial obligation hereunder. Without the prior written consent
of the Company, which consent may be granted or withheld by the
Company in its sole and absolute discretion, Consultant may not
assign his rights or duties under this Agreement and any such
assignment by Consultant shall be null and void.
14.4 Attorneys' Fees. If any litigation arises as a result
of the terms, conditions or provisions of this Agreement, the
prevailing party shall be entitled to recover from the non-
prevailing party all reasonable attorneys' fees at all trial and
appellate levels, as well as all costs and expenses.
14.5 Governing Law and Venue. This Agreement shall be
governed by, and construed and enforced in accordance with, the
laws of the State of Florida. Any action or claim arising from,
under or pursuant to this Agreement shall be brought in the
courts, state or federal, within the State of Florida, and the
parties expressly waive the right to bring any legal action or
claims in any other courts. The parties hereto hereby consent to
venue in any state or federal court within the State of Florida
having jurisdiction over the County of Broward for all purposes
in connection with any action or proceeding commenced between the
parties hereto in connection with or arising from this Agreement.
14.6 Waiver. Any waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed
as a waiver of any other provision hereof and shall not be
effective at all unless in writing. A waiver of any of the terms
and conditions hereof shall not be construed as a general waiver
by either party, and such waiving party shall be free to
reinstate any such term or condition, with or without notice to
the other party.
14.7 Survival. The provisions of this Agreement shall
survive the termination of this Agreement or the assignment of
this Agreement by the Company.
14.8 Confidentiality. Except as otherwise required by law,
Consultant hereby agrees to hold in the strictest confidence all
of the terms and conditions set forth herein; provided, however,
Consultant may disclose the terms hereof to its attorneys,
accountants and other financial and legal advisors as reasonably
necessary. Unauthorized disclosure of the terms of this Agreement
shall be a material breach of this Agreement, entitling the
Company to terminate this Agreement effective upon notice and
further entitling the Company to all legal and equitable remedies
for such breach.
14.9 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon:
(i) delivery thereof if by hand; (ii) three (3) days after
mailing if sent by mail (registered or certified mail, postage
prepaid, return receipt requested); (iii) on the next business
day after deposit if sent by a recognized overnight delivery
service; or (iv) upon confirmation of transmission if sent by
telecopy or facsimile transmission.
If to the Company: CHANCELLOR OF LAUDERHILL I, INC.
197 First Avenue
Needham, Massachusetts 02194
Attention: General Counsel
If to Consultant: SRR Consulting Corp.
5500 Northwest 69th Avenue
Lauderhill, FL 33319
Attention: Stanley R. Rosenthal
14.10 Entire Agreement; Modification. This Agreement
contains the entire understanding of the parties with respect to
the subject matter hereof and supersedes all prior agreements,
oral or written, and all communications between the parties
relating to such subject matter. This Agreement may not be
amended or modified except by mutual written agreement.
14.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same instrument.
14.12 Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, representatives, successors, and permitted
assigns.
14.13 Time Is Of The Essence. Time is of the essence with
respect to every provision of this Agreement.
14.14 Captions. The captions contained herein are used
solely for convenience and shall not be deemed to define or limit
the provisions of this Agreement.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed as of the date first written above.
COMPANY:
CHANCELLOR OF LAUDERHILL I,
INC., a Delaware corporation
Witness:
By:____________________________
Print Name:____________________
Title:_________________________
CONSULTANT:
SRR CONSULTING CORP.
By:____________________________
STANLEY R. ROSENTHAL
Its:________________________
EXHIBIT "A"
LIST OF CONSULTING SERVICES
[TO BE ATTACHED]
EXHIBIT "B"
COMPENSATION PAYMENT SCHEDULE
The Compensation shall be payable $150,000.00 on the date of this
Agreement and the remaining $1,850,000.00 shall be payable as
follows:
1. $200,000 on January 1, 1998;
2. $200,000 on July 1, 1998;
3. $200,000 on January 1, 1999;
4. $200,000 on July 1, 1999;
5. $200,000 on January 1, 2000;
6. $200,000 on July 1, 2000;
7. $200,000 on January 1, 2001;
8. $200,000 on July 1, 2001;
9. $200,000 on January 2, 2002; and
10. $50,000 on July 1, 2002.
LEASE
UNICOM PARTNERSHIP, LTD.
a Florida Limited Partnership
as LANDLORD
AND
CHANCELLOR OF LAUDERHILL I, INC.
a Delaware Corporation
as TENANT
LEASE
UNICOM PARTNERSHIP LTD. (LANDLORD) AND
CHANCELLOR OF LAUDERHILL I, INC., (TENANT)
Table of Contents
ARTICLE 1.
Lease of Premises. . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Premises. . . . . . . . . . . . . . . . . . . . . . 1
1.02 Title and Condition of Premises . . . . . . . . . . 2
ARTICLE 2.
Use of Premises. . . . . . . . . . . . . . . . . . . . . . . . 3
2.01 Use.. . . . . . . . . . . . . . . . . . . . . . . . 3
2.02 Maintain License, etc.. . . . . . . . . . . . . . . 3
2.03 Public Use. . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3.
Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.01 Term. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4.
Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.01 Base Rent . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 5.
Payment of Taxes, Assessments, Etc.. . . . . . . . . . . . . . 6
5.01 Payment of Impositions. . . . . . . . . . . . . . . 6
5.02 Excluded and Substituted Taxes, etc.. . . . . . . . 6
5.03 Evidence of Payment.. . . . . . . . . . . . . . . . 7
5.04 Contest of Impositions. . . . . . . . . . . . . . . 7
5.05 Joinder by Landlord.. . . . . . . . . . . . . . . . 7
5.06 Reserve Fund Payments. . . . . . . . . . . . . . . 7
ARTICLE 6.
Additional Covenants of Landlord . . . . . . . . . . . . . . . 8
6.01 No Liens . . . . . . . . . . . . . . . . . . . . . . 8
6.02 No Transfer of Premises. . . . . . . . . . . . . . . 8
6.03 No Dissolution . . . . . . . . . . . . . . . . . . . 8
6.04 Limitation on Business . . . . . . . . . . . . . . . 8
6.05 No Voluntary Bankruptcy. . . . . . . . . . . . . . . 8
6.06 Cooperation. . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 7.
Additional Covenants of Tenant . . . . . . . . . . . . . . . . 8
7.01 Maintenance of Existence . . . . . . . . . . . . . . 8
7.02 Inventory. . . . . . . . . . . . . . . . . . . . . . 8
7.03 Licenses and Approvals . . . . . . . . . . . . . . . 9
7.04 Returns, Reports, etc. . . . . . . . . . . . . . . . 9
7.05 Works Orders; Statements of Deficiencies . . . . . . 9
7.06 Revenues and Expenses. . . . . . . . . . . . . . . . 9
7.07 Single Purpose Entity. . . . . . . . . . . . . . . . 9
ARTICLE 8.
Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 9
8.01 Tenant's Compliance.. . . . . . . . . . . . . . . . 9
8.02 Right To Contest Applicable Laws. . . . . . . . . . 9
8.03 Landlord's Compliance. . . . . . . . . . . . . . . . 10
ARTICLE 9.
Insurance and Indemnification. . . . . . . . . . . . . . . . . 10
9.01 Building Insurance. . . . . . . . . . . . . . . . . 10
9.02 Liability Insurance.. . . . . . . . . . . . . . . . 10
9.03 Professional Liability Insurance. . . . . . . . . . 10
9.04 Insurance Criteria. . . . . . . . . . . . . . . . . 10
9.05 HUD Financing Insurance Requirements. . . . . . . . 11
9.06 Evidence of Insurance.. . . . . . . . . . . . . . . 11
9.07 Waiver Of Subrogation . . . . . . . . . . . . . . . 11
9.08 Indemnification. . . . . . . . . . . . . . . . . . . 11
ARTICLE 10.
Party's Right to Perform Other Party's Covenants . . . . . . . 12
10.01 Landlord's Right To Perform. . . . . . . . . . . . 12
10.02 Reimbursement By Tenant. . . . . . . . . . . . . . 12
10.03 Tenant's Rights to Perform . . . . . . . . . . . . 12
ARTICLE 11.
Repairs and Maintenance of the Premises. . . . . . . . . . . . 13
11.01 Tenant's Repairs . . . . . . . . . . . . . . . . . 13
11.02 Landlord's Repairs . . . . . . . . . . . . . . . . 13
11.03 Additional Furniture, Furnishings and Equipment. . 13
ARTICLE 12.
Surrender. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.01 Surrender. . . . . . . . . . . . . . . . . . . . . 13
12.02 Removal of Furniture, Fixtures and Equipment.. . . 14
12.03 Abandonment by Tenant. . . . . . . . . . . . . . . 14
12.04 Loss or Damage To Property.. . . . . . . . . . . . 14
12.05 [Intentionally Omitted] . . . . . . . . . . . . 14
12.06 Inventory. . . . . . . . . . . . . . . . . . 14
12.07 Assignment of Rights. . . . . . . . . . . . . . 14
ARTICLE 13.
Alterations, Improvements and Additions. . . . . . . . . . . . 15
13.01 Alterations. . . . . . . . . . . . . . . . . . . . 15
13.02 Compliance with Applicable Laws. . . . . . . . . 15
13.03 Cooperation of Landlord. . . . . . . . . . . . . . 15
13.04 Landlord's Title.. . . . . . . . . . . . . . . . . 15
ARTICLE 14.
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
14.01 Discharge of Liens.. . . . . . . . . . . . . . . . 16
14.02 Landlord's Discharge.. . . . . . . . . . . . . . . 16
14.03 Consent Not Implied. . . . . . . . . . . . . . . . 16
ARTICLE 15.
No Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
15.01 No Waste.. . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 16.
Entry on Premises by Landlord. . . . . . . . . . . . . . . . . 16
16.01 Landlord's Entry.. . . . . . . . . . . . . . . . . 16
16.02 Entry Conditions . . . . . . . . . . . . . . . . . 17
16.03 Interference with Tenant.. . . . . . . . . . . . . 17
ARTICLE 17.
Damage or Destruction. . . . . . . . . . . . . . . . . . . . . 17
17.01 Cancellation Due To Casualty . . . . . . . . . . . 17
17.02 Damage.. . . . . . . . . . . . . . . . . . . . . . 18
17.03 Insurance Proceeds.. . . . . . . . . . . . . . . . 18
17.04 Insufficient or Excess Net Proceeds. . . . . . . . 19
17.05 Term Extension.. . . . . . . . . . . . . . . . . . 19
ARTICLE 18.
Condemnation.. . . . . . . . . . . . . . . . . . . . . . . . . 19
18.02 Partial Taking.. . . . . . . . . . . . . . . . . . 20
18.03 Award. . . . . . . . . . . . . . . . . . . . . . 20
18.04 Restoration. . . . . . . . . . . . . . . . . . . . 20
18.05 Insufficient or Excess Net Award.. . . . . . . . . 20
18.06 Fee Mortgagee Retention of Net Award. . . . . . 20
ARTICLE 19.
Assignments and Subleases Of Tenant's Interest . . . . . . . . 21
19.01 Assignments, etc.. . . . . . . . . . . . . . . . . 21
19.02 Prohibition on Modification. . . . . . . . . . . . 21
ARTICLE 20.
Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 21.
Mortgages By Landlord. . . . . . . . . . . . . . . . . . . . . 22
21.01 Fee Mortgage.. . . . . . . . . . . . . . . . . . . 22
21.02 Subordination. . . . . . . . . . . . . . . . . . . 22
21.03 Nondisturbance.. . . . . . . . . . . . . . . . . . 23
21.04 Subordination of Fee Mortgage. . . . . . . . . . . 23
21.05 Payments By Tenant on Behalf of Landlord.. . . . . 23
ARTICLE 22.
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
22.01 Events of Default. . . . . . . . . . . . . . . . . 23
22.02 Landlord's Remedies. . . . . . . . . . . . . . . 24
22.03 Landlord's Default.. . . . . . . . . . . . . . . . 25
22.04 No Waiver. . . . . . . . . . . . . . . . . . . . . 25
22.05 Cumulative Remedies. . . . . . . . . . . . . . . . 25
ARTICLE 23.
Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . 26
23.01 Quiet Enjoyment. . . . . . . . . . . . . . . . . . 26
ARTICLE 24.
Estoppel Certificates. . . . . . . . . . . . . . . . . . . . . 26
24.01 Tenant's Certificate.. . . . . . . . . . . . . . . 26
24.02 Landlord's Certificate.. . . . . . . . . . . . . . 26
ARTICLE 25.
Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
25.01 Arbitration Procedure. . . . . . . . . . . . . . . 27
25.02 Payment. . . . . . . . . . . . . . . . . . . . . . 27
25.03 Disputes Subject To Arbitration. . . . . . . . . . 27
ARTICLE 26.
General Provisions . . . . . . . . . . . . . . . . . . . . . . 28
26.01 Severability.. . . . . . . . . . . . . . . . . . . 28
26.02 Notices. . . . . . . . . . . . . . . . . . . . . . 28
26.03 Waiver of Jury Trial.. . . . . . . . . . . . . . . 28
26.04 Consent of Landlord. . . . . . . . . . . . . . . . 28
26.05 Payments Under Protest.. . . . . . . . . . . . . . 29
26.06 No Oral Modification.. . . . . . . . . . . . . . . 29
26.07 Covenants To Bind and Benefit Respective Parties.. 29
26.08 Captions and Table of Contents.. . . . . . . . . . 29
26.09 Memorandum of Lease. . . . . . . . . . . . . . . . 29
26.10 Attorneys' Fees. . . . . . . . . . . . . . . . . . 29
26.11 Waiver . . . . . . . . . . . . . . . . . . . . . . 29
26.12 Governing Law; Venue.. . . . . . . . . . . . . . . 30
26.13 Business Days. . . . . . . . . . . . . . . . . . . 30
26.14 Reference Rate . . . . . . . . . . . . . . . . . . 30
26.15 Time. . . . . . . . . . . . . . . . . . . . . . . 30
26.16 Relationship of the Parties. . . . . . . . . . . . 30
Exhibits
A Legal Description
B Excluded Assets
C Permitted Encumbrances
D Current Mortgage
E Qualifying Subordination, Non-Disturbance and
Attornment Agreement
F Memorandum of Lease
LEASE
THIS AGREEMENT OF LEASE (the "Lease") effective as of
the 1st day of July, 1997, by and between UNICOM PARTNERSHIP,
LTD., a Florida limited partnership ("Landlord"), and
CHANCELLOR OF LAUDERHILL I, INC. a Delaware corporation
("Tenant").
W I T N E S E T H:
WHEREAS, Landlord is the owner of the land situated in the
County of Broward, State of Florida and legally described in
Exhibit A attached hereto ("Land");
WHEREAS, the Land is improved with an assisted
living/independent living facility commonly known as Forest
Trace at Inverrary, whose address is 5500 Northwest 69th
Avenue, Lauderhill, Florida 33319.
WHEREAS, Landlord desires to lease to Tenant, and Tenant
desires to lease from Landlord, the Land, together with all
improvements now or hereafter located thereon, including,
without limitation, the Facility (as hereinafter defined) and
all other tangible assets used in connection with the Facility;
and
WHEREAS, Landlord and Tenant have entered into a certain
Agreement to Lease dated the date hereof, (the "Agreement to
Lease") with respect to the Premises (as hereinafter defined);
and
WHEREAS, concurrent with the execution of this Lease,
Landlord and Tenant are entering into an Option to Purchase
Agreement (the "Purchase Option") with regard to the Premises;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the covenants
and agreements hereinafter contained, Landlord and Tenant
hereby agree as follows:
ARTICLE 1.
Lease of Premises
1.01 Premises. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord, upon the terms, covenants
and conditions hereinafter set forth, the following described
premises (collectively, "Premises"):
(a) the Land;
(b) the buildings and improvements erected thereon,
all replacements thereof and all new or
additional buildings and improvements erected on
the Land (collectively, "Facility"); and
(c) the right, title and interest, if any, of
Landlord in and to:
(i) Any strips and gores of land adjoining
the Land on any side thereof;
(ii) Any land lying in the bed of any
street or avenue abutting the Land, to
the center line thereof;
(iii) Any easements or other rights in
adjoining property enuring to the
benefit of Landlord by reason of
ownership of the Land;
ial All Tangible Assets (as defined in the
Agreement to Lease) relating to the
Facility and the Landlord's business
conducted at the Facility, including,
without limitation all vehicles,
fixtures, machinery, equipment,
furniture, furnishings and other
assets (except those assets listed in
Exhibit B attached hereto) used in or
in connection with the use, occupation
and operation of the Land and Facility
and all alterations, additions and
improvements hereafter made to the
Land and Facility, title to which may
vest in Landlord.
SUBJECT, HOWEVER, to the permitted liens and other
encumbrances set forth on Exhibit C attached hereto ("Permitted
Encumbrances").
1.02 Title and Condition of Premises. Landlord
represents and warrants as of the date hereof and as of the
Commencement Date (as defined in Section 3.01), upon which
representation and warranty Tenant has relied in the execution
of this Lease, that (i) Landlord is the owner of the Premises
in fee simple absolute, free and clear of all liens and
encumbrances except the Permitted Encumbrances, and the
Premises include all of the assets necessary (as of the
Commencement Date) to meet all applicable regulatory
requirements and to permit Tenant to continue operation of the
Facility as a going concern and assisted living/independent
living facility with 324 units (2 of which serve as an assisted
living lounge and an assisted living dining room) of which
40 beds are licensed for assisted living use; (ii) this Lease
is and shall be a first encumbrance on the Premises subject
only to the Permitted Encumbrances; and (iii) there are no
easements, restrictions, zoning ordinances or similar
governmental regulations which prevent the use of the Premises
for the Permitted Use.
ARTICLE fa
Use of Premises
2.01 Use.
(a) Tenant shall use the Premises as an assisted
living/independent living facility and such other ancillary
uses as are consistent with Landlord's current operation of the
Premises (the "Permitted Use"). Tenant shall not use the
Premises for any other purposes without Landlord's prior
written consent not to be unreasonably withheld. In the event
any proposed change in use is implemented, the proposed use
shall become a "Permitted Use" and all other appropriate
changes in phraseology in this Lease shall automatically be
deemed to have been made.
(b) Tenant shall not use or allow the Premises to be
used for any unlawful purpose or in violation of any
certificate of occupancy or any other applicable laws covering
or affecting the use of the Premises or any part thereof or for
any use which may, at law, constitute a nuisance, public or
private, or which may make void or voidable any insurance then
in force with respect thereto.
2.02 Maintain License, etc. Except in the event that
Tenant engages in a Permitted Use other than use of the
Premises as an assisted living/independent living in accordance
with Section 2.01 hereof, during the Term (as defined in
Section 3.01), Tenant shall maintain its license from the
Florida Agency for Health Care Administration (or any successor
agency) to operate 40 beds in the Facility as assisted living
beds.
2.03 Public Use. Tenant shall not suffer or permit the
Premises or any portion thereof to be used by the public, as
such, without restriction or in such manner as might reasonably
tend to impair Landlord's title to the Premises or any portion
thereof, or in such manner as might reasonably make possible a
claim or claims of adverse usage, adverse possession or
prescription by the public, as such, or of implied dedication,
of the Premises or any portion thereof. Tenant hereby
acknowledges that Landlord does not hereby consent, expressly
or by implication, to the unrestricted use or possession of the
whole or any portion of the Premises by the public, as such.
ARTICLE 3.
Term
3.01 Term.
(a) The term of this Lease (the "Term") shall be
three (3) years commencing as of July 1, 1997 ("Commencement
Date"), and expiring on the day preceding the third (3rd)
anniversary of the Commencement Date, unless sooner terminated
as provided for herein; provided, however, (i) in the event of
a casualty at the Facility, the Term shall be extended without
the need for further documentation for a period of time
necessary to restore the Facility to the available occupancy
existing prior to such casualty plus an additional three (3)
months and (ii) in the event Tenant exercises its option to
purchase the Premises as set forth in the Purchase Option, the
Term shall be extended for a period of time up to 120 days, so
as to permit Tenant to consummate the transactions contemplated
by the Purchase Option unless the Purchase Option is earlier
terminated by Tenant thereunder; provided, however, that in the
case of (ii) above, any extension of the Term shall be solely
for the purposes of Tenant's exercise of the Purchase Option
and not for the purposes of any computations hereunder or under
the Purchase Option other than as set forth in Section 4.02
hereof. The last day of the Term is referred to herein as the
"Expiration Date."
(b) As used in this Lease, the term "Lease Year"
shall refer to a period of 365 days (366 in any leap year)
commencing on the Commencement Date or any anniversary of the
Commencement Date.
ARTICLE 4.
Rent
4.01 Base Rent.
(a) Tenant shall pay to Landlord, in such currency
of the United States of America as at the time of payment shall
be legal tender for payment of private and public debts, annual
rent in equal monthly installments ("Base Rent") over and above
the other payments to be made by Tenant as hereinafter
provided, equal to:
(i) The monthly principal and interest on
the outstanding HUD Financing (as
defined below) for the Facility which
Landlord represents and warrants is
$198,051.41 per month; plus
(ii) The amount necessary for payment of
real estate taxes, property insurance,
replacement reserve funds and mortgage
insurance premiums related to the HUD
Financing.
4.02 Additional Rent.
(a) The parties agree Tenant shall pay Landlord
after the Base Rent payable under Section 4.01 and after
retention by Tenant of the amounts in 4.02(b) below, as
additional rent, the amounts set forth in item 4.02 (c) below
(the "Additional Rent").
(b) (i) During the first year of the Term, Tenant
shall retain One Million Seventy-Five Thousand Dollars
($1,075,000) of "Profit Before Depreciation" (as defined below)
after payment of Base Rent. During the second year of the
Term, Tenant shall retain One Million One Hundred Seventy-Five
Thousand Dollars ($1,175,000) of "Profit Before Depreciation"
after payment of Base Rent. During the third year of the term
of the Term, Tenant shall retain One Million Two Hundred
Seventy-Five Thousand Dollars ($1,275,000) of "Profit Before
Depreciation" after payment of Base Rent;
(ii) Tenant shall receive the amount described in
Section 4.02(b)(i) in arrears in equal installments on the
fifteenth (15th) day of the month following the sixth (6th)
month and the twelfth (12th) month during each Lease Year of
the Term.
(c) The Landlord shall be paid all other remaining
revenue from the Premises after the above payments; provided,
however, to the extent the "Profit Before Depreciation" of the
Facility (as computed on HUD form 92410(7/91) or any subsequent
replacement of that form or if said form(s) is unavailable,
computed under the same principles as that form) less principal
amortization under the HUD Financing and reduced for (i) the
amount of interest actually incurred on the HUD Financing in
excess of the amount reflected on such form and (ii) an
additional amount of $400,000 exceeds $2,300,000 during any
annual period, fifty percent (50%) of such excess amount shall
be retained by Tenant and the balance paid to Landlord. Such
computation shall be made as if this Lease was not in place and
shall not otherwise be adversely affected by the Lease or
related transactions.
Notwithstanding the above, should Tenant fail to receive
the full amount of the sums set forth in Section 4.02(b) in any
Lease Year during the Term ("Tenant's Priority Return") due to
inadequate Facility revenue or for any other reason including,
but not limited to casualty, taking or capital improvements by
Landlord as required hereunder (the "Deficiency"), the parties
agree that on an annual basis and for as long thereafter as may
be necessary to eliminate the Deficiency as promptly as
possible, all Additional Rent or other sums which may be due
Landlord by Tenant (other than Base Rent) shall be reduced by
the amount of the Deficiency.
4.03 Other Conditions to Rent Payments.
(a) The Base Rent shall be paid:
(i) Without advance notice, demand, offset, or
deduction;
(ii) On or prior to the twenty-fifth (25th) day
of the first day of the first month following the execution and
delivery of this Lease, and for each succeeding month of the
Term, in arrears, on the twenty-fifth (25th) day of each month;
(iii) Notwithstanding anything herein to the
contrary, Landlord hereby covenants and agrees that Tenant
shall have the right to pay the Base Rent then due and payable
by Landlord under the HUD Financing directly to the applicable
servicer or HUD, in which event the amount actually paid by
Tenant to service such debt shall be applied as a credit
against any Base Rent due and payable by Tenant to Landlord
hereunder; and
(iv) If the Term does not end on the last
day of a month, the Base Rent for that partial month shall be
prorated by multiplying the monthly Base Rent by a fraction,
the numerator of which is the number of days of the partial
month included in the Term and the denominator of which is the
total number of days in the full calendar month.
(b) The parties agree that, notwithstanding any contrary
term herein, all computations of expense and revenue hereunder
shall be made as of July 1, 1997 (or October 1, 1997 if
applicable under the Agreement to Lease), provided that
retention by Tenant of revenues of the Premises pursuant to
Section 4.02(b) shall commence as of the date ("Retention
Date") of receipt by Landlord of the last of (i) the Option
Payment pursuant to the Agreement to Lease or (ii) the
Consulting Fee under the Consulting Agreement. In the event
the Retention Date is later than July 1, 1997 (or October 1,
1997, if applicable), the amounts retained by Tenant under
Article 4.02(b) for the first Lease Year shall be prorated
based upon the actual number of days in the first Lease Year
occurring subsequent to the Retention Date.
ARTICLE 5.
Payment of Taxes, Assessments, Etc.
5.01 Payment of Impositions. Except as otherwise
provided in Section 5.02 of this Lease or as otherwise included
in Base Rent, Tenant shall pay or cause to be paid, before any
fine, penalty, interest or cost may be added thereto (or, if
the bills therefor are directed to Landlord and Landlord fails
to submit same to Tenant in a timely manner sufficient to
permit Tenant to comply with the foregoing, then within fifteen
(15) business days after Landlord's submission of such bills to
Tenant), all such real estate taxes, assessments, sewer rents,
water meter and water charges, excises, levies, license and
permit fees, charges for public utilities and all such other
charges which at any time during the Term may be assessed,
levied, confirmed or imposed upon, the Premises (collectively,
the "Impositions", and any one of the same being hereinafter
referred to as an "Imposition"); provided, however, that:
(a) if, by law, any Imposition may at the option of
the taxpayer be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Tenant
may exercise the option to pay the same, including any accrued
interest on the unpaid balance of such Imposition, in
installments and, in such event, shall pay such installments as
may become due during the Term; and
(b) all Impositions for the fiscal or tax years in
which the Term begins and ends shall be apportioned so that
Tenant shall pay only those portions thereof which correspond
with the portion of said years as are within the Term.
(c) as to sales tax (and any interest and penalties
thereon), if any, which may be due hereunder in connection with
all Rent payments, Tenant shall be responsible for the first
$500,000 of such tax (or any interest and penalties thereon)
over the Term and Landlord shall be responsible for the
balance.
5.02 Excluded and Substituted Taxes, etc. Nothing
contained in this Lease shall require Tenant to pay municipal,
county, state or federal income taxes assessed against
Landlord, or municipal, state or federal capital levy, gift,
estate, succession, inheritance or transfer taxes of Landlord,
or corporation excess profits or franchise taxes imposed upon
any corporate owner of the fee of the Premises or any income,
profits, or revenue tax, assessment or charge imposed upon Base
Rent as such, payable by Tenant under this Lease; provided,
however, that, if, at any time during the Term, the methods of
taxation prevailing on the Commencement Date shall be altered
so that in lieu of or as a substitute for the whole or any part
of any Imposition now levied, assessed or imposed on real
estate and the improvements thereon, there shall be levied,
assessed and imposed a tax, assessment, levy, imposition or
charge, wholly or partially as a capital levy, or otherwise, on
the rents received therefrom, or, by or based in whole or in
part, upon the Premises, and imposed upon Landlord, then all
such taxes or assessments, or the part thereof so measured or
based, shall be deemed to be included within the term
"Impositions" for the purposes hereof (but only to the extent
that such substitution shall relieve Tenant in whole or in part
from the payment of any Imposition enumerated in Section 5.01)
to the extent that the same would be payable if the Premises
were the only property of Landlord subject to such Impositions,
and Tenant shall pay and discharge the same as herein provided
in respect of the payment of any other Imposition.
5.03 Evidence of Payment. Tenant from time to time, upon
Landlord's reasonable request, shall furnish to Landlord within
ten (10) days before the date when any Imposition would be
delinquent, receipts of the appropriate taxing authority, or
other evidence reasonably satisfactory to Landlord, evidencing
the payment of any Impositions.
5.04 Contest of Impositions. Landlord shall have the
right, to seek a reduction in the valuation or an exemption of
the Premises for tax purposes and to contest the amount or
validity, in whole or in part, of any Imposition by appropriate
proceedings diligently conducted in good faith and may defer
payment of such Imposition, provided that neither the Premises
nor any part thereof would by reason of such postponement or
deferment be in danger of being forfeited or lost. Landlord
may, after reasonable notice to Tenant, pay such contested item
or items if the protection of the Premises or of Landlord's
interest therein shall, in the reasonable judgment of Landlord,
require such payment.
5.05 Joinder by Landlord. Tenant shall (at no cost to
Tenant) join in any proceedings referred to in Section 5.04 if
the provisions of any Applicable Law at the time in effect
shall require that such proceedings be brought by or be joined
in by Tenant or any lessee of the Premises. Any reduction in
Impositions shall result in an adjustment to Base Rent.
5.06 Reserve Fund Payments. Tenant agrees to fund all
real estate tax and casualty insurance reserves (collectively,
the "Real Estate and Casualty Reserves") and replacement
reserves (the "Replacement Reserves") required to be paid by
Landlord under the HUD Financing described in Exhibit D
attached hereto.
ARTICLE 6.
Additional Covenants of Landlord
6.01 No Liens. Landlord shall not create, incur, or
permit to exist any lien, charge, encumbrance, easement or
restriction upon the Premises, except as specifically permitted
by the terms of this Lease.
6.02 No Transfer of Premises. Landlord shall not sell,
lease, mortgage, convey or otherwise transfer any legal,
beneficial or equitable interest in the Premises or Landlord,
except as specifically permitted, contemplated, or disclosed in
the Agreement to Lease, or required by the terms of this Lease,
the Agreement to Lease, or the Purchase Option.
6.03 No Dissolution. Landlord shall not without the prior
written consent of Tenant, which consent may be withheld in
Tenant's sole discretion, dissolve, liquidate, merge,
consolidate or terminate its existence or sell, assign, lease,
or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) except as
specifically permitted or required by the terms of this Lease,
the Agreement to Lease, or the Purchase Option.
6.04 Limitation on Business. At all times throughout the
Term, Landlord shall engage in no business other than the
ownership, leasing and management of the Premises, together
with any activities incidental thereto or required to be
conducted by Landlord pursuant to the terms of this Lease, the
Purchase Option or the Agreement to Lease.
6.05 No Voluntary Bankruptcy. Landlord shall not file a
voluntary petition in bankruptcy or make a general assignment
for the benefit of creditors.
6.06 Cooperation. Landlord shall at all times cooperate
in all reasonable respects and take all actions necessary on
its part to obtain and maintain in full force and effect
waivers, licenses, permits and governmental approvals which may
be necessary to permit Tenant to lease and thereafter to
operate the Facility as an assisted living/ independent living
facility. In connection with each such application, the
Landlord shall furnish Tenant with such existing data and
information as may be reasonable and shall use its best efforts
to assist in any reasonable way requested by Tenant.
ARTICLE 7.
Additional Covenants of Tenant
7.01 Maintenance of Existence. During the Term, Tenant
agrees to preserve and maintain its existence and good
standing.
7.02 Inventory. During the Term, Tenant agrees to
maintain inventory relating to the operation of the Facility in
an amount sufficient to operate the Facility in the ordinary
course.
7.03 Licenses and Approvals. Tenant shall secure and keep
in effect all material licenses, certifications, and approvals
from federal, state, and local governmental and administrative
agencies having jurisdiction over Tenant or the Premises
required for the continued operation of the Facility by Tenant.
7.04 Returns, Reports, etc. Tenant shall file all tax
returns, plans and filings of any kind or nature which are
required to be filed with respect to Tenant's operation of and
leasehold interest in, the Facility during the Term.
7.05 Works Orders; Statements of Deficiencies. Tenant
shall provide to Landlord, within ten (10) business days after
receipt, copies of any work orders or statements of
deficiencies relating to the Premises which are issued by any
state department of health or state or local licensure agency,
or police or fire department, sanitation, health or work
authorities or any other federal, state or municipal authority.
7.06 Revenues and Expenses. During the Term, Tenant shall
have the right to receive all revenues generated by the
operation of the Facility and, except as specifically provided
otherwise in this Lease, shall be responsible for all expenses
arising therefrom.
7.07 Single Purpose Entity. Tenant shall engage in no
business other than the leasing, ownership and operation of the
Premises.
ARTICLE 8.
Compliance with Laws
8.01 Tenant's Compliance. Except as otherwise provided
in this Lease, throughout the Term, Tenant, at its sole cost
and expense, shall comply in all material respects with all
present and future laws, ordinances, orders, rules, regulations
and requirements of all federal, state and municipal
governments, departments, commissions, boards and officers,
foreseen or unforeseen, ordinary as well as extraordinary,
which may be applicable to the Premises or to the use or manner
of use of the Premises ("Applicable Laws"). This undertaking
shall not be deemed breached by the existence of routine
correctable violations disclosed upon licensure or
certification surveys by any federal, state or local
governmental authority provided that Tenant proceeds to correct
same. Notwithstanding anything herein to the contrary, Tenant
shall not be required to make any structural changes or
improvements to the Premises.
8.02 Right To Contest Applicable Laws. Tenant shall have
the right, after prior written notice to Landlord, to contest
by appropriate legal proceedings conducted in good faith, in
the name of Tenant or Landlord or both, the validity or
application of any Applicable Laws; provided, that compliance
with such Applicable Laws pending the prosecution of any such
proceeding would not subject Landlord to civil or criminal
liability or fine.
Landlord shall, subject to the foregoing, execute and deliver
any appropriate papers which may be necessary or proper to
permit Tenant so to contest the validity or application of any
such Applicable Laws.
8.03 Landlord's Compliance. Landlord shall make all
structural changes to the Premises necessary to comply with
Applicable Laws.
ARTICLE 9.
Insurance and Indemnification
9.01 Building Insurance. Tenant, at its sole cost and
expense, shall at all times during the Term procure and
maintain for the benefit of Landlord and Tenant, a policy of
property insurance with such extended coverage as shall from
time to time be customary for premises similarly situated in
Broward County, Florida, covering the Premises in an amount
sufficient to prevent Landlord or Tenant from being or becoming
a co-insurer within the terms of the policy in question with an
agreed amount clause (which amount shall in no event be less
than 80% of the full replacement value of the Premises).
9.02 Liability Insurance. Tenant shall (from Facility
revenues) maintain commercial general liability insurance,
including public liability and property damage, with a minimum
combined single limit of liability of Three Million Dollars
($3,000,000) in the aggregate and $1,000,000 per occurrence for
personal injuries or deaths of persons occurring in or about
the Premises.
9.03 Professional Liability Insurance. Tenant, at its
sole cost and expense, shall maintain professional liability
insurance customarily issued in connection with assisted living
operations in an amount not less than One Million Dollars
($1,000,000).
9.04 Insurance Criteria. Insurance policies required by
this Lease shall:
(a) be issued by insurance companies of recognized
responsibility;
(b) name the nonprocuring party, the Fee Mortgagee,
and other persons or entities reasonably designated by Landlord
or Tenant, as the case may be, as additional insureds as their
interests may appear; other landlords or tenants may also be
added as additional insureds in a blanket policy;
(c) provide that the insurance not be canceled or
materially changed in the scope or amount of coverage unless
fifteen (15) days or more advance notice is given to the
nonprocuring party;
(d) be primary policies not as contributing with, or
in excess of, the coverage that the other party may carry; and
(e) be permitted to be carried through one or more
of the following:
(i) a "blanket policy"; or
(ii) "umbrella" coverage ;
9.05 HUD Financing Insurance Requirements. Tenant shall
also maintain any additional insurance as shall be required
under the HUD Financing.
9.06 Evidence of Insurance. By the Commencement Date and
upon each renewal of its insurance policies, each party shall
give certificates of insurance to the other party evidencing
the insurance coverage required under this Article 9.
9.07 Waiver Of Subrogation. Each of Landlord and Tenant
hereby waives any and every claim for recovery from the other
for any and all loss or damage of or to the Premises or of or
to the contents thereof, or of or to the rents therefrom or the
use thereof, whether such loss or damage is due to the
negligence of Landlord or Tenant or its respective agents or
employees, to the extent that such loss or damage is covered or
coverable under a property insurance policy, provided, however,
that the aforesaid waiver by any party shall not be effective
if such party's insurance policy does not permit or would be
invalidated by such waiver.
9.08 Indemnification.
(a) Tenant agrees to defend, protect, indemnify and
save harmless Landlord from and against all liability to third
parties (including but not limited to the officers, agents,
contractors, and business associates of Tenant) arising out of
(i) Tenant's use and occupancy of the Premises (other than
liability arising with respect to Landlord's failure to perform
or observe any of Landlord's obligations under this Lease or
any negligence on the part of Landlord), (ii) the negligence or
intentional misconduct of Tenant and its servants, agents,
employees, contractors, suppliers, workers and invitees, or
(iii) Tenant's failure to perform or observe any covenant or
condition required to be performed or observed by Tenant under
this Lease.
(b) Landlord agrees to defend, protect, indemnify
and save harmless Tenant from and against all liability to
third parties (including but not limited to the officers,
agents, contractors, and business associates of Landlord)
arising out of (i) Landlord's use, operation and maintenance of
the Premises (other than liability arising with respect to
Tenant's failure to perform or observe any of Tenant's
obligations under this Lease or any negligence on the part of
Tenant), (ii) the negligence or intentional misconduct of
Landlord and its servants, agents, employees, contractors,
suppliers, workers and invitees, or (iii) Landlord's failure to
perform or observe any covenant or condition required to be
performed or observed by Landlord under this Lease.
(c) If any claim is asserted or any action is
commenced against a party (the "Indemnified Party") in respect
of which such Indemnified Party is entitled to seek
indemnification hereunder, such Indemnified Party shall give
prompt notice to the other party (the "Indemnifying Party").
Such Indemnifying Party shall have the right, with counsel
approved by such Indemnified Party (not to be unreasonably
withheld), to assume the defense of such claim or action. If
the Indemnifying Party shall so assume such defense then it
shall not be responsible for the fees of any separate counsel
retained by the Indemnified Party. If the Indemnifying Party
shall believe that the Indemnified Party is not entitled to
indemnification hereunder then the Indemnifying Party shall not
be required to assume such defense but if it shall be finally
determined by a court of competent jurisdiction that the
Indemnified Party is or was entitled to indemnification, then
the Indemnifying Party shall also be liable for the counsel
fees incurred by the Indemnified Party in connection with such
claim or action.
ARTICLE 10.
Party's Right to Perform Other Party's Covenants
10.01 Landlord's Right To Perform. If Tenant shall at
any time fail to pay any Imposition in accordance with the
provisions of Article 5, or to take out, pay for, maintain or
deliver any of the insurance policies or certificates therefor
as provided for in Article 9, or shall fail to make any other
payment or perform any other act on its part to be made or
performed, Landlord, after providing Tenant with the notice
required pursuant to Section 22.01 of this Lease, and without
waiving or releasing Tenant from any obligation of Tenant
contained in this Lease or from any Default by Tenant and
without waiving Landlord's right to take such action as may be
permissible under this Lease as a result of such Default, may
(but shall be under no obligation to):
(a) pay any Imposition payable by Tenant pursuant to
the provisions of Article 5, or
(b) take out, pay for and maintain any of the
insurance policies provided for in Article 9, or
(c) make any other payment or perform any other act
on Tenant's part to be made or performed as in this Lease
provided, and, subject to the entry conditions set forth in
Section 16.02, may enter upon the Premises for any such
purpose, and take all such action thereon, as may be necessary
therefor.
10.02 Reimbursement By Tenant. All amounts properly paid
by Landlord and all reasonable costs and expenses incurred by
Landlord in connection with the performance of any such act
shall be paid by Tenant to Landlord not later than thirty (30)
days after demand.
10.03 Tenant's Rights to Perform. If Landlord shall at
any time fail to make any payment or perform any other act on
its part to be made or performed under this Lease, Tenant,
after providing Landlord with the notice required pursuant to
Section 22.03 of this Lease and without waiving or releasing
Landlord from any obligation of Landlord contained in this
Lease or from any Default by Landlord and without waiving
Tenant's right to take such action as may be permissible under
this Lease as a result of such Default may (but shall be under
no obligation to) remedy such default for the account and at
the expense of Landlord; provided, however, in the event of an
emergency, Tenant may remedy the default immediately and
without notice. If the Tenant makes any expenditures or incurs
any obligations for the payment of money in connection
therewith, such sums paid or obligations incurred shall be paid
by Landlord to Tenant upon demand provided that Tenant shall
have the right to deduct all such sums from amounts due
hereunder other than Base Rent. Notwithstanding anything
herein to the contrary, the remedies set forth in this Lease
shall not affect in any manner such claim to actual or
constructive eviction or other claim for damages or relief to
which Tenant may be entitled under Applicable Laws.
ARTICLE 11.
Repairs and Maintenance of the Premises
11.01 Tenant's Repairs. Throughout the Term, Tenant, at
its sole cost and expense shall make all nonstructural repairs
necessary to keep the Premises in good order and condition, and
repair, reasonable wear and tear, casualty and condemnation
excepted. Notwithstanding the foregoing, Landlord shall make
all repairs required pursuant to this Section 11.01 to the
extent such repairs are needed because of the misconduct or
negligence of Landlord, its officers, employees, agents or
invitees, and are not covered by the insurance carried by or
required to be carried by Tenant hereunder.
11.02 Landlord's Repairs. Throughout the Term, Landlord,
at its sole cost and expense, shall make all structural repairs
and replacements necessary to keep the Premises in good order,
condition and repair, reasonable wear and tear, casualty and
condemnation excepted. Notwithstanding the foregoing, Tenant
shall make all repairs required pursuant to this Section 11.02
to the extent such repairs are needed because of the misconduct
or negligence of Tenant, its officers, employees, agents or
invitees and are not covered by the insurance carried by or
required to be carried by Tenant hereunder.
11.03 Additional Furniture, Furnishings and Equipment.
Tenant shall have the right to install additional furniture,
furnishings, equipment and machinery on the Premises and in the
Facility at its sole expense and not from revenue from the
Premises (i.e., in addition to that located in the Facility as
of the Commencement Date; hereinafter referred to as
"Additional FF&E"), with Tenant retaining the right to remove
and/or replace such Additional FF&E from time to time and upon
the termination of this Lease, subject to the provisions of
Section 12.02 hereof.
ARTICLE t w
Surrender
12.01 Surrender. Except as otherwise provided herein,
Tenant shall on the last day of the Term or upon any earlier
termination of this Lease (other than upon a closing under the
Purchase Option), surrender the Premises to Landlord without
delay and in good order, condition and repair, except for (a)
reasonable wear and tear; (b) casualty and condemnation; and
(c) alterations as permitted by this Lease. Such surrender
shall be free and clear of all lettings and occupancies other
than subleases then terminable at the option of the landlord
thereof, subleases permitted under this Lease without
Landlord's consent (except the Sublease), or subleases to which
Landlord shall have specifically consented, and shall be free
and clear of all liens and encumbrances other than the
Permitted Encumbrances and any liens and encumbrances created
or suffered by Landlord.
12.02 Removal of Furniture, Fixtures and Equipment. Any
Additional FF&E may be removed by Tenant at or prior to the
termination or expiration of this Lease, provided, however,
that the removal thereof will not structurally injure the
Premises or necessitate fundamental changes in or repairs to
the Premises.
12.03 Abandonment by Tenant. Any personal property of
Tenant or any subtenant, which shall remain in or on the
Premises after the termination of this Lease and the removal of
Tenant or such subtenant from the Premises, may, at the option
of Landlord, be deemed to have been abandoned by Tenant or such
subtenant and either may be retained by Landlord as its
property or be disposed of in such manner as Landlord may
elect, or if Landlord shall give written notice to Tenant to
such effect, such property shall be removed by Tenant at
Tenant's sole cost and expense. If this Lease shall terminate
pursuant to Articles 17 or 18, then, notwithstanding Sections
12.02 and 12.03 Tenant or any subtenant shall have a reasonable
time thereafter to remove any personal property of Tenant.
12.04 Loss or Damage To Property. Landlord shall not be
responsible for any loss or damage occurring to any property
owned by Tenant, except where such loss or damage arises out of
the negligence or willful misconduct of Landlord, its officers,
employees or agents.
12.05 [Intentionally Omitted].
12.06 Inventory. Notwithstanding anything to the
contrary contained in this Article 12, Tenant shall not remove
from the Premises at the expiration of the Term or earlier
termination of this Lease any inventory of linens, food and
medical supplies ("Inventory") at the Facility.
12.07 Assignment of Rights. Upon the expiration or
termination of this Lease for any reason other than
consummation of the sale of the Premises to Tenant:
(a) Tenant and Landlord shall execute and deliver,
as assignor and assignee, respectively, an assignment and
assumption agreement, pursuant to which Tenant shall
assign to Landlord all contracts associated with the
ongoing operation of the Facility, other than insurance
and contracts for which a third-party consent to
assignment is required and which consent has not been
obtained;
(b) All expenses and income arising from the conduct
of the business of the Facility in the ordinary course
shall be prorated by the parties as of the date of such
expiration or termination, in the same manner as
prorations were made
between Landlord and Tenant as of the Commencement Date
pursuant to the Agreement to Lease; and
(c) All Assets (as defined in the Agreement to Lease)
licensed, leased or otherwise transferred to Tenant shall be
reassigned to Landlord on the same terms and conditions as
they were assigned to Tenant provided such assignment shall
transfer all interest of Tenant to Landlord and be subject to
appropriate third party and governmental consents.
In addition to the foregoing, in advance of (and, if not
completed, following) the expiration or termination of this Lease
for any reason other than consummation of the sale of the Premises
to Tenant, Tenant shall cooperate with the Landlord in all respects
in causing all Licenses (as defined in the Agreement to Lease) to
be reissued or transferred to Landlord or Landlord's designee.
ARTICLE 13.
Alterations, Improvements and Additions
13.01 Alterations. Subject to compliance with and observance
of all of the terms, conditions, covenants and agreements provided
for in this Lease, Tenant shall have the right, to be exercised at
Tenant's option at any time during the Term of this Lease, and
without Landlord's consent, to make alterations, improvements
and/or additions, in and to the Premises; provided, however, that:
(i) such alteration, improvement and/or addition is non-structural,
does not diminish the value of the Premises and has no material
impact on the operation of the Premises; (ii) for improvements in
excess of $10,000, Tenant shall furnish to Landlord, prior to the
commencement of any such work, a copy of the plans and
specifications for such work and the name of the general contractor
engaged to perform such work; (iii) Tenant shall have obtained the
prior written consent of the holder of any Fee Mortgage if required
by the terms of such Fee Mortgage, and (iv) such improvements shall
be paid for by Tenant from sources other than revenues of the
Premises. Such work shall be performed in accordance with all
applicable terms and conditions of any such Fee Mortgage. The
Tenant will not be permitted to make any alterations during the
three-year term of the lease unless approved in advance by HUD as
required by the July 27, 1995, Regulatory Agreement.
13.02 Compliance with Applicable Laws. All alterations,
additions and/or improvements shall be done subject to and in
accordance with all Applicable Laws.
13.03 Cooperation of Landlord. Upon request of Tenant, but
at Tenant's sole cost and expense, Landlord shall join in Tenant's
application for any building permit or license required in
connection with such alteration, improvement and/or addition, and,
subject to the prior written consent of the holder of any Fee
Mortgage, shall grant such utility easements as may be required in
connection therewith.
13.04 Landlord's Title. Any and all buildings, structures,
additions and improvements upon the Land at the expiration or
sooner termination of this Lease shall then become property of
Landlord and shall be surrendered at that time in accordance with
the provisions of Section 12.01. The provisions of this Section
shall not apply if Tenant exercises its option to purchase the
Premises in accordance with the terms of the Purchase Option.
ARTICLE 14.
Liens
14.01 Discharge of Liens. Tenant shall, within fifteen (15)
days after receiving notice of any mechanic's lien for material or
work claimed to have been furnished to the Premises on Tenant's
behalf and at Tenant's request either discharge the lien, or
contest in good faith and with due diligence the validity of the
lien.
14.02 Landlord's Discharge. If Tenant does not discharge the
lien or commence to contest the disputed lien within such fifteen
(15) day period, Landlord may pay any reasonable amounts to
discharge the lien. Tenant shall then be liable to Landlord for
the amounts paid by Landlord in accordance with Section 10.02 of
this Lease plus reasonable expenses and interest at the applicable
legal rate.
14.03 Consent Not Implied. Nothing in this Lease contained
shall be deemed or construed in any way as constituting the consent
or request of Landlord, express or implied by inference or
otherwise, to any contractor, subcontractor, laborer or materialman
for the performance of any labor or the furnishing of any materials
for any specific improvement, alteration to or repair of the
Premises or any part thereof.
ARTICLE 15.
No Waste
15.01 No Waste. Tenant shall not do or suffer any waste or
damage, disfigurement or injury to the Premises or any part
thereof, but this shall not be deemed to prevent alterations,
improvements and additions to the Premises permitted pursuant to
other provisions of this Lease.
ARTICLE 16.
Entry on Premises by Landlord
16.01 Landlord's Entry. Tenant shall permit Landlord and its
authorized representatives to enter the Premises at all reasonable
times for the purpose of:
(a) inspecting the Premises,
(b) making any necessary repairs thereto and performing
any work therein required to be performed by Landlord under this
Lease or that Landlord may perform pursuant to Section 10.01 of
this Lease on account of Tenant's failure to comply with the terms
and conditions of this Lease, or
(c) complying with Applicable Laws under Article 8.
(d) commencing six (6) months prior to the expiration of
the Term, showing the Premises to prospective tenants and/or
management companies.
Except as otherwise required in this Lease, nothing herein shall
imply any duty on the part of Landlord to do any such work.
16.02 Entry Conditions. Notwithstanding Section 16.01, entry
by Landlord onto the Premises is conditioned upon Landlord:
(a) giving Tenant at least twenty-four (24) hours
advance notice, except in an emergency;
(b) promptly finishing any work for which Landlord or
its contractors entered; and
(c) causing the least practical interference to Tenant's
business.
16.03 Interference with Tenant. Notwithstanding Sections
16.01 and 16.02:
(a) if Landlord's entry materially and substantially
interferes with the conduct of Tenant's business (and the entry is
not needed because of Tenant's negligence or willful misconduct),
any amount due Landlord hereunder (other than Base Rent) shall
abate in proportion to the extent of the interference; and
(b) if the Landlord causes damage to Tenant's property,
Landlord shall be liable for any damage to the extent the damage is
not covered by the insurance carried by Tenant.
ARTICLE 17.
Damage or Destruction
17.01 Cancellation Due To Casualty. Notwithstanding anything
in this Lease to the contrary, if, at any time during the Term, the
Facility shall be destroyed or damaged by fire or any other cause,
Tenant shall have the right to terminate this Lease by notice to
Landlord in the event that (i) all of the Facility is substantially
damaged and the restoration of the premises to its prior-existing
condition is in violation of Applicable Laws; (ii) the Net Proceeds
(as defined below) on account of such damage or destruction is
unavailable or insufficient to repair, replace and rebuild the
Premises with buildings, structures, improvements and equipment of
equal or better character, quality and condition than existed
immediately prior to such occurrence and Landlord fails to fund
such deficiency to Tenant's reasonable satisfaction within 90 days
of such casualty (such repairs, replacements and rebuilding
hereinafter sometimes referred to as the "Restoration Work"); or
(iii) the Fee Mortgagee elects not to make the Net Proceeds
available for the Restoration Work and the Landlord fails to fund
the amount needed for the Restoration Work. In the event Tenant
elects to terminate this Lease pursuant to this Section 17.01, this
Lease and the Term shall cease and expire as of the date of such
damage or destruction (the "Revised Expiration Date") with the same
force and effect as if the Revised Expiration Date were the date
originally set forth in this Lease for the expiration of the Term
except that Tenant shall have no obligation to repair, replace or
rebuild any buildings, structures, improvements or equipment, and
the proceeds of all insurance shall be paid to and belong to
Landlord, and Landlord shall pay to Tenant the Adjusted Option
Payment (as defined in the Option to Purchase), subject to the
rights of the holder of any Fee Mortgage. For the purposes of this
Section Landlord shall have provided satisfactory evidence of
funding for any deficiency in insurance proceeds if Landlord
provides (i) evidence to Tenant that such funds are available in
cash or other form of liquid investment subject to Tenant's
reasonable approval or (ii) a commitment letter from an
institutional lender at prevailing rates in the amount of such
deficiency with financial and closing terms subject to Tenant's
approval.
17.02 Damage. If, during the Term, the buildings,
improvements or the equipment on, in or appurtenant to the Premises
on the Commencement Date, or thereafter erected or installed
thereon or therein, shall be destroyed or damaged in whole or in
part by fire or other cause, and Tenant does not terminate this
Lease pursuant to Section 17.01, Landlord shall, except as
otherwise hereinafter provided, use the Net Proceeds to promptly
repair, replace and rebuild the same with buildings, structures,
improvements and equipment of equal or better character, quality
and condition than existed immediately prior to such occurrence.
17.03 Insurance Proceeds. In the event of a loss in excess
of $250,000, the proceeds of any insurance applicable to the
particular casualty, less any cost and expense incurred in
adjusting or collecting such proceeds (hereinafter sometimes
referred to as the "Net Proceeds"), shall be deposited in an
interest bearing account with a bank or trust company having a
capital and surplus of at least $50,000,000, in trust, and such
party (hereinafter referred to as the "Trustee") shall make
available such Net Proceeds upon the terms and conditions
hereinafter set forth. The Net Proceeds shall be disbursed from
time to time at the request of and at the direction of Landlord, to
the parties whom Landlord may employ to perform the Restoration
Work, as same shall progress, or to Landlord, if Landlord shall
make or pay for the cost of any Restoration Work, in reimbursement
for the fair value of the work and materials actually incorporated
in the Premises. Such payments shall be made by such Trustee from
time to time, upon the written request of Landlord, by a duly
authorized officer of Landlord, which shall be accompanied by a
certificate, addressed to the Trustee, and to Landlord and to the
holder of any Fee Mortgage, of the architect or engineer in charge
of the Restoration Work, setting forth that the amount then
requested to be withdrawn either has been paid by Landlord or is
properly due to contractors, subcontractors, materialmen,
engineers, architects, or other persons who have rendered services
or furnished materials in connection with such Restoration Work.
In the event of a loss of less than $250,000, the proceeds of
insurance relating thereto shall be assigned or paid directly to
Landlord, to be applied by Landlord in accordance with the
provisions of this Section 17.03.
17.04 Insufficient or Excess Net Proceeds. In the event the
Net Proceeds shall be insufficient to properly and completely
accomplish the entire Restoration Work and Tenant does not elect to
terminate this Lease pursuant to Section 17.01 of this Lease,
Landlord shall be liable to pay the additional amount required to
complete the Restoration Work. If the Net Proceeds shall be in
excess of the cost of the Restoration Work, the excess shall be
paid to and retained by Landlord.
17.05 Term Extension. In the event of a casualty, and in the
event the Lease is not terminated by Tenant in the instances
permitted hereunder, the Term of the Lease shall be extended for
the amount of time the Facility is not in operation and the
Restoration Work is being performed, plus an additional three (3)
months.
ARTICLE 18.
Condemnation.
18.01 Cancellation in the Event of a Taking.
(a) If the Premises shall, in its entirety, be taken in
or by condemnation or other eminent domain proceedings (or by
conveyance in lieu thereof), this Lease and the Term shall
terminate and expire on the earlier of (i) the date of vesting of
title in such taking (which date is hereinafter referred to as the
"Date of Taking"), and (ii) that date which is 30 days after notice
of the taking is received by Landlord (such date of termination and
expiration on account of a taking hereinafter referred to as the
"Taking Termination Date"), in which case the obligations and
liabilities of Tenant under this Lease which have accrued on or
prior to the Taking Termination Date.
(b) Upon the taking of substantially all of the Premises
in or by condemnation or other eminent domain proceedings (or by
conveyance in lieu thereof), Tenant in its sole and absolute
discretion, shall have the right to terminate this Lease by notice
to Landlord, which notice shall specify the "Taking Termination
Date" and all rights and obligations of Tenant hereunder shall
expire and terminate other than obligations and liabilities of
Tenant under this Lease which have accrued on or prior to the
Taking Termination Date.
(c) Upon the taking of less than substantially all of
the Premises in or by condemnation or other eminent domain
proceedings (or by conveyance in lieu thereof), Tenant shall have
the right to terminate this Lease by notice to Landlord specifying
the Taking Termination Date if such taking materially interferes
with Tenant's ability to continue its business operations in
substantially the same manner at the Facility as immediately prior
to the taking, in which case all rights and obligations of Tenant
hereunder shall expire and terminate other than obligations and
liabilities of Tenant under this Lease which have accrued on or
prior to the Taking Termination Date.
18.02 Partial Taking. In the event of a taking of a part of
the Premises in or by condemnation or other eminent domain
proceedings (or by conveyance in lieu thereof) and Tenant does not
terminate this Lease pursuant to Section 18.01, this Lease shall
continue in full force and effect.
18.03 Award. If at any time during the Term the whole or any
part of the Premises shall be taken for any public or quasi-public
purpose by any lawful power or authority by the exercise of the
right of condemnation or eminent domain (or by conveyance in lieu
thereof), Landlord shall be entitled to and shall receive any and
all awards and payments that may be made in any such proceeding.
Any award of payment that may be made in any such proceeding, after
deducting the reasonable cost and expense incurred in connection
with the establishment and collection of such award or payment, is
herein called the "Net Award". Notwithstanding anything else in
this Section, Tenant may claim and recover from the condemning
authority a separate award for furniture, fixtures and equipment
paid for by Tenant from its own funds and not from Facility
revenues. In the event Tenant closes under the Option to Purchase,
Tenant shall receive a credit at closing equal to (i) the amount of
the Net Award if the taking will not affect the revenues of the
Facility or (ii) an equitable sum mutually agreed to by the parties
if the taking will affect the revenues of the Facility.
18.04 Restoration. If a portion of the Premises shall be
taken in or by condemnation or other eminent domain proceedings (or
by conveyance in lieu thereof), and this Lease shall not be
terminated in accordance with the provisions of Sections 18.01,
Landlord shall, to the extent practicable, after any such partial
taking, use the Net Award to promptly and diligently commence and
complete the Restoration Work for the Premises as nearly as
practicable to the condition which existed prior to such partial
taking. In the event the Net Award is in excess of $250,000, the
Net Award shall be deposited in an interest bearing account in
trust with the Trustee, and the Trustee shall make available such
Net Award upon the same terms and conditions as set forth in
Section 17.03 substituting "Net Award" for "Net Proceeds" as used
therein.
18.05 Insufficient or Excess Net Award. If the cost of the
Restoration Work required to be made by Tenant pursuant to Section
18.04 exceeds the amount of the Net Award, the deficiency shall be
deposited by Landlord with the Trustee. Any Net Award remaining
after final payment for the cost of Restoration Work shall belong
to Landlord, subject to the rights of the holder of any Fee
Mortgagee.
18.06 Fee Mortgagee Retention of Net Award. If the Fee
Mortgagee shall refuse to release the Net Award for purposes of
restoration, the Adjusted Option Payment shall be repaid by
Landlord to Tenant.
ARTICLE 19.
Assignments and Subleases Of Tenant's Interest
19.01 Assignments, etc.
(a) Except as otherwise expressly provided for in this
Article 19, during the Term, Tenant shall not assign this Lease or
any of Tenant's interest hereunder, nor transfer, assign or
sublease all or any part of the Premises, nor suffer or permit the
Premises or any part thereof to be used by any person (excluding
staff, and residents of the Facility) or entity without in each
instance Landlord's prior written consent, which consent shall not
be unreasonably withheld, delayed or conditioned.
(b) Notwithstanding anything to the contrary in Section
19.01(a), Tenant may assign or sublease part or all of the Premises
without Landlord's consent to:
(i) any corporation, partnership or other legal
entity that controls, is controlled by, or in
under common control with, Tenant; or
(ii) any corporation or other entity resulting from
the merger or consolidation with Tenant or to
any entity that acquires all of Tenant's assets
as a going concern of the business that is
being conducted on the Premises, as long as the
assignee or subtenant is a bona fide entity and
assumes the obligations of Tenant.
(c) Subleases and assignments by Tenant are subject to
the following:
(i) the terms of this Lease;
(ii) the term thereof shall not extend beyond
the Term of this Lease;
(iii) consent to one sublease or assignment
does not waive the consent
requirement for future assignments or
subleases.
(d) In the event of an assignment in compliance with
this Section 19.01, the assignee shall assume all obligations under
the Lease and each assignor shall remain fully liable hereunder for
all obligations under the Lease.
(e) Without limiting the above, Landlord consents to the
Sublease of even date herewith between Tenant as sublessor, and
CareMatrix of Lauderhill I, Inc. as sublessee (the "Sublease").
19.02 Prohibition on Modification. Tenant shall not modify
any residential unit lease or sublease, so as to reduce the rent,
shorten the term, or adversely affect in any other respect to any
material extent the rights of the landlord thereunder, or permit
cancellation or accept the surrender of any such subtenant without
the prior written consent of Landlord in each instance, which
consent shall not be required to the institution or prosecution of
any action or proceedings against such subtenant by reason of a
default on the part of such subtenant under the terms of such
sublease. Such consent of Landlord shall not be required to cancel
any such sublease provided that it is replaced by another sublease
which shall qualify hereunder. In addition to being subject and
subordinate to the rights of Landlord hereunder, each such sublease
shall contain a specific provision to the effect that such sublease
may not be modified or amended so as to reduce the rent, shorten
the term, or adversely affect in any other respect to any material
extent the rights of the landlord thereunder, or be cancelled or
surrendered without the prior written consent of Landlord in each
instance.
ARTICLE 20.
Intentionally Omitted
ARTICLE 21.
Mortgages By Landlord
21.01 Fee Mortgage. Landlord has heretofore encumbered the
Land and the Facility with a mortgage as more particularly
described on Exhibit D. Any such mortgage or other security device
now or hereafter encumbering all or any part of the Landlord's
interest in the Premises is herein called a "Fee Mortgage" and the
holder of any such mortgage or other security device is herein
called a "Fee Mortgagee". Except as otherwise expressly provided
for in this Lease, during the Term Landlord shall not further
finance the Premises, or otherwise encumber the Premises or
Landlord's interest in this Lease or the revenues derived therefrom
and shall not grant any further mortgages, liens or other similar
security devices in respect of the Premises or Landlord's interest
in this Lease or amend, lengthen or modify such Fee Mortgage or the
terms or conditions thereof without in each instance obtaining
Tenant's prior written consent, to be granted in Tenant's sole
discretion.
21.02 Subordination. Subject to the provisions of Section
21.03:
(a) this Lease and the rights of Tenant hereunder shall
be and are hereby expressly made subject to and subordinate at all
times to the lien of each Fee Mortgage, and to all amendments,
modifications, renewals, extensions, consolidations and
replacements thereof; and
(b) such subordination shall be automatic and shall
require no further action by Landlord or Tenant for its
effectiveness.
21.03 Nondisturbance. Notwithstanding the provisions of
Sections 21.01 and 21.02, this Lease and the rights of Tenant
hereunder shall not be subordinate to the lien of any Fee Mortgage,
other than the HUD Financing, unless the Fee Mortgagee shall
execute and deliver to Tenant a nondisturbance agreement
substantially in the form of Exhibit E or such other form which is
not less favorable to Tenant and as to which Tenant has no
reasonable objection (a "Qualifying Subordination, Non-Disturbance
and Attornment Agreement"). Tenant agrees to execute and return
any Qualifying Subordination, NonDisturbance Agreement within
twenty (20) days of its receipt thereof.
21.04 Subordination of Fee Mortgage. Notwithstanding
anything to the contrary contained herein, any Fee Mortgagee may
subordinate its Fee Mortgage to this Lease by sending Tenant notice
in writing subordinating such Fee Mortgage to this Lease, and
Tenant agrees to execute and deliver to such Fee Mortgagee an
instrument consenting to or confirming the subordination of such
Fee Mortgage to this Lease within twenty (20) days of its receipt
of such notice.
21.05 Payments By Tenant on Behalf of Landlord. Except as
provided otherwise in this Lease, Landlord hereby covenants to pay
all principal and interest payments and all mortgage insurance,
reserve fund and other payments when and as due under each Fee
Mortgage affecting the Premises and to keep same current at all
times. If there shall be a default by Landlord in the payment of
either the principal, interest, mortgage insurance, reserve fund
payments or any other amount due under any Fee Mortgage affecting
the Premises, Tenant shall have the right to pay the amount so in
default, and the reasonable costs and expense, if any, of any
foreclosure action or other suit or proceeding instituted by the
Fee Mortgagee upon such default, and upon making such payment
Tenant shall, in addition to other remedies, be entitled to offset
and deduct the amount so paid from the Base Rent due hereunder
until the amount of such payment shall have been repaid therefrom
by Landlord to Tenant. Landlord agrees to request the servicer of
the HUD Financing to provide a copy of all notices provided to
Landlord under the HUD Financing to Tenant at the same time such
notice is provided to Landlord.
ARTICLE 22.
Default
22.01 Events of Default. Each of the following shall be a
default by Tenant and a breach of this Lease (sometimes
collectively called "Defaults", and each individually called a
"Default"):
(a) Tenant's failure to pay any Base Rent when due, and
such failure continues uncured for a period of three (3) business
days after Tenant receives notice from Landlord of such payment
default;
(b) Tenant's failure to perform or observe any other
Tenant obligation for a period of thirty (30) days after Tenant
receives notice from Landlord setting forth in reasonable detail
the nature and extent of the failure and identifying the applicable
Lease provision(s), or in the event such performance cannot
reasonably be completed within such thirty (30) day period with
reasonable diligence, Tenant's failure to in good faith commence
such performance within such thirty (30) day period and thereafter
diligently pursue such performance to completion;
(c) Tenant's failure to vacate or stay any of the
following within ninety (90) days after they occur;
(i) a petition in bankruptcy is filed by or
against Tenant;
(ii) Tenant is adjudicated as bankrupt or
insolvent;
(iii) a receiver, trustee, or liquidator is
appointed for all or a substantial
part of Tenant's property; or
(iv) Tenant makes a general assignment for the
benefit of creditors.
(d) Tenant's filing of a petition in bankruptcy.
(e) An Event of Default by Tenant under the Agreement to
Lease or Purchase Option.
Notwithstanding anything to the contrary in Section 22.01(c), any
such proceeding or action involving bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any
future federal bankruptcy code or any other present or future
applicable federal, state or other statute or law, shall not
constitute a Default pursuant to the terms of this Article, unless
such proceeding, action or remedy shall be taken or brought by or
against the then holder of the leasehold estate under this Lease or
Optionee under the Option to Purchase.
22.02 Landlord's Remedies.
(a) If Tenant commits a Default, Landlord may, at its
option, at any time during the continuation of such Default, give
written notice to Tenant stating that this Lease and the Term
hereby demised has expired and terminated. Upon the giving of such
notice, this Lease and the Term hereby demised, and all rights of
the Tenant hereunder, shall expire and terminate as if that date
were the date herein definitely fixed for the termination of the
Term of this Lease, and the Tenant hereof shall quit and surrender
the Premises. In such event, Tenant shall provide such notices to
and file such applications with governmental agencies and otherwise
cooperate with Landlord to obtain all permits, licenses,
authorizations and approvals required under Florida and federal law
in order for Landlord to resume operation of the Facility after the
termination of this Lease.
(b) Upon the termination of this Lease as provided in
subparagraph (a) above: (i) Landlord or Landlord's agents and
employees may re-enter the Premises by action or proceeding at law,
and may repossess the same, subject to any notice or waiting period
and/or governmental approval process established or required under
applicable federal or state licensure and/or certification
regulations pertaining to a change of licensee or ownership of the
Facility and in any event in a manner which ensures the safe
transfer of the care and control of the residents in the Facility;
and (ii) Tenant shall thereupon pay to Landlord Base Rent due under
this Lease when due and payable from and after the period
commencing on the date of such termination. Notwithstanding the
foregoing, Landlord shall be obligated to mitigate its damages
hereunder and any amounts which Landlord receives as a result of
such mitigation shall be applied against Base Rent payable
hereunder.
22.03 Landlord's Default. The following shall be a default
by Landlord and a breach of this Lease ("Default"): Landlord's
failure to perform or observe any of its Lease obligations after a
period of thirty (30) days or the additional time, if any, that is
reasonably necessary to promptly and diligently cure the failure
after receiving notice from Tenant. The notice required hereunder
shall give in reasonable detail the nature and extent of the
failure and identify the Lease provision(s) containing the
obligation(s). After Tenant receives notice of a Fee Mortgagee's
name and address and request for notice upon Landlord's Default,
Tenant shall provide the notice required by this Section to the Fee
Mortgagee at the same time Tenant gives notice to Landlord. If
Landlord commits a Default, Tenant may terminate this Lease and/or
pursue any remedies given in this Lease or under Applicable Law.
22.04 No Waiver. No failure by Landlord to insist upon the
strict performance of any agreement, term, covenant or condition
hereof or to exercise any right or remedy consequent upon a breach
thereof, and no acceptance of full or partial rent during the
continuance of any such breach, shall constitute a waiver of any
such breach or of such agreement, term, covenant or condition. No
agreement, term, covenant or condition hereof to be performed or
complied with by Tenant, and no breach thereof, shall be waived,
altered or modified except by a written instrument executed by
Landlord. No waiver of any breach shall affect or alter this
Lease, but each and every agreement, term, covenant and condition
hereof shall continue in full force and effect with respect to any
other then existing or subsequent breach thereof.
22.05 Cumulative Remedies. Each right and remedy provided
for in this Lease shall be cumulative and, except as provided
herein, shall be in addition to every other right or remedy
provided for in this Lease or now or hereafter existing at law or
in equity or by statute or otherwise, and the exercise or beginning
of the exercise by Landlord or Tenant of any one or more of the
rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not,
except as provided herein, preclude the simultaneous or later
exercise by the party in question of any or all other rights or
remedies provided for in this Lease or, except as provided herein,
now or hereafter existing at law or in equity or by statute or
otherwise.
ARTICLE 23.
Quiet Enjoyment
23.01 Quiet Enjoyment. Tenant, upon paying the Base Rent and
other amounts due hereunder and observing and keeping all
covenants, agreements and conditions of this Lease on its part to
be kept, shall quietly have and enjoy the Premises during the Term
without hindrance or molestation by anyone claiming by, through or
under Landlord as such, subject, however, to the exceptions,
reservations and conditions of this Lease.
ARTICLE 24.
Estoppel Certificates
24.01 Tenant's Certificate. Tenant shall, without charge, at
any time and from time to time, within fifteen (15) days after
request by Landlord, certify by written instrument, duly executed,
acknowledged and delivered, to Landlord, or any other person, firm
or corporation specified by Landlord:
(a) that this Lease is unmodified and in full force and
effect, or, if there have been any modifications, that the same is
in full force and effect as modified and stating the modification;
(b) whether or not there are then existing any set-offs
or defenses against the enforcement of any of the agreements,
terms, covenants hereof and any modifications hereof upon the part
of Tenant to be performed or complied with, and, if so, specifying
the same;
(c) the dates, if any, to which any amounts of rent
hereunder have been paid in advance;
(d) the date of expiration of the current Term;
(e) the rent then payable under this Lease; and
(f) such other items reasonably requested by Landlord.
l fac Landlord's Certificate. Landlord shall, without
charge, at any time and from time to time, within fifteen (15) days
after request by Tenant certify by written instrument, duly
executed, acknowledged and delivered, to the effect that this Lease
is unmodified and in full force and effect (or if there shall have
been modifications that the same is in full force and effect as
unmodified and stating the modifications) the dates to which the
Base Rent have been paid, the date of expiration of the Term, the
Base Rent then payable under this Lease, such other items
reasonably requested by Tenant and stating whether or not Tenant is
in default in performance of any covenant, agreement or condition
contained in this Lease and, if so, specifying each such default of
which the person executing such certificate may have knowledge.
ARTICLE 25.
Disputes
25.01 Arbitration Procedure. For disputes subject to
arbitration under Section 25.03 that are not resolved by the
parties within ten (10) days after either party gives notice to the
other of its desire to arbitrate the dispute, the dispute shall be
settled by binding arbitration by the American Arbitration
Association in accord with its then prevailing rules. Judgment
upon the arbitration award may be entered in any court having
jurisdiction. The arbitrators shall have no power to change the
Lease provisions. The arbitration panel shall consist of three
arbitrators, one of whom must be a real estate attorney actively
engaged in the practice of law for at least the last five (5) years
and one of which must be a health care consultant with at least
five (5) years experience. Both parties shall continue performing
their Lease obligations pending the award in the arbitration
proceeding. The arbitrators shall award the prevailing party
reasonable expenses and costs including reasonable attorneys' fees
pursuant to Section 26.10 plus interest on the amount due at
Reference Rate (as defined in Section 26.14 hereof) or the maximum
rate then allowed by Applicable Law, whichever is less.
25.02 Payment. The losing party shall pay to the prevailing
party the amount of the final arbitration award. If payment is not
made within ten (10) business days after the date of the
arbitration award is no longer appealable, then in addition to any
remedies under the law:
(a) if Landlord is the prevailing party, it shall have
the same remedies for failure to pay the arbitration award as it
has for Tenant's failure to pay the Base Rent; and
(b) if Tenant is the prevailing party, it may deduct any
remaining unpaid award from any payment due hereunder other than
Base Rent.
25.03 Disputes Subject To Arbitration. The following
disputes are subject to arbitration:
(a) any disputes that the parties agree to submit to
arbitration; and
(b) the amount of any abatement of Base Rent or
adjustment to the Purchase Price because of damage or condemnation.
ARTICLE 26.
General Provisions
26.01 Severability. If any term or provision of this Lease
or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
26.02 Notices. All notices required to be given hereunder
shall be given in writing to the appropriate party or parties at
the following addresses:
To the Landlord: Unicom Partnership, Ltd.
5500 Northwest 69th Avenue
Lauderhill, Florida 3319
Attention: Stanley Rosenthal
Bruce B. Litwer
To Tenant: Chancellor of Lauderhill, I, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attention: General Counsel
With a copy to: Christopher J. Donovan, Esq.
McDermott, Will & Emery
75 State Street
Boston, Massachusetts 02109
or at such other place as such party may designate in writing to
the other party. All notices shall be deemed to have been
delivered (a) upon delivery if hand-delivered, (b) on the next
business day after deposit with a recognized overnight courier, or
(c) on the date shown on the return receipt if delivered by
registered mail, return receipt requested.
26.03 Waiver of Jury Trial. The parties hereto waive a trial
by jury of any and all issues arising in any action or proceeding
between them or their successors under or connected with this Lease
or any of its provisions, any negotiations in connection therewith,
or Tenant's use or occupation of the Premises.
26.04 Consent of Landlord. Unless otherwise expressly stated
herein, where any provision of this Lease requires the consent or
approval of Landlord, Landlord agrees that Landlord will not
unreasonably withhold or delay such consent or approval. Where any
provision of this Lease requires Tenant to do anything to the
satisfaction of Landlord, Landlord agrees that Landlord will not
unreasonably refuse to state Landlord's satisfaction of such action
by Tenant.
26.05 Payments Under Protest. In case of any dispute between
Landlord and Tenant with respect to the amount of money payable by
Tenant to Landlord under the provisions of this Lease, Tenant shall
be privileged to make payment under protest and, in such event,
shall be privileged to assert and prosecute a claim or claims for
the recovery of the sum, or any part thereof, that shall have been
so paid by Tenant under protest.
26.06 No Oral Modification. All prior understandings and
agreements between the parties are merged within this agreement,
which together with the Agreement to Lease and the Purchase Option
fully and completely sets forth the understanding of the parties;
and this Lease may not be changed or terminated orally or in any
manner other than by an agreement in writing and signed by the
party against whom enforcement of the change or termination is
sought.
26.07 Covenants To Bind and Benefit Respective Parties. The
covenants and agreements herein contained shall bind and inure to
the benefit of Landlord, its successors and assigns, and Tenant,
its permitted successors and assigns.
26.08 Captions and Table of Contents. The captions of this
Lease are for convenience and reference only and in no way define,
limit or describe the scope or intent of this Lease nor in any way
affect this Lease. The table of contents preceding this Lease but
under the same cover is for the purpose of convenience and
reference only and is not to be deemed or construed in any as part
of this Lease, nor as supplemental thereto or amendatory thereof.
26.09 Memorandum of Lease. Landlord and Tenant agree to
execute concurrently with the execution of this Lease and to cause
to be recorded in the public records of Broward County, Florida a
memorandum of this Lease substantially in the form of Exhibit F.
26.10 Attorneys' Fees. In any litigation between the parties
regarding this Lease, the losing party shall pay to the prevailing
party all reasonable expenses and court costs including attorneys'
fees incurred by the prevailing party. A party shall be considered
the prevailing party if:
(a) it initiated the litigation and substantially
obtains the relief it sought, either through a judgment or the
losing party's voluntary action before arbitration (after it is
scheduled), trial, or judgment.
(b) the other party withdraws its action without
substantially obtaining the relief it sought; or
(c) it did not initiate the litigation and judgment is
entered for either party, but without substantially granting the
relief sought.
26.11 Waiver. The failure of either party to exercise any of
its rights is not a waiver of those rights. A party waives only
those rights specified in writing and signed by the party waiving
its rights.
26.12 Governing Law; Venue. This Lease shall be governed by
the laws of the state of Florida. The parties agree that any
action hereunder may be brought in the State or Federal courts of
the State of Florida.
26.13 Business Days. Business days means Monday through
Friday inclusive, excluding holidays. Throughout this Lease,
wherever "days" are used the term shall refer to calendar days.
Wherever the term "business days" is used the term shall refer to
business days.
26.14 Reference Rate. Reference Rate means, at any time, the
rate of interest per annum then most recently published in the Wall
Street Journal as the Prime Rate. For purposes of this Lease, each
change in any interest rate due to a change in the Reference Rate
shall take effect on the effective date of the change in the
Reference Rate. The Reference Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged
to any customer.
26.15 Time. Time is of the essence hereto.
26.16 Relationship of the Parties. This Lease creates no
joint venture, agency, partnership or other relationship between
the parties, other than that of landlord and tenant.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first set forth above.
Tenant: CHANCELLOR OF LAUDERHILL I, INC.
Witness:
By: ______________________________
Its
Landlord: UNICOM PARTNERSHIP LTD.
By its general partner
Witness:
By: ______________________________
Name:
Title:
INDEX OF EXHIBITS
Exhibit Description
Exhibit A Legal Description
Exhibit B Excluded Assets
Exhibit C Permitted Encumbrances
Exhibit D Current Mortgage
Exhibit E Qualifying Subordination, Non-
Disturbance and Attornment Agreement
Exhibit F Memorandum of Lease
OPTION TO PURCHASE AGREEMENT
THIS OPTION TO PURCHASE AGREEMENT (the
"Agreement") is made effective as of the 1st day of July, 1997, by
and between Chancellor of Lauderhill I, Inc., a Delaware
corporation having an address of 197 First Avenue, Needham,
Massachusetts 02194 ("Optionee) and Unicom Partnership Ltd., a
Florida limited partnership with its principal place of business at
5500 Northwest 69th Avenue, Lauderhill, Florida 33319 ("hereinafter
referred to as the "Optionor").
WITNESSETH
WHEREAS, Optionor is the owner of the
Forest Trace at Inverrary (the "Facility") situated on land more
particularly described in Schedule "A" attached hereto; and
WHEREAS, Optionor, as lessor, and
Optionee, as lessee, have entered into a certain Lease of even
date herewith (the "Lease") pursuant to which Optionor will lease
the Facility to Optionee and Optionee will lease the Facility from
Optionor upon the terms and conditions and for the term set forth
in the Lease; and
WHEREAS, Optionee desires an option to
purchase and acquire the Facility and certain tangible and
intangible assets used in connection therewith and Optionor desires
to grant such option to Optionee.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Optionor hereby grants to Optionee the option
hereinafter provided on the terms and conditions hereafter
contained.
I. DEFINITIONS
The following terms have the following
meanings when used herein:
1. "Agreement to Lease" shall mean
that certain Agreement to Lease by and among Optionor and Optionee,
and CareMatrix of Lauderhill I, Inc.
2. "Assets" shall have the meaning
ascribed to such term in the Agreement to Lease.
3. "Contaminants" shall have the
meaning ascribed to such term in the Agreement to Lease.
4."HUD Financing" shall have the
meaning ascribed to such term in the Lease.
5. "Infectious Wastes" shall have the
meaning ascribed to such term in the Agreement to Lease.
6. "Landlord" shall have the meaning
ascribed to such term in the Lease.
7."Lease Year" shall have the meaning
ascribed to such term in the Lease.
8."Other Property" shall mean the
Assets other than the Assets relating to the Facility.
9. "Permitted Encumbrances" shall mean
the permitted liens set forth on Schedule "B" attached hereto.
10."Person" shall have the meaning
ascribed to such term in the Agreement to Lease.
11. "Property" shall mean (a) the
Assets relating to the Facility, and (b) the Records and Plans
relating to the Facility.
12. "Real Estate" shall have the
meaning ascribed to such term in the Agreement to Lease.
13."Real Estate and Casualty Reserves"
shall have the meaning ascribed to such term in the Lease.
14."Replacement Reserves" shall have
the meaning ascribed to such term in the Lease.
15. "Records and Plans" shall have the
meaning ascribed to such term in the Agreement to Lease.
16."Tenant" shall have the meaning
ascribed to such term in the Lease.
17. Other terms are defined in the
text as they appear.
Capitalized terms not otherwise
defined herein have the meaning set forth in the Lease or Agreement
to Lease.
II. OPTION
A.Grant of Option
Subject to the terms and conditions
hereinafter set forth, Optionor hereby gives and grants to Optionee
the exclusive right and option (hereunder called the "Option") to
purchase and acquire the Property.
B.Option Payment
Optionee shall contemporaneously with
the Closing under the Agreement to Lease, pay Optionor a payment of
$4,500,000 in consideration for the grant of the Option (the"Option
Payment"). In the event Optionee elects to exercise the Option
provided herein, the Option Payment shall be applied against
payment of the Purchase Price (as hereinafter defined). In the
event Optionee does not elect to exercise the Option, Optionor
shall retain the Option Payment except in those instances
specifically provided for herein or in the Agreement to Lease.
C.Exercise of Option
1. Optionee may exercise the Option at
any time within ninety (90) days prior to the end of the Lease Term
(the "Option Exercise Period").
2. Exercise of the Option shall be
accomplished by giving an Option Notice in the form attached hereto
as Exhibit A within the Option Exercise Period.
3. Upon exercise of the Option,
Optionor shall be obligated to assign, transfer and convey to
Optionee the Property (including good and clear record and
marketable fee simple title to the Real Estate subject only to the
Permitted Encumbrances) on the terms, conditions and provisions set
forth herein.
D. Purchase Price
1.The purchase price for the Property
(the "Purchase Price"), payable in full at Closing subject to the
adjustments set forth in this Agreement, shall be equal to the sum
of (a) the outstanding principal and accrued and unpaid interest on
the HUD Financing as of Closing (the "HUD Balance") plus (b) the
product of eight and three quarters (8) multiplied by the Cash
Flow (as defined below) generated from operations at the Property
during the third year of the Lease, (as extended as permitted by
the Lease), plus (c) an amount of Six Hundred Thousand Dollars
($600,000) plus (d) extraordinary mortgage amortization from and
after the date hereof. The Option Payment and HUD Balance shall be
a credit against the cash payable to Optionor at Closing.
In the event of a casualty at the
Property, the period used to calculate Cash Flow shall be either
(i) the last twelve (12) months of the Lease Term (as extended
thereunder) excluding the period of time any revenue producing
portion of the Facility is not in operation as a result of a
casualty, plus the first three (3) months thereafter or (ii) the
third year from the period prior to such casualty annualized for
twelve months, whichever period of time produces a greater Cash
Flow amount.
Notwithstanding anything contained
herein to the contrary, the Cash Flow amount used to calculate the
Purchase Price shall be subject to an adjustment to "normalize"
income resulting from any assisted living units being converted to
independent living units. "Normalize" as used herein shall mean
the amount determined by multiplying (A) the number of months of
vacancy related to the units converted in the twelve month period
used for the purposes of calculating Cash Flow by the average
monthly rate for similar units in the Property, by (B) forty
percent (40%).
"Cash Flow" as defined herein shall
mean the "Profit Before Depreciation" of the Facility (as computed
on HUD form 92410(7/91) or any subsequent replacement of that form
or if said form(s) are not available, computed under the same
principles as that form), less principal amortization under the HUD
Financing and reduced for (i) interest actually incurred on the HUD
Financing in excess of the amount reflected on such form during the
period referenced above and (ii) an additional amount of
$400,000.00. The Lease shall have no impact on the computations
hereunder unless expressly provided therein.
E.Place and Date of Closing
The purchase of the Property shall be
consummated (the "Closing") at the office of McDermott, Will &
Emery in Miami, Florida, or at such other place as Optionee and
Optionor may agree, on the date set forth in Optionee's Option
Notice (the "Closing Date"), which Closing Date shall be not less
than sixty (60) days and not more than one hundred twenty (120)
days after delivery of the Option Notice; provided, however, in no
event shall the Closing Date be earlier than 120 days after the
third (3) year anniversary of the Lease Commencement Date (as such
date is permissibly extended under the Lease due to a casualty).
F.Conduct of Optionor Prior to Closing
The Optionor covenants and agrees
that, during the period from the Expiration Date of the Lease
through the Closing Date: (i) Optionor's Business, the Real Estate
and the Assets shall be operated in the ordinary course of business
and in a manner consistent with Optionor's past practice; (ii) no
sale, disposition, removal or encumbrance of any furniture,
fixtures or equipment located at any of the Real Estate shall be
made without the approval of Optionee other than replacements of
similar quality due to obsolescence in the ordinary course of
business; (iii) no decrease shall be made in the usual rates
charged to residents at the Facility without the approval of
Optionee or otherwise permitted pursuant to the Management
Agreement; (iv) the Optionor shall use its best efforts to preserve
the business operation of Optionor's Business and to preserve for
the Optionee the goodwill of the Facility's suppliers, residents in
the Facility, and others having business relations with the
Facility; and (v) the Optionor shall use its best efforts to retain
the services of the Facility's current management-level and
professional employees and to maintain existing staffing patterns
at the Facility.
III. CLOSING PURSUANT TO THIS OPTION
A. Optionor's Deliveries at Closing
At the Closing, Optionor shall execute
(if applicable) and deliver each of the following, each in form
reasonably satisfactory to Optionee:
1.a recordable special warranty deed
executed by Optionor, conveying good and clear record and
marketable fee simple title to the Real Estate to Optionee or its
nominee, subject only to the Permitted Encumbrances;
2.a bill of sale in the form of
Exhibit B attached hereto executed by Optionor transferring, and
warranting that each Optionor is transferring all of such
Optionor's interest in all Property other than the Real Estate to
Optionee or its nominee;
3.all maintenance, operations,
development, leasing, management, construction, equipment and
miscellaneous contracts, and an assignment thereof and all
warranties applicable thereto to Optionee or its nominee which
Optionee elects to have assigned to it within thirty (30) days
prior to the Closing;
4.all certificates of occupancy, and
any other permits, licenses or approvals in the possession or under
the control of any of the Optionor necessary to permit the lawful
use and occupancy of the Property in its then current use and an
assignment thereof to Optionee or its nominee (except to the extent
previously furnished by Optionor to Optionee);
5.such other deeds, assignments, other
instruments of transfer and conveyance as Optionee may reasonably
request for the purpose of accomplishing and consummating the
transfer of the Property to Optionee;
6.all documentation reasonably
necessary to evidence the due authorization and enforceability of
all Closing documents delivered by Optionor at Closing;
7.customary No Lien and Possession
affidavits, FIRPTA affidavit and other customary documents and
affidavits; and
8.the Settlement Statement; and
9.the pre-Closing Payables and
Delinquent Resident Accounts as required under Section III.E below.
B. Optionee's Deliveries at Closing
At the Closing, Optionee shall execute
(if applicable) and deliver each of the following:
1.
Such portion of the Purchase Price in
bank or cashier's check or by wired
funds as is required hereunder.
2.
The Settlement Statement.
C. Costs
Optionor shall pay all transfer taxes,
including, but not limited to, deed stamps. Optionee shall pay the
cost of any title examination and title insurance premium. All
other closing costs shall be borne by the party which customarily
absorbs the same pursuant to conveyancing practice in the State of
Florida. Each party shall pay the fees and expenses of any
attorneys retained by such party.
D. Fee Mortgages
Optionee shall either assume the HUD
Balance at Closing, in which case such HUD Balance (exclusive of
any assumption fee which Optionee shall pay) shall be applied to
the Purchase Price so that Optionee shall receive a credit for such
sum or (ii) provide funds equal to the HUD Balance to Optionor. In
the event Optionee elects to assume the HUD Financing, Optionor
agrees to cooperate and take all actions reasonably requested by
Optionee in connection with such assumption. In the event Optionee
does not assume the HUD Financing, Optionor shall use such portion
of the Purchase Price to discharge the HUD Financing provided
Optionee shall pay any prepayment charges in connection with the
discharge of the HUD Financing. Optionee acknowledges that the HUD
Financing cannot be prepaid before August 1, 2000.
E. Adjustments and Prorations
1.Real Estate Tax Reserves, Casualty
Reserves, Mortgage Insurance Premiums and Replacement Reserves
shall be credited to Optionor. In addition, the parties will make
other customary adjustments and prorations for real estate and
tangible personal property taxes, Rent, the Inventory (at cost),
building supplies, utilities, payroll, benefits and the interest on
the HUD Balance for the month of the closing. Tax prorations will
be based on the current period bill, if available, or, if not
available based on the prior period bill with a post-closing
adjustment when the current period bill is received.
2. Trade Payables. At the Closing,
the Optionor shall provide Optionee with a true and complete
listing of all of the known outstanding trade payables and accrued
expenses of the Optionor relating to the Facility (the "Pre-Closing
Payables") identifying the amount of Pre-Closing Payables as of a
date not more than fifteen (15) days prior to the Closing.
3. Delinquent Resident Accounts. At
the Closing, the Optionor shall provide Optionee with a true and
complete listing, as of a date not more than fifteen (15) days
prior to the Closing, of any resident or residents at the Facility
who are delinquent in the payment of their bills.
4. Other Closing Adjustments. All
expenses attributable to the operation of the Property (measured on
an accrual basis) and all income (measured on an accrual basis)
through 11:59 p.m. on the day before the Closing shall be for the
account of the Optionor. Thereafter, such income and expense shall
be for the account of Optionee. Except as otherwise expressly
provided in this Agreement, the Optionor shall remain responsible
for all accounts payable, and shall be entitled to all accounts
receivable, through 11:59 p.m. on the day before the Closing. In
effecting the proration, the Optionor shall be credited for items
of expense paid in advance and debited for items of expense accrued
but not paid for as of the Closing. In addition, in effecting the
proration, Optionee shall receive a credit for all deposits and
advance payments relating to services to be provided to residents
of the Facility after the Closing. In addition, on or about the
Closing, the Optionor shall cause final utility meter readings to
be made for all utilities serving the Real Estate and the Optionor
shall pay or cause to be paid all final bills rendered from such
meter readings.
F.Conditions Precedent to Closing
1. The following shall be express
conditions precedent to Closing and to the obligation of the
Optionee to pay the Purchase Price as above provided (the "Closing
Conditions"), and are for the sole benefit of the Optionee and may
be waived by Optionee in whole or in part in its sole discretion:
a.No breach or default by Optionor
having a material adverse effect on the Facility shall have
occurred under this Agreement beyond any applicable grace periods.
b.All representations and warranties
of Optionor herein shall be and remain true, correct and complete
in all material respects as of the Closing unless the failure of
such representation and warranty to be true is a result solely of
acts or omissions of Optionee, and Optionor shall have delivered
such affidavits and statements dated as of the Closing as Optionee
may require so certifying.
c.Optionor shall have delivered all
items required pursuant to Section III.A., hereof.
d.Optionee shall have received (i) a
good and sufficient special warranty deed running to Optionee or
its nominee, and said deed shall convey a good and clear record and
marketable fee simple title thereto, subject only to the Permitted
Encumbrances, and (ii) a commitment for an ALTA title insurance
policy, dated as of the Closing Date, issued by a national title
insurance company acceptable to Optionee which shall not contain
any exceptions other than the Permitted Encumbrances (or
encumbrances directly and exclusively granted by Optionee).
G.Remedies
1. In the event that Optionee shall
have exercised the Option hereunder and Optionor shall fail to
perform any material covenant hereunder or to satisfy or cause to
be satisfied any Closing Condition following thirty (30) days
written notice from Optionee (during which time the terms of the
Option, the Lease and Agreement of Lease shall continue as if no
such failure had occurred), then, the Closing shall be extended for
ninety (90) days and Optionor shall use best efforts to perform
such covenant or satisfy such Closing Condition. In the event that
the above-referenced ninety (90) day period shall have expired and
Optionor shall have been unable after using best efforts to perform
such covenant or satisfy such Closing Condition, then Optionee
shall have the following rights and remedies, at its sole election:
a.To revoke the exercise of the Option
and terminate this Agreement, in which case all obligations of the
parties hereto shall cease, the Option Payment shall be returned to
Optionee and this Agreement shall be void and without recourse to
the parties hereto; provided, however, that for the failure of a
Condition Precedent constituting the violation by Optionor of the
representations and warranties in Section V.5 (unless caused by
Optionor), V.7 (unless caused by Optionor), V.8 (unless breach
relates to title to the Property, is uninsured and, materially
adversely affects the operation of the Property), V.9 or V.10,
Optionee shall only be entitled to receive such portion of the
Option Payment as is equal to the following amount: (i) the Option
Payment less (ii) Facility revenue retained by Optionee as Tenant
under Section 4.02 of the Lease plus (iii) 8% per annum on such net
amount (i.e. the difference between (i) and (ii)) through the date
of payment to Optionee (the "Adjusted Option Payment"); otherwise
Optionee shall be paid the Option Payment, or
b.To seek specific performance of
Optionor's obligations hereunder.
2. In the event that Optionee shall
have exercised the Option hereunder and shall fail to pay to the
party designated by Optionor the Purchase Price at Closing, and
Optionor shall have fully performed all covenants and satisfied all
Closing Conditions, then Optionor's sole and exclusive remedy in
lieu of all other rights of Optionor at law or in equity (and
Optionor hereby waives any such rights) shall be to terminate this
Agreement and retain the Option Payment as liquidated and agreed
final damages (it being agreed that it would be impractical or
extremely difficult to fix the actual damages resulting therefrom).
IV. CASUALTY AND CONDEMNATION
1.In the event the Property is damaged
or destroyed so as to permit Tenant to terminate the Lease pursuant
to Article 17 thereof, and Optionee so terminates, the Adjusted
Option Payment shall be paid to Optionee, all obligations of the
parties shall cease, and this Agreement shall be void without
recourse to the parties hereto.
2.In the event the Property is damaged
or destroyed and this Agreement is not terminated, this Agreement
and the Lease shall remain in full force and effect, and the
Closing hereunder shall, at Optionee's election, be extended for
the period of time set forth in Section 17.05 of the Lease.
3. If there is any taking, so as to
permit the Tenant to terminate the Lease pursuant to Article 18
thereof, and Optionee so terminates the Lease, all obligations of
the parties hereto shall cease, the Adjusted Option Payment shall
be paid to Optionee and this Agreement shall be void and without
recourse to the parties hereto.
4. If any part of the Property is
taken and this Agreement is not terminated pursuant to the Lease,
then, in the event of a Closing hereunder, the Purchase Price shall
be (i) reduced by the amount of the award or compensation received
by Optionor on account of the taking if the taking does not affect
the revenue of the Facility or (ii) reduced by an equitable sum
mutually agreed to by the parties if the taking affects the revenue
of the Facility.
V. REPRESENTATIONS AND WARRANTIES
Optionor's Representations and
Warranties.
Optionor hereby covenants, represents,
warrants to and agrees with Optionee that the following shall be
true and correct as of the Closing:
1. Organization, Power and Standing.
Optionor is a limited partnership duly organized, validly existing
and in good standing as such under the laws of the State of
Florida, and has all requisite power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement.
2. Authorization and Enforceability.
This Agreement has been duly authorized, executed and delivered by
Optionor, constitutes the legal, valid and binding obligation of
Optionor and is enforceable against Optionor in accordance with its
terms, except to the extent such enforceability may be limited by
bankruptcy, reorganization, insolvency or similar laws of general
applicability governing the enforcement of the rights of creditors
or by the general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
3. Compliance with Charter Documents.
The execution, delivery and performance of this Agreement by
Optionor and the consummation by Optionor of the transactions
contemplated hereby will not violate or conflict with or constitute
a default under any term of the Partnership Agreement of Optionor.
Schedule 5.1.3 attached to the Agreement to Lease are true and
complete copies of Optionor's Partnership Agreement, as of the date
of this Agreement.
4. No Breach, Etc. The execution,
delivery and performance of this Agreement will not conflict with
or result in a breach of or default by Optionor under any material
term, condition, or provision of any order, writ, injunction,
decree, contract, agreement, or instrument to which Optionor is a
party or by which the Property are or may be bound which default
would have a material adverse affect on the Property, will not
result in the creation or imposition of any lien, charge, or
encumbrance of any nature upon the Property, and will not give to
others any interest or rights in, or with respect to the Property
unless such right is fully protected by Optionee's title insurance.
5. Compliance With Laws. Neither the
execution and delivery of this Agreement by Optionor nor the
consummation by Optionor of any transaction contemplated hereby
does or will violate or give rise to any violations or defaults
under any Legal Requirement (as defined in the Agreement to Lease).
The Property is not in violation of any Legal Requirement (unless
such violation was caused by Optionee) or any outstanding covenants
of any Permitted Encumbrances, and there exists no condition or
event pertaining to the Property, which after notice or lapse of
time, or both, would be held so to violate or to give rise to any
such default. Optionor has not received any notice, and Optionor
has no knowledge, of any impending order or requirement which would
cause additional expenditures to be made to bring the Property into
compliance with Legal Requirements or any such outstanding
covenants.
6. Intentionally Omitted.
7.Environmental Matters. Except to
the extent disclosed in the Agreement to Lease, Optionor is not
subject to any type of enforcement action or compliance order for
any violation or alleged violation of any environmental laws,
rules, standards or regulations, including, but not limited to,
those related to waste-management, air pollution control,
waste-water treatment or noise abatement. Optionor has not
received any notice or citation for noncompliance by it with
respect to any of the foregoing relating to the Property or has any
knowledge of any circumstance which could reasonably be expected to
result in any such enforcement action or compliance order. To the
best of Optionor's knowledge:
a.There are no Contaminants which have
at any time been generated, transported, disposed of, recycled or
otherwise handled in any way by Optionor or others in or about any
of the Real Estate, except as occurs in the ordinary course of the
lawful operation of an assisted living/independent living facility
in the State of Florida.
b.There are no locations in or about
any of the Real Estate where Contaminants or Infectious Wastes from
the operation of the Property have been disposed of.
c.There has been no prior use
(including uses by any predecessor) of any of the Real Estate
whereby Contaminants were at any time located on or contained
within the Facility or the Real Estate, except as occurs in the
ordinary course of the lawful operation of an assisted
living/independent living facility in the State of Florida.
d.There are no past or continuing
releases of Contaminants from the Real Estate, except as occurs in
the ordinary course of the lawful operation of an assisted
living/independent living facility in the State of Florida.
e.Optionor has not been notified that
any person's health has or may have been impaired (including any
past or present employee) as the result of the use, existence or
disposal of Contaminants or Infectious Wastes on the Real Estate.
f.All Infectious Wastes have been
stored, transported and disposed of in accordance with all laws,
licensure and certification standards applicable to Optionor and
the Facility.
g.There are no underground storage
tanks at the Real Estate, nor have any such storage tanks been
removed from the Real Estate.
8.Litigation. There is no litigation,
at law or in equity, or any proceeding before or investigation by
any federal, state or municipal court, board or other governmental
or administrative agency or any arbitrator, against Optionor in
connection with the operation of the Facility or otherwise
affecting the Real Estate or the Assets, pending or, to the best of
each Optionor's knowledge, threatened or any reasonable factual
basis therefor, except for such of the foregoing as are described
in Schedule C attached hereto which would have a material adverse
effect on the operation of the Facility. No judgment, decree or
order of any federal, state or municipal court, board or other
governmental or administrative agency or any arbitrator has been
issued against Optionor which has a material adverse effect on the
operation of the Facility.
9.Optionor has no knowledge of any
material pending or proposed municipal betterments for which a lien
could be imposed on the Premises.
10.There are no condemnation
proceedings pending, or, to the best of each Optionor's knowledge,
proposed or threatened against all or any part of the Property
which would have a material adverse effect on the operation of the
Facility.
11.No Misrepresentations. Optionor
has not made an untrue statement of material fact which has a
material adverse effect on the operation of the Facility in any
representation or warranty by Optionor or in any instrument,
certification or statement furnished to Optionee nor has Optionor
omitted to state a material fact necessary to make the statements
contained herein or therein not misleading.
Optionee's Representations and
Warranties.
Optionee hereby represents, covenants
and warrants to and agrees with Optionor that the following shall
be true and correct as of the Closing:
1.Organization, Power and Standing.
Optionee 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, partnership and otherwise, to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. Optionee shall be qualified to
do business in the State of Florida as of the Closing Date.
2.Authorization and Enforceability.
This Agreement has been duly authorized, executed and delivered by
Optionee constitutes the legal, valid and binding obligation of
Optionee and is enforceable against Optionee in accordance with its
terms, except to the extent such enforceability may be limited by
bankruptcy, reorganization, insolvency or similar laws of general
applicability governing the enforcement of the rights of creditors
or by the general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
3. Compliance with Charter Documents.
The execution, delivery and performance of this Agreement by
Optionee and the consummation by Optionee of the transactions
contemplated hereby will not violate or conflict with or constitute
a default under any term of the Articles of Incorporation or By-
laws of Optionee.
ac No Breach, Etc. The execution,
delivery and performance of this Agreement will not conflict with
or result in a breach of or default by Optionee under any material
term, condition, or provision of any order, writ, injunction,
decree, contract, agreement, or instrument to which Optionee is a
party or any applicable law.
5. Litigation. There is no
litigation, at law or in equity, or any proceeding before or
investigation by any federal, state or municipal court, board of
arbitrator, against Optionee, pending (or, to the best of
Optionee's knowledge, threatened or any reasonable factual basis
therefor), which might materially and adversely affect the legality
or validity of this Agreement or the transactions contemplated
thereby.
VI. 1.Indemnification of Optionee.
Optionor shall defend, indemnify and
hold harmless Optionee and any affiliate of Optionee against all
damages, civil and criminal monetary penalties, losses and
reasonable expenses, including any reasonable attorneys' and other
professional fees (hereinafter referred to collectively as
"Liabilities") in connection with any matter arising out of or
related to any of the following (solely to the extent not covered
by insurance): (a) any audit or investigation by any governmental
authority or administrative agency (whenever conducted) concerning
the operation of the Facility or any other Assets relating to the
Facility by Optionor prior to the Closing or any amounts paid to
Optionor with respect to any period prior to the Closing; any
assessments, adjustments (including rate adjustments) or offsets
made against Optionee or the Facility or other Assets relating to
the Facility as a result of such an audit or investigation or in
connection with the recovery by any governmental authority or
administrative agency of any overpayments made to Optionor for
services performed prior to Closing or any depreciation recapture
applicable to the period prior to Closing; (b) any reasonable costs
of defense of, and any judgment against Optionee with respect to,
any litigation relating to the operation of the Assets relating to
the Facility prior to the Closing; (c) any suit, claim or
proceeding of any nature seeking to recover damages for personal
injury, death or property damage due or alleged to be due to
occurrences in connection with the operation of the Assets relating
to the Facility prior to the Closing; and (d) any other liability,
damage, cost, claim, expense or assessment asserted against
Optionee or the Assets relating to the Facility as a result of, or
with respect to, Optionor's ownership or operation of the Assets
relating to the Facility prior to the Closing.
2.Indemnification of Optionor
Optionee shall defend, indemnify and
hold harmless Optionor and any affiliate of Optionor against all
damages, civil and criminal monetary penalties, losses and
reasonable expenses, including any reasonable attorneys' and other
professional fees (hereinafter referred to collectively as
"Liabilities") in connection with any matter arising out of or
related to any of the following (solely to the extent not covered
by insurance): (a) any audit or investigation by any governmental
authority or administrative agency (whenever conducted) concerning
the operation of the Facility or any other Assets relating to the
Facility by Optionee after the Closing or any amounts paid to
Optionee with respect to any period after the Closing; any
assessments, adjustments (including rate adjustments) or offsets
made against Optionor or the Facility or other Assets relating to
the Facility as a result of such an audit or investigation or in
connection with the recovery by any governmental authority or
administrative agency of any overpayments made to Optionee for
services performed after the Closing or any depreciation recapture
applicable to the period after the Closing; (b) any reasonable
costs of defense of, and any judgment against Optionor with respect
to, any litigation relating to the operation of the Assets relating
to the Facility after the Closing; (c) any suit, claim or
proceeding of any nature seeking to recover damages for personal
injury, death or property damage due or alleged to be due to
occurrences in connection with the operation of the Assets relating
to the Facility after the Closing; and (d)
any other liability, damage, cost, claim, expense or assessment
asserted against Optionor or the Assets relating to the Facility as
a result of, or with respect to, Optionee's ownership or operation
of the Assets relating to the Facility after the Closing.
VII. MISCELLANEOUS
A. Successors and Assigns
All of the terms and provisions hereof
shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
B. Governing Law
This Agreement shall be governed and
construed in accordance with the laws of the State of Florida.
C. Headings
Headings at the beginning of each
numbered Article and Section of this Agreement are solely for the
convenience of reference of the parties and are not a part of this
Agreement.
D.Attorneys' Fees
If a breach or default by either party
shall occur, the breaching or defaulting party agrees to pay all
costs, expenses and charges, including reasonable attorneys' fees,
which may be incurred by the other in the enforcement of its rights
pursuant to this Agreement.
E. Equitable Remedies
In the event of a breach or threatened
breach of this Agreement by Optionor, the remedy at law in favor of
Optionee may be inadequate, and Optionee, in addition to all other
rights which may be available to it, shall accordingly have the
right of specific performance in the event of any breach, or
injunction in the event of any threatened breach, of this Agreement
by Optionor.
F. Counterparts
This Agreement may be executed in two
or more counterparts, each of which shall be an original but all of
which shall together constitute one and the same agreement.
G.Severability
Every provision of this Agreement is
intended to be severable. In the event that any term or provision
hereof is declared by a court of competent jurisdiction to be
illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the balance of the terms and provisions
hereof, which terms and provisions shall remain binding and
enforceable, and such unenforceable provision shall be deemed
reformed so as to give maximum permissible effect to the intention
of the parties as expressed herein.
H. Amendment
This Agreement can be modified or
rescinded only by a writing expressly referring to this Agreement
and signed by all of the parties.
I.Memorandum of Option
Optionor and Optionee each agree that
neither will record or file this document in any public office or
Registry of Deeds but will record a memorandum hereof to provide
the public with notice of the existence hereof. Optionee shall pay
the cost of recording of such memorandum.
J.Notices
All notice, report, demand or other
instrument authorized or required to be given or furnished under
this Agreement shall be deemed given or furnished (i) when
addressed to the party intended to receive the same, at the address
of such party set forth below and delivered at such address, by
hand to such party or (ii) when received if deposited in the United
States mail as first class registered or certified mail, return
receipt requested, postage paid; the return receipt shall be
conclusive evidence of delivery. The addresses of the parties are
as follows:
Optionor:Unicom Partnership, Ltd.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
Attn: Stanley Rosenthal
with a copy to:Bruce B. Litwer
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
Optionee:
Chancellor of Lauderhill I, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attn: General Counsel
with a copy to:Christopher J. Donovan,
Esq.
McDermott, Will & Emery
75 State Street, Suite 1700
Boston, Massachusetts 02109
Either party may change the address to which any such notice,
report, demand or other instrument is to be delivered or mailed, by
furnishing written notice of such change to the other party.
K.Assignment of Rights.
Subject to any HUD approval, if
applicable, Optionee shall be entitled to assign its right to
exercise the Option granted herein to (i) any entity controlled by,
controlling or under common control with Optionee or any entity to
which Optionee can assign the Lease or (ii) a real estate
investment trust or similar financing entity (a "REIT") in
connection with the financing of the purchase of the Property and
the lease of the Property from the REIT to Optionee or an affiliate
thereof, provided that Optionee shall give notice to Optionor of
any such assignment or (iii) to any other party with the consent of
Optionor exercised in its sole discretion.
L.No Further Encumbrance. Between the
date hereof and the expiration of the Option Exercise Period, no
contract for or on behalf of or affecting any portion of the
Property shall be negotiated or entered into by Optionor which
cannot be terminated without charge, cost, penalty, or premium, and
Optionor shall not enter into any lease for, or further encumber
(except any approved financing due to a casualty under the Lease),
any portion of the Property.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first set forth above.
Optionee:
CHANCELLOR OF LAUDERHILL I, INC.
Witness:
By:______________________________
Name:
Title:
Optionor:
UNICOM PARTNERSHIP LTD.
By its general partner
By:_____________________________
Name:
Title:
INDEX OF EXHIBITS AND SCHEDULES
ExhibitDescription
AOption Notice
BBill of Sale
ScheduleDescription
ALegal Description of Real Estate
BPermitted Encumbrances
CLitigation
SCHEDULE A
LEGAL DESCRIPTION OF REAL ESTATE
SCHEDULE B
PERMITTED ENCUMBRANCES
SCHEDULE C
LITIGATION
EXHIBIT A
OPTION NOTICE
(date)
(to Optionor or successor)
address
Ladies and Gentlemen:
Reference is made to the Option to
Purchase Agreement dated ________, ____ (the "Option") between
Unicom Partnership Ltd., a Florida limited partnership having an
address of 5550 Northwest 69th Avenue, Lauderhill, Florida 33319
("Optionor") and Chancellor of Lauderhill I, Inc. a Delaware
corporation having an address of 197 First Avenue, Needham,
Massachusetts 02194 ("Optionee"). The undersigned is the holder of
Optionee's interest in the Option.
Pursuant to Section II.B. of the
Option you are advised that the Option is hereby exercised.
The date for closing of the
transaction shall be ____________________.
Please refer to the Option with
respect to your obligations in preparation for settlement.
Very truly yours,
_________________________
(holder of Option)
EXHIBIT B
BILL OF SALE
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT ("Agreement") is made as of
September 24, 1997, by and between NEWALL ASSISTED LIVING, LTD., a
Florida limited partnership ("Newall"), and CHANCELLOR OF
LAUDERHILL II, INC., a Delaware corporation ("Chancellor").
ARTICLE I
ORGANIZATION AND PURPOSES OF THE VENTURE
Section 1.1 Formation. The Venturers hereby form a Joint
Venture Partnership (the "Venture") which shall be a general
partnership under the Florida Revised Uniform Partnership Act, as
amended (the "Act"). The Venturers' rights and obligations and the
Venture's status, administration and determination shall be
governed by the Act, to the extent not inconsistent with the
provisions of this Agreement. If there is any conflict between the
provisions of this Agreement and the provisions of the Act, the
provisions of this Agreement shall control to the extent permitted
by law.
Section 1.2 Name. The name of the Venture shall be "NEWALL-
CHANCELLOR 69TH AVENUE ASSOCIATES".
Section 1.3 Place of Business. The Venture's executive
offices and initial principal place of business shall be located at
5500 Northwest 69th Avenue, Lauderhill, Florida 33319. The
Venture's principal place of business may be changed to such other
place as the Executive Committee (hereinafter defined) may
designate from time to time to the Venturers upon not less than ten
(10) days' prior written notice.
Section 1.4 General Purposes. The general business purpose of
the Venture shall be to acquire title to certain real property
consisting of approximately four and two-tenths (4.2) acres of
vacant land located in Lauderhill, Broward County, Florida, and
more particularly described on Exhibit "A" attached hereto and made
a part hereof (the "Property") and to develop and construct an
assisted living project to be comprised of approximately one
hundred twenty (120) beds (the "Project") on the Property. For the
avoidance of doubt, this Agreement, the Venture and the business of
the partnership formed between the Venturers shall be limited to
the aforementioned activities at the Project and the Property and
shall not extend to any other activity, development or site. The
parties acknowledge that upon the mutual agreement of the
Venturers, at any time prior to December 31, 1997, another parcel
of real property may be substituted for the Property (the
"Substitute Property"), in which event, all references in this
Agreement to the term "Property" shall thereafter be deemed to
refer to the Substitute Property.
Section 1.5 Specific Purposes and Objectives. In furtherance
of the foregoing general purposes, the parties intend (in the name
of the Venture) to acquire, own, develop, improve, maintain,
operate and/or lease the Project and the Property.
Section 1.6 Fulfillment of Purposes. The parties intend to
fulfill their business purposes by working together utilizing their
financial strength, management experience, and operations, real
estate development and marketing expertise.
Section 1.7 Term. The term of this Agreement shall be from
the date of this Agreement until December 31, 2047, unless sooner
terminated as provided herein (the Term").
Section 1.8 Assignment of Contract Rights. It shall be a
condition precedent to the commencement of the Term of the Venture
that Newall, Chancellor and CareMatrix of Massachusetts, Inc.
("CareMatrix," which term shall include its nominee), as the case
may be, shall assign or transfer (as the case may be) to the
Venture, and the Venture shall assume from Newall, Chancellor and
CareMatrix, as the case may be, all of their right, title and
interest in and to the following (the "Contract Rights"): (i) the
Property; and (ii) all plans and surveys, soil tests, construction
contracts, architect/engineer agreements, governmental permits and
approvals, appraisals, environmental site assessments, and all
other rights, permits, information, records and documentation
concerning or otherwise affecting the Project, to the extent the
same are assignable. If said conditions precedent are not satisfied
within one hundred twenty (120) days from the date of this
Agreement, the parties shall mutually agree upon a revised schedule
for such assignment, transfer and acceptance. The Venture shall be
responsible for the payment of all costs and expenses incurred in
connection with the Contract Rights (the "Contract Obligations").
The Contract Obligations (including, but not limited to, payment of
the "Agreed Value" as hereinafter defined) of the Property) shall
be payable by the Venture to Newall, Chancellor, CareMatrix, or the
appropriate third party, as the case may be, at the time of, and
from, the first advance under the Project Financing (as hereinafter
defined) for the Project.
Section 1.9 Other Agreements. Simultaneously with the
execution of this Agreement, (i) the Venture and Chancellor shall
enter into the Lease Agreement (as defined hereinbelow) for the
Project, (ii) the Venture and CareMatrix shall enter into the
Development Agreement (as defined hereinbelow), (iii) the Venture
and Stanley Rosenthal (or his nominee) shall enter into the
Management Agreement (as hereinafter defined), (iv) the Venture and
Stanley Rosenthal (or his nominee) shall enter into the Services
Agreement (as defined hereinbelow), and (v) the Venture and
Chancellor shall enter into the Option Agreement (as defined
below).
Section 1.10 Other Business. Except as provided in Section
4.6 hereof, this Agreement shall not prohibit any Affiliate of a
Venturer from conducting other business or activities not related
to the Venture, and no such Affiliate shall be accountable to the
Venture or the other Venturers in connection therewith, whether or
not such other business or activities, directly or indirectly,
compete with the business of the Venture. Further, no Venturer
shall be liable or accountable to the Venture or the other
Venturers for failure to disclose or make available to the Venture
any business opportunity that such Venturer or its Affiliate
becomes aware of in its capacity as a Venturer or otherwise.
Section 1.11 Title to Property. All real and personal
property owned by the Venture shall be owned by the Venture as an
entity and no Venturer shall have any ownership interest in such
property in such Venturer's individual name or right, and each
Venturer's interest in the Venture shall be personal property.
Except as otherwise provided in this Agreement, the Venture shall
hold all of its real and personal property in the name of the
Venture and not in the name of any Venturer.
Section 1.12 Payment of Individual Obligations. The Venture's
credit and assets shall be used solely for the benefit of the
Venture, and no asset of the Venture shall be transferred or
encumbered for or in payment of any individual obligation of any
Venturer.
Section 1.13 Execution of Documents. Forthwith upon the
execution of this Agreement, the Venturers shall take or shall
procure that the Venture or the Venturers' respective Affiliates
take, the following steps:
(a) completion of all formalities and payment of all fees
necessary to constitute the Venture as a Florida general
partnership;
(b) the payment of the initial Capital Contributions
referred to in Section 6.1;
(c) the nomination of the Venturer's respective
representatives on the Executive Committee which shall
initially be those set forth on Schedule 1.13(c);
(d) the filing of a Statement of Partnership Authority, in
form acceptable to the Venturers, with the Secretary of
State for Florida; and
(e) the ratification by the Executive Committee of all
acts, expenditures, contracts and commitments
heretofore undertaken, incurred or entered into by
either of the Venturers on behalf of the Venture and in
furtherance of the venturers business.
ARTICLE II
DEFINITIONS AND TERMS
Section 2.1 Definitions. For purposes of this Agreement,
unless the context indicates otherwise, the following terms shall
have the meanings assigned to them in this Article II.
(a) "Adjusted Capital Account Deficit" means (for
federal income tax purposes) with respect to any Venturer the
deficit balance, if any, in such Venturer's capital account as of
the end of any tax year after giving effect to the following
adjustments:
(i) Credit to such capital account the sum of (i)
any amount which such Venturer is obligated to restore to such
capital account pursuant to any provision of this Agreement, plus
(ii) an amount equal to such Venturer's share of Minimum Gain as
determined under Regulation 1.704-2(g)(1) and such Venturer's
share of Partner Nonrecourse Debt Minimum Gain as determined under
Regulation 1.704-2(i)(5), plus (iii) any amounts which such
Venturer is deemed to be obligated to restore pursuant to
Regulation 1.704-1(b)(2)(ii)(c); and
(ii) Debit to such capital account the items
described in Regulation 1.704-1(b)(2)(ii)(d)(4), (5), and (6).
(b) "Affiliate" shall mean any Person who is, on the
date of this Agreement, or may hereafter become: (i) any
shareholder, officer or director of either Venturer; and (ii) any
individual, corporation, partnership or other entity which either
directly or through one or more intermediaries, controls, is
controlled by, or is under common control with, either Venturer, or
for whom any other affiliate of a Venturer is a director, officer,
shareholder or general partner. An individual or entity which,
either alone or pursuant to an arrangement or understanding with
one or more other individuals or entities (a) owns, controls or has
the power to vote (including by proxy) greater than fifty percent
(50%) of any class of voting securities of an entity or who
determines in any manner the election or appointment of a majority
of the directors thereof, or (b) has the power or practical ability
to exercise controlling influence over the management or policies
of such entity, shall be deemed to be in control of such entity.
(c) "Agreed Value" shall mean the Fair Market Value of
the Property as of the date of this Agreement as mutually agreed
upon by the Venturers or, if no such agreement has been reached
within sixty (60) days of the date of this Agreement, the Agreed
Value shall be the Fair Market Value of the Property as of the date
of this Agreement as determined by the Independent Expert and such
determination shall be binding upon the Venturers.
(d) "Budget" shall mean the budget of expected capital
and operating expenditure, including marketing expenditure in
respect of the business of the Venture, as shall be adopted by the
Executive Committee for each fiscal year of the Venture.
(e) "Building Contract" shall mean the contract or
contracts to be entered into by the Venture for the construction of
all or any part of the Project and/or for the performance of any
other works or services in connection with the construction of the
Project.
(f) "Capital Account" shall mean the capital account of
each Venturer maintained and determined pursuant to Article VII of
this Agreement.
(g) "Capital Contributions" shall mean the total amount
of money and the Fair Market Value of property actually contributed
by each Venturer to the Venture and acceptable to the Venture
pursuant to the terms of this Agreement.
(h) "Capital Transactions" shall mean the occurrence of
any of the following events, to the extent that any such event is
attributable to capital in accordance with generally accepted
accounting principles: (i) a sale of all or part of the property or
assets of the Venture outside the ordinary course of business; (ii)
a mortgage or mortgage refinancing covering, in whole or in part,
the property or assets of the Venture; (iii) the condemnation of
the property of the Venture, in whole or in part; or (iv) the
receipt by the Venture of proceeds realized from title or fire or
extended coverage insurance covering the Venture's property, to the
extent that such proceeds exceed the amounts expended for repairing
or restoring the property with respect to which the proceeds are
received and any fees or expenses incurred in connection with the
adjustment of such loss or in connection with such repair or
restoration.
(i) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(j) "Development Agreement" shall mean that certain
turnkey development agreement by and between the Venture and
CareMatrix pursuant to which CareMatrix will supervise the
development and construction of the Project.
(k) "Distributable Cash Flow" of the Venture shall mean
all cash and cash equivalents of the Venture from all sources, on
hand as of the last day of the period of determination thereof
prior to any distribution to the Venturers and after payment of all
then due expenses of operating and managing the Venture's business
(including payments for capital improvements and replacements) and
after payment of all then due debts and liabilities of the Venture
[including the Project Financing and any Chancellor Loan (as
hereinafter defined)] and any prepayments of debts and liabilities
of the Venture that the Executive Committee elects to make and
after establishment of any reserves deemed necessary by the
Executive Committee for (i) the repayment of any debts or
liabilities of the Venture; (ii) the working capital requirements
of the Venture; and (iii) any contingent or unforeseen liabilities
of the Venture.
(l) "Fair Market Value" shall mean such value as shall
be agreed between the Venturers or (if they shall fail to agree
within sixty (60) days of notice from either party to the other) as
determined by an Independent Expert.
(m) "Independent Arbitrator" shall mean an independent
lawyer with not less than ten (10) years of experience in
commercial property and assisted living facilities, appointed by
agreement between the Venturers or if the Venturers are unable to
agree within seven (7) days of the date on which either Venturer
receives notice that such appointment is necessary, each of the
Venturers shall select an Independent Arbitrator who shall, in
turn, select a third Independent Arbitrator who shall serve as the
Independent Arbitrator for purposes hereof. The Venturers shall
supply the Independent Arbitrator with such information as the
Independent Arbitrator shall request. The Venturers shall be
entitled to make submissions to the Independent Arbitrator.
(n) "Independent Expert" shall mean an independent MAI
appraiser located in Broward County, Florida, appointed by
agreement between the Venturers or if the Venturers are unable to
agree within seven (7) days of the date on which either Venturer
receives notice that such appointment is necessary, each of the
Venturers shall select an Independent Expert who shall, in turn,
select a third Independent Expert who shall serve as the
Independent Expert for purposes hereof. The Venturers shall supply
the Independent Expert with such information as the Independent
Expert shall request. The Venturers shall be entitled to make
submissions to the Independent Expert and the Independent Expert's
costs shall be borne by the Venture.
(o) "Independent Mediator" shall mean an independent
lawyer with not less than ten (10) years of experience in
commercial property and assisted living facilities, appointed by
agreement between the Venturers or if the Venturers are unable to
agree within seven (7) days of the date on which either Venturer
receives notice that such appointment is necessary, each of the
Venturers shall select an Independent Mediator who shall, in turn,
select a third Independent Mediator who shall serve as the
Independent Mediator for purposes hereof. The Independent Mediator
shall act as an expert and not as an arbitrator and the Venturers
shall supply the Independent Mediator with such information as the
Independent Mediator shall request. The Venturers shall be entitled
to make submissions to the Independent Mediator and the Independent
Mediator's costs shall be borne by the Venture.
(p) "Lease Agreement" shall mean that certain lease
agreement by and between the Venture, as lessor, and Chancellor, as
lessee, with respect to the leasing of the Project.
(q) "Management Agreement" shall mean that certain
management agreement pursuant to which Stanley Rosenthal (or his
nominee) shall provide operational management and marketing
services for the Project prior to completion thereof.
(r) "Option Agreement" shall mean that certain option to
purchase agreement by and between the Venture and Chancellor
pursuant to which Chancellor shall have the option to purchase the
Project.
(s) "Percentage Interest" shall mean the percentage
ownership interest of a Venturer in the Venture, which for each
Venturer shall be equal to fifty percent (50%).
(t) "Person" shall mean an individual, partnership,
limited liability company, limited liability partnership,
corporation, trust and any other association or legal entity.
(u) "Principal Contract" shall mean any contract which
is material to the acquisition, ownership, development,
improvement, maintenance, management, operation, leasing, project
financing, marketing, or disposition of any of the Venture
Properties, including the Building Contract, the Development
Contract, the Management Agreement and the Services Agreement.
(v) "Project Financing" shall mean the construction
financing and permanent financing for the development and
construction of the Project.
(w) "Services Agreement" shall mean that certain
services agreement by and between the Venture and Stanley Rosenthal
(or his nominee) pursuant to which Stanley Rosenthal (or his
nominee) shall provide construction consulting services to the
Project.
(x) "Transfer" shall mean any disposition of a venture
Interest by a Venturer (including, without limitation, gifts,
sales, assignments, pledges, encumbrances, bequests and all other
dispositions) whether voluntary or involuntary, or by court order
or by operation of law.
(y) "Venture Interest" of a Venturer shall mean such
Venturer's right, title and interest in the Venture and all of such
Venturer's rights and obligations with respect thereto, as set
forth in or referred to in this Agreement.
(z) "Venture Properties" shall mean the Property and any
other assets or property, real or personal, tangible or intangible,
contingent or otherwise which is owned by the Venture.
(aa) "Venturer" shall mean Newall and Chancellor and
their respective permitted assignees.
(bb) "Venturers" shall mean collectively Newall and
Chancellor and their respective permitted assignees.
Section 2.2 Terms Generally. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(a) All pronouns and all variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the person or entity may require.
(b) The words "herein, "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision;
and
(c) The words "including" and "include" and other words
of similar import shall be deemed to be followed by the phrase
"without limitation."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties. Newall
represents and warrants to Chancellor, and Chancellor represents
and warrants to Newall as follows; provided that reference in this
Section to "each party" shall mean only Chancellor with respect to
the representations and warranties of Chancellor and only Newall
with respect to the representations and warranties of Chancellor:
(a) Newall represents that it is a limited partnership,
duly organized, validly existing and in good standing under the
laws of Florida, and Chancellor represents that it is a
corporation, duly organized, validly existing and in good standing
under the laws of Delaware and is duly authorized to do business
and in good standing as a foreign corporation in the State of
Florida.
(b) Each party has the full partnership or corporate, as
applicable, power and authority to execute, deliver and perform
this Agreement and each of the agreements contemplated to be
executed by it by this Agreement and such execution, delivery and
performance has been duly authorized by all necessary partnership
or corporate, as applicable, action on the part of each party.
This Agreement has been duly executed by each party and constitutes
the legal, valid and binding obligation of each party, enforceable
in accordance with its terms.
(c) Neither the execution, delivery nor performance by
each party of this Agreement or any of the agreements contemplated
to be executed by it by this Agreement, will (i) conflict with or
result in a violation of the limited partnership agreement or
articles of incorporation of such party, (ii) conflict with or
result in a violation of any law, statute, regulation, judgment,
decree or other determination of governmental authority applicable
to such party, (iii) require any consent or authorization or filing
with or any other act by or in respect of any governmental
authority except as contemplated by this Agreement, or (iv) result
in a breach of or constitute a default under any mortgage, lease,
agreement, indenture, instrument or undertaking to which such party
is a party or by which it or any of its properties are bound.
(d) None of the representations of each party contained
herein is untrue or misleading in any material respect. Each party
knows of no fact which materially and adversely affects the
business, operations, prospects or condition, financial or
otherwise, of such party which could have a material adverse effect
on the Venture and which has not been disclosed to the other
Venturer in writing.
(e) That it shall use its best efforts to obtain all
licenses, consents and approvals required under the laws of
Florida, necessary to enable it to enter into this Agreement and
carry out its obligations pursuant to this Agreement or as
contemplated by this Agreement ("Obligations");
(f) That it is not in default under any agreement or
instrument of indebtedness nor is it a party to nor has it been
threatened with any litigation or other proceedings such as might
materially and adversely affect its ability to perform its
Obligations;
(g) That throughout the Term it shall not carry on or be
engaged or interested in any other business or venture, except for
business or ventures related to the business of the Venture;
(h) That it has not made a material misstatement of, or
failed to disclose to the other Venturer, any known material fact
which would materially affect the decision of the other Venturer to
enter into this Agreement or acquire and develop the Property as
the case may be;
(i) The Venturers acknowledge to each other that the
Venture may engage and rely upon third party professionals who will
perform services with regard to the Project and the business of the
Venture (including, but not limited to, title, environmental,
planning, zoning, stability or other problems or adverse covenants,
or third-party interests). Each Venturer shall have the benefit of
any and all warranties, causes of action and opinions received from
such professionals, regardless of whether or not such professionals
were originally engaged by Newall or Chancellor, provided that the
fees of such professional were paid or reimbursed by the Venture.
Except as set forth in this Agreement, neither Venturer is relying
upon the other as to the feasibility of the Project or the business
of the Venture.
ARTICLE IV
DEVELOPMENT OF PROJECT
Section 4.1 Development of the Project. Subject to the terms
and conditions hereof, and in furtherance of the purposes of the
Venture as set forth in Sections 1.5 and 1.6, Newall and Chancellor
intend jointly and exclusively through the Venture to acquire,
construct, develop, improve, maintain, manage, operate and/or lease
the Project.
Section 4.2 Site Plan. Upon approval by both of the
Venturers, attached hereto as Schedule 4.2 will be a proposed
preliminary site plan of development for the Project as presently
contemplated by the Venturers (the "Site Plan"). The Venturers
recognize that this plan of development shall evolve or change over
time as circumstances may dictate, including approvals by all
applicable governmental authorities, site limitations and
development requirements, and such other matters as may be
determined by the Executive Committee.
Section 4.3 Other Opportunities. Neither Venturer shall be
obligated to present, offer or otherwise extend to the other
Venturer, any development or business opportunity of which it
becomes aware, whether related to assisted/independent living
facilities or otherwise, wherever located.
Section 4.4 Development of Other Properties. Except as
provided in Section 4.6 hereof, notwithstanding anything contained
herein to the contrary, each of Newall and Chancellor shall, and
their Affiliates, parents and subsidiaries will, be free to and
have the absolute right to pursue, develop, acquire and operate any
property or business operations.
Section 4.5 Additional Agreements. (a) Except as otherwise
expressly provided in this Agreement, neither party, nor any of its
Affiliates, shall have any authority to bind or act for, or assume
any obligations or responsibility on behalf of, any other party
hereto or any of its Affiliates or the Venture. No party to this
Agreement or any of its Affiliates shall, by virtue of executing
this Agreement, be responsible or liable for any indebtedness or
other obligation of the other party hereto or any of its Affiliates
incurred or arising either before, on or after the execution of
this Agreement.
(b) Except as expressly provided in this Agreement, this
Agreement shall not be construed to create any duty or obligation
on the part of either party hereto or any of its Affiliates, or any
other person employed by, related to or in any way affiliated with
either party or any of its Affiliates to disclose or offer to the
other party, or obtain for the benefit of the other party or its
Affiliates, any other business activity, investment opportunity, or
venture or other interest therein, or to create on the part of
either party hereto (i) any claim, right or cause of action against
the other party hereto or any other person employed by, related to
or in any way affiliated with, either of the parties by reason of
any direct or indirect investment or other participation, whether
active or passive, in any other activity or venture or interest
therein, or (ii) any right to any such activity or venture or
interest therein or the income or profits derived therefrom.
Section 4.6 Restrictions on Venturers. (a) Except as set
forth in Schedule 4.6(a) hereof neither Newall nor any Affiliate of
Newall shall, directly or indirectly, during the Term (i) develop,
acquire, own, manage, operate, control or participate in any manner
in the ownership, management, operation or control of, or be
connected as an officer, employee, partner, director, principal,
consultant, agent or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any business,
venture or activity involving a nursing home, assisted living,
residential care, personal care, senior housing or subacute care
facility operating within a radius of seven (7) miles from the
Project, or (ii) recruit or otherwise seek to induce any employee
of the Project, to terminate his or her employment or violate any
agreement with or duty to his/her employer, or hire any such
employee, or (iii) solicit or encourage any Person who is a
customer, resident or supplier of the Project to terminate its
relationship with such Project. For purposes of clause (ii) above,
a person shall not be deemed to be an employee of the Project if
s/he is not an employee of the Project at any time within the six
(6) month period prior to the date such person is recruited,
engaged or hired by Newall, or any Affiliate of Newall.
(b) Except as set forth in Schedule 4.6(b) hereof neither
Chancellor nor any Affiliate of Chancellor shall, directly or
indirectly, during the Term (i) develop, acquire, own, manage,
operate, control or participate in any manner in the ownership,
management, operation or control of, or be connected as an officer,
employee, partner, director, principal, consultant, agent or
otherwise with, or have any financial interest in, or aid or assist
anyone else in the conduct of, any business, venture or activity
involving a nursing home, assisted living, residential care,
personal care, senior housing or subacute care facility operating
within a radius of seven (7) miles from the Project, or (ii)
recruit or otherwise seek to induce any employee of the Project, to
terminate his or her employment or violate any agreement with or
duty to his/her employer, or hire any such employee, or (iii)
solicit or encourage any Person who is a customer, resident or
supplier of the Project to terminate its relationship with such
Project. For purposes of clause (ii) above, a person shall not be
deemed to be an employee of the Project if s/he is not an employee
of the Project at any time within the six (6) month period prior to
the date such person is recruited, engaged or hired by Chancellor,
or any Affiliate of Chancellor.
(c) No provision of this Section 4.6 shall prohibit any party
or Affiliate thereof from investing a non-controlling position in
any publicly traded entity.
ARTICLE V
MANAGEMENT AND FEES
Section 5.1 Management Fees and Expenses. Except as
elsewhere specifically set forth herein, Newall and Chancellor will
share, on an equal basis, all costs incurred by the Venture in
connection with the Project. Neither Venturer shall be entitled to
receive any fees or other compensation for its participation on the
Executive Committee other than as specifically set forth in this
Agreement.
Section 5.2 Management of Venture. (a) Newall and Chancellor
shall be co-managing general partners of the Venture.
Responsibility for the management of the affairs of the Venture
(including all decisions relating to the acquisition, ownership,
development, improvement, maintenance, management, operation,
leasing, project financing, marketing, and disposition of all
Venture Properties) shall be vested in a committee comprised of two
(2) persons (the "Executive Committee"). The Executive Committee
shall manage, supervise and conduct all of the business and affairs
of the Venture and perform such duties as would customarily be
performed by a board of directors of a corporation. Each party
shall initially designate one (1) individual to serve on the
Executive Committee and may replace its representative from time to
time upon written notice to the other party. The representative of
Newall on the Executive Committee is referred to below as the "A
Nominee" and the representative of Chancellor is referred to below
as the "B Nominee". Each such representative is sometimes referred
to below as a "Nominee".
(b) Each member of the Executive Committee shall be
entitled to one (1) vote. The vote of the majority of the members
of the Executive Committee at a meeting at which a quorum has been
established shall constitute the decision of the Executive
Committee. The presence of the "A Nominee" and the "B Nominee"
shall be required in order to constitute a quorum.
(c) Regular meetings of the Executive Committee shall be
held on a monthly basis (at least one of which per quarter shall be
held in the Venture's offices) or more frequently as may be
designated by majority vote of the Executive Committee and shall be
convened on not less than seven (7) days prior written notice to
each Venturer and each Nominee. Special meetings of the Executive
Committee may be called for any purpose, by any member of the
Executive Committee, upon at least ten (10) days prior written
notice to the other members of the Executive Committee. Meetings of
the Executive Committee that are not held at the Venture's offices
shall take place in Massachusetts (alternating between the offices
of each Venturer) unless agreed to the contrary by the Executive
Committee. Members of the Executive Committee may attend meetings
by telephone conference call. The Executive Committee may, from
time to time, appoint non-voting members to the Executive Committee
or invite various advisors, professionals or consultants to attend
meetings of the Executive Committee but no such person shall have a
vote.
(d) None of the members of the Executive Committee shall
be entitled to receive any compensation or expense reimbursement
solely by reason of serving on the Executive Committee, except that
members of the Executive Committee shall be reimbursed for their
actual out of pocket expenses incurred in attending Executive
Committee meetings.
(e) A resolution in writing signed by each member of the
Executive Committee shall be as valid as if the matter set out in
that resolution had been agreed at a meeting of the Executive
Committee at which a quorum has been established duly convened and
held.
Section 5.3 Executive Committee Decisions. The following
actions and decisions ("Executive Decisions") shall require the
consent of a majority of the votes of the Executive Committee:
(a) The sale, leasing, mortgaging, hypothecation,
encumbrance or conveyance of all or substantially all of the
property or assets of the Venture (including the Venture
Properties);
(b) The acquisition of any real property or any interest
therein or option in respect thereof;
(c) The adoption of the Budget;
(d) Expenditures in excess of five percent (5%) over the
amounts contemplated for those expenditures by the Budget or any
expenditure not identified in the relevant Budget or any
expenditure in excess of $10,000.00 not previously delegated to be
spent or authorized to be spent;
(e) The agreement of the Venture to guarantee any
indebtedness of any Person or to give any indemnity or security of
whatever nature;
(f) The sale, hypothecation or securitization of notes
receivable owed to the Venture;
(g) The incurring of any indebtedness in excess of
$25,000.00 not contemplated by the relevant Budget;
(h) The approval of marketing and advertising plans,
materials and distribution schemes;
(i) The appropriate levels of the Venturers' Capital
Accounts as determined in accordance with this Agreement;
(j) The approval of all tax returns to be filed by the
Venture;
(k) The commencement or settlement of any lawsuit or
threatened proceedings by or against the Venture, except as set out
in Section 14.15;
(l) The selection of legal counsel to represent the
Venture in any material lawsuit or major transaction;
(m) The selection of the Venture's accountants;
(n) The engagement or compensation increase of any
employee or independent contractor whose compensation, whether by
salary, commission or otherwise, is expected to exceed $50,000.00
during the first twelve (12) months after such engagement or
increase;
(o) (i) The execution of any Principal Contract by the
Venture, (ii) the execution of any Principal Contract with either
Venturer or any Affiliate, the value of which (determined by
reference to all sums payable thereunder by either party) exceeds
$50,000.00 or (iii) the material variation or waiver of substantial
rights under any of the foregoing; or
(p) Entering into any transactions between the Venture
and any Venturer or an Affiliate of any Venturer.
Section 5.4 Venturer Obligations. The Venturers shall, and
shall ensure that their Nominees on the Executive Committee shall,
exercise all voting rights and other powers of control available to
them so as to ensure (insofar as they are able by the exercise of
such rights and powers) that at all times during the Term:
(a) the Venturer's business consists exclusively of
those matters referred to in this Agreement and is conducted in
accordance with best business practice and in accordance with
sound, commercial profit-making principles;
(b) that the Venture complies with, and that each of the
other parties thereto complies with the terms of each of the
Principal Contracts; and
(c) that the Venture is treated as a general partnership
established under the Act and resident in Florida.
Section 5.5 INTENTIONALLY DELETED.
Section 5.6 Agenda. Each Venturer shall deliver a written
agenda to the other Venturer at least seven (7) days prior to each
regular or special meeting of the Executive Committee which sets
forth (in reasonable detail) a list of the issues which such
Venturer desires to discuss and the business to be conducted at the
related meeting ("Agenda"). If any Venturer intends to include on
the Agenda, any items of an unforeseen, non-standard or
extraordinary nature, such Venturer shall provide its Agenda to the
other Venturer at least five (5) days prior to the meeting. If
neither Venturer submits an Agenda for the meeting, the Agenda from
the previous meeting shall be used.
Section 5.7 Resolution of Deadlock.
(a) In the event that either: (i) the Executive
Committee cannot obtain a majority of votes on any material
issue(s) presented at a regular or special meeting of the Executive
Committee convened pursuant to Section 5.2, the result of which is
that the Venture's ability to function in the normal course of
business is substantially impeded; or (ii) no quorum is present at
two (2) consecutive, duly noticed Executive Committee meetings; or
(iii) the Venturers are unable, within ninety (90) days after the
start of any fiscal year of the Venture, to agree the Budget for
that year; then such issue(s) shall be memorialized in a writing to
be sent within ten (10) days of the occurrence of the applicable
event described above, together with a reasonable description as to
each Venturer's concerns with respect to such issue(s) (such
writing herein referred to as the "Dispute Notice"). The Venturers
shall, during the five (5) day period from the date of the Dispute
Notice, diligently, reasonably and in good faith attempt to resolve
said dispute(s) or deal with the matters set out in the Agenda for
the meetings (as the case may be); provided that, with respect to
any issue(s) that are set forth on the Dispute Notice which were
not set forth on the Agenda provided pursuant to Section 5.6 in
connection with any related meeting, the Venturers shall have ten
(10) days from the date of the Dispute Notice to resolve said
issue(s).
(b) In the event that all issue(s) set forth on a
Dispute Notice have not been resolved by the date required pursuant
to Section 5.7(a) or an Executive Committee meeting at which a
quorum has been established has not been held (as the case may be)
(the "Resolution Date"), the Venturers shall participate in good
faith, in non-binding mediation on such unresolved issues. The
Venturers hereby agree that the Independent Mediator shall act as
mediator.
(c) If despite the reasonable, good faith efforts of the
Independent Mediator and Venturers, the Venturers have not resolved
the outstanding issue(s) within thirty (30) days from the
Resolution Date, a "Deadlock" shall be deemed to have occurred as
of such date (the "Deadlock Date"). Notwithstanding anything herein
to the contrary, the failure of the Executive Committee to obtain a
majority number of votes on any of the following issues or
proposals, (which are set forth by way of example and without
limitation) shall not be deemed to have caused a Deadlock: (i) the
increase in the number of beds to be constructed at the Project to
more than 120 beds, (ii) the removal of any personnel, (iii) the
change of the Venture's existing primary acquisition and
development lender, or (iv) the failure to engage in any business
transaction with an Affiliate of either Venturer, except as
required by this Agreement.
(d) Upon the occurrence of a Deadlock, the unresolved
issues in the Dispute Notice shall be settled by binding
arbitration by the Independent Arbitrator in accord with then
prevailing Commercial Rules of the American Arbitration
Association. Arbitration shall take place in the Fort Lauderdale
area unless the Venturers otherwise agree. Judgment upon the
arbitration decision may be entered in accordance with applicable
law in any court having jurisdiction. The Independent Arbitrator
shall have no power to change the provisions of this Agreement. The
Venturers shall continue performing their obligations under this
Agreement pending the award in the arbitration proceeding. The
Independent Arbitrator shall award the prevailing party reasonable
expenses and costs including reasonable attorneys' fees.
Section 5.8 Miscellaneous Limitations on Authority of
Venturers. During the Term, neither Venturer shall:
(a) Use the name of the Venture (or any substantially
similar name) or any trademark or trade name adopted by the
Venture, except in the ordinary course of the Venture's business;
(b) Commit any act or deed which would make it
impossible to carry on the ordinary business of the Venture;
(c) Confess a judgment against the Venture or settle any
dispute against the Venture; or
(d) Abandon or transfer or dispose of any Venture
property, real or personal or agree to do so.
Section 5.9 Exercise of Put Option. Notwithstanding anything
to the contrary contained in this Article V, Newall shall be
entitled, without the consent of Chancellor, to exercise the Put
Option (as defined in the Option Agreement) on behalf of the
Venture pursuant to the terms of the Option Agreement.
ARTICLE VI
CAPITAL CONTRIBUTIONS AND LOANS
Section 6.1 Initial Capital Contributions. Upon execution
hereof, each Venturer shall make the respective Capital
Contributions to the Venture as set forth on Schedule 6.1 attached
hereto and made a part hereof.
Section 6.2 Additional Capital Contributions. If at any time
after the stabilization of the Project any Venturer determines that
additional capital is necessary or desirable to meet the
obligations of the Venture for operating the Project, such Venturer
may make a capital call to the other Venturer to fund payments
required. In the event of a capital call, each Venturer shall
contribute its pro-rata share in accordance with its Percentage
Interest within twenty (20) business days after the date of such
capital call. In the event that any Venturer fails to so make such
capital contribution, the other Venturer shall have the option, but
not the obligation, to contribute all or any portion of the
non-contributing party's required capital contribution (the
"Contributing Venturer"). In such event, the Contributing Venturer
shall receive repayment of the entire amount, if any, of any such
capital contribution so made (a "Preferred Capital Contribution"),
together with interest on the unpaid amount outstanding from time
to time on such Preferred Capital Contribution at a rate equal to
twelve percent (12%) per annum from the date such Preferred Capital
Contribution is made until the entire amount thereof is repaid,
paid on a priority basis as provided in Section 9.2 prior to the
distribution of Distributable Cash Flow to any of the Venturers.
Section 6.3 Return of Capital Contributions. No Venturer
shall have the right to withdraw from the Venture, or to demand or
receive the return of its Capital Contributions, except as
specifically provided for in this Agreement.
Section 6.4 Project Financing. (a) CareMatrix will use
reasonable efforts to obtain the Project Financing. The terms and
conditions of the Project Financing shall be subject to the
approval of the Executive Committee. The Project Financing shall be
non-recourse or substantially non-recourse to Chancellor and
Newall, except that if a portion of the Project Financing is
required to be guaranteed, Chancellor shall provide such guarantee.
(b) If the amount of the Project Financing is less than
one hundred percent (100%) of the amount necessary to acquire,
develop and construct the Project, or if any additional amounts are
required to operate the Project prior to stabilization of the
Project, Chancellor will loan or cause to be loaned (any such loan
being a "Chancellor Loan"), on a non-recourse basis to Newall, the
amount of any such shortfall to the Venture at a rate equal to the
rate announced by Fleet Bank of Massachusetts, N.A. from time to
time as its prime rate plus two percent (2%) per annum and repaid
to Chancellor on the same repayment terms as the Project Financing,
pursuant to agreements in form and substance mutually agreeable to
Chancellor and the Venture. Any payment due to Chancellor under any
Chancellor Loan shall be paid to Chancellor on a priority basis
prior to the distribution of Distributable Cash Flow to any of the
Venturers.
ARTICLE VII
CAPITAL ACCOUNTS
Section 7.1 Establishment. (a) The Venturers shall establish
and maintain in the Venture's books, a separate Capital Account for
each Venturer in accordance with Federal income tax accounting
principles and Treasury Regulation 1.704-l(b).
(b) Except as may otherwise be provided in this
Agreement, whenever it is necessary to determine the Capital
Account of a Venturer, the Capital Account of such Venturer shall
be determined after giving effect to all allocations and
distributions for transactions effected prior to the time as of
which such determination is to be made. Any Venturer who shall
acquire an interest or whose interest shall be increased by means
of a Transfer to it of all or part of the interest of another
Venturer, shall have a Capital Account which reflects such
Transfer.
(c) It is the intention of the Venturers to satisfy the
capital account maintenance requirements of Treasury Regulation
Section 1.704-l(b)(2)(iv). If the Venturers determine that
adjustments to Capital Accounts are necessary to comply with such
regulations, then the adjustments shall be made provided that they
do not materially impact upon the manner in which property is
distributed to the Venturers in liquidation of the Venture.
Section 7.2 No Interest. No interest shall be paid to any
Venturer on any Capital Contribution made to the Venture except as
otherwise unanimously agreed to by the Venturers but without
prejudice to Section 6.2.
Section 7.3 Negative Balances. Any Venturer may make
additional voluntary contributions at any time to reduce any
negative balance in such Venturer's Capital Account, provided,
however, that such an additional voluntary contribution shall not
change the Percentage Interests of the Venturers.
Section 7.4 Restoration. At no time during the Term of the
Venture or upon the dissolution and liquidation of the Venture
shall a Venturer with a negative balance in its Capital Account
have any obligation to the Venture or to any other Venturer to
restore such negative balance, except in respect of any negative
balance resulting from withdrawal of capital or from a distribution
in contravention of this Agreement or applicable Treasury
Regulations.
ARTICLE VIII
PROFIT AND LOSS
Section 8.1 In General. After first giving effect to the
allocations set forth in Section 8.3 hereof, profit and loss shall
be allocated as follows:
(a) Profit shall be allocated among the Venturers
in proportion to their respective Percentage Interests.
(b) Loss shall be allocated to the Venturers in
proportion to their respective Percentage Interests.
(c) Notwithstanding the foregoing, the Venture
shall make the following special allocations:
(i) gross income attributable to the Additional
Rent (as defined in the Lease Agreement) shall be specially
allocated to Newall; and
(ii) any Venturer which makes a Preferred Capital
Contribution shall be allocated items of ordinary income in an
amount equal to the interest accrued on such Preferred Capital
Contribution for such fiscal period.
Section 8.2 Capital Transactions. Notwithstanding the
provisions of the immediately preceding Section 8.1, profit or loss
realized by the Venture in connection with Capital Transactions, or
upon the liquidation and termination of the Venture, after giving
effect to all events occurring prior to such sale or other
disposition, or liquidation and termination, and the allocation of
Profits and Losses arising as a result of such events, shall be
allocated as follows:
(a) Profit shall be allocated
(i) First, to eliminate any deficit in the
Capital Accounts of the Venturers, in proportion to such deficit
Capital Accounts;
(ii) Second, to the Venturers in proportion to
the difference between each Venturer's net Capital Contribution and
its positive Capital Account balance until each Venturer has been
allocated an amount equal to the excess, if any, of its net Capital
Contribution over its positive Capital Account balance;
(iii) Third, among the Venturers pro rata in
proportion to their respective Percentage Interests.
(b) Any loss realized by the Venture in connection
with a Capital Transaction, or upon the liquidation and termination
of the Venture, after giving effect to all events occurring prior
to such sale or other disposition, or liquidation and termination,
and the allocation of Profits and Losses as a result of such
events, shall be allocated among the Venturers in proportion to
their respective Percentage Interests.
Section 8.3 Special Provisions.
(a) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article VIII, if there is a net decrease in
Venture Minimum Gain (as defined in Regulation 1.704-2(d)) during
any tax year, then each Venturer shall be allocated such amount of
income and gain for such year (and subsequent years, if necessary)
determined under and in the manner required by Regulation 1.704-
2(g)(1) and (g)(3) as is necessary to meet the requirements for a
minimum gain chargeback as provided in Regulation 1.704-2(f).
(b) Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Article VIII except
Section 8.3(a) hereof, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain (as determined in accordance with
Regulation 1.704-2(i)(5)) attributable to a Partner Nonrecourse
Debt (as defined in Regulation .704-2(b)(4)) during any tax year,
any Venturer who has a share of the Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt
determined in accordance with Regulation 1.704-2(i)(5) shall be
allocated such amount of income and gain for such year (and
subsequent years, if necessary) determined under and in the manner
required by Regulation 1.704-2(i)(4) as is necessary to meet the
requirements for a minimum gain chargeback as is provided in that
Regulation.
(c) Qualified Income Offset. If a Venturer unexpectedly
receives any adjustment, allocation or distribution described in
Regulation 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of income
and gain shall be specially allocated to such Member in an amount
and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Venturer
as quickly as possible, provided that an allocation pursuant to
this subsection (c) shall be made only if and to the extent that
such Venturer would have an Adjusted Capital Account Deficit after
all other allocations provided for in this Section 8.3 of this
Agreement tentatively have been made as if this subsection (c) were
not in this Agreement.
(d) Code 754 Adjustment. To the extent that an
adjustment to the basis of any asset pursuant to Code 734(b) or
Code 743(b) is required to be taken into account in determining
Capital Accounts as provided in Regulation l.704-1(b)(2)(iv)(m),
the adjustment shall be treated (if an increase) as an item of gain
or (if a decrease) as an item of loss, and such gain or loss shall
be allocated to the Venturer consistent with the allocation of the
adjustment pursuant to such Regulation.
(e) Gross Income Allocation. If at the end of any tax
year any Venturer has a Capital Account deficit which is in excess
of the sum of the items to be credited to a Venturer's Capital
Account under clause (a) of the definition of Adjusted Capital
Account Deficit, each such Venturer shall be allocated items of
income and gain in the amount of such excess as quickly as possible
provided that an allocation pursuant to this Section 8.3(e) shall
only be made if and to the extent the such Venturer would have a
Capital Account deficit in excess of such sum after accounting for
all other allocations provided for in this Article VIII other than
that described in this Section 8.3(e). As among Venturers having
such excess, if there are not sufficient items of income and gain
to eliminate all such excess, such allocations shall be made in
proportion to the amount of each Venturer's respective excess.
(f) Nonrecourse Deductions. Nonrecourse Deductions (as
determined under Regulation 1.704-2(c)) for any tax year shall be
allocated to the Venturers in accordance with their Percentage
Interests.
(g) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deduction (as defined in Regulation l.704-2(i)(2))
shall be allocated pursuant to Regulation 1.704-2(i) to the
Venturer who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which it is attributable.
(h) Purpose and Application. The purpose and the intent
of the special allocations provided for in this Section 8.3 are to
comply with the provisions of Regulations l.704-1(b) and l.704-2,
and such special allocations are to be made so as to accomplish
that result. However, to the extent possible, the Venturers in
allocating items of income, gain, loss, or deduction among the
Venturers shall take into account the special allocations in such a
manner that the net amount of allocations to each Venturer shall be
the same as such Venturer's distributive share of profit and loss
would have been had the events requiring the special allocations
not taken place. The Venturers shall apply the provisions of this
Section 8.3 in whatever order they reasonably believe will minimize
any economic distortion that otherwise might result from the
application of the special allocations.
Section 8.4 Tax Allocations. Solely for federal, state,
and local income tax purposes and not with respect to determining
any Venturer's Capital Account, each item of income, gain, loss and
deduction shall, to the extent appropriate, be allocated among the
Venturers in the same manner as its correlative item of "book"
income, gain, loss or deduction has been allocated pursuant to the
other provisions of this Article VIII. A Venturer's distributive
share of income, gain, loss, or deduction with respect to any
property (other than money) contributed to the Venture, or with
respect to any property, the asset value of which was adjusted upon
the acquisition of an interest by a new Venturer or an increase in
the interest of an existing Venturer in exchange for a capital
contribution, shall be made by the approval of the Executive
Committee in any manner which is permissible under Internal Revenue
Code Section 704(c) and the regulations thereunder.
ARTICLE IX
DISTRIBUTIONS
Section 9.1 Distributable Cash Flow. The Distributable Cash
Flow of the Venture shall be determined by the Executive Committee
at such times as they shall agree by majority vote, but not less
frequently than monthly.
Section 9.2 Distributions. The Distributable Cash Flow shall
be paid to the Venturers at such times as the Executive Committee
shall agree by majority vote; provided that Distributable Cash Flow
shall be paid to the Venturers not less frequently than monthly.
All Distributable Cash Flow shall be distributed in the following
order:
(a) First, to Newall in an amount equal to the Additional
Rent (as defined in the Lease Agreement);
(b) Second, to the payment and discharge of all accrued
interest due either Venturer under any Preferred Capital
Contribution;
(c) Third, to the payment and discharge of the
outstanding principal balance due either Venturer under any
Preferred Capital Contribution; and
(d) Fourth, the balance, if any, to the Venturers in
proportion to their respective Percentage Interests.
Notwithstanding anything set forth herein to the contrary, in the
event that the Distributable Cash Flow distributed to Newall for
any month is less than the Additional Rent paid to the Venture for
the applicable month, Chancellor shall directly pay to Newall fifty
percent (50%) of said deficit amount.
Section 9.3 Special Distribution. Notwithstanding anything
set forth herein to the contrary, upon closing of the Project
Financing, the Venture shall distribute to Newall an amount equal
to the Agreed Value of the Property contributed to the Venture by
Newall.
ARTICLE X
EVENTS OF DEFAULT
Section 10.1 Definition. For the purpose of this Agreement,
"an "Event of Default" means the occurrence of any of the
following:
(a) either of the Venturers committing a material breach
of its obligations under this Agreement and, in the
case of a breach capable of remedy, failing to
remedy the same within thirty (30) days of being
specifically required in writing to do so by the
other Venturer; or
(b) any distress, execution, sequestration or other
process being levied or enforced upon or sued out
against the property of either Venturer which is not
discharged within thirty (30) days; or
(c) the inability of either Venturer to pay its debts in
the normal course of business; or
(d) either Venturer ceasing or threatening to cease
wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction
or amalgamation without insolvency previously
approved by the other Venturer (such approval not to
be unreasonably withheld); or
(e) any encumbrancer, taking possession of or a receiver
or trustee being appointed over the whole or any
part of the undertaking, property or assets of
either Venturer; or
(f) the making of an order or the passing of a
resolution for the winding up of either Venturer,
otherwise than for the purpose of a reconstruction
or amalgamation without insolvency previously
approved by the other Venturer (such approval not to
be unreasonably withheld); or
(g) any default by a Venturer or its Affiliate
under any agreements with a lender providing
financing to the Venture which causes a default
under any financing provided to the Venture.
Section 10.2 Remedies. If either Venturer commits an Event
of Default ("Defaulting Venturer"), then the other Venturer ("Non-
Defaulting Venturer") shall be entitled, in its entire discretion,
to bring an action against either the Defaulting Venturer or any of
its Affiliates, for specific performance or compensatory or
consequential damages caused to the Non-Defaulting Venturer as a
result of the Event of Default.
ARTICLE XI
ACCOUNTING MATTERS
Section 11.1 Fiscal Year. The fiscal year of the Venture
shall end on December 31 of each year unless otherwise required by
the Code. The Venturers shall use their respective reasonable
endeavors to agree the Budget for each fiscal year by the
commencement of such fiscal year or as soon as possible thereafter.
Section 11.2 Books, Records and Report.
(a) Maintaining Books and Records. Accurate books,
records, and accounts shall be maintained for the Venture in
accordance with generally accepted accounting principles
consistently applied, showing its assets, liabilities, operations,
transactions and financial condition. The Venture's books shall be
maintained by or under the control of the Executive Committee at
the principal office of the Venture, and each Venturer shall have
the right, upon reasonable notice given to the other Venturer, to
inspect, extract and copy such books during regular business hours
of the Venture.
(b) Income Tax Returns. The Executive Committee shall
cause income tax returns for the Venture to be prepared and filed
with the appropriate authorities. Within one hundred twenty (120)
days after the close of each fiscal year of the Venture, the
Executive Committee shall send to each Venturer such information as
will be sufficient to prepare documents which may be required to be
filed under all applicable income tax laws.
(c) Financial Statements. The Executive Committee shall
cause to be prepared and distributed to each Venturer the following
financial statements, prepared in accordance with generally
accepted accounting principles consistently applied, at the times
indicated:
(i) Monthly. Current month and year to date profit
and loss statement, balance sheet and statement of sources and uses
of funds within thirty (30) days of end of each calendar month;
(ii) Quarterly. Current quarter and year to date
profit and loss statement, balance sheet and statement of sources
and uses of funds as of end of calendar quarter within thirty (30)
days of end of each calendar quarter; and
(iii) Annually. Audited current year profit and
loss statement, balance sheet and statement of sources and uses of
funds within one hundred twenty (120) days of end of each calendar
year.
Section 11.3 Bank Accounts. All Venture funds received from
any and all sources shall be deposited in nominated bank accounts
with nominated bank account numbers in the name of, and to the
credit of, the Venture in a bank or banks to be determined by
unanimous agreement of the Executive Committee and may be withdrawn
only with the approval and signature of those individuals so
authorized by the Executive Committee.
Section 11.4 Income Tax Elections. In the event of a
distribution of property made in the manner provided under Section
734 of the Code, or in the event of a transfer of any Venturer
Interest permitted by this Agreement made in the manner provided in
Section 743 of the Code, the Executive Committee, on behalf of the
Venture, may, with the consent of all Venturers, cause to be filed
an election under Section 754 of the Code in accordance with the
procedures set forth in the applicable regulations promulgated
thereunder.
Section 11.5 Audits of Income Tax Returns.
(a) Appointment of Tax Matters Partner. The tax matters
partner ("TMP"), as referred to in Code 6231 (a) (7), for theVenture shall be
Chancellor. (b) Employment of Advisors. The TMP shall
employ experienced tax advisors to represent the Venture in connection with
any audit or investigation of the Venture by the Internal Revenue Service and
in connection with all subsequent administrative and judicial proceedings
arising out of such audit. The fees and expenses of such tax advisors shall be
an expense of the Venture. It shall be the responsibility of each Venturer, at
its own expense, to employ tax advisors to represent its separate interests.
(c) Notice and Expenses. The TMP shall keep the
Venturers reasonably informed of all administrative and judicial
proceedings, as required by the Code, and shall furnish to each
Venturer a copy of each notice or other communication received by
the TMP from the Internal Revenue Service. All expenses incurred by
the TMP in serving as TMP shall be Venture expenses and shall be
paid by the Venture. Any Venturer has the right to participate in
any administrative proceedings relating to the determination of
Venture tax items. Each Venturer who elects to participate in such
proceedings will be responsible for any expenses incurred by such
Venturer in connection with such participation.
(d) Indemnification of TMP. The Venturers shall and
hereby do cause the Venture to indemnify the TMP against any and
all judgments, fines, amounts paid in settlement, and expenses
(including reasonable attorneys' fees, whether incurred before or
at trial or during any appellate proceedings, and court costs)
incurred by the TMP in any civil, criminal, or investigative
proceeding in which the TMP is involved or threatened to be
involved by reason of being the TMP for the Venture other than
anything which arises out of the TMP's fraud, willful or
intentional misconduct, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of its position as
TMP.
ARTICLE XII
TRANSFER OF VENTURE INTEREST
Section 12.1 Transfer Restrictions. Except as expressly
permitted or required by any other Section of this Agreement, a
Venturer may not Transfer part of its Venture Interest and may not
Transfer all of its Venture Interest without the other Venturer's
prior written consent. Except as provided in Section 12.2, a
transaction which results in a change of the Persons which, either
alone or pursuant to an arrangement or understanding with one or
more other Persons (a) owns, controls or has the power to vote
(including by proxy) greater than fifty percent (50%) of any class
of voting securities of a Venturer or a Venturer's parent company
or who determines in any manner the election or appointment of a
majority of the directors (or its Executive Committee nominees)
thereof, or (b) has the power or practical ability to exercise
controlling influence over the management or policies of a Venturer
or a Venturer's parent company, from that existing on the date of
this Agreement, shall be deemed a "Change of Control" that shall
permit the Venturer not subject to a Change of Control (the
"Non-changing Venturer") to have the option to make an Offer to the
other Venturer pursuant to Section 12.3, below for a period of one
(1) year from the date upon which it becomes aware of the Change of
Control (the "Transition Period").
Section 12.2 Permitted Transfers. A Venturer may Transfer
all (but not less than all) of its Venture Interest to any
Affiliate of such Venturer, and the transferee of the Venturer's
Venture Interest shall be automatically admitted as a Venturer and
shall succeed to the interests, rights and obligations of such
transferring Venturer in the Venture to the extent transferred,
provided that:
(a) Such transferee also assumes all other guarantee and
other obligations of the Venturer concerned in such form as the
other Venturer may reasonably require; and
(b) Such Transfer is effected on terms which require the
immediate re-transfer to the original Venturer of the Venture
Interest concerned and of the obligations referred to in paragraph
12.2(a) above, in the event that such new Venturer ceases to be an
Affiliate of the original Venturer.
In addition to the foregoing, with respect to the interest of
Stanley Rosenthal in Newall (or the general partner of Newall), in
the event of the death of Stanley Rosenthal, he shall be permitted
to Transfer all (but not less than all) of such interest to his
spouse, children or grandchildren, a trust established for his
benefit or the benefit of his spouse, children or grandchildren, or
by will or the laws of intestacy.
Section 12.3 Buy-Sell.
(a) Offer of Venturer.
(i) Upon the occurrence of a Change of Control,
during the Transition Period, the Non-changing Venturer
(hereinafter referred to as the "Initiating Venturer"), may offer
in writing to sell its entire Venture Interest to the other
Venturer ("Receiving Venturer") or to buy the Receiving Venturer's
entire Venture Interest (the "Offer"). The Offer shall set forth
the Initiating Venturer's opinion of the value of the Venture
Properties and shall contain a calculation based thereon, of the
value of the Initiating Venturer's Venture Interest and of the
Receiving Venturer's Venture Interest, pro rata pursuant to their
Percentage Interests. During the thirty (30) day period beginning
on the date of receipt of the Offer (the "Option Period"), the
Receiving Venturer must elect to (1) purchase the Initiating
Venturer's Venture interest for an amount equal to the value
thereof as specified in the Offer; or (2) sell to the Initiating
Venturer the Receiving Venturer's entire Venture Interest for an
amount equal to the value thereof specified in the Offer. The
Receiving Venturer shall give the Initiating Venturer written
notice of the Receiving Venturer's election pursuant to this
Section before the termination of the Option Period and if the
Receiving Venturer fails to do so, the Receiving Venturer shall be
deemed to have agreed to sell its Venture Interest to the
Initiating Venturer for an amount equal to the value thereof
specified in the Offer.
(ii) If the Receiving Venturer has duly elected to
purchase the Initiating Venturer's Venture Interest, both parties
shall complete such purchase pursuant to Section 12.3(b) below.
(iii) If the Receiving Venturer has duly elected or
is deemed to have elected to sell its Venture Interest to the
Initiating Venturer, both parties shall complete such purchase
pursuant to Section 12.3(b) below.
(b) Closing. Closing of a purchase required pursuant to
Section 12.3(a) shall occur at the purchasing Venturer's principal
business office on such business day and hour as the purchasing
party requests, but not later than sixty (60) days after the Option
Period's termination (the "Latest Closing Date"). Payment for a
Venture Interest purchased under Section 12.3 shall be made all in
cash at closing.
(c) Breach. An Offer by an Initiating Venturer pursuant
to Section 12.3(a) must be an unconditional and irrevocable
agreement to sell the Initiating Venturer's Venture Interest, not
subject to any contingency. An Offer by an Initiating Venturer
pursuant to Section 12.3(a) also shall be deemed to include an
unconditional and irrevocable agreement to purchase the Remaining
Venturer's Venture Interest if the Receiving Venturer elects to
have its Venture Interest purchased, not subject to any
contingency. In addition to any other remedy provided elsewhere in
this Agreement or by law, if a Venturer breaches its obligation
under this Section to purchase or sell its Venture Interest
("Breaching Venturer") pursuant to the terms of an accepted Offer,
the other Venturer ("Remaining Venturer") shall have an option to
purchase the Breaching Venturer's Venture Interest for a price
equal to eighty percent (80%) of the value originally set forth in
the related Offer. Closing of a purchase of a Breaching Venturer's
Venture Interest shall occur at the Venture's principal business
office on such business day and hour as the Remaining Venturer
requests, but not later than ten (10) days after the date of the
breach. Payment for such Venture Interest shall be made in the
manner provided in Section 12.3(b) of this Agreement.
Section 12.4 Third Party Offer.
(a) Generally. Except as permitted or required by the
terms of this Agreement, a Venturer may not transfer all or part of
its Venture Interest.
(b) Third Party Offer. Except as provided in section
12.1 or 12.2, a Venturer who wishes to transfer its Venture
Interest to a Person other than another Venturer ("Initiating
Venturer") shall obtain a bona fide written offer from such Person
("Third Party Offer", as further defined below), to buy the
Initiating Venturer's entire Venture Interest and shall send a copy
of such Third Party Offer to the other Venturer ("Receiving
Venturer"). Such copy shall include the names of the principals of
such Third Party (if the Third Party is not a public company) and
financial statements of the Third Party and of its principals (if
the Third Party is not a public company).
(c) Rights of Receiving Venturer. During the sixty (60)
day period beginning on the date of receipt of a true and complete
copy of the Third Party Offer ("Option Period"), the Receiving
Venturer shall elect to do one of the following:
(i) purchase the Initiating Venturer's Venture
Interest at the price specified in the Third Party Offer without
regard to any deposit required of the Third Party prior to closing;
or
(ii) consent to the sale of the Initiating
Venturer's Venture Interest to the Third Party in accordance with
the Third Party Offer.
The Receiving Venturer shall give the Initiating Venturer written
notice of the Receiving Venturer's election pursuant to this
section by the end of the Option Period and if the Receiving
Venturer fails to do so, the Receiving Venturer shall be deemed to
have consented to the sale of the Initiating Venturer's Venture
Interest to the Third Party in accordance with the Third Party
Offer.
(d) Closing on Purchase by Receiving Venturer. Closing
of any purchase of the Initiating Venturer's Venture Interest by
the Receiving Venturer pursuant to section 12.4(e) shall occur at
the Initiating Venturer's principal business office. Closing shall
occur on such date and payment shall be made in such manner as is
provided in the Third Party Offer.
(e) Sale to Third Party. If the Receiving Venturer has
consented to a sale of the Initiating Venturer's Interest to a
Third Party pursuant to Section 12.4(c), the Initiating Venturer
may sell its entire Venture Interest to the Third Party at any time
within ninety (90) days after the Option Period's termination
provided that such sale shall be made on terms no more favorable to
the Third Party than the terms contained in the Third Party Offer.
If the Initiating Venturer's entire Venture Interest is not sold in
accordance with the terms of the preceding sentence, such Venture
Interest shall again become subject to all of the conditions and
restrictions of this Article XII.
Section 12.5 Substituted Venturer. In the event a Venturer
transfers all of its Venture Interest in compliance with the
provisions of this Article XII, it is a condition precedent to such
Transfer, incapable of waiver, that:
(a) the transferring Venturer and its transferee execute
and deliver such instruments as counsel for the Venture or its
principal lender deems necessary or desirable to effect such
substitution;
(b) such transferee accepts and agrees in writing to be
bound by all of the terms and provisions of this Agreement and any
and all other documents to which the Venturer or its parent company
is bound which affect the operation, development, or financing of
the Project; and
(c) such transferee pays all reasonable expenses
connected with such substitution.
ARTICLE XIII
DISSOLUTION AND WINDING UP
Section 13.1 Liquidating Events. The Venture shall dissolve
and commence winding up upon the first to occur of any of the
following ("Liquidating Events"):
(a) At the end of the Term;
(b) The sale of all of the Venture Properties;
(c) The written agreement of both Venturers to wind up
and liquidate the Venture;
(d) The happening of any event that makes it unlawful to
carry on the business of the Venture;
(e) The happening of any event which causes there to be
only one Venturer;
(f) If that certain Agreement to Lease dated of even
date hereof between Unicom Partnership Ltd., a Florida limited
partnership, and Chancellor of Lauderhill I, Inc., a Delaware
corporation (the "Agreement to Lease") is terminated by the parties
thereto or if the Lease (as defined in the Agreement to Lease) is
not executed by the parties thereto;
(g) The termination of the Development Agreement
pursuant to Section 5.2 thereof; or
(h) If (i) the Development Agreement is terminated
pursuant to Section 7.1 thereof and (ii) the Liquidated Damages (as
defined in the Development Agreement) are due Newall.
The Venturers hereby agree that, notwithstanding any provision of
the Act, the Venture shall not dissolve before the occurrence of a
Liquidating Event. If it is determined, by a court of competent
jurisdiction that the Venture has dissolved before the occurrence
of a Liquidating Event, the Venturers hereby agree to continue the
Venture's business without a winding up or liquidation.
Section 13.2 Winding Up. Upon the occurrence of a
Liquidating Event, the Venture shall continue solely for the
purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its
creditors. No Venturer shall take any action that is inconsistent
with, or not necessary to or appropriate for, winding up the
Venture's business and affairs. The Executive Committee shall be
responsible for overseeing the winding up and liquidation of the
Venture and shall take full account of the Venture's liabilities
and its properties, and the Venture Properties shall be liquidated
as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom, to the extent sufficient therefor,
shall be applied and distributed in the following order:
(a) First, to the payment and discharge of all of the
Venture's debts and liabilities to creditors other than the
Venturers;
(b) Second, to the payment and discharge of all of the
Venture's debts and liabilities to the Venturers (including,
without limitation, any Chancellor Loan) pro rata to those debts
and liabilities;
(c) Third, to the payment of the balance due either
Venturer under any Preferred Capital Contribution; and
(d) Fourth, the balance, if any, to the Venturers in
proportion to their positive Capital Account Balances.
Section 13.3 INTENTIONALLY DELETED.
Section 13.4 Rights of Venturers. Except as otherwise
provided in this Agreement, each Venturer shall look solely to the
assets of the Venture for the return of its Capital Contributions
and shall have no right or power to demand or receive property
other than cash from the Venture. No Venturer shall have priority
over any other Venturer as to the return of its Capital
Contributions, distributions, or allocations except as otherwise
provided in this Agreement.
Section 13.5 Notice of Dissolution. If a Liquidating Event
occurs under Section 13.1, the Executive Committee shall provide
written notice thereof to each of the Venturers forthwith and to
all other parties with whom the Venture regularly conduct business
(as determined in the discretion of the Executive Committee),
within thirty (30) days.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Closing Costs. All reasonable costs of the
Venturers properly and reasonably incurred in connection with the
preparation of this Agreement and the formation of the Venture
shall be borne by the Venture. Notwithstanding anything to the
contrary contained in this Agreement, if the Venture dissolves upon
the occurrence of the Liquidating Event described in Section
13.1(g), Chancellor shall be solely responsible for the payment of
all applicable documentary stamp taxes in connection with the
conveyance of the Property from the Venture to Newall or its
designee; provided, however, if the termination of the Development
Agreement is due to the Litigation (as defined in the Development
Agreement), then each Venturer shall be responsible for payment of
fifty percent (50%) of the cost of such documentary stamp taxes.
Section 14.2 Further Assurances. Each party agrees to
execute, acknowledge, deliver, file and record such further
certificates, amendments, instruments and documents, and to do all
such other acts and things, as may be required by law or may be
necessary or advisable to carry out the intent and purpose of this
Agreement.
Section 14.3 Successors and Assigns. This Agreement shall be
binding upon the parties hereto and their respective successors and
legal assigns and shall inure to the benefit of the parties hereto
and, except as otherwise provided herein, their respective
successors and legal assigns. No Person other than the parties
hereto and their respective successors and legal assigns, shall
have any rights or claims under this Agreement. Subject to the
provisions of Article XII and this Section, no party shall assign
this Agreement or any rights, benefits, obligations or remedies
hereunder or any other interest herein or therein without the prior
written consent of the other party hereto. Any attempt so to assign
or to delegate any of the foregoing without such consent shall be
void and of no effect.
Section 14.4 Entire Agreement; Amendment; Etc. This
Agreement supersedes all prior agreements between the parties with
respect to the subject matter hereof, and contains the entire
agreement among the parties with respect to such subject matter.
This Agreement may not be amended, supplemented or discharged, and
no provisions hereof may be modified or waived except expressly by
an instrument in writing signed by each party.
No waiver of any provision hereof by either party hereto shall
be deemed a waiver by the other party nor shall any such waiver by
either party be deemed a continuing waiver of any matter by such
party. No failure by either party to take any action with respect
to a breach by the other party of this Agreement or a default by
the other party hereunder shall constitute a waiver of the former
party's right to enforce any provision of this Agreement or to take
action with respect to such breach or default or any subsequent
breach or default. Waiver by party of any breach or failure to
comply with any provision of this Agreement by the other party
shall not be construed as, or constitute, a continuing waiver of
such provisions, or a waiver of any other breach of or failure to
comply with any other provisions of this Agreement.
Section 14.5 No Brokers. Each of the parties hereto warrants
to the other that there are no brokerage commissions or finders
fees (or any basis therefor) resulting from any action taken by
such party or any person acting or purporting to act on its behalf
upon entering into this Agreement, except The Immo Group, which
shall be paid by the Venture. Each party agrees to indemnify and
hold harmless the other party and its Affiliates for all costs,
damages or other expenses arising out of any misrepresentation made
in this Section.
Section 14.6 Submission to Jurisdiction: Jury Waiver. To the
fullest extent permitted by applicable law, each party hereto
agrees (i) that any claim, action or proceeding by such party
seeking any relief whatsoever arising out of, or in connection
with, this Agreement or the transactions contemplated hereby shall
may be brought in the state or Federal courts in the State of
Florida and the Venturers hereby submit, and agree to join in
procuring that the Venture submits, to the exclusive jurisdiction
of such courts; and (ii) irrevocably waives any objection which it
may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
Section 14.7 Confidentiality. (a) Each party agrees not to
disclose any of the terms of this Agreement or any confidential,
proprietary or non-public information relating to the assets, trade
secrets, methods, financial affairs, or business of either party
hereto or the Venture ("Confidential Information"), provided that
such disclosure may be made (i) to any person who is a partner,
officer, director, advisor or employee of such party or counsel to
or accountants of such party solely for their use and on a
need-to-know basis, (ii) with the prior written consent of the
other party, (iii) subject to the next succeeding paragraph,
pursuant to a subpoena or order issued by a court, arbitrator or
governmental body, agency or official, or (iv) pursuant to the
requirements of tax laws, securities laws or the rules and
regulations of any securities exchange applicable to a Venturer.
(b) In the event that a Venturer or any of its
Affiliates shall receive a request to disclose any of the terms of
this Agreement, or any other Confidential Information, under a
subpoena or order, such Venturer or Affiliate shall (i) promptly
notify the other Venturer thereof, (ii) consult with the Executive
Committee on the advisability of taking steps to resist or narrow
such request, and (iii) if disclosure is required or deemed
advisable, cooperate with the other Venturer in any attempt it may
make to obtain an order or other assurance that confidential
treatment will be accorded those terms of this Agreement, or any
other Confidential Information, that are disclosed.
(c) In the event that this Agreement is terminated for
any reason whatsoever, upon the request of the disclosing party, a
party receiving any written Confidential Information shall promptly
return to the disclosing party all written Confidential Information
which it may have received from or on behalf of the other party and
shall not retain any copies or extracts therefrom.
(d) Each party acknowledges that in the event of any
breach of this Section 14.7, the non-disclosing party may be
irreparably and immediately harmed and monetary damages alone may
not be an adequate remedy. Accordingly, in addition to any other
remedy to which it may be entitled at law or in equity, the
non-disclosing party shall be entitled to seek and obtain an
injunction or injunctions to prevent breaches or threatened
breaches of this Section and/or to compel specific performance of
this Section 14.7. Each party also agrees to reimburse the
nondisclosing party for all costs and expenses, including
attorneys' fees, incurred by the disclosing party in attempting to
enforce the obligations of the other party hereunder. No failure or
delay in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude any other
or further exercise thereof.
Section 14.8 Non-Solicitation. Each Venturer agrees that it
will not at any time during the Term or for a period of one (1)
year after the termination or expiration of this Agreement, whether
voluntarily or involuntarily, directly or indirectly for itself or
any other person or entity solicit, interfere with or endeavor to
entice away from the other Venturer any of its employees, officers,
directors or agents.
Section 14.9 Publicity. During the Term of this Agreement,
no public release, announcement or other form of publicity
concerning the transactions contemplated by this Agreement shall be
issued by either party or any of its Affiliates without the prior
approval of the other party (which approval shall not be
unreasonably withheld), except as may be required by applicable law
or the rules or regulations of any securities exchange on which the
securities of the party required to make such disclosure are
listed, in which case such party shall, to the extent possible,
allow the other party reasonable time to comment on such disclosure
in advance of its issuance.
Section 14.10 Notices. (i) Unless otherwise specified in
this Agreement, all notices, demands, elections, requests or other
communications that any party to this Agreement may desire or be
required to give hereunder shall be in writing and shall be given
by hand delivery, facsimile (with the hard copy of such facsimile
promptly delivered to the addressee), by post prepaid, registered
or recorded delivery or by a recognized overnight courier service
providing confirmation of delivery, addressed as follows:
If to Newall: 5500 Northwest 69th Avenue
Lauderhill, Florida 33319
Attention: Stanley Rosenthal
with a copy to: Bruce Litwer, Esq.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
If to Chancellor: 197 First Avenue
Needham, Massachusetts 02194
Attention: President
with a copy to: James M. Clary, III, Esq.
197 First Avenue
Needham, Massachusetts 02194
(ii) Each party shall have the right to designate
another address or change in address by written notice to the other
in the manner prescribed herein.
(iii) All notices given pursuant to this Section
shall be deemed to have been properly given (i) if delivered by
hand, on the date of delivery or on the date delivery was refused
by the addressee, or (ii) if delivered by mail or by overnight
courier, on the date of delivery as established by the return
receipt or courier service confirmation (or the date on which the
return receipt or courier service confirms that acceptance of
delivery was refused by the addressee).
Section 14.11 Headings and Captions. All headings and
captions contained in this Agreement are inserted for convenience
only and shall not be deemed a part of this Agreement.
Section 14.12 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an
original and all of which, when taken together, shall constitute
one Agreement.
Section 14.13 Governing Law. This Agreement shall be
construed in accordance with the laws of the State of Florida,
without regard to conflict of law provisions thereof.
Section 14.14 Invalidity. Every provision of this Agreement
is intended to be severable. The invalidity and unenforceability of
any particular provision of this Agreement in any jurisdiction
shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
Section 14.15 Claims by Venture. (a) If either Venturer
("the First Venturer") shall reasonably believe that the Venture
has a claim against, or a claim which may involve a claim against
the other Venturer, then the First Venturer shall be entitled,
through its Executive Committee Nominee(s), to decide whether to
instigate litigation and to conduct such litigation, without
requiring the approval or involvement of the other Venturer.
(b) If either Venturer asserts any claim against the
Venture or threatens to do so, then the Venture's response to such
claim and the conduct of any litigation, shall be controlled by the
other Venturer without requiring the approval or involvement of the
Venturer concerned.
(c) If the Venture is unsuccessful in any claim,
litigation or proceedings described above, the First Venturer shall
be solely responsible and shall indemnify the Venture and the other
Venturer, for all costs and expenses incurred by the Venture, and
the other Venturer, in connection with such claim, litigation or
proceeding.
Section 14.16 Time for Performance. If any of the time
periods set forth in this Agreement expires on a Saturday, Sunday
or legal holiday in the State of Florida or the United States of
America, then the time period shall automatically be deemed
extended to the next succeeding business day.
[SIGNATURES APPEAR ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
WITNESSES: NEWALL:
NEWALL ASSISTED LIVING, LTD., a
Florida limited partnership
By: Asliv, Inc., a Florida
corporation, its General
Partner
By:
Print Name:________________ Print Name:
Title:
Print Name:________________
WITNESSES: CHANCELLOR:
CHANCELLOR OF LAUDERHILL II,
INC., a Delaware corporation
By:
Print Name:__________________ Print Name:
Title:
Print Name:__________________
EXHIBITS:
Exhibit "A" Legal Description of Property
SCHEDULES:
Schedule 1.13(c) Executive Committee Nominees
Schedule 4.2 Site Plan (TO BE ATTACHED UPON APPROVAL)
Schedule 4.6(a) Exception(s) to Restrictions on Newall
Schedule 4.6(b) Exception(s) to Restrictions on Chancellor
Schedule 6.1 Initial Capital Contributions
\47156\014\JTVTRAGM.004
EXHIBIT A
LEGAL DESCRIPTION
A portion of Tract "A", BOULEVARD FOREST, according to the plat
thereof, as recorded in Plat Book 113, Page 39 of the Public
Records of Broward County, Florida, being more particularly
described as follows:
COMMENCING at the Northwest corner of Tract "A":
THENCE North 89degrees 32'45" East, along the North line of said Tract
"A", a distance of 264.88 feet, to the POINT OF BEGINNING;
THENCE continue North 89 degrees 32'45" East, along said North line, a
distance of 825.12 feet;
THENCE South 00 degrees 27'15" East, a distance of 110.00 feet to a point
on the arc of a non-tangent curve concave to the South (said point
bears North 11 degrees 04'58" East from the radius point of the next
described curve);
THENCE Southwesterly, along the arc of said curve having a radius
of 90.00 feet, a delta of 64 degrees 00'00", and an arc distance of 100.53
feet to a point of Tangency;
THENCE South 37 degrees 04'58" West, a distance of 96.87 feet to the
beginning of a curve concave to the North;
THENCE Westerly, along the arc of said curve having a radius of
174.81 feet, a delta of 80 degrees 17'56", and an arc distance of 244.99
feet to a Point of Reverse Curvature with a curve concave to the
South;
THENCE Westerly, along the arc of said curve having a radius of
500.00 feet, a delta of 49 degrees 30'00", and an arc distance of 431.97
feet to an intersection with a non-tangent curve concave to the
South (said point bears North 09 degrees 22'54" East from the radius point
of the next described curve);
THENCE Westerly, along the arc of said curve having a radius of
140.00 feet, a delta of 15 degrees 47'21", and an arc distance of 38.58
feet to a Point of Non-Tangency;
THENCE North 00 degrees 27'15" West, 244.39 feet to the POINT OF BEGINNING;
Said lands lying in the City of Lauderhill, Broward County,
Florida.
SCHEDULE 1.13(c)
EXECUTIVE COMMITTEE NOMINEES
Newall: Stanley Rosenthal
Chancellor: James M. Clary, III
SCHEDULE 4.2
SITE PLAN
[TO BE ATTACHED UPON APPROVAL]
SCHEDULE 4.6(a)
EXCEPTIONS TO RESTRICTIONS ON NEWALL
NONE
SCHEDULE 4.6(b)
EXCEPTIONS TO RESTRICTIONS ON CHANCELLOR
Plantation, Florida Project
Tamarac, Florida Project
Forest Trace Project
SCHEDULE 6.1
INITIAL CAPITAL CONTRIBUTIONS
Newall: The Property.
Chancellor: Reasonable costs and expenses associated with
obtaining all required approvals for
development of the Property.
LEASE
NEWALL-CHANCELLOR 69TH AVENUE ASSOCIATES,
a Florida Joint Venture
as LANDLORD
AND
CHANCELLOR OF LAUDERHILL II, INC.,
a Delaware Corporation
as TENANT
LEASE
NEWALL-CHANCELLOR 69TH AVENUE ASSOCIATES (LANDLORD) AND
CHANCELLOR OF LAUDERHILL II, INC. (TENANT)
Table of Contents
ARTICLE 1. Lease of Premises
1.01 Premises. . . . . . . . . . . . . . . . . . . . .1
1.02 Title and Condition of Premises . . . . . . . . .2
ARTICLE 2. Use of Premises
2.01 Use . . . . . . . . . . . . . . . . . . . . . . .3
2.02 Maintain License, etc.. . . . . . . . . . . . . .3
2.03 Public Use. . . . . . . . . . . . . . . . . . . .3
ARTICLE 3. Term
3.01 Term. . . . . . . . . . . . . . . . . . . . . . .4
3.01 Renewal Terms . . . . . . . . . . . . . . . . . .4
ARTICLE 4. Rent
4.01 Base Rent . . . . . . . . . . . . . . . . . . . .4
4.02 Additional Rent . . . . . . . . . . . . . . . . .4
4.03 Other Conditions to Rent Payments . . . . . . . .4
ARTICLE 5. Payment of Taxes, Assessments, Etc.
5.01 Payment of Impositions. . . . . . . . . . . . . .6
5.02 Excluded and Substituted Taxes, etc.. . . . . . .7
5.03 Evidence of Payment.. . . . . . . . . . . . . . .7
5.04 Contest of Impositions. . . . . . . . . . . . . .7
5.05 Joinder by Landlord.. . . . . . . . . . . . . . .8
5.06 Reserve Fund Payments. . . . . . . . . . . . . .8
ARTICLE 6. Additional Covenants of Landlord
6.01 No Liens. . . . . . . . . . . . . . . . . . . . .8
6.02 No Transfer of Premises . . . . . . . . . . . . .8
6.03 No Dissolution. . . . . . . . . . . . . . . . . .8
6.04 Limitation on Business. . . . . . . . . . . . . .8
6.05 No Voluntary Bankruptcy . . . . . . . . . . . . .8
6.06 Cooperation . . . . . . . . . . . . . . . . . . .9
ARTICLE 7. Additional Covenants of Tenant
7.01 Maintenance of Existence. . . . . . . . . . . . .9
7.02 Inventory . . . . . . . . . . . . . . . . . . . .9
7.03 Licenses and Approvals. . . . . . . . . . . . . .9
7.04 Returns, Reports, etc.. . . . . . . . . . . . . .9
7.05 Works Orders; Statements of Deficiencies. . . . .9
7.06 Revenues and Expenses . . . . . . . . . . . . . .9
7.07 Single Purpose Entity . . . . . . . . . . . . . .9
7.08 Assignment and Assumption of Management
Agreement . . . . . . . . . . . . . . . . . . . 10
ARTICLE 8. Compliance with Laws
8.01 Tenant's Compliance.. . . . . . . . . . . . . . 10
8.02 Right To Contest Applicable Laws. . . . . . . . 10
8.03 Landlord's Compliance . . . . . . . . . . . . . 10
ARTICLE 9. Insurance and Indemnification
9.01 Building Insurance. . . . . . . . . . . . . . . 11
9.02 Liability Insurance.. . . . . . . . . . . . . . 11
9.03 Professional Liability Insurance. . . . . . . . 11
9.04 Insurance Criteria. . . . . . . . . . . . . . . 11
9.05 HUD Financing Insurance Requirements. . . . . . 12
9.06 Evidence of Insurance.. . . . . . . . . . . . . 12
9.07 Waiver Of Subrogation . . . . . . . . . . . . . 12
9.08 Indemnification . . . . . . . . . . . . . . . . 12
ARTICLE 10. Party's Right to Perform Other Party's Covenants
10.01 Landlord's Right To Perform.. . . . . . . . . . 13
10.02 Reimbursement By Tenant.. . . . . . . . . . . . 13
10.03 Tenant's Rights to Perform. . . . . . . . . . . 14
ARTICLE 11. Repairs and Maintenance of the Premises
11.01 Tenant's Repairs. . . . . . . . . . . . . . . . 14
11.02 Landlord's Repairs. . . . . . . . . . . . . . . 14
11.03 Additional Furniture, Furnishings and
Equipment . . . . . . . . . . . . . . . . . . . 14
ARTICLE 12. Surrender
12.01 Surrender.. . . . . . . . . . . . . . . . . . . 15
12.02 Removal of Furniture, Fixtures and Equipment. . 15
12.03 Abandonment by Tenant.. . . . . . . . . . . . . 15
12.04 Loss or Damage To Property. . . . . . . . . . . 15
12.05 [Intentionally Omitted] . . . . . . . . . . . . 15
12.06 Inventory. . . . . . . . . . . . . . . . . . . 16
12.07 Assignment of Rights. . . . . . . . . . . . . . 16
ARTICLE 13. Alterations, Improvements and Additions
13.01 Alterations.. . . . . . . . . . . . . . . . . . 16
13.02 Compliance with Applicable Laws. . . . . . . . 17
13.03 Cooperation of Landlord.. . . . . . . . . . . . 17
13.04 Landlord's Title. . . . . . . . . . . . . . . . 17
ARTICLE 14. Liens
14.01 Discharge of Liens. . . . . . . . . . . . . . . 17
14.02 Landlord's Discharge. . . . . . . . . . . . . . 17
14.03 Consent Not Implied.. . . . . . . . . . . . . . 17
ARTICLE 15. No Waste
15.01 No Waste. . . . . . . . . . . . . . . . . . . . 18
ARTICLE 16. Entry on Premises by Landlord
16.01 Landlord's Entry. . . . . . . . . . . . . . . . 18
16.02 Entry Conditions. . . . . . . . . . . . . . . . 18
16.03 Interference with Tenant. . . . . . . . . . . . 18
ARTICLE 17. Damage or Destruction
17.01 Cancellation Due To Casualty. . . . . . . . . . 20
17.02 Damage. . . . . . . . . . . . . . . . . . . . . 20
17.03 Insurance Proceeds. . . . . . . . . . . . . . . 20
17.04 Insufficient or Excess Net Proceeds.. . . . . . 20
ARTICLE 18. Condemnation
18.01 Cancellation in the Event of Taking . . . . . . 21
18.02 Partial Taking. . . . . . . . . . . . . . . . . 21
18.03 Award. . . . . . . . . . . . . . . . . . . . . 21
18.04 Restoration.. . . . . . . . . . . . . . . . . . 22
18.05 Insufficient or Excess Net Award. . . . . . . . 22
ARTICLE 19. Assignments and Subleases Of Tenant's Interest
19.01 Assignments, etc. . . . . . . . . . . . . . . . 22
19.02 Prohibition on Modification.. . . . . . . . . . 23
ARTICLE 20. Intentionally Omitted. . . . . . . . . . . . . . . . 24
ARTICLE 21. Mortgages By Landlord
21.01 Fee Mortgage. . . . . . . . . . . . . . . . . . 24
21.02 Subordination.. . . . . . . . . . . . . . . . . 24
21.03 Nondisturbance. . . . . . . . . . . . . . . . . 25
21.04 Subordination of Fee Mortgage.. . . . . . . . . 25
21.05 Payments By Tenant on Behalf of Landlord. . . . 25
ARTICLE 22. Default
22.01 Events of Default.. . . . . . . . . . . . . . . 25
22.02 Landlord's Remedies. . . . . . . . . . . . . . 26
22.03 Landlord's Default. . . . . . . . . . . . . . . 27
22.04 No Waiver . . . . . . . . . . . . . . . . . . . 27
22.05 Cumulative Remedies.. . . . . . . . . . . . . . 28
ARTICLE 23. Quiet Enjoyment
23.01 Quiet Enjoyment.. . . . . . . . . . . . . . . . 28
ARTICLE 24. Estoppel Certificates
24.01 Tenant's Certificate. . . . . . . . . . . . . . 28
24.02 Landlord's Certificate. . . . . . . . . . . . . 29
ARTICLE 25. Disputes
25.01 Arbitration Procedure.. . . . . . . . . . . . . 29
25.02 Payment.. . . . . . . . . . . . . . . . . . . . 29
25.03 Disputes Subject To Arbitration.. . . . . . . . 30
ARTICLE 26. General Provisions
26.01 Severability. . . . . . . . . . . . . . . . . . 30
26.02 Notices.. . . . . . . . . . . . . . . . . . . . 30
26.03 Waiver of Jury Trial. . . . . . . . . . . . . . 31
26.04 Consent of Landlord.. . . . . . . . . . . . . . 31
26.05 Payments Under Protest. . . . . . . . . . . . . 31
26.06 No Oral Modification. . . . . . . . . . . . . . 31
26.07 Covenants To Bind and Benefit Respective
Parties.. . . . . . . . . . . . . . . . . . . . 31
26.08 Captions and Table of Contents. . . . . . . . . 31
26.09 Memorandum of Lease . . . . . . . . . . . . . . 32
26.10 Attorneys' Fees . . . . . . . . . . . . . . . . 32
26.11 Waiver. . . . . . . . . . . . . . . . . . . . . 32
26.12 Governing Law; Venue. . . . . . . . . . . . . . 32
26.13 Business Days. . . . . . . . . . . . . . . . . 32
26.14 Reference Rate. . . . . . . . . . . . . . . . . 32
26.15 Time. . . . . . . . . . . . . . . . . . . . . . 33
26.16 Relationship of the Parties . . . . . . . . . . 33
Exhibits
A Legal Description
B Excluded Assets
C Permitted Encumbrances
D Qualifying Subordination, Non-Disturbance and Attornment
Agreement
E Memorandum of Lease
LEASE
THIS LEASE (the "Lease") dated this 24th day of
September, 1997, by and between NEWALL-CHANCELLOR 69TH AVENUE
ASSOCIATES, a Florida joint venture ("Landlord"), and
CHANCELLOR OF LAUDERHILL II, INC. a Delaware corporation
("Tenant").
W I T N E S E T H:
WHEREAS, Landlord is the owner of certain real property
consisting of approximately four and two-tenths (4.2) acres of
vacant land situated in Lauderhill, in the County of Broward,
State of Florida and legally described in Exhibit A attached
hereto ("Land");
WHEREAS, Landlord intends to develop and construct on the
Land an assisted living facility to be comprised of
approximately one hundred twenty (120) beds;
WHEREAS, Landlord desires to lease to Tenant, and Tenant
desires to lease from Landlord, the Land, together with all
improvements now or hereafter located thereon, including,
without limitation, the Facility (as hereinafter defined) and
all other tangible assets used in connection with the Facility;
and
WHEREAS, concurrent with the execution of this Lease,
Landlord and Tenant are entering into an Option to Purchase
Agreement (the "Purchase Option") with regard to the Premises
(as hereinafter defined).
NOW, THEREFORE, FOR AND IN CONSIDERATION of the covenants
and agreements hereinafter contained, Landlord and Tenant
hereby agree as follows:
ARTICLE 1.
Lease of Premises
1.01 Premises. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord, upon the terms, covenants
and conditions hereinafter set forth, the following described
premises (collectively, "Premises"):
(a) the Land;
(b) the buildings and improvements to be erected
thereon, all replacements thereof and all new
or additional buildings and improvements
erected on the Land (collectively,
"Facility"); and
(c) the right, title and interest, if any, of
Landlord in and to:
(i) Any strips and gores of land
adjoining the Land on any side
thereof;
(ii) Any land lying in the bed of any
street or avenue abutting the
Land, to the center line thereof;
(iii) Any easements or other rights in
adjoining property enuring to the
benefit of Landlord by reason of
ownership of the Land;
(iv) All tangible assets ("Tangible
Assets") relating to the Facility
and the Landlord's business
conducted at the Facility,
including, without limitation all
vehicles, fixtures, machinery,
equipment, furniture, furnishings
and other assets (except those
assets listed in Exhibit B
attached hereto) used in or in
connection with the use,
occupation and operation of the
Land and Facility and all
alterations, additions and
improvements hereafter made to
the Land and Facility, title to
which may vest in Landlord.
SUBJECT, HOWEVER, to the permitted liens and other
encumbrances set forth on Exhibit C attached hereto ("Permitted
Encumbrances").
1.02 Title and Condition of Premises. Landlord
represents and warrants as of the date hereof and as of the
Commencement Date (as defined in Section 3.01), upon which
representation and warranty Tenant has relied in the execution
of this Lease, that (i) Landlord is the owner of the Premises
in fee simple absolute, free and clear of all liens and
encumbrances except the Permitted Encumbrances, and the
Premises shall include all of the assets necessary (as of the
Commencement Date) to meet all applicable regulatory
requirements and to permit Tenant to operate the Facility as a
going concern and assisted living facility with 120 beds
licensed for assisted living use; (ii) this Lease is and shall
be a first encumbrance on the Premises subject only to the
Permitted Encumbrances; and (iii) there are no easements,
restrictions, zoning ordinances or similar governmental
regulations which prevent the use of the Premises for the
Permitted Use (as hereinafter defined).
ARTICLE 2.
Use of Premises
2.01 Use.
(a) Tenant shall use the Premises as an assisted
living facility and such other ancillary uses as are consistent
with the operation of an assisted living facility (the
"Permitted Use"). Tenant shall not use the Premises for any
other purposes without Landlord's prior written consent not to
be unreasonably withheld. In the event any proposed change in
use is implemented, the proposed use shall become a "Permitted
Use" and all other appropriate changes in phraseology in this
Lease shall automatically be deemed to have been made.
(b) Tenant shall not use or allow the Premises to
be used for any unlawful purpose or in violation of any
certificate of occupancy or any other applicable laws covering
or affecting the use of the Premises or any part thereof or for
any use which may, at law, constitute a nuisance, public or
private, or which may make void or voidable any insurance then
in force with respect thereto.
2.02 Maintain License, etc. Except in the event that
Tenant engages in a Permitted Use other than use of the
Premises as an assisted living facility in accordance with
Section 2.01 hereof, during the Term (as defined in Section
3.01), Tenant shall maintain its license from the Florida
Agency for Health Care Administration (or any successor agency)
to operate the approximately 120 beds in the Facility as
assisted living facility beds.
2.03 Public Use. Tenant shall not suffer or permit the
Premises or any portion thereof to be used by the public, as
such, without restriction or in such manner as might reasonably
tend to impair Landlord's title to the Premises or any portion
thereof, or in such manner as might reasonably make possible a
claim or claims of adverse usage, adverse possession or
prescription by the public, as such, or of implied dedication,
of the Premises or any portion thereof. Tenant hereby
acknowledges that Landlord does not hereby consent, expressly
or by implication, to the unrestricted use or possession of the
whole or any portion of the Premises by the public, as such.
ARTICLE 3.
Term
3.01 Initial Term.
(a) The initial term of this Lease (the "Initial
Term") shall be fifteen (15) years commencing on the first day
of the next calendar month following the date that (i) all
appropriate and necessary permits, licenses, approvals,
certificates and certifications have been issued by the
appropriate governmental entities having jurisdiction over the
Facility to permit Tenant to operate the Facility lawfully as
an assisted living facility, and (ii) all punchlist items in
connection with the construction of the Facility are completed
to the reasonable satisfaction of Tenant ("Commencement Date"),
and expiring on the day preceding the fifteenth (15th)
anniversary of the Commencement Date, unless sooner terminated
or otherwise extended as provided for herein. The last day of
the Term is referred to herein as the "Expiration Date."
Unless otherwise indicated, as used in this Lease, the word
"Term" shall mean the Initial Term and any properly exercised
Renewal Term (as hereinafter defined).
(b) As used in this Lease, the term "Lease Year"
shall refer to a period of 365 days (366 in any leap year)
commencing on the Commencement Date or any anniversary of the
Commencement Date.
3.02 Renewal Terms. Landlord hereby grants to Tenant the
right and option to renew the Initial Term of this Lease for
two (2) successive terms of five (5) years each (each of which
is referred to as a "Renewal Term"); the first Renewal Term
shall commence from the date of the expiration of the Initial
Term of this Lease and the second Renewal Term shall commence
from the date of the expiration of the first Renewal Term. In
order to exercise the option herein granted, Tenant must give
Landlord written notice of Tenant's intention to exercise the
option to renew not less than thirty (30) days prior to the
expiration of the Initial Term of this Lease with respect to
the first Renewal Term and not less than thirty (30) days prior
to the expiration of the first Renewal Term with respect to the
second Renewal Term. All of the terms, covenants and conditions
of this Lease will apply during any Renewal Term.
ARTICLE 4.
Rent
4.01 Base Rent.
(a) Tenant shall pay to Landlord, in such currency
of the United States of America as at the time of payment shall
be legal tender for payment of private and public debts, annual
rent in equal monthly installments ("Base Rent") over and above
the other payments to be made by Tenant as hereinafter
provided, equal to:
(i) The monthly principal and
interest on the outstanding
Project Financing (as defined
below) for the Facility; plus
(ii) The amount necessary for payment
of real estate taxes, property
insurance, and replacement
reserve funds related to the
Project Financing; plus
(iii) The monthly principal and
interest on any outstanding
Chancellor Loan (as defined in
Landlord's joint venture
agreement).
4.02 Additional Rent.
(a) The parties agree Tenant shall pay Landlord
after the Base Rent payable under Section 4.01, as additional
rent (the "Additional Rent"), fifty percent (50%) of the Cash
Flow (as hereinafter defined). "Cash Flow" as used herein shall
mean all cash and cash equivalents received by Tenant from all
sources from the operation of the Facility, on hand as of the
last day of the period of determination thereof, after payment
of all then due expenses of operating and managing the Facility
(including, without limitation, payments due under the
Management Agreement (as hereinafter defined) and payments for
capital improvements and replacements to the extent of the then
current annual portion thereof based upon the amortization of
such capital improvements and replacements over the useful life
thereof) and after payment of all then due debts and
liabilities relating to the Facility [including the Project
Financing and any Chancellor Loan (as defined in Landlord's
joint venture agreement)] and after establishment of any
reserves required under the Project Financing.
4.03 Other Conditions to Rent Payments.
(a) The Base Rent shall be paid:
(i) Without advance notice, demand, offset, or
deduction unless the offset or deduction is made by Tenant as
specifically permitted by this Lease;
(ii) On or prior to the tenth (10th) day of the
first month following the Commencement Date, and for each
succeeding month of the Term, on the tenth (10th) day of each
month;
(iii) Notwithstanding anything herein to the
contrary, Landlord hereby covenants and agrees that Tenant
shall have the right to pay the Base Rent then due and payable
by Landlord under the Project Financing directly to the
applicable lender, in which event the amount actually paid by
Tenant to service such debt shall be applied as a credit
against any Base Rent due and payable by Tenant to Landlord
hereunder; and
(iv) If the Term does not end on the last day of a
month, the Base Rent for that partial month shall be prorated
by multiplying the monthly Base Rent by a fraction, the
numerator of which is the number of days of the partial month
included in the Term and the denominator of which is the total
number of days in the full calendar month.
(b) The Additional Rent shall be paid:
(i) Without advance notice, demand, offset, or
deduction unless the offset or deduction is made by Tenant as
specifically permitted by this Lease;
(ii) On or prior to the tenth (10th) day of the
first month following the Commencement Date, and for each
succeeding month of the Term, in arrears, on the tenth (10th)
day of each month;
ARTICLE 5.
Payment of Taxes, Assessments, Etc.
5.01 Payment of Impositions. Except as otherwise
provided in Section 5.02 of this Lease or as otherwise included
in Base Rent, Tenant shall pay or cause to be paid, before any
fine, penalty, interest or cost may be added thereto (or, if
the bills therefor are directed to Landlord and Landlord fails
to submit same to Tenant in a timely manner sufficient to
permit Tenant to comply with the foregoing, then within fifteen
(15) business days after Landlord's submission of such bills to
Tenant), all such real estate taxes, assessments, sewer rents,
water meter and water charges, excises, levies, license and
permit fees, charges for public utilities and all such other
charges which at any time during the Term may be assessed,
levied, confirmed or imposed upon, the Premises (collectively,
the "Impositions", and any one of the same being hereinafter
referred to as an "Imposition"); provided, however, that:
(a) if, by law, any Imposition may at the option of
the taxpayer be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Tenant
may exercise the option to pay the same, including any accrued
interest on the unpaid balance of such Imposition, in
installments and, in such event, shall pay such installments as
may become due during the Term; and
(b) all Impositions for the fiscal or tax years in
which the Term begins and ends shall be apportioned so that
Tenant shall pay only those portions thereof which correspond
with the portion of said years as are within the Term.
(c) as to sales tax, if any, which may be due
hereunder in connection with all rent payments, Tenant shall be
responsible for payment of such tax.
5.02 Excluded and Substituted Taxes, etc. Nothing
contained in this Lease shall require Tenant to pay municipal,
county, state or federal income taxes assessed against
Landlord, or municipal, state or federal capital levy, gift,
estate, succession, inheritance or transfer taxes of Landlord,
or corporation excess profits or franchise taxes imposed upon
any corporate owner of the fee of the Premises or any income,
profits, or revenue tax, assessment or charge imposed upon Base
Rent as such, payable by Tenant under this Lease; provided,
however, that, if, at any time during the Term, the methods of
taxation prevailing on the Commencement Date shall be altered
so that in lieu of or as a substitute for the whole or any part
of any Imposition now levied, assessed or imposed on real
estate and the improvements thereon, there shall be levied,
assessed and imposed a tax, assessment, levy, imposition or
charge, wholly or partially as a capital levy, or otherwise, on
the rents received therefrom, or, by or based in whole or in
part, upon the Premises, and imposed upon Landlord, then all
such taxes or assessments, or the part thereof so measured or
based, shall be deemed to be included within the term
"Impositions" for the purposes hereof (but only to the extent
that such substitution shall relieve Tenant in whole or in part
from the payment of any Imposition enumerated in Section 5.01)
to the extent that the same would be payable if the Premises
were the only property of Landlord subject to such Impositions,
and Tenant shall pay and discharge the same as herein provided
in respect of the payment of any other Imposition.
5.03 Evidence of Payment. Tenant from time to time, upon
Landlord's reasonable request, shall furnish to Landlord within
ten (10) days before the date when any Imposition would be
delinquent, receipts of the appropriate taxing authority, or
other evidence reasonably satisfactory to Landlord, evidencing
the payment of any Impositions.
5.04 Contest of Impositions. Tenant shall have the right
to seek a reduction in the valuation or an exemption of the
Premises for tax purposes and to contest the amount or
validity, in whole or in part, of any Imposition by appropriate
proceedings diligently conducted in good faith and may defer
payment of such Imposition, provided that neither the Premises
nor any part thereof would by reason of such postponement or
deferment be in danger of being forfeited or lost. Landlord
may, after reasonable notice to Tenant, pay such contested item
or items if the protection of the Premises or of Landlord's
interest therein shall, in the reasonable judgment of Landlord,
require such payment.
5.05 Joinder by Landlord. Landlord shall join in any
proceedings referred to in Section 5.04 if the provisions of
any Applicable Law (as hereinafter defined) at the time in
effect shall require that such proceedings be brought by or in
the name of Landlord or any owner of the Premises. Landlord
shall not ultimately be subjected to any liability for the
payment of any costs or expenses in connection with any such
proceedings. Tenant shall be entitled to any refund of any
Imposition and penalties or interest thereon received by
Landlord which have been paid by Tenant, or which have been
paid by Landlord but previously reimbursed in full by Tenant.
5.06 Reserve Fund Payments. Tenant agrees to fund all
real estate tax and casualty insurance reserves (collectively,
the "Real Estate and Casualty Reserves") and replacement
reserves (the "Replacement Reserves") required to be paid by
Landlord under the Project Financing.
ARTICLE 6.
Additional Covenants of Landlord
6.01 No Liens. Landlord shall not create, incur, or
permit to exist any lien, charge, encumbrance, easement or
restriction upon the Premises, except as specifically permitted
by the terms of this Lease.
6.02 No Transfer of Premises. Landlord shall not sell,
lease, mortgage, convey or otherwise transfer any legal,
beneficial or equitable interest in the Premises or Landlord
(except as provided in Landlord's joint venture agreement),
except as required by the terms of this Lease or the Purchase
Option.
6.03 No Dissolution. Landlord shall not without the prior
written consent of Tenant, which consent may be withheld in
Tenant's sole discretion, dissolve, liquidate, merge,
consolidate or terminate its existence or sell, assign, lease,
or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) except as
specifically permitted or required by the terms of this Lease
or the Purchase Option.
6.04 Limitation on Business. At all times throughout the
Term, Landlord shall engage in no business other than the
ownership, leasing and management of the Premises, together
with any activities incidental thereto or required to be
conducted by Landlord pursuant to the terms of this Lease or
the Purchase Option.
6.05 No Voluntary Bankruptcy. Landlord shall not file a
voluntary petition in bankruptcy or make a general assignment
for the benefit of creditors.
6.06 Cooperation. Landlord shall at all times cooperate
in all reasonable respects and take all actions necessary on
its part to obtain and maintain in full force and effect
waivers, licenses, permits and governmental approvals which may
be necessary to permit Tenant to lease and thereafter to
operate the Facility as an assisted living facility. In
connection with each such application, the Landlord shall
furnish Tenant with such existing data and information as may
be reasonable and shall use its best efforts to assist in any
reasonable way requested by Tenant.
ARTICLE 7.
Additional Covenants of Tenant
7.01 Maintenance of Existence. During the Term, Tenant
agrees to preserve and maintain its existence and good
standing.
7.02 Inventory. During the Term, Tenant agrees to
maintain inventory relating to the operation of the Facility in
an amount sufficient to operate the Facility in the ordinary
course.
7.03 Licenses and Approvals. Tenant shall secure and keep
in effect all material licenses, certifications, and approvals
from federal, state, and local governmental and administrative
agencies having jurisdiction over Tenant or the Premises
required for the continued operation of the Facility by Tenant.
7.04 Returns, Reports, etc. Tenant shall file all tax
returns, plans and filings of any kind or nature which are
required to be filed with respect to Tenant's operation of and
leasehold interest in, the Facility during the Term.
whi Works Orders; Statements of Deficiencies. Tenant
shall provide to Landlord, within ten (10) business days after
receipt, copies of any work orders or statements of
deficiencies relating to the Premises which are issued by any
state department of health or state or local licensure agency,
or police or fire department, sanitation, health or work
authorities or any other federal, state or municipal authority.
7.06 Revenues and Expenses. During the Term, Tenant shall
have the right to receive all revenues generated by the
operation of the Facility and, except as specifically provided
otherwise in this Lease, shall be responsible for all expenses
arising therefrom.
7.07 Single Purpose Entity. Tenant shall engage in no
business other than the leasing, ownership and operation of the
Premises.
7.08 Assignment and Assumption of Management Agreement.
Commencing as of the Commencement Date and continuing for the
Term, Landlord assigns to Tenant, and Tenant assumes from
Landlord, those obligations which accrue as of the Commencement
Date under that certain management agreement by and between
Landlord and SRR Management Corp. (or its nominee) ("Manager")
pursuant to which Manager shall provide operational management
and marketing services for the Facility (the "Management
Agreement").
ARTICLE 8.
Compliance with Laws
8.01 Tenant's Compliance. Except as otherwise provided
in this Lease, throughout the Term, Tenant, at its sole cost
and expense, shall comply in all material respects with all
present and future laws, ordinances, orders, rules, regulations
and requirements of all federal, state and municipal
governments, departments, commissions, boards and officers,
foreseen or unforeseen, ordinary as well as extraordinary,
which may be applicable to the Premises or to the use or manner
of use of the Premises ("Applicable Laws"). This undertaking
shall not be deemed breached by the existence of routine
correctable violations disclosed upon licensure or
certification surveys by any federal, state or local
governmental authority provided that Tenant proceeds to correct
same. Notwithstanding anything herein to the contrary, Tenant
shall not be required to make any structural changes or
improvements to the Premises.
8.02 Right To Contest Applicable Laws. Tenant shall have
the right, after prior written notice to Landlord, to contest
by appropriate legal proceedings conducted in good faith, in
the name of Tenant or Landlord or both, the validity or
application of any Applicable Laws; provided, that compliance
with such Applicable Laws pending the prosecution of any such
proceeding would not subject Landlord to civil or criminal
liability or fine.
Landlord shall, subject to the foregoing, execute and deliver
any appropriate papers which may be necessary or proper to
permit Tenant so to contest the validity or application of any
such Applicable Laws.
8.03 Landlord's Compliance. Landlord shall make all
structural changes to the Premises necessary to comply with
Applicable Laws.
ARTICLE 9.
Insurance and Indemnification
9.01 Building Insurance. Tenant, at its sole cost and
expense, shall at all times during the Term procure and
maintain for the benefit of Landlord and Tenant, a policy of
property insurance with such extended coverage as shall from
time to time be customary for premises similarly situated in
Broward County, Florida, covering the Premises in an amount
sufficient to prevent Landlord or Tenant from being or becoming
a co-insurer within the terms of the policy in question with an
agreed amount clause (which amount shall in no event be less
than 80% of the full replacement value of the Premises).
9.02 Liability Insurance. Tenant shall (from Facility
revenues) maintain commercial general liability insurance,
including public liability and property damage, with a minimum
combined single limit of liability of Three Million Dollars
($3,000,000) in the aggregate and $1,000,000 per occurrence for
personal injuries or deaths of persons occurring in or about
the Premises.
9.03 Professional Liability Insurance. Tenant, at its
sole cost and expense, shall maintain professional liability
insurance customarily issued in connection with assisted living
operations in an amount not less than One Million Dollars
($1,000,000).
9.04 Insurance Criteria. Insurance policies required by
this Lease shall:
(a) be issued by insurance companies of recognized
responsibility;
(b) name the nonprocuring party, the Fee Mortgagee
(as hereinafter defined), and other persons or entities
reasonably designated by Landlord or Tenant, as the case may
be, as additional insureds as their interests may appear; other
landlords or tenants may also be added as additional insureds
in a blanket policy;
(c) provide that the insurance not be canceled or
materially changed in the scope or amount of coverage unless
fifteen (15) days or more advance notice is given to the
nonprocuring party;
(d) be primary policies not as contributing with,
or in excess of, the coverage that the other party may carry;
and
(e) be permitted to be carried through one or more
of the following:
(i) a "blanket policy"; or
(ii) "umbrella" coverage;
9.05 Project Financing Insurance Requirements. Tenant
shall also maintain any additional insurance as shall be
required under the Project Financing.
9.06 Evidence of Insurance. By the Commencement Date and
upon each renewal of its insurance policies, each party shall
give certificates of insurance to the other party evidencing
the insurance coverage required under this Article 9.
9.07 Waiver Of Subrogation. Each of Landlord and Tenant
hereby waives any and every claim for recovery from the other
for any and all loss or damage of or to the Premises or of or
to the contents thereof, or of or to the rents therefrom or the
use thereof, whether such loss or damage is due to the
negligence of Landlord or Tenant or its respective agents or
employees, to the extent that such loss or damage is covered or
coverable under a property insurance policy, provided, however,
that the aforesaid waiver by any party shall not be effective
if such party's insurance policy does not permit or would be
invalidated by such waiver.
9.08 Indemnification.
(a) Tenant agrees to defend, protect, indemnify and
save harmless Landlord from and against all liability to third
parties (including but not limited to the officers, agents,
contractors, and business associates of Tenant) arising out of
(i) Tenant's use and occupancy of the Premises (other than
liability arising with respect to Landlord's failure to perform
or observe any of Landlord's obligations under this Lease or
any negligence on the part of Landlord), (ii) the negligence or
intentional misconduct of Tenant and its servants, agents,
employees, contractors, suppliers, workers and invitees, or
(iii) Tenant's failure to perform or observe any covenant or
condition required to be performed or observed by Tenant under
this Lease.
(b) Landlord agrees to defend, protect, indemnify
and save harmless Tenant from and against all liability to
third parties (including but not limited to the officers,
agents, contractors, and business associates of Landlord)
arising out of (i) Landlord's use, operation and maintenance of
the Premises (other than liability arising with respect to
Tenant's failure to perform or observe any of Tenant's
obligations under this Lease or any negligence on the part of
Tenant), (ii) the negligence or intentional misconduct of
Landlord and its servants, agents, employees, contractors,
suppliers, workers and invitees, or (iii) Landlord's failure to
perform or observe any covenant or condition required to be
performed or observed by Landlord under this Lease.
(c) If any claim is asserted or any action is
commenced against a party (the "Indemnified Party") in respect
of which such Indemnified Party is entitled to seek
indemnification hereunder, such Indemnified Party shall give
prompt notice to the other party (the "Indemnifying Party").
Such Indemnifying Party shall have the right, with counsel
approved by such Indemnified Party (not to be unreasonably
withheld), to assume the defense of such claim or action. If
the Indemnifying Party shall so assume such defense then it
shall not be responsible for the fees of any separate counsel
retained by the Indemnified Party. If the Indemnifying Party
shall believe that the Indemnified Party is not entitled to
indemnification hereunder then the Indemnifying Party shall not
be required to assume such defense but if it shall be finally
determined by a court of competent jurisdiction that the
Indemnified Party is or was entitled to indemnification, then
the Indemnifying Party shall also be liable for the counsel
fees incurred by the Indemnified Party in connection with such
claim or action.
ARTICLE 10.
Party's Right to Perform Other Party's Covenants
10.01 Landlord's Right To Perform. If Tenant shall at
any time fail to pay any Imposition in accordance with the
provisions of Article 5, or to take out, pay for, maintain or
deliver any of the insurance policies or certificates therefor
as provided for in Article 9, or shall fail to make any other
payment or perform any other act on its part to be made or
performed, Landlord, after providing Tenant with the notice
required pursuant to Section 22.01 of this Lease, and without
waiving or releasing Tenant from any obligation of Tenant
contained in this Lease or from any Default by Tenant and
without waiving Landlord's right to take such action as may be
permissible under this Lease as a result of such Default, may
(but shall be under no obligation to):
(a) pay any Imposition payable by Tenant pursuant to
the provisions of Article 5, or
(b) take out, pay for and maintain any of the
insurance policies provided for in Article 9, or
(c) make any other payment or perform any other act
on Tenant's part to be made or performed as in this Lease
provided, and, subject to the entry conditions set forth in
Section 16.02, may enter upon the Premises for any such
purpose, and take all such action thereon, as may be necessary
therefor.
10.02 Reimbursement By Tenant. All amounts properly paid
by Landlord and all reasonable costs and expenses incurred by
Landlord in connection with the performance of any such act
shall be paid by Tenant to Landlord not later than thirty (30)
days after demand.
10.03 Tenant's Rights to Perform. If Landlord shall at
any time fail to make any payment or perform any other act on
its part to be made or performed under this Lease, Tenant,
after providing Landlord with the notice required pursuant to
Section 22.03 of this Lease and without waiving or releasing
Landlord from any obligation of Landlord contained in this
Lease or from any Default by Landlord and without waiving
Tenant's right to take such action as may be permissible under
this Lease as a result of such Default may (but shall be under
no obligation to) remedy such default for the account and at
the expense of Landlord; provided, however, in the event of an
emergency, Tenant may remedy the default immediately and
without notice. If the Tenant makes any expenditures or incurs
any obligations for the payment of money in connection
therewith, such sums paid or obligations incurred shall be paid
by Landlord to Tenant upon demand provided that Tenant shall
have the right to deduct all such sums from amounts due
hereunder other than Base Rent. Notwithstanding anything
herein to the contrary, the remedies set forth in this Lease
shall not affect in any manner such claim to actual or
constructive eviction or other claim for damages or relief to
which Tenant may be entitled under Applicable Laws.
ARTICLE 11.
Repairs and Maintenance of the Premises
11.01 Tenant's Repairs. Throughout the Term, Tenant, at
its sole cost and expense shall make all nonstructural repairs
necessary to keep the Premises in good order and condition, and
repair, reasonable wear and tear, casualty and condemnation
excepted. Notwithstanding the foregoing, Landlord shall make
all repairs required pursuant to this Section 11.01 to the
extent such repairs are needed because of the misconduct or
negligence of Landlord, its officers, employees, agents or
invitees, and are not covered by the insurance carried by or
required to be carried by Tenant hereunder.
11.02 Landlord's Repairs. Throughout the Term, Landlord,
at its sole cost and expense, shall make all structural repairs
and replacements necessary to keep the Premises in good order,
condition and repair, reasonable wear and tear, casualty and
condemnation excepted. Notwithstanding the foregoing, Tenant
shall make all repairs required pursuant to this Section 11.02
to the extent such repairs are needed because of the misconduct
or negligence of Tenant, its officers, employees, agents or
invitees and are not covered by the insurance carried by or
required to be carried by Tenant hereunder.
11.03 Additional Furniture, Furnishings and Equipment.
Tenant shall have the right to install additional furniture,
furnishings, equipment and machinery on the Premises and in the
Facility (i.e., in addition to that located in the Facility as
of the Commencement Date; hereinafter referred to as
"Additional FF&E"), with Tenant retaining the right to remove
and/or replace such Additional FF&E from time to time and upon
the termination of this Lease, subject to the provisions of
Section 12.02 hereof.
ARTICLE 12.
Surrender
12.01 Surrender. Except as otherwise provided herein,
Tenant shall on the last day of the Term or upon any earlier
termination of this Lease (other than upon a closing under the
Purchase Option), surrender the Premises to Landlord without
delay and in good order, condition and repair, except for (a)
reasonable wear and tear; (b) casualty and condemnation; and
(c) alterations as permitted by this Lease. Such surrender
shall be free and clear of all lettings and occupancies other
than subleases then terminable at the option of the landlord
thereof, subleases permitted under this Lease without
Landlord's consent (except the Sublease), or subleases to which
Landlord shall have specifically consented, and shall be free
and clear of all liens and encumbrances other than the
Permitted Encumbrances and any liens and encumbrances created
or suffered by Landlord.
12.02 Removal of Furniture, Fixtures and Equipment. Any
Additional FF&E may be removed by Tenant at or prior to the
termination or expiration of this Lease, provided, however,
that the removal thereof will not structurally injure the
Premises or necessitate fundamental changes in or repairs to
the Premises.
12.03 Abandonment by Tenant. Any personal property of
Tenant or any subtenant, which shall remain in or on the
Premises after the termination of this Lease and the removal of
Tenant or such subtenant from the Premises, may, at the option
of Landlord, be deemed to have been abandoned by Tenant or such
subtenant and either may be retained by Landlord as its
property or be disposed of in such manner as Landlord may
elect, or if Landlord shall give written notice to Tenant to
such effect, such property shall be removed by Tenant at
Tenant's sole cost and expense. If this Lease shall terminate
pursuant to Articles 17 or 18, then, notwithstanding Sections
12.02 and 12.03 Tenant or any subtenant shall have a reasonable
time thereafter to remove any personal property of Tenant.
12.04 Loss or Damage To Property. Landlord shall not be
responsible for any loss or damage occurring to any property
owned by Tenant, except where such loss or damage arises out of
the negligence or willful misconduct of Landlord, its officers,
employees or agents.
12.05 [Intentionally Omitted].
12.06 Inventory. Notwithstanding anything to the
contrary contained in this Article 12, Tenant shall not remove
from the Premises at the expiration of the Term or earlier
termination of this Lease any inventory of linens, food and
medical supplies ("Inventory") at the Facility.
12.07 Assignment of Rights. Upon the expiration or
termination of this Lease for any reason other than
consummation of the sale of the Premises to Tenant:
(a) Tenant and Landlord shall execute and deliver,
as assignor and assignee, respectively, an assignment and
assumption agreement, pursuant to which Tenant shall
assign to Landlord all contracts associated with the
ongoing operation of the Facility (including, without
limitation, the Management Agreement), other than
insurance and contracts for which a third-party consent to
assignment is required and which consent has not been
obtained; and
(b) All expenses and income arising from the
conduct of the business of the Facility in the ordinary
course shall be prorated by the parties as of the date of
such expiration or termination; and
In addition to the foregoing, in advance of (and, if
not completed, following) the expiration or termination of this
Lease for any reason other than consummation of the sale of the
Premises to Tenant, Tenant shall cooperate with the Landlord in
all respects in causing all licenses related to the operation
of the Facility to be reissued or transferred to Landlord or
Landlord's designee.
ARTICLE 13.
Alterations, Improvements and Additions
13.01 Alterations. Subject to compliance with and
observance of all of the terms, conditions, covenants and
agreements provided for in this Lease, Tenant shall have the
right, to be exercised at Tenant's option at any time during
the Term of this Lease, and without Landlord's consent, to make
alterations, improvements and/or additions, in and to the
Premises; provided, however, that: (i) such alteration,
improvement and/or addition is non-structural, does not
diminish the value of the Premises and has no material impact
on the operation of the Premises; (ii) for improvements in
excess of $10,000, Tenant shall furnish to Landlord, prior to
the commencement of any such work, a copy of the plans and
specifications for such work and the name of the general
contractor engaged to perform such work; and (iii) Tenant shall
have obtained the prior written consent of the holder of the
Fee Mortgage (as hereinafter defined) if required by the terms
of such Fee Mortgage . Such work shall be performed in
accordance with all applicable terms and conditions of the
Project Financing.
13.02 Compliance with Applicable Laws. All alterations,
additions and/or improvements shall be done subject to and in
accordance with all Applicable Laws.
13.03 Cooperation of Landlord. Upon request of Tenant,
but at Tenant's sole cost and expense, Landlord shall join in
Tenant's application for any building permit or license
required in connection with such alteration, improvement and/or
addition, and, subject to the prior written consent of the
holder of the Fee Mortgage, shall grant such utility easements
as may be required in connection therewith.
13.04 Landlord's Title. Any and all buildings,
structures, additions and improvements upon the Land at the
expiration or sooner termination of this Lease shall then
become property of Landlord and shall be surrendered at that
time in accordance with the provisions of Section 12.01. The
provisions of this Section shall not apply if Tenant exercises
its option to purchase the Premises in accordance with the
terms of the Purchase Option.
ARTICLE 14.
Liens
14.01 Discharge of Liens. Tenant shall, within fifteen
(15) days after receiving notice of any mechanic's lien for
material or work claimed to have been furnished to the Premises
on Tenant's behalf and at Tenant's request either discharge the
lien, or contest in good faith and with due diligence the
validity of the lien.
14.02 Landlord's Discharge. If Tenant does not discharge
the lien or commence to contest the disputed lien within such
fifteen (15) day period, Landlord may pay any reasonable
amounts to discharge the lien. Tenant shall then be liable to
Landlord for the amounts paid by Landlord in accordance with
Section 10.02 of this Lease plus reasonable expenses and
interest at the applicable legal rate.
14.03 Consent Not Implied. Nothing in this Lease
contained shall be deemed or construed in any way as
constituting the consent or request of Landlord, express or
implied by inference or otherwise, to any contractor,
subcontractor, laborer or materialman for the performance of
any labor or the furnishing of any materials for any specific
improvement, alteration to or repair of the Premises or any
part thereof.
ARTICLE 15.
No Waste
15.01 No Waste. Tenant shall not do or suffer any waste
or damage, disfigurement or injury to the Premises or any part
thereof, but this shall not be deemed to prevent alterations,
improvements and additions to the Premises permitted pursuant
to other provisions of this Lease.
ARTICLE 16.
Entry on Premises by Landlord
16.01 Landlord's Entry. Tenant shall permit Landlord and
its authorized representatives to enter the Premises at all
reasonable times for the purpose of:
(a) inspecting the Premises,
(b) making any necessary repairs thereto and
performing any work therein required to be performed by
Landlord under this Lease or that Landlord may perform pursuant
to Section 10.01 of this Lease on account of Tenant's failure
to comply with the terms and conditions of this Lease,
(c) complying with Applicable Laws under Article 8,
or
(d) commencing six (6) months prior to the
expiration of the Term, showing the Premises to prospective
tenants and/or management companies.
Except as otherwise required in this Lease, nothing herein
shall imply any duty on the part of Landlord to do any such
work.
16.02 Entry Conditions. Notwithstanding Section 16.01,
entry by Landlord onto the Premises is conditioned upon
Landlord:
(a) giving Tenant at least twenty-four (24) hours
advance notice, except in an emergency;
(b) promptly finishing any work for which Landlord
or its contractors entered; and
(c) causing the least practical interference to
Tenant's business.
16.03 Interference with Tenant. Notwithstanding Sections
16.01 and 16.02:
(a) if Landlord's entry materially and substantially
interferes with the conduct of Tenant's business (and the entry
is not needed because of Tenant's negligence or willful
misconduct), any amount due Landlord hereunder (other than Base
Rent) shall abate in proportion to the extent of the
interference; and
(b) if the Landlord causes damage to Tenant's
property, Landlord shall be liable for any damage to the extent
the damage is not covered by the insurance carried by Tenant.
ARTICLE 17.
Damage or Destruction
17.01 Cancellation Due To Casualty. Notwithstanding
anything in this Lease to the contrary, if, at any time during
the Term, the Facility shall be destroyed or damaged by fire or
any other cause, Tenant shall have the right to terminate this
Lease by notice to Landlord in the event that (i) all of the
Facility is substantially damaged and the restoration of the
premises to its prior-existing condition is in violation of
Applicable Laws; (ii) the Net Proceeds (as defined below) on
account of such damage or destruction is unavailable or
insufficient to repair, replace and rebuild the Premises with
buildings, structures, improvements and equipment of equal or
better character, quality and condition than existed
immediately prior to such occurrence and Landlord fails to fund
such deficiency to Tenant's reasonable satisfaction within 90
days of such casualty (such repairs, replacements and
rebuilding hereinafter sometimes referred to as the
"Restoration Work"); or (iii) the holder of the Fee Mortgage
elects not to make the Net Proceeds available for the
Restoration Work and the Landlord fails to fund the amount
needed for the Restoration Work. In the event Tenant elects to
terminate this Lease pursuant to this Section 17.01, this Lease
and the Term shall cease and expire as of the date of such
damage or destruction (the "Revised Expiration Date") with the
same force and effect as if the Revised Expiration Date were
the date originally set forth in this Lease for the expiration
of the Term except that Tenant shall have no obligation to
repair, replace or rebuild any buildings, structures,
improvements or equipment, and the proceeds of all insurance
shall be paid to and belong to Landlord. For the purposes of
this Section Landlord shall have provided satisfactory evidence
of funding for any deficiency in insurance proceeds if Landlord
provides (i) evidence to Tenant that such funds are available
in cash or other form of liquid investment subject to Tenant's
reasonable approval or (ii) a commitment letter from an
institutional lender at prevailing rates in the amount of such
deficiency with financial and closing terms subject to Tenant's
approval.
17.02 Damage. If, during the Term, the buildings,
improvements or the equipment on, in or appurtenant to the
Premises on the Commencement Date, or thereafter erected or
installed thereon or therein, shall be destroyed or damaged in
whole or in part by fire or other cause, and Tenant does not
terminate this Lease pursuant to Section 17.01, Tenant shall,
except as otherwise hereinafter provided, use the Net Proceeds
to promptly repair, replace and rebuild the same with
buildings, structures, improvements and equipment of equal or
better character, quality and condition than existed
immediately prior to such occurrence.
17.03 Insurance Proceeds. In the event of a loss in
excess of $250,000, the proceeds of any insurance applicable to
the particular casualty, less any cost and expense incurred in
adjusting or collecting such proceeds (hereinafter sometimes
referred to as the "Net Proceeds"), shall be deposited in an
interest bearing account with a bank or trust company having a
capital and surplus of at least $50,000,000, in trust, and such
party (hereinafter referred to as the "Trustee") shall make
available such Net Proceeds upon the terms and conditions
hereinafter set forth. The Net Proceeds shall be disbursed
from time to time at the request of and at the direction of
Tenant, to the parties whom Tenant may employ to perform the
Restoration Work, as same shall progress, or to Tenant, if
Tenant shall make or pay for the cost of any Restoration Work,
in reimbursement for the fair value of the work and materials
actually incorporated in the Premises. Such payments shall be
made by such Trustee from time to time, upon the written
request of Tenant, by a duly authorized officer of Tenant,
which shall be accompanied by a certificate, addressed to the
Trustee, and to Landlord and to the holder of the Fee Mortgage,
of the architect or engineer in charge of the Restoration Work,
setting forth that the amount then requested to be withdrawn
either has been paid by Tenant or is properly due to
contractors, subcontractors, materialmen, engineers,
architects, or other persons who have rendered services or
furnished materials in connection with such Restoration Work.
In the event of a loss of less than $250,000, the proceeds of
insurance relating thereto shall be assigned or paid directly
to Tenant, to be applied by Tenant in accordance with the
provisions of this Section 17.03.
17.04 Insufficient or Excess Net Proceeds. In the event
the Net Proceeds shall be insufficient to properly and
completely accomplish the entire Restoration Work and Tenant
does not elect to terminate this Lease pursuant to Section
17.01 of this Lease, Landlord shall be liable to pay the
additional amount required to complete the Restoration Work.
If the Net Proceeds shall be in excess of the cost of the
Restoration Work, the excess shall be paid to and retained by
Landlord.
ARTICLE 18.
Condemnation.
18.01 Cancellation in the Event of a Taking.
(a) If the Premises shall, in its entirety, be taken
in or by condemnation or other eminent domain proceedings (or
by conveyance in lieu thereof), this Lease and the Term shall
terminate and expire on the earlier of (i) the date of vesting
of title in such taking (which date is hereinafter referred to
as the "Date of Taking"), and (ii) that date which is 30 days
after notice of the taking is received by Landlord (such date
of termination and expiration on account of a taking
hereinafter referred to as the "Taking Termination Date"), in
which case the obligations and liabilities of Tenant under this
Lease which have accrued on or prior to the Taking Termination
Date, and the Base Rent provided in this Lease to be paid by
Tenant shall be apportioned and paid by Tenant through the
Taking Termination Date.
(b) Upon the taking of substantially all of the
Premises in or by condemnation or other eminent domain
proceedings (or by conveyance in lieu thereof), Tenant in its
sole and absolute discretion, shall have the right to terminate
this Lease by notice to Landlord, which notice shall specify
the "Taking Termination Date" and all rights and obligations of
Tenant hereunder shall expire and terminate other than
obligations and liabilities of Tenant under this Lease which
have accrued on or prior to the Taking Termination Date, and
the Base Rent provided in this Lease to be paid by Tenant shall
be apportioned and paid by Tenant through the Taking
Termination Date.
(c) Upon the taking of less than substantially all
of the Premises in or by condemnation or other eminent domain
proceedings (or by conveyance in lieu thereof), Tenant shall
have the right to terminate this Lease by notice to Landlord
specifying the Taking Termination Date if such taking
materially interferes with Tenant's ability to continue its
business operations in substantially the same manner at the
Facility as immediately prior to the taking, in which case all
rights and obligations of Tenant hereunder shall expire and
terminate other than obligations and liabilities of Tenant
under this Lease which have accrued on or prior to the Taking
Termination Date.
18.02 Partial Taking. In the event of a taking of a part
of the Premises in or by condemnation or other eminent domain
proceedings (or by conveyance in lieu thereof) and Tenant does
not terminate this Lease pursuant to Section 18.01, this Lease
shall continue in full force and effect.
18.03 Award. If at any time during the Term the whole or
any part of the Premises shall be taken for any public or
quasi-public purpose by any lawful power or authority by the
exercise of the right of condemnation or eminent domain (or by
conveyance in lieu thereof), Landlord shall be entitled to and
shall receive any and all awards and payments that may be made
in any such proceeding. Any award of payment that may be made
in any such proceeding, after deducting the reasonable cost and
expense incurred in connection with the establishment and
collection of such award or payment, is herein called the "Net
Award". Notwithstanding anything else in this Section, Tenant
may claim and recover from the condemning authority a separate
award for Tenant's moving expenses, business dislocation
damages, Tenant's personal property and fixtures, the
unamortized costs of leasehold improvements paid for by Tenant,
and any other award. In the event Tenant closes under the
Option to Purchase, Tenant shall receive a credit at closing
equal to (i) the amount of the Net Award if the taking does not
relate to the revenue of the Facility or (ii) an equitable sum
mutually agreed to by the parties if the taking affects the
revenue of the Facility.
18.04 Restoration. If a portion of the Premises shall be
taken in or by condemnation or other eminent domain proceedings
(or by conveyance in lieu thereof), and this Lease shall not be
terminated in accordance with the provisions of Sections 18.01,
Landlord shall, to the extent practicable, after any such
partial taking, use the Net Award to promptly and diligently
commence and complete the Restoration Work for the Premises as
nearly as practicable to the condition which existed prior to
such partial taking. In the event the Net Award is in excess
of $250,000, the Net Award shall be deposited in an interest
bearing account in trust with the Trustee, and the Trustee
shall make available such Net Award upon the same terms and
conditions as set forth in Section 17.03 substituting "Net
Award" for "Net Proceeds" as used therein.
18.05 Insufficient or Excess Net Award. If the cost of
the Restoration Work required to be made by Tenant pursuant to
Section 18.04 exceeds the amount of the Net Award, the
deficiency shall be deposited by Landlord with the Trustee.
Any Net Award remaining after final payment for the cost of
Restoration Work shall belong to Landlord, subject to the
rights of the holder of the Fee Mortgage.
ARTICLE 19.
Assignments and Subleases Of Tenant's Interest
19.01 Assignments, etc.
(a) Except as otherwise expressly provided for in
this Article 19, during the Term, Tenant shall not assign this
Lease or any of Tenant's interest hereunder, nor transfer,
assign or sublease all or any part of the Premises, nor suffer
or permit the Premises or any part thereof to be used by any
person (excluding staff, and residents of the Facility) or
entity without in each instance Landlord's prior written
consent, which consent shall not be unreasonably withheld,
delayed or conditioned.
(b) Notwithstanding anything to the contrary in
Section 19.01(a), Tenant may assign or sublease part or all of
the Premises without Landlord's consent to:
(i) any corporation, partnership or other
legal entity that controls, is
controlled by, or in under common
control with, Tenant; or
(ii) any corporation or other entity
resulting from the merger or
consolidation with Tenant or to any
entity that acquires all of Tenant's
assets as a going concern of the
business that is being conducted on
the Premises, as long as the assignee
or subtenant is a bona fide entity and
assumes the obligations of Tenant.
(c) Subleases and assignments by Tenant are subject
to the following:
(i) the terms of this Lease;
(ii) the term thereof shall not extend
beyond the Term of this Lease;
(iii) consent to one sublease or
assignment does not waive the
consent requirement for future
assignments or subleases.
(d) In the event of an assignment in compliance
with this Section 19.01, the assignee shall assume all
obligations under the Lease and each assignor shall remain
fully liable hereunder for all obligations accruing under the
Lease.
(e) Without limiting the above, Landlord hereby
consents to any assignment of this Lease to, or any sublease
now or hereinafter entered into between Tenant as sublessor,
and CareMatrix of Lauderhill II, Inc. as sublessee.
19.02 Prohibition on Modification. Tenant shall not
modify any residential unit lease or sublease, so as to reduce
the rent, shorten the term, or adversely affect in any other
respect to any material extent the rights of the landlord
thereunder, or permit cancellation or accept the surrender of
any such subtenant without the prior written consent of
Landlord in each instance, which consent shall not be required
to the institution or prosecution of any action or proceedings
against such subtenant by reason of a default on the part of
such subtenant under the terms of such sublease. Such consent
of Landlord shall not be required to cancel any such sublease
provided that it is replaced by another sublease which shall
qualify hereunder. In addition to being subject and
subordinate to the rights of Landlord hereunder, each such
sublease shall contain a specific provision to the effect that
such sublease may not be modified or amended so as to reduce
the rent, shorten the term, or adversely affect in any other
respect to any material extent the rights of the landlord
thereunder, or be cancelled or surrendered without the prior
written consent of Landlord in each instance.
ARTICLE 20.
Intentionally Omitted
ARTICLE 21.
Mortgages By Landlord
21.01 Fee Mortgage. Landlord intends to encumber the
Land and the Facility with a mortgage which shall secure the
construction financing and permanent financing for the
development and construction of the Facility (the "Project
Financing"). Any such mortgage or other security device now or
hereafter encumbering all or any part of the Landlord's
interest in the Premises is herein called the "Fee Mortgage"
and the holder of any such mortgage or other security device is
herein called the "Fee Mortgagee". Except as otherwise
expressly provided for in this Lease, during the Term Landlord
shall not further finance the Premises, or otherwise encumber
the Premises or Landlord's interest in this Lease or the
revenues derived therefrom and shall not grant any further
mortgages, liens or other similar security devices in respect
of the Premises or Landlord's interest in this Lease or amend,
lengthen or modify such Project Financing or the Fee Mortgage
or the terms or conditions thereof without in each instance
obtaining Tenant's prior written consent, to be granted in
Tenant's sole discretion.
21.02 Subordination. Subject to the provisions of
Section 21.03:
(a) this Lease and the rights of Tenant hereunder
shall be and are hereby expressly made subject to and
subordinate at all times to the lien of the Fee Mortgage, and
to all amendments, modifications, renewals, extensions,
consolidations and replacements thereof; and
(b) such subordination shall be automatic and shall
require no further action by Landlord or Tenant for its
effectiveness.
21.03 Nondisturbance. Notwithstanding the provisions of
Sections 21.01 and 21.02, this Lease and the rights of Tenant
hereunder shall not be subordinate to the lien of the Fee
Mortgage, unless the Fee Mortgagee shall execute and deliver to
Tenant a nondisturbance agreement substantially in the form of
Exhibit D or such other form which is not less favorable to
Tenant and as to which Tenant has no reasonable objection (a
"Qualifying Subordination, Non-Disturbance and Attornment
Agreement"). Tenant agrees to execute and return any
Qualifying Subordination, NonDisturbance Agreement within
twenty (20) days of its receipt thereof.
21.04 Subordination of Fee Mortgage. Notwithstanding
anything to the contrary contained herein, the Fee Mortgagee
may subordinate its Fee Mortgage to this Lease by sending
Tenant notice in writing subordinating such Fee Mortgage to
this Lease, and Tenant agrees to execute and deliver to such
Fee Mortgagee an instrument consenting to or confirming the
subordination of such Fee Mortgage to this Lease within twenty
(20) days of its receipt of such notice.
21.05 Payments By Tenant on Behalf of Landlord. Except
as provided otherwise in this Lease, Landlord hereby covenants
to pay all principal and interest payments and all reserve fund
and other payments when and as due under the Project Financing
affecting the Premises and to keep same current at all times.
If there shall be a default by Landlord in the payment of
either the principal, interest, reserve fund payments or any
other amount due under the Project Financing, Tenant shall have
the right to pay the amount so in default, and the reasonable
costs and expense, if any, of any foreclosure action or other
suit or proceeding instituted by the Fee Mortgagee upon such
default, and upon making such payment Tenant shall, in addition
to other remedies, be entitled to offset and deduct the amount
so paid from the Base Rent due hereunder until the amount of
such payment shall have been repaid therefrom by Landlord to
Tenant. Landlord agrees to request the Fee Mortgagee or its
servicer furnish a copy of all notices provided to Landlord
under the Project Financing to Tenant at the same time such
notice is provided to Landlord.
ARTICLE 22.
Default
22.01 Events of Default. Each of the following shall be
a default by Tenant and a breach of this Lease (sometimes
collectively called "Defaults", and each individually called a
"Default"):
(a) Tenant's failure to pay any Base Rent when due,
and such failure continues uncured for a period of three (3)
business days after Tenant receives notice from Landlord of
such payment default;
(b) Tenant's failure to perform or observe any
other Tenant obligation for a period of thirty (30) days after
Tenant receives notice from Landlord setting forth in
reasonable detail the nature and extent of the failure and
identifying the applicable Lease provision(s), or in the event
such performance cannot reasonably be completed within such
thirty (30) day period with reasonable diligence, Tenant's
failure to in good faith commence such performance within such
thirty (30) day period and thereafter diligently pursue such
performance to completion;
(c) Tenant's failure to vacate or stay any of the
following within ninety (90) days after they occur;
(i) a petition in bankruptcy is filed
by or against Tenant;
(ii) Tenant is adjudicated as bankrupt
or insolvent;
(iii) a receiver, trustee, or
liquidator is appointed for all
or a substantial part of Tenant's
property; or
(iv) Tenant makes a general assignment
for the benefit of creditors.
(d) Tenant's filing of a petition in bankruptcy;
or
(e) An Event of Default by Tenant under the
Purchase Option.
Notwithstanding anything to the contrary in Section 22.01(c),
any such proceeding or action involving bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or
any future federal bankruptcy code or any other present or
future applicable federal, state or other statute or law, shall
not constitute a Default pursuant to the terms of this Article,
unless such proceeding, action or remedy shall be taken or
brought by or against the then holder of the leasehold estate
under this Lease or "Optionee" under the Option to Purchase.
22.02 Landlord's Remedies.
(a) If Tenant commits a Default, Landlord may, at
its option, at any time during the continuation of such
Default, give written notice to Tenant stating that this Lease
and the Term hereby demised has expired and terminated. Upon
the giving of such notice, this Lease and the Term hereby
demised, and all rights of the Tenant hereunder, shall expire
and terminate as if that date were the date herein definitely
fixed for the termination of the Term of this Lease, and the
Tenant hereof shall quit and surrender the Premises. In such
event, Tenant shall provide such notices to and file such
applications with governmental agencies and otherwise cooperate
with Landlord to obtain all permits, licenses, authorizations
and approvals required under Florida and federal law in order
for Landlord to resume operation of the Facility after the
termination of this Lease.
(b) Upon the termination of this Lease as provided
in subparagraph (a) above: (i) Landlord or Landlord's agents
and employees may re-enter the Premises by action or proceeding
at law, and may repossess the same, subject to any notice or
waiting period and/or governmental approval process established
or required under applicable federal or state licensure and/or
certification regulations pertaining to a change of licensee or
ownership of the Facility and in any event in a manner which
ensures the safe transfer of the care and control of the
residents in the Facility; and (ii) Tenant shall thereupon pay
to Landlord Base Rent due under this Lease when due and payable
from and after the period commencing on the date of such
termination. Notwithstanding the foregoing (i) Landlord shall
be obligated to mitigate its damages hereunder and any amounts
which Landlord receives as a result of such mitigation shall be
applied against Base Rent payable hereunder and (ii) the
provisions of Section 22 notwithstanding, Landlord shall not
terminate this Lease due to a Default hereunder during any
period when the Purchase Option is in effect.
22.03 Landlord's Default. The following shall be a
default by Landlord and a breach of this Lease ("Default"):
Landlord's failure to perform or observe any of its Lease
obligations after a period of thirty (30) days or the
additional time, if any, that is reasonably necessary to
promptly and diligently cure the failure after receiving notice
from Tenant. The notice required hereunder shall give in
reasonable detail the nature and extent of the failure and
identify the Lease provision(s) containing the obligation(s).
After Tenant receives notice of the Fee Mortgagee's name and
address and request for notice upon Landlord's Default, Tenant
shall provide the notice required by this Section to the Fee
Mortgagee at the same time Tenant gives notice to Landlord. If
Landlord commits a Default, Tenant may terminate this Lease
and/or pursue any remedies given in this Lease or under
Applicable Law.
22.04 No Waiver. No failure by Landlord to insist upon
the strict performance of any agreement, term, covenant or
condition hereof or to exercise any right or remedy consequent
upon a breach thereof, and no acceptance of full or partial
rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such agreement,
term, covenant or condition. No agreement, term, covenant or
condition hereof to be performed or complied with by Tenant,
and no breach thereof, shall be waived, altered or modified
except by a written instrument executed by Landlord. No waiver
of any breach shall affect or alter this Lease, but each and
every agreement, term, covenant and condition hereof shall
continue in full force and effect with respect to any other
then existing or subsequent breach thereof.
22.05 Cumulative Remedies. Each right and remedy
provided for in this Lease shall be cumulative and, except as
provided herein, shall be in addition to every other right or
remedy provided for in this Lease or now or hereafter existing
at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Landlord or Tenant of
any one or more of the rights or remedies provided for in this
Lease or now or hereafter existing at law or in equity or by
statute or otherwise shall not, except as provided herein,
preclude the simultaneous or later exercise by the party in
question of any or all other rights or remedies provided for in
this Lease or, except as provided herein, now or hereafter
existing at law or in equity or by statute or otherwise.
ARTICLE 23.
Quiet Enjoyment
23.01 Quiet Enjoyment. Tenant, upon paying the Base Rent
and other amounts due hereunder and observing and keeping all
covenants, agreements and conditions of this Lease on its part
to be kept, shall quietly have and enjoy the Premises during
the Term without hindrance or molestation by anyone claiming
by, through or under Landlord as such, subject, however, to the
exceptions, reservations and conditions of this Lease.
ARTICLE 24.
Estoppel Certificates
24.01 Tenant's Certificate. Tenant shall, without
charge, at any time and from time to time, within fifteen (15)
days after request by Landlord, certify by written instrument,
duly executed, acknowledged and delivered, to Landlord, or any
other person, firm or corporation specified by Landlord:
(a) that this Lease is unmodified and in full force
and effect, or, if there have been any modifications, that the
same is in full force and effect as modified and stating the
modification;
(b) whether or not there are then existing any
set-offs or defenses against the enforcement of any of the
agreements, terms, covenants hereof and any modifications
hereof upon the part of Tenant to be performed or complied
with, and, if so, specifying the same;
(c) the dates, if any, to which any amounts of rent
hereunder have been paid in advance;
(d) the date of expiration of the current Term;
(e) the rent then payable under this Lease; and
(f) such other items reasonably requested by
Landlord.
24.02 Landlord's Certificate. Landlord shall, without
charge, at any time and from time to time, within fifteen (15)
days after request by Tenant certify by written instrument,
duly executed, acknowledged and delivered, to the effect that
this Lease is unmodified and in full force and effect (or if
there shall have been modifications that the same is in full
force and effect as unmodified and stating the modifications)
the dates to which the Base Rent have been paid, the date of
expiration of the Term, the Base Rent then payable under this
Lease, such other items reasonably requested by Tenant and
stating whether or not Tenant is in default in performance of
any covenant, agreement or condition contained in this Lease
and, if so, specifying each such default of which the person
executing such certificate may have knowledge.
ARTICLE al
Disputes
25.01 Arbitration Procedure. For disputes subject to
arbitration under Section 25.03 that are not resolved by the
parties within ten (10) days after either party gives notice to
the other of its desire to arbitrate the dispute, the dispute
shall be settled by binding arbitration by the American
Arbitration Association in accord with its then prevailing
rules. Judgment upon the arbitration award may be entered in
any court having jurisdiction. The arbitrators shall have no
power to change the Lease provisions. The arbitration panel
shall consist of three arbitrators, one of whom must be a real
estate attorney actively engaged in the practice of law for at
least the last five (5) years and one of which must be a health
care consultant with at least five (5) years experience. Both
parties shall continue performing their Lease obligations
pending the award in the arbitration proceeding. The
arbitrators shall award the prevailing party reasonable
expenses and costs including reasonable attorneys' fees
pursuant to Section 26.10 plus interest on the amount due at
Reference Rate (as defined in Section 26.14 hereof) or the
maximum rate then allowed by Applicable Law, whichever is less.
25.02 Payment. The losing party shall pay to the
prevailing party the amount of the final arbitration award. If
payment is not made within ten (10) business days after the
date of the arbitration award is no longer appealable, then in
addition to any remedies under the law:
(a) if Landlord is the prevailing party, it shall
have the same remedies for failure to pay the arbitration award
as it has for Tenant's failure to pay the Base Rent; and
(b) if Tenant is the prevailing party, it may deduct
any remaining unpaid award from any payment due hereunder other
than Base Rent.
25.03 Disputes Subject To Arbitration. The following
disputes are subject to arbitration:
(a) any disputes that the parties agree to submit to
arbitration; and
(b) the amount of any abatement of Base Rent because
of damage or condemnation.
ARTICLE 26.
General Provisions
26.01 Severability. If any term or provision of this
Lease or the application thereof to any person or circumstances
shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Lease
shall be valid and be enforced to the fullest extent permitted
by law.
26.02 Notices. All notices required to be given
hereunder shall be given in writing to the appropriate party or
parties at the following addresses:
To the Landlord: Newall Assisted Living, Ltd.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
Attention: Stanley Rosenthal
Bruce Litwer, Esq.
and
Chancellor of Lauderhill II, Inc.
197 First Avenue
Needham, Mass. 02194
Attention: President
James M. Clary, III, Esq.
To Tenant: Chancellor of Lauderhill, II, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attention: President
James M. Clary, III, Esq.
With a copy to: Christopher J. Donovan, Esq.
McDermott, Will & Emery
75 State Street
Boston, Massachusetts 02109
or at such other place as such party may designate in writing
to the other party. All notices shall be deemed to have been
delivered (a) upon delivery if hand-delivered, (b) on the next
business day after deposit with a recognized overnight courier,
or (c) on the date shown on the return receipt if delivered by
registered mail, return receipt requested.
26.03 Waiver of Jury Trial. The parties hereto waive a
trial by jury of any and all issues arising in any action or
proceeding between them or their successors under or connected
with this Lease or any of its provisions, any negotiations in
connection therewith, or Tenant's use or occupation of the
Premises.
26.04 Consent of Landlord. Unless otherwise expressly
stated herein, where any provision of this Lease requires the
consent or approval of Landlord, Landlord agrees that Landlord
will not unreasonably withhold or delay such consent or
approval. Where any provision of this Lease requires Tenant to
do anything to the satisfaction of Landlord, Landlord agrees
that Landlord will not unreasonably refuse to state Landlord's
satisfaction of such action by Tenant.
26.05 Payments Under Protest. In case of any dispute
between Landlord and Tenant with respect to the amount of money
payable by Tenant to Landlord under the provisions of this
Lease, Tenant shall be privileged to make payment under protest
and, in such event, shall be privileged to assert and prosecute
a claim or claims for the recovery of the sum, or any part
thereof, that shall have been so paid by Tenant under protest.
26.06 No Oral Modification. All prior understandings and
agreements between the parties are merged within this
agreement, which together with the Purchase Option fully and
completely sets forth the understanding of the parties; and
this Lease may not be changed or terminated orally or in any
manner other than by an agreement in writing and signed by the
party against whom enforcement of the change or termination is
sought.
26.07 Covenants To Bind and Benefit Respective Parties.
The covenants and agreements herein contained shall bind and
inure to the benefit of Landlord, its successors and assigns,
and Tenant, its permitted successors and assigns.
26.08 Captions and Table of Contents. The captions of
this Lease are for convenience and reference only and in no way
define, limit or describe the scope or intent of this Lease nor
in any way affect this Lease. The table of contents preceding
this Lease but under the same cover is for the purpose of
convenience and reference only and is not to be deemed or
construed in any as part of this Lease, nor as supplemental
thereto or amendatory thereof.
26.09 Memorandum of Lease. Landlord and Tenant agree to
execute concurrently with the execution of this Lease and to
cause to be recorded in the public records of Broward County,
Florida a memorandum of this Lease substantially in the form of
Exhibit E.
26.10 Attorneys' Fees. In any litigation between the
parties regarding this Lease, the losing party shall pay to the
prevailing party all reasonable expenses and court costs
including attorneys' fees incurred by the prevailing party. A
party shall be considered the prevailing party if:
(a) it initiated the litigation and substantially
obtains the relief it sought, either through a judgment or the
losing party's voluntary action before arbitration (after it is
scheduled), trial, or judgment.
(b) the other party withdraws its action without
substantially obtaining the relief it sought; or
(c) it did not initiate the litigation and judgment
is entered for either party, but without substantially granting
the relief sought.
26.11 Waiver. The failure of either party to exercise
any of its rights is not a waiver of those rights. A party
waives only those rights specified in writing and signed by the
party waiving its rights.
26.12 Governing Law; Venue. This Lease shall be governed
by the laws of the state of Florida. The parties agree that
any action hereunder may be brought in the State or Federal
courts of the State of Florida.
26.13 Business Days. Business days means Monday through
Friday inclusive, excluding holidays. Throughout this Lease,
wherever "days" are used the term shall refer to calendar days.
Wherever the term "business days" is used the term shall refer
to business days.
26.14 Reference Rate. Reference Rate means, at any time,
the rate of interest per annum then most recently published in
the Wall Street Journal as the Prime Rate. For purposes of
this Lease, each change in any interest rate due to a change in
the Reference Rate shall take effect on the effective date of
the change in the Reference Rate. The Reference Rate is a
reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer.
26.15 Time. Time is of the essence hereto.
26.16 Relationship of the Parties. This Lease creates no
joint venture, agency, partnership or other relationship
between the parties, other than that of landlord and tenant.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
Signed, sealed and delivered
in the presence of: Tenant:
CHANCELLOR OF LAUDERHILL II,
INC.
________________________ By: ____________________________
Print Name:_____________ Its
________________________
Print Name:_____________
Landlord:
NEWALL-CHANCELLOR 69TH
AVENUE ASSOCIATES, a
Florida joint venture
By: NEWALL ASSISTED LIVING,
LTD., a Florida limited
partnership, a Joint
Venturer
By: Asliv, Inc., a Florida
corporation, its
General Partner
________________________ By: __________________________
Print Name: Name:
Title:
________________________
Print Name:
By: CHANCELLOR OF LAUDERHILL
II,
INC., a Delaware
corporation,
a Joint Venturer
________________________ By: __________________________
Print Name: Name:
Title:
________________________
Print Name:
INDEX OF EXHIBITS
Exhibit Description
Exhibit A Legal Description
Exhibit B Excluded Assets
Exhibit C Permitted Encumbrances
Exhibit D Qualifying Subordination, Non-
Disturbance and Attornment
Agreement
Exhibit E Memorandum of Lease
EXHIBIT A
LEGAL DESCRIPTION
A portion of Tract "A", BOULEVARD FOREST, according to the plat
thereof, as recorded in Plat Book 113, Page 39 of the Public
Records of Broward County, Florida, being more particularly
described as follows:
COMMENCING at the Northwest corner of Tract "A":
THENCE North 89 degrees 32'45" East, along the North line of said Tract
"A", a distance of 264.88 feet, to the POINT OF BEGINNING;
THENCE continue North 89 degrees 32'45" East, along said North line, a
distance of 825.12 feet;
THENCE South 00 degrees 27'15" East, a distance of 110.00 feet to a
point on the arc of a non-tangent curve concave to the South
(said point bears North 11 degrees 04'58" East from the radius point of
the next described curve);
THENCE Southwesterly, along the arc of said curve having a
radius of 90.00 feet, a delta of 64 degrees 00'00", and an arc distance
of 100.53 feet to a point of Tangency;
THENCE South 37 degrees 04'58" West, a distance of 96.87 feet to the
beginning of a curve concave to the North;
THENCE Westerly, along the arc of said curve having a radius of
174.81 feet, a delta of 80 degrees 17'56", and an arc distance of
244.99 feet to a Point of Reverse Curvature with a curve
concave to the South;
THENCE Westerly, along the arc of said curve having a radius of
500.00 feet, a delta of 49 degrees 30'00", and an arc distance of
431.97 feet to an intersection with a non-tangent curve concave
to the South (said point bears North 09 degrees 22'54" East from the
radius point of the next described curve);
THENCE Westerly, along the arc of said curve having a radius of
140.00 feet, a delta of 15 degrees 47'21", and an arc distance of 38.58
feet to a Point of Non-Tangency;
THENCE North 00 degrees 27'15" West, 244.39 feet to the POINT OF
BEGINNING;
Said lands lying in the City of Lauderhill, Broward County,
Florida.
EXHIBIT B
EXCLUDED ASSETS
NONE
EXHIBIT C
PERMITTED ENCUMBRANCES
1. Broward County property taxes, which are not yet due
and payable.
2. Easements, restrictions and dedications as shown on
Plat of BOULEVARD FOREST, recorded in Plat Book 113,
Page 39, together with Agreements for Amendment of
Notation on Plat filed January 12, 1989, in Official
Records Book 16110, page 46, and filed February 13,
1997, in Official Records Book 26027, page 97.
3. Restrictive Covenants filed October 1, 1969, in
Official Records Book 4037, page 435.
4. Restrictive Covenant filed April 23, 1987, in
Official Records Book 14373, page 917, together with
First Amendment filed July 24, 1987, in Official
Records Book 14652, page 125.
5. Easement granted to Southern Bell Telephone and
Telegraph Company filed March 27, 1987, in Official
Records Book 14471, page 363.
6. Declaration of Covenants, Conditions and Restrictions
for The Boulevard Forest filed June 11, 1987, in
Official Records Book 14523, page 215.
7. Easement granted to the City of Lauderhill, the
County of Broward, the State of Florida and the
United States Government filed June 14, 1989, in
Official Records Book 16519, page 835.
8. Road Impact Agreement in favor of Broward County
filed December 12, 1996, in Official Records Book
25767, page 821.
9. Recreational Impact Agreement filed February 13,
1997, in Official Records Book 26027, page 103.
10. Educational Impact Agreement in favor of Broward
County filed February 13, 1997, in Official Records
Book 26027, page 114.
11. Judgment in favor of United States of America,
against Unicom Partnership Ltd., a Florida limited
partnership, filed July 14, 1995, in Official Records
Book 23681, page 395.
ALL IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement"), made and
entered into this 24th day of September, 1997, by and between
SRR MANAGEMENT CORP., a Florida corporation with a principal
place of business at 5500 Northwest 69th Avenue, Lauderhill,
Florida 33319, hereinafter referred to as "Manager", and
NEWALL-CHANCELLOR 69TH AVENUE ASSOCIATES, a Florida joint
venture with a principal place of business at 5500 Northwest
69th Avenue, Lauderhill, Florida 33319, hereinafter referred to
as "Owner".
WHEREAS, Owner is the owner of certain real property
consisting of approximately four and two-tenths (4.2) acres of
vacant land situated in Lauderhill, in the County of Broward,
State of Florida and legally described in Schedule "A" attached
hereto, upon which Owner intends to develop and construct an
assisted living facility to be comprised of approximately one
hundred twenty (120) beds (the "Facility"); and
WHEREAS, Owner has determined that the hiring of a
management company to provide day-to-day management of the
Facility is necessary for the efficient operation of the
Facility;
WHEREAS, Manager has represented that it is
experienced in the management of similar facilities, is
knowledgeable as to the state and federal requirements
governing the operation of senior housing facilities and
assisted living facilities and that the owners and employees of
Manager are qualified management professionals;
WHEREAS, based upon Manager's representations set
forth herein, Owner has determined that the hiring of Manager
is cost-effective and consistent with Owner's desire to provide
quality care to the residents at the Facility at the lowest
cost;
WHEREAS, Owner has determined that the services
provided by Manager will augment the services provided by it so
as to increase productivity;
WHEREAS, Owner has determined that the hiring of
Manager on the terms and conditions hereinafter set forth will
not prevent Owner from exercising ultimate control over the
policies and operations of the Facility; and
WHEREAS, Manager is willing to manage the day-to-day
operations of the Facility on the terms and conditions
hereinafter set forth.
Now, therefore, the parties agree as follows:
(a) Appointment and Acceptance. Owner
hereby appoints Manager as exclusive agent for the management
of the Facility, and Manager accepts the appointment, subject
to the terms and conditions set forth in this Agreement.
(b) Definitions. As used in this
Agreement:
(i)"Lease" means that certain
lease of even date hereof by and between Owner, as Landlord,
and Chancellor of Lauderhill II, Inc., a Delaware corporation,
as Tenant.
(ii)"Mortgage" means any mortgage
now or hereinafter encumbering the Facility.
(iii)"Mortgagee" means the holder
of any Mortgage or any duly designated successor thereto.
(iv)"Principal Parties" means
Owner and Manager.
(v)"Tenant" means the "Tenant"
under the Lease, and its successors, assigns and subtenant.
(c) Services Prior to Construction of
Facility . In addition to the other services to be provided by
Manager under this Agreement, prior to the time of the
completion of construction of the Facility, Manager shall
provide operational management and marketing services for the
Owner prior to completion of the Facility.
(d) Management Input. Manager will
advise and assist Owner with respect to management input as it
relates to the requirements of the Mortgagee or the Mortgage.
Manager's specific tasks will be as follows:
(i)Preparation and submission to
Owner of a recommended operating budget for each operating year
of the project.
(ii)Participating in occupancy
conferences with Mortgagee officials.
(iii)Preparation and submission to
Owner (for Owner's signature) and submission to Mortgagee of
any reports required by the Mortgagee.
(iv)Participation in the on-site
inspection of the Facility required by Mortgagee.
(e) Basic Information. Manager is
thoroughly familiar with the proposed location, construction,
layout and plan.
(f) Marketing. Manager shall have
responsibility for the marketing of the apartments at the
Facility through the end of the Term. During this period,
Manager shall have total and exclusive responsibility for all
marketing activities, which shall include full responsibility
for monitoring and assuring the Facility's compliance with
federal and state fair housing requirements and any other legal
or regulatory requirement that relates to the marketing of the
units or the selection of the tenants. Manager shall also
assist Owner in the marketing of the Facility by reviewing all
marketing brochures, mailings, advertisements and other such
material as Owner may from time to time utilize in its
marketing effort. In addition, Manager shall assist Owner in
the development and execution of marketing programs, including,
but not limited to, community outreach and awareness and on-
site events such as marketing brunches and teas.
(g) Rentals. Manager will maintain
rental records based upon the information provided to it by
Owner. Incidental thereto, the following provisions will
apply:
(i)Owner will provide Manager with
an accurate record of any lease concessions that have been
provided to a new tenant at least thirty (30) days prior to the
date that tenant is to move into the Facility.
(ii)Manager will be responsible
for collection of security deposits in accordance with the
terms of each tenant's lease and deposit them and disburse
them, if required, in accordance with the lease terms.
Security deposits will be deposited by Manager, as agent for
the Owner in an interest-bearing account, separate from all
other accounts and funds, with a bank or other financial
institution whose deposits are insured by an agency of the
United States government, and a pro rata share of the interest
earned will be credited to each tenant's security deposit if
required by state law. This account will be carried in Owner's
name and designated of record as "the Northwest 69th Avenue
Security Deposit Account".
(h) Collection of Rents and Other
Receipts. Manager will supervise the collection when due of
all rents, charges and other amounts receivable on Owner's
account in connection with the management and operation of the
Facility. Such receipts (except for tenants' security
deposits, which will be handled as specified in Paragraph 7
above) will be deposited in an account separate from all other
accounts and funds with a bank whose deposits are insured by an
agency of the United States Government. This account will be
carried in Owner's name and designated of record as "the
Northwest 69th Avenue Operating Account".
(i) Enforcement of Leases. Manager
will secure full compliance by each tenant with the terms of
the tenant's lease. Voluntary compliance will be emphasized,
and Manager, utilizing the services of a Social Services
Director when available, will counsel tenants and make
referrals to community agencies in cases of financial hardship
or under other circumstances deemed appropriate by Manager, to
the end that involuntary termination of tenancies may be
avoided to the maximum extent consistent with sound management
of the project. Nevertheless, Manager may lawfully terminate
any tenancy when, in Manager's judgment, sufficient cause
(including, but not limited to, nonpayment of rent) for such
termination occurs under the terms of the tenant's lease. For
this purpose, Manager is authorized to consult with legal
counsel to be designated by Owner to bring actions for eviction
and to execute notices to vacate and judicial pleadings
incident to such actions; provided, however, that Manager will
keep Owner informed of such actions and will follow such
instructions as Owner may prescribe for the conduct of any such
action. Subject to Owner's approval, attorney's fees and other
necessary costs incurred in connection with such actions will
be paid out of the operating account as project expenses.
(j) Maintenance and Repair. Manager
will cause the project to be maintained and repaired in
accordance with state and local codes, and in a condition at
all times acceptable to Owner and the Mortgagee, including, but
not limited to, cleaning, painting, decorating, plumbing,
electrical, HVAC, appliances, carpentry, grounds care, and such
other maintenance and repair work as may be necessary, subject
to any limitations imposed by Owner in addition to those
contained herein.
Incident thereto, the following provisions will
apply:
(i)Attention will be given to
preventive maintenance, and to the greatest extent feasible,
the services of regular maintenance employees will be used.
(ii)Subject to Owner's prior
approval, Manager will contract in Manager's own name with
qualified independent contractors for the maintenance and
repair of air conditioning systems and elevators, and for
extraordinary repairs beyond the capability of regular
maintenance employees.
(iii)Manager will systematically
and promptly receive and investigate all service requests from
tenants, take such action thereon as may be justified, and will
keep records of same. Emergency requests will be received and
services on a twenty-four (24) hour basis. Complaints of a
serious nature will be reported to Owner after investigation.
(iv)Manager is authorized to
purchase all materials, equipment, tools, appliances, supplies
and services necessary to proper maintenance and repair.
(v)Notwithstanding any of the
foregoing provisions, the prior approval of Owner will be
required for any expenditure which exceeds Five Thousand
($5,000.00) Dollars in any one instance for labor, materials or
otherwise in connection with the maintenance and repair of the
Facility, except for recurring expenses within the limits of
the operating budget or emergency repairs involving manifest
danger to persons or property, or required to avoid suspension
of any necessary service to the project. In the latter event,
Manager will inform Owner of the facts as promptly as possible.
(vi)Manager will physically
inspect each apartment unit prior to commencement of the
occupancy by any tenant and at least annually thereafter.
(vii)Manager shall be responsible
for maintaining an adequate inventory for the proper operation
of the Facility in accordance with the terms of this Agreement.
(k) Utilities and Services. In
accordance with the operating budget, Manager will make
arrangements for water, electricity, gas, fuel oil, sewage and
trash disposal, vermin extermination, decorating, laundry
facilities and telephone service. Subject to Owner's prior
approval, Manager will make such contracts in Manager's name as
may be necessary to secure such utilities and services.
(l) Employees. The Management
Certification attached as Exhibit A hereby prescribes the
number, qualifications and duties of the personnel to be
regularly employed in the management of the project, including
a general manager, a resident services director, and
maintenance, bookkeeping, clerical and other managerial
employees. All such personnel will be employees of the Owner,
and treated as Facility expenses, subject to the following
conditions:
(i)The General Manager will have
duties of the type usually associated with his/her position,
and the Resident Services Director will be responsible for the
conduct of the resident services program for the Facility.
Nevertheless, the General Manager and Resident Services
Director will coordinate the activities in the interest of good
overall management. The General Manager and Resident Services
Director will be subject to the approval of Owner.
(ii)The compensation (including
fringe benefits) payable to the on-site management and
maintenance employees will be as prescribed in the Management
Certification and treated as Facility expenses. In addition,
all local, state and federal taxes and assessments (including,
but not limited to, social security taxes, unemployment
insurance and workers' compensation insurance) incidental to
the employment of such personnel will be borne solely by the
Facility, and will not be paid out of Manager's fee.
(iii)Manager will not discriminate
against any employee, applicant for employment or contractor
because of race, color, religion, sex or national origin.
Notwithstanding anything to the contrary provided in this
Paragraph 12, any salaries payable by the Manager to Stanley
Rosenthal, and the accountant, attorney and administrative
assistant of Manager, shall be treated as expenses of Manager
and not as expenses of the Facility.
(m) Disbursements from Operating
Account.
(i) From the funds collected and
deposited in the operating account pursuant to Paragraph 8
above, Manager will make the following disbursements promptly
when due and payable:
(1)Compensation payable to the
employees specified in Paragraph 12 above, and for the taxes
and assessments payable to local, state and federal governments
specified in Paragraph 12b above in connection with the
employment of such personnel.
(2)The single aggregate payment
required to be made monthly by Owner to the Mortgagee,
including the amounts due under the mortgage for principal
amortization, interest, mortgage insurance premium, ground
rents, taxes and assessments, fire and other hazard insurance
premiums, and any amounts specified in the Mortgage for
allocation to the reserve for replacements.
(3)All sums otherwise due and
payable by Owner as expenses of the Facility authorized to be
incurred by Manager under the terms of this Agreement,
including compensation payable to Manager pursuant to Paragraph
23 below for its service hereunder.
(4)Invest Facility funds, unless
Owner specifically directs Manager not to invest such funds.
(ii) Except for the disbursements
mentioned in this Paragraph 13, funds will be disbursed or
transferred from the operating account only as Owner may from
time to time direct in writing.
(iii) In the event the balance in the
operating account is at any time insufficient to pay
disbursements due and payable under this Paragraph 13, Owner
will remit sufficient funds to cover the deficiency.
(n) Budgets. Annual operating budgets
for the Facility will be approved by Owner and a copy submitted
to Mortgagee if required by the Mortgagee. Annual
disbursements for each type of operating expense itemized in
the budget will not exceed the amount authorized by the
approved budget. Manager will prepare a recommended operating
budget for each fiscal year beginning during the term of this
Agreement, and will submit the same to Owner at least thirty
(30) days before the beginning of the fiscal year beginning
during the term of this Agreement, and will submit the same to
Owner at least thirty (30) days before the beginning of any
succeeding fiscal year. Owner will promptly inform Manager of
the changes, if any, incorporated in the approved budget, and
Manager will keep Owner informed of any anticipated deviation
from the receipts or disbursements stated in the approved
budget. Manager will also:
(i)Assure that the Facility
expenses are reasonable in amount and necessary to the
operation of the Facility.
(ii)Exert reasonable effort to
maximize Facility income and to take advantage of discounts and
credit the Facility with all discounts, rebates or commissions
(including any sales or property tax relief granted by the
state or local government) received with respect to purchases,
service contracts and other transactions made on behalf of the
Facility.
(iii)Obtain contracts, materials,
supplies and services, including the preparation of the annual
audit, on terms most advantageous to the Facility and at costs
not in excess of amounts ordinarily paid for such contracts,
materials, supplies and services in the area such services are
rendered or supplies and materials furnished.
(iv)Solicit verbal or written cost
estimates as necessary to comply with the provisions of this
paragraph and document reasons for accepting other than the
lowest bid. Manager will maintain copies of such documentation
and make such documentation available for inspection during
normal business hours.
(o) Records and Reports. In addition
to the other provisions of this Agreement, Manager will have
the following responsibilities with respect to records and
reports:
(i)Establish and maintain the
Facility's accounts, books and records in accordance with
generally accepted accounting principles and in a condition
that will facilitate audit.
(ii)All records related to the
operations of the Facility, regardless of where they are
housed, shall be considered the property of Owner.
(iii)With respect to each fiscal
year ending during the term of this Agreement, Manager will
prepare an annual financial report in accordance with generally
accepted accounting principles or the directives of the
Mortgagee. Such report will be audited in accordance with
generally accepted auditing standards by a certified public
accountant or other independent auditor acceptable to Owner and
Mortgagee. The financial report including Manager's
certification and the auditor's report will be submitted to
Owner within ninety (90) days after the end of the fiscal year
for Owner's further certification and submission to the
Mortgagee. Compensation for the auditor's services will be
paid out of the operating account as an expense of the
Facility.
(iv)Manager will prepare a monthly
report comparing actual and budgeted figures of receipts and
disbursements, and will submit each such report to Owner within
ten (10) days after the end of the month covered.
(v)By the twentieth (20th) day of
each month, Manager will furnish Owner with an itemized list of
all delinquent accounts, including rental accounts, as of the
tenth (10) day of the same month.
(vi)By the fifteenth (15th) day of
each month, Manager will furnish Owner with a statement of
receipts and disbursements during the previous month, with a
schedule of accounts receivable and payable, and reconciled
bank statements for the operating account and security deposit
account as of the end of the previous month.
(vii)If the rental collections
fall below operating expenses for a sustained period of thirty
(30) days, Manager will immediately send written notification
of same to Mortgagee.
(viii)Manager will furnish such
information (including occupancy reports) as may be requested
by Owner or the Mortgagee from time to time with respect to the
financial, physical and operational condition of the Facility.
Mortgagee may inspect any records which relate to the
Facility's purchase of goods or services. This right to
inspect extends to records of Owner, Manager or companies
having an identity-of-interest with Owner or Manager.
(ix)Except as otherwise provided
in this Agreement, all offsite bookkeeping, clerical and other
management overhead expenses (including, but not limited to,
costs of office supplies and equipment, data processing
services, postage, transportation for managerial personnel and
telephone services) will be borne by Manager out of Manager's
own funds and will not be treated as Facility expenses.
(p) Business with Identity of Interest
Relationships. Manager agrees that it will purchase goods or
services from individuals or companies having an identity of
interest with Owner or Manager only if the charges levied by
those individuals or companies are not in excess of the costs
that would be incurred in making arms-length purchases on the
open market.
(i)Manager agrees to provide
minorities, women and socially and economically disadvantaged
firms equal opportunity to participate in the Facility's
procurement and contracting activities.
(ii)Manager further agrees that
the following clause will be included in any contract entered
into with an identity of interest individual or business for
the provision of goods or services to the Facility: "Upon
request of Mortgagee or (name of Owner or Manager), (name of
contractor or supplier) will make available to Mortgagee, at a
reasonable time and place, its records and records of identity
of interest companies which relate to goods and services
charged to the Facility. Records and information will be
sufficient to permit Mortgagee to determine the services
performed, the dates the services were performed, the location
at which the services were performed, the time consumed in
providing the services, the charges made for materials and the
per unit and total charges levied for said services." Manager
will request such records within seven (7) days of receipt of
Mortgagee's request to do so.
(iii)In the event charges levied
by an identity of interest firm exceed charges which were or
would have been levied by non-identity of interest firms for
similar services or materials, Manager, at the request of
Mortgagee, shall refund any excessive amounts which were paid
from the Facility funds. Within twenty (20) days of receipt of
Mortgagee's letter, Manager shall refund any amounts found to
be excessive.
(q) Resident Services Program.
Manager will be responsible to Owner for carrying out the
resident services program. The resident services director will
be directly responsible to the Facility's general manager for
the conduct of this program.
(r) Tenant-Management Relations.
Manager will encourage and assist residents of the Facility in
forming and maintaining representative organizations to promote
their common interests, and will maintain good faith
communication with such organizations to the end result that
problems affecting the Facility and its residents may be
avoided or solved on the basis of mutual self-interest.
(s) On-Site Management Facilities.
Subject to the further agreement of Owner and Manager as to
more specific terms, Manager will maintain a management office
within the Facility or on the property located adjacent to the
Facility.
(t) Insurance. Owner will inform
Manager of insurance to be carried with respect to the Facility
and its operations, and Manager will cause such insurance to be
placed and kept in effect at all times. Manager will pay
premiums out of the operating account, and premiums will be
treated as operating expenses. Insurance policies listed below
will be in force and maintained to the best of Manager's
ability at all times. Fidelity bonds and hazard insurance
policies will name Mortgagee as an additional loss payee.
(i)Fidelity bond or employee
dishonesty coverage for: (1) all principals of Manager; and
(2) all persons who participate directly or indirectly in the
management and maintenance of the Facility and its assets,
accounts and records. Coverage will be at least equal to the
Facility's gross potential income for two (2) months.
(ii)Hazard insurance coverage in
an amount required by the Facility's Mortgage.
(iii)Public liability coverage
with Manager designated as one of the insured.
(u) Compliance with Governmental
Orders. Manager will take such actions as may be necessary to
comply promptly with any and all governmental orders or other
requirements affecting the Facility, whether imposed by
federal, state, county or municipal authority, subject,
however, to the limitation stated in Paragraph 10e with respect
to repairs. Nevertheless, Manager shall take no such action so
long as Owner is contesting or has affirmed its intention to
contest, any such order or requirement. Manager will notify
Owner in writing of all notices of such orders or other
requirements within seventy-two (72) hours from the time of
their receipt.
(v) Non-Discrimination. In the
performance of its obligations under this Agreement, Manager
will comply with provisions of any federal, state or local law
prohibiting discrimination against persons on grounds of race,
color, creed, sex or national origin, including Title VI of the
Civil Rights Act of 1964, Title VIII of the Civil Rights Acts
of 1968, Execute Order 11063 and all regulations implementing
those laws.
(w) Management Fee.
(i)Base Management Fee. As
compensation for the services to be rendered by Manager during
the Term (as hereinafter defined), of this Agreement, Manager
shall pay itself, at its principal office given below (or at
such other place as Manager may from time to time designate in
writing), and at the time hereinafter specified, a monthly
management fee (the "Management Fee") equal to the greater of
(i) SEVEN THOUSAND AND NO/100 DOLLARS ($7,000.00) per month, or
(ii) three and one-half percent (3-1/2%) percent of Gross Revenues
(as hereinafter defined) for the period commencing six (6)
months prior to the estimated date of receipt of the
certificate of occupancy for the Facility (the "Commencement
Date") through the remainder of the Term. The Management Fee
will be paid in arrears and shall be due and payable on or
before the fifteenth (15th) day of each month following the
month in which services were rendered. Manager shall not be
entitled to any fee for any and all services rendered under
this Agreement prior to the Commencement Date. In the event
that the date used by the parties to estimate the Commencement
Date is not the actual Commencement Date, the parties agree to
adjust the portion of the Management Fee paid to Manager prior
to the Commencement Date so that the amount received by Manager
equals the amount for the six (6) month period as provided
above.
"Gross Revenues" as used herein
shall mean and include all revenues actually received by Owner
from or by reason of the operation of the Facility, including,
without limitation, all revenue of the Facility for or on
account of any and all goods provided and services rendered or
activities during the period from the date of this Agreement
and thereafter, the gross dollar amount of all such billings by
the Facility to or on behalf of residents directly or
indirectly connected with the Facility or the provision of all
such goods and services.
(x) Term of Agreement. This Agreement
shall be effective as of the date of this Agreement, and shall
remain in effect through that later of (i) June 30, 2002, or
(ii) twenty-seven (27) months after the Commencement Date (the
"Term"); provided, however, that the Term shall be extended for
a period of time equal to the period of time that the Facility
is not in operation as a result of a fire or other casualty at
the Facility, plus three (3) months.
Manager will turn over to Owner
all of the Facility's cash, trust accounts, investments and
financial records within thirty (30) days of the date this
Agreement is terminated.
(y) Termination for Cause. Either
party may terminate this Agreement by delivering thirty (30)
days written notice (a "Termination Notice") to the other party
in the event that any of the following occurs:
(i)any illegal act engaged in by
any party in the operation of the Facility;
(ii)if any party files or has a
petition or complaint in receivership or bankruptcy filed
against it which has not been dismissed within ninety (90) days
of such filing; or
(iii)the breach by any party (the
"Breaching Party") of any other material provision in, or
obligation imposed by, this Agreement which violation shall
have not been cured to the reasonable satisfaction of the other
party (the "Claiming Party") within thirty (30) days following
the date on which the Claiming Party delivers notice to the
Breaching Party describing with specificity both the claimed
breach and the actions required to be taken in order to cure
the claimed breach; provided that in the event that the claimed
breach is not reasonably susceptible of being cured within
thirty (30) days, the cure period shall be extended for such
additional time as may be reasonably required provided such
addition time shall not exceed thirty (30) days.
(z) Interpretive Provisions.
(i)At all times, this Agreement
will be subject and subordinate to all rights of the Mortgagee,
and will inure to the benefit of and constitutes a binding
obligation upon the Principal Parties and their respective
successors and assigns. To the extent this Agreement confers
rights upon the Mortgagee, it will be deemed to inure to its
benefit, but without liability to it, in the same manner and
with the same effect as though the Mortgagee were a primary
party to this Agreement.
(ii)This Agreement constitutes the
entire agreement between Owner and Manager with respect to the
management and operation of the Facility and no change will be
valid unless made by supplemental written agreement, executed
and approved by the Principal Parties. Manager acknowledges
that neither it nor any affiliate has a current or conditional
agreement for the Facility other than as set forth herein.
(iii)This Agreement may be
executed in several counterparts, each of which shall
constitute a complete original Agreement, which may be
introduced as evidence or used for any other purpose without
production of any of the other counterparts.
(aa) Out-of-Pocket and Capital
Expenditures. Manager shall pay all costs necessary to equip
an on-site management and marketing office and, in addition,
shall pay all costs necessary to make such equipment fully
operational.
(ab) Partners of Owner Not Liable. All
obligations of Owner hereunder shall be recourse only to the
assets of Owner, and no employee, officer, director or partner
of Owner shall have any personal liability whatsoever with
respect to any such obligations.
(ac) Access to Books and Records. As a
subcontractor that may be subject to Section 1861(v) (1) (i) of
the Social Security Act (the "Act"), Manager shall, upon
written request and in accordance with the above-mentioned
section of the Act and regulations promulgated pursuant
thereto, make available to the Comptroller General, the
Secretary of Health and Human Services, and their duly
authorized representatives, a copy of this Agreement and access
to Manager's books, documents, and records necessary to verify
the nature and extent of the costs of services provided to
Owner. Such access will be available until the expiration of
four (4) years after the services to which the costs are
related have been furnished.
(ad) Amendments. This Agreement shall
not be changed modified, terminated, or discharged, in whole or
in part, except by an instrument in writing signed by Owner and
Manager, their respective successors or assigns, or otherwise
as provided herein. Such modifications shall be in writing and
signed by Owner and Manager.
(ae) Governing Law. The provisions of
this Agreement shall be governed by, construed, and interpreted
in accordance with the laws of the State of Florida. Any
change in any applicable law which has the effect of rendering
any part of this Agreement invalid, illegal, or unenforceable
shall not render the remainder of this Agreement invalid,
illegal, or unenforceable, and the parties hereto agree that in
the event that any part of this Agreement is rendered invalid,
illegal, or unenforceable, that they shall negotiate in good
faith to amend any such part of this Agreement so as to comply
with any such law, as amended, and further the respective
objectives of the parties hereto.
(af) Assignment. Neither Owner nor
Manager will assign its interests in this Agreement, without
the prior written consent of the other; provided that Owner may
assign its interests hereunder to the Tenant under the Lease
without the consent of Manager.
(ag) Successors. This Agreement shall
be binding upon and inure to the benefit of the parties and to
their permitted respective successors and assigns.
(ah) Captions. The captions of this
Agreement are for convenience and reference only and in no way
define, describe, extend or limit the scope of intent of this
Agreement or the intent of any provision contained in this
Agreement.
(ai) Notices. Any notice, demand,
consent, or other written instrument to be given or received
under this Agreement ("Notice") required or permitted to be
given shall be in writing signed by the party giving such
Notice and/or consent and shall be hand delivered, sent by a
nationally recognized overnight carrier or sent, postage
prepaid, by Certified or Registered Mail, Return Receipt
Requested, to the other party at the addresses listed below:
As to Manager: SRR Management Corp.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
Attention: Stanley Rosenthal
with a copy to: Bruce Litwer, Esq.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
As to Owner: Newall Assisted Living, Ltd.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
Attention: Stanley Rosenthal
Bruce Litwer, Esq.
and
Chancellor of Lauderhill II, Inc.
197 First Avenue
Needham, Mass. 02194
Attention: President
James M. Clary, III, Esq.
with a copy to: Christopher J. Donovan, Esq.
McDermott, Will & Emery
75 State Street
Suite 1700
Boston, MA 02109-1807
Any party shall have the right to change the place to which
such Notice shall be sent or delivered by similar notice sent
in like manner to all other parties hereto. All notices sent
by certified mail shall be deemed received three (3) days after
the date postmarked. All notices that are hand delivered shall
be deemed received upon delivery or when delivery is refused to
the office or address of the addressee.
(aj) Property. Trade names, marketing
material, marketing ideas and development material and records
developed specifically for and related to this Facility shall
be the property of Owner. All operational forms and documents
including, but not limited to, policy and procedure manuals,
operational forms, level of care determination systems,
management policy books, inspection control manuals, and
nursing management books are and will remain the property of
Owner. All financial management forms, documents and software
systems including, but not limited to, bookkeeping manuals,
financial forms, financial spreadsheets, database or word
processing forms, financial accounting packages and outcome
information systems are and will remain the property of Owner.
IN WITNESS WHEREOF, the Principal Parties have
executed this Agreement as of the date first written above.
Signed, sealed and delivered
in the presence of:
OWNER:
NEWALL-CHANCELLOR 69TH AVENUE ASSOCIATES, a Florida
joint venture
By: NEWALL ASSISTED LIVING, LTD.,
a
Florida limited partnership, a
Joint Venturer
By:
Asliv, Inc., a Florida corporation, its General
Partner
__________________________ By: __________________________
Print Name: Name:
Title:
__________________________
Print Name:
By: CHANCELLOR OF LAUDERHILL II,
INC., a Delaware
corporation, a Joint Venturer
__________________________ By: __________________________
Print Name: Name:
Title:
__________________________
Print Name:
MANAGER:
SRR MANAGEMENT CORP., a Florida corporation
__________________________ By:___________________________
Print Name: Name:
Title:
__________________________
Print Name:
47156\014\MANAGE.003
SCHEDULE "A"
LEGAL DESCRIPTION
A portion of Tract "A", BOULEVARD FOREST, according to the plat
thereof, as recorded in Plat Book 113, Page 39 of the Public
Records of Broward County, Florida, being more particularly
described as follows:
COMMENCING at the Northwest corner of Tract "A":
THENCE North 89 degrees 32'45" East, along the North line of said Tract
"A", a distance of 264.88 feet, to the POINT OF BEGINNING;
THENCE continue North 89 degrees 32'45" East, along said North line, a
distance of 825.12 feet;
THENCE South 00 degrees 27'15" East, a distance of 110.00 feet to a
point on the arc of a non-tangent curve concave to the South
(said point bears North 11 degrees 04'58" East from the radius point of
the next described curve);
THENCE Southwesterly, along the arc of said curve having a
radius of 90.00 feet, a delta of 64 degrees 00'00", and an arc distance
of 100.53 feet to a point of Tangency;
THENCE South 37 degrees 04'58" West, a distance of 96.87 feet to the
beginning of a curve concave to the North;
THENCE Westerly, along the arc of said curve having a radius of
174.81 feet, a delta of 80 degrees 17'56", and an arc distance of
244.99 feet to a Point of Reverse Curvature with a curve
concave to the South;
THENCE Westerly, along the arc of said curve having a radius of
500.00 feet, a delta of 49 degrees 30'00", and an arc distance of
431.97 feet to an intersection with a non-tangent curve concave
to the South (said point bears North 09 degrees 22'54" East from the
radius point of the next described curve);
THENCE Westerly, along the arc of said curve having a radius of
140.00 feet, a delta of 15 degrees 47'21", and an arc distance of 38.58
feet to a Point of Non-Tangency;
THENCE North 00 degrees 27'15" West, 244.39 feet to the POINT OF
BEGINNING;
Said lands lying in the City of Lauderhill, Broward County,
Florida.
EXHIBIT A
MANAGEMENT CERTIFICATION
To be completed if, as and when the Facility is financed
through HUD or a related entity where a Certification is
required to be provided.
OPTION TO PURCHASE AGREEMENT
THIS OPTION TO PURCHASE AGREEMENT (the "Agreement")
is made as of the 24th day of September, 1997, by and between
Chancellor of Lauderhill II, Inc., a Delaware corporation
having an address of 197 First Avenue, Needham, Massachusetts
02194 ("Optionee) and Newall-Chancellor 69th Avenue Associates,
a Florida joint venture with its principal place of business at
5500 Northwest 69th Avenue, Lauderhill, Florida 33319
("hereinafter referred to as the "Optionor").
WITNESSETH
WHEREAS, Optionor is the owner of certain real
property consisting of approximately four and two-tenths (4.2)
acres of vacant land situated in Lauderhill, in the County of
Broward, State of Florida and legally described in Schedule "A"
attached hereto, upon which Optionor intends to develop and
construct an assisted living facility to be comprised of
approximately one hundred twenty (120) beds (the "Facility");
and
WHEREAS, Optionor, as lessor, and Optionee, as
lessee, have entered into a certain Lease of even date
herewith (the "Lease") pursuant to which Optionor will lease
the Facility to Optionee and Optionee will lease the Facility
from Optionor upon the terms and conditions and for the term
set forth in the Lease; and
WHEREAS, Optionee desires an option to purchase and
acquire the Facility and certain tangible and intangible assets
used in connection therewith and Optionor desires to grant such
option to Optionee.
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Optionor hereby grants to Optionee the option hereinafter
provided on the terms and conditions hereafter contained.
I. DEFINITIONS
The following terms have the following meanings when
used herein:
1. "Assets" shall mean the
following assets
(A) All of the real property described
in Schedule "A" attached hereto, including the
Facility, land, buildings, improvements, fixtures and
equipment located thereon, appurtenant rights,
easements, permits and licenses related thereto
(collectively, the "Real Estate");
(B) All other tangible assets owned by
Optionor and used in or in connection with the
operation of the Real Estate and the operation of the
Facility as of the Commencement Date, together with
all replacements thereof and additions thereto made
between the Commencement Date and the Closing Date
(collectively, the "Personal Property"), including,
without limitation, all assets described in the
following categories:
(a)
All of the tangible personal
property of Optionor located at
the Real Estate, including,
without limitation, all fixtures,
machinery, equipment, office
equipment, furniture, furnishings,
building maintenance equipment,
all parts and accessories and
supplies for the same, all
leasehold improvements; and all
motor vehicles; all such assets to
be included even if fully
depreciated or amortized or
otherwise written off the books of
the Optionor; and
(b)
All computer equipment, software
and, to the extent assignable,
software licenses of Optionor; and
(C) To the extent permissible under
applicable laws, all licenses, permits, certificates
(including Certificates of Need, if applicable) and
franchises necessary to operate the Facility and
otherwise conduct the business conducted at the
Facility and the Real Estate, and all waivers of any
requirements pertaining to such licenses, permits,
certificates and franchises.
(D) All of the right, title, benefit,
and interest of Optionor in and to all goodwill, all
registered or unregistered trademarks, trade or brand
names, service marks and similar intangible property
pertaining to the Facility and the Real Estate,
including without limitation, the right to use any
words indicating that the business of the Facility is
being carried on, including the right, title and
interest of Optionor to use the name of the Facility.
ct "Cash Flow" shall mean the
"Profit Before Depreciation" of the Facility (as hypothetically
computed in accordance with HUD form 92410 (7/91)) less
principal amortization under the Project Financing and the
Chancellor Loan (as defined in the Lease).
3. "Commencement Date" shall have
the meaning ascribed to such term in the Lease.
4. "Contaminants" shall mean (i)
any pollutant, contaminant or hazardous substance (within the
meaning of such terms under the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, and any implementing regulations) but excepting
Infectious Wastes or (ii) any hazardous or toxic substance or
material within the meaning of any federal, state or local law
applicable to Optionor or the Real Estate, but excepting
Infectious Wastes.
5. "Infectious Wastes" shall mean
medical, human or other healthcare related waste which, under
any Legal Requirement, is required to be stored, transported or
disposed of in a manner designed to contain contamination or
infection caused by such waste.
6. "Landlord" shall have the
meaning ascribed to such term in the Lease.
7."Lease Year" shall have the
meaning ascribed to such term in the Lease.
8."Legal Requirements" shall mean
any federal, state, local or foreign law, statute, standard,
ordinance, code, order, rule, regulation, resolution,
promulgation, or any order, judgment or decree of any court,
arbitrator, tribunal or governmental authority, or any license,
franchise, permit or similar right granted under any of the
foregoing, or any similar provision having the force and effect
of law.
9."Management Agreement" shall
have the meaning ascribed to such term in the Lease.
10."Other Property" shall mean the
Assets other than the Assets relating to the Facility.
11. "Permitted Encumbrances" shall
mean the permitted liens set forth on Schedule "B" attached
hereto.
12."Person" shall mean any
individual, partnership, corporation, association, trust, joint
venture, unincorporated organization, or entity, and any
government, governmental department or agency or political
subdivision thereof.
13."Project Financing" shall have
the meaning ascribed to such term in the Lease.
14. "Property" shall mean (a) the
Assets relating to the Facility, and (b) the Records and Plans
relating to the Facility.
15."Real Estate and Casualty
Reserves" shall have the meaning ascribed to such term in the
Lease.
16."Replacement Reserves" shall
have the meaning ascribed to such term in the Lease.
17. "Records and Plans" shall mean
the following records and plans:
(A) All of the resident occupancy
(and, if applicable and consented to by such resident, medical
records) and employee personnel records of the Facility, and
all of the operating manuals, procedures manuals, training
manuals and other books and records used by Optionor in
operating the Facility and the Real Estate; and
(B) All plans, specifications and
architectural renderings of the Real Estate, if any.
18."Tenant" shall have the meaning
ascribed to such term in the Lease.
19. Other terms are defined in the
text as they appear.
Capitalized terms not otherwise defined herein have
the meaning set forth in the Lease.
II. OPTION
A. Grant of Option
Subject to the terms and
conditions hereinafter set forth, Optionor hereby gives and
grant to Optionee the exclusive right and option (hereunder
called the "Option") to purchase and acquire the Property.
B. Exercise of Option
1. Optionee may exercise the
Option at any time during the sixty (60) days prior to the
later to occur of (a) the expiration of the term of the
Management Agreement, and (b) twenty-seven (27) months after
the Commencement Date (the "Option Exercise Period").
2. Exercise of the Option shall be
accomplished by giving an Option Notice in the form attached
hereto as Exhibit A-1 within the sixty (60) day Option Exercise
Period.
3. Upon exercise of the Option,
Optionor shall be obligated to assign, transfer and convey to
Optionee the Property including good and clear record and
marketable fee simple title to the Real Estate subject only to
the Permitted Encumbrances on the terms, conditions and
provisions set forth herein.
C. Purchase Price
1.The purchase price for the
Property (the "Purchase Price"), payable in full at Closing
subject to the adjustments set forth in this Agreement, shall
be equal to the sum of (a) the outstanding balance of the
Project Financing as of Closing (the "Loan Balance") plus (b)
the product of eight and three quarters (8 3/4) multiplied by
the Cash Flow during the twelve (12) month period immediately
preceding the end of the Option Exercise Period (the
"Calculation Period"). The Loan Balance shall be a credit
against the Purchase Price.
In the event of a casualty at the Property during the
Calculation Period such that all or a portion of the Facility
is not in operation, the period used to calculate Cash Flow
shall be either (i) the Calculation Period excluding the period
of time the Facility is not in operation as a result of a
casualty plus the first three (3) months thereafter or (ii) the
Calculation Period prior to such casualty annualized for twelve
months, whichever period of time produces a greater Cash Flow
amount.
D. Place and Date of Closing
The purchase of the Property shall
be consummated (the "Closing") at the office of McDermott, Will
& Emery in Miami, Florida, or at such other place as Optionee
and Optionor may agree, on the date set forth in Optionee's
Option Notice (the "Closing Date"), which Closing Date shall be
not more than ninety (90) days after delivery of the Option
Notice.
E. Conduct of Optionor Prior to
Closing
The Optionor covenants and agrees
that, through the period prior to Closing: (i) the Facility,
the Real Estate and the Assets shall be operated in the
ordinary course of business and in a manner consistent with
Optionor's past practice; (ii) no sale, disposition, removal or
encumbrance of any furniture, fixtures or equipment located at
any of the Real Estate shall be made without the approval of
Optionee other than replacements of similar quality due to
obsolescence in the ordinary course of business; (iii) no
decrease shall be made in the usual rates charged to residents
at the Facility without the approval of Optionee or otherwise
permitted pursuant to the Management Agreement; (iv) the
Optionor shall use its best efforts to preserve the business
operation of the Facility and to preserve for the Optionee the
goodwill of the Facility's suppliers, residents in the
Facility, and others having business relations with the
Facility; and (v) the Optionor shall use its best efforts to
retain the services of the Facility's current management-level
and professional employees and to maintain existing staffing
patterns at the Facility.
III. CLOSING PURSUANT TO THIS OPTION
A. Optionor's Deliveries at Closing
At the Closing, Optionor shall execute (if
applicable) and deliver each of the following, each in form
reasonably satisfactory to Optionee:
1.a recordable special warranty
deed executed by Optionor, conveying good and clear record and
marketable fee simple title to the Real Estate to Optionee or
its nominee, subject only to the Permitted Encumbrances;
2.a bill of sale in the form of
Exhibit B attached hereto executed by Optionor transferring,
and warranting that each Optionor is transferring all of such
Optionor's interest in all Property other than the Real Estate
to Optionee or its nominee;
3.all maintenance, operations,
development, leasing, management, construction, equipment and
miscellaneous contracts, and an assignment thereof and all
warranties applicable thereto to Optionee or its nominee which
Optionee elects to have assigned to it within thirty (30) days
prior to the Closing;
4.all certificates of occupancy,
and any other permits, licenses or approvals in the possession
or under the control of any of the Optionor necessary to permit
the lawful use and occupancy of the Property in its then
current use and an assignment thereof to Optionee or its
nominee (except to the extent previously furnished by Optionor
to Optionee);
5.such other deeds, assignments,
other instruments of transfer and conveyance as Optionee may
reasonably request for the purpose of accomplishing and
consummating the transfer of the Property to Optionee;
6.customary No Lien and Possession
affidavits, FIRPTA affidavit and other customary documents and
affidavits; and
7.a settlement statement.
B. Optionee's Deliveries at Closing
At the Closing, Optionee shall execute (if
applicable) and deliver each of the following:
1.
Such portion of the Purchase Price in bank or
cashier's check or by wired funds as is required
hereunder.
2.
The settlement statement.
C. Costs
Optionor shall pay all transfer taxes, including, but
not limited to, deed stamps. Optionee shall pay the cost of
any title examination and title insurance premium. All other
closing costs shall be borne by the party which customarily
absorbs the same pursuant to conveyancing practice in the State
of Florida. Each party shall pay the fees and expenses of any
attorneys retained by such party.
D. Fee Mortgages
Optionee shall have the right to elect to assume any
or all of the Loan Balance at Closing, in which case such Loan
Balance (exclusive of any assumption fee which Optionee shall
pay) shall be applied to the Purchase Price so that Optionee
shall receive a credit for such sum. In the event Optionee
elects to assume the Project Financing, Optionor agrees to
cooperate and take all actions reasonably requested by Optionee
in connection with such assignment. In the event Optionee does
not assume the Project Financing, Optionor shall use such
portion of the Purchase Price to discharge the Project
Financing provided Optionee shall pay any prepayment charges in
connection with the discharge of the Project Financing.
E. Adjustments and Prorations
There shall be no prorations of
any costs related to the operation of the Facility, including
utilities and similar expenses, for which a proration was made
between Landlord and Tenant as of the Commencement Date of the
Lease. Fifty percent (50%) of the Real Estate and Casualty
Reserves, and Replacement Reserves shall be credited to
Optionor. In addition, the parties will make other customary
prorations to the extent not made previously under the Lease
for taxes, rent, the inventory, building supplies, payroll,
benefits and the Loan Balance.
F. Conditions Precedent to Closing
1. The following shall be express
conditions precedent to Closing and to the obligation of the
Optionee to pay the Purchase Price as above provided (the
"Closing Conditions"), and are for the sole benefit of the
Optionee and may be waived by Optionee in whole or in part in
its sole discretion:
a.No breach or default by Optionor
shall have occurred under this Agreement beyond any applicable
grace periods.
b.All representations and
warranties of Optionor herein shall be and remain true, correct
and complete in all material respects as of the Closing unless
the failure of such representation and warranty to be true is a
result solely of acts or omissions of Optionee, and Optionor
shall have delivered such affidavits and statements dated as of
the Closing as Optionee may require so certifying.
c.Optionor shall have delivered
all items required pursuant to Section III.A., hereof.
d.Optionee shall have received (i)
a good and sufficient special warranty deed running to Optionee
or its nominee, and said deed shall convey a good and clear
record and marketable and fee simple title thereto, subject
only to the Permitted Encumbrances, and (ii) an ALTA title
insurance policy, dated as of the Closing Date, issued by a
title insurance company acceptable to Optionee which shall not
contain any exceptions other than the Permitted Encumbrances,
containing such endorsements are statutorily available to an
owner under Florida law and in the amount of the Purchase
Price.
G. Remedies
1. In the event that Optionee
shall have exercised the Option hereunder and Optionor shall
fail to perform any covenant hereunder or to satisfy or cause
to be satisfied any Closing Condition following thirty (30)
days written notice from Optionee (during which time the terms
of the Option and the Lease shall continue as if no such
failure had occurred), then, the Closing shall be extended for
ninety (90) days and Optionor shall use best efforts to perform
such covenant or satisfy such Closing Condition. In the event
that the above-referenced ninety (90) day period shall have
expired and Optionor shall have been unable after using best
efforts to perform such covenant or satisfy such Closing
Condition, then Optionee shall have the following rights and
remedies, at its sole election:
a.To revoke the exercise of the
Option and terminate this Agreement, in which case all
obligations of the parties hereto shall cease and this
Agreement shall be void and without recourse to the parties
hereto.
b.To seek specific performance of
Optionor's obligations hereunder.
2. In the event that Optionee
shall have exercised the Option hereunder and shall fail to pay
to the party designated by Optionor the Purchase Price at
Closing, and Optionor shall have fully performed all covenants
and satisfied all Closing Conditions, then Optionor's sole and
exclusive remedies in lieu of all other rights of Optionor at
law or in equity (and Optionor hereby waives any such rights)
shall be (i) to terminate this Agreement, or (ii) to seek
specific performance of Optionee's obligations hereunder.
IV. CASUALTY AND CONDEMNATION
1.In the event the Property is
damaged or destroyed so as to permit Tenant to terminate the
Lease pursuant to Article 17 thereof, Optionee shall have the
right to terminate this Agreement, in which case all
obligations of the parties shall cease, and this Agreement
shall be void without recourse to the parties hereto.
2.In the event the Property is
damaged or destroyed and this Agreement is not terminated, this
Agreement, and the Lease shall remain in full force and effect,
provided that the Closing hereunder shall at Optionee's
election be extended until thirty (30) days after completion of
all repairs necessary to cause the Property to be repaired,
replaced or rebuilt with buildings, structures, improvements
and equipment of equal or better character, quality and
condition that existed immediately prior to such damage or
destruction (regardless of whether such damage occurred prior
to or after delivery of the Exercise Notice) plus an additional
90 days.
3. If there is any taking, so as
to permit the Tenant to terminate the Lease pursuant to Article
18 thereof, Optionee shall have the right to terminate this
Agreement, in which case all obligations of the parties hereto
shall cease and this Agreement shall be void and without
recourse to the parties hereto.
4. If any part of the Property is
taken and this Agreement is not terminated pursuant to the
Lease, then, in the event of a Closing hereunder, the Purchase
Price shall be (i) reduced by the amount of the award or
compensation received by Optionor on account of the taking if
the taking does not affect the revenue of the Facility or (ii)
reduced by an equitable sum mutually agreed to by the parties
if the taking affects the revenue of the Facility.
V. REPRESENTATIONS AND WARRANTIES
Optionor's Representations and Warranties.
Optionor hereby covenants,
represents, warrants to and agrees with Optionee that the
following shall be true and correct as of the Closing:
1. Organization, Power and
Standing. Optionor is a joint venture duly organized, validly
existing and in good standing as such under the laws of the
State of Florida, and has all requisite power and authority,
corporate and otherwise, to execute, deliver and perform this
Agreement.
2. Authorization and
Enforceability. This Agreement has been duly authorized,
executed and delivered by Optionor, constitutes the legal,
valid and binding obligation of Optionor and is enforceable
against Optionor in accordance with its terms, except to the
extent such enforceability may be limited by bankruptcy,
reorganization, insolvency or similar laws of general
applicability governing the enforcement of the rights of
creditors or by the general principles of equity (regardless of
whether considered in a proceeding at law or in equity).
3. Compliance with Charter
Documents. The execution, delivery and performance of this
Agreement by Optionor and the consummation by Optionor of the
transactions contemplated hereby will not violate or conflict
with or constitute a default under any term of the Joint
Venture Agreement of Optionor.
4. No Breach, Etc. The execution,
delivery and performance of this Agreement will not conflict
with or result in a breach of or default by Optionor under any
material term, condition, or provision of any order, writ,
injunction, decree, contract, agreement, or instrument to which
Optionor is a party or by which the Property are or may be
bound which default would have an adverse affect on the
Property, will not result in the creation or imposition of any
lien, charge, or encumbrance of any nature upon the Property,
and will not give to others any interest or rights in, or with
respect to the Property unless such right is fully protected by
Optionee's title insurance and no defense exists to any
potential claim relating thereto under such insurance.
5. Compliance With Laws. Neither
the execution and delivery of this Agreement by Optionor nor
the consummation by Optionor of any transaction contemplated
hereby does or will violate or give rise to any violations or
defaults under any Legal Requirement. The Property is not in
violation of any Legal Requirement (unless such violation was
caused by Optionee) or any outstanding covenants of any
Permitted Encumbrances, and there exists no condition or event
pertaining to the Property, which after notice or lapse of
time, or both, would be held so to violate or to give rise to
any such default. Optionor has not received any notice, and
Optionor has no knowledge, of any impending order or
requirement which would cause additional expenditures to be
made to bring the Property into compliance with Legal
Requirements or any such outstanding covenants.
6. Intentionally Omitted.
7.Environmental Matters. Optionor
is not subject to any type of enforcement action or compliance
order for any violation or alleged violation of any
environmental laws, rules, standards or regulations, including,
but not limited to, those related to waste-management, air
pollution control, waste-water treatment or noise abatement.
Optionor has not received any notice or citation for
noncompliance by it with respect to any of the foregoing
relating to the Property or has any knowledge of any
circumstance which could reasonably be expected to result in
any such enforcement action or compliance order. To the best
of Optionor's knowledge:
a.There are no Contaminants which
have at any time been generated, transported, disposed of,
recycled or otherwise handled in any way by Optionor or others
in or about any of the Real Estate, except as occurs in the
ordinary course of the lawful operation of an assisted
living/independent living facility in the State of Florida.
b.There are no locations in or
about any of the Real Estate where Contaminants or Infectious
Wastes from the operation of the Property have been disposed
of.
c.There has been no prior use
(including uses by any predecessor) of any of the Real Estate
whereby Contaminants were at any time located on or contained
within the Facility or the Real Estate, except as occurs in the
ordinary course of the lawful operation of a nursing home
facility in the State of Florida.
d.There are no past or continuing
releases of Contaminants from the Real Estate, except as occurs
in the ordinary course of the lawful operation of a nursing
home facility in the State of Florida.
e.Optionor has not been notified
that any person's health has or may have been impaired
(including any past or present employee) as the result of the
use, existence or disposal of Contaminants or Infectious Wastes
on the Real Estate.
f.All Infectious Wastes have been
stored, transported and disposed of in accordance with all
laws, licensure and certification standards applicable to
Optionor and the Facility.
g.There are no underground storage
tanks at the Real Estate, nor have any such storage tanks been
removed from the Real Estate.
8.Litigation. There is no
litigation, at law or in equity, or any proceeding before or
investigation by any federal, state or municipal court, board
or other governmental or administrative agency or any
arbitrator, against Optionor in connection with the operation
of the Facility or otherwise affecting the Real Estate or the
Assets, pending or, to the best of each Optionor's knowledge,
threatened or any reasonable factual basis therefor, except for
such of the foregoing as are described in Schedule C attached
hereto. No judgment, decree or order of any federal, state or
municipal court, board or other governmental or administrative
agency or any arbitrator has been issued against Optionor which
has a material adverse effect.
9.Optionor has no knowledge of any
pending or proposed municipal betterments for which a lien
could be imposed on the Premises.
10.There are no condemnation
proceedings pending, or, to the best of each Optionor's
knowledge, proposed or threatened against all or any part of
the Property.
11.No Misrepresentations.
Optionor has not made an untrue statement of material fact
which has a material adverse effect in any representation or
warranty by Optionor or in any instrument, certification or
statement furnished to Optionee nor has Optionor omitted to
state a material fact necessary to make the statements
contained herein or therein not misleading.
Optionee's Representations and Warranties.
Optionee hereby represents, covenants and warrants to
and agrees with Optionor that the following shall be true and
correct as of the Closing:
1.Organization, Power and
Standing. Optionee 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, partnership
and otherwise, to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
Optionee shall be qualified to do business in the State of
Florida as of the Closing Date.
2.Authorization and
Enforceability. This Agreement has been duly authorized,
executed and delivered by Optionee constitutes the legal, valid
and binding obligation of Optionee and is enforceable against
Optionee in accordance with its terms, except to the extent
such enforceability may be limited by bankruptcy,
reorganization, insolvency or similar laws of general
applicability governing the enforcement of the rights of
creditors or by the general principles of equity (regardless of
whether considered in a proceeding at law or in equity).
3. Compliance with Charter
Documents. The execution, delivery and performance of this
Agreement by Optionee and the consummation by Optionee of the
transactions contemplated hereby will not violate or conflict
with or constitute a default under any term of the Articles of
Incorporation or By-laws of Optionee.
4. No Breach, Etc. The execution,
delivery and performance of this Agreement will not conflict
with or result in a breach of or default by Optionee under any
material term, condition, or provision of any order, writ,
injunction, decree, contract, agreement, or instrument to which
Optionee is a party or any applicable law.
5. Litigation. There is no
litigation, at law or in equity, or any proceeding before or
investigation by any federal, state or municipal court, board
of arbitrator, against Optionee, pending (or, to the best of
Optionee's knowledge, threatened or any reasonable factual
basis therefor), which might materially and adversely affect
the legality or validity of this Agreement or the transactions
contemplated thereby.
VI. INDEMNIFICATION
1. Indemnification of Optionee.
Optionor shall defend, indemnify and hold harmless
Optionee and any affiliate of Optionee against all damages,
civil and criminal monetary penalties, losses and reasonable
expenses, including any reasonable attorneys' and other
professional fees (hereinafter referred to collectively as
"Liabilities") in connection with any matter arising out of or
related to any of the following except to the extent such
Liability results from the act or omission of Tenant under the
Lease: (a) any audit or investigation by any governmental
authority or administrative agency (whenever conducted)
concerning the operation of the Facility or any other Assets
relating to the Facility by Optionor prior to the Closing or
any amounts paid to Optionor with respect to any period prior
to the Closing; any assessments, adjustments (including rate
adjustments) or offsets made against Optionee or the Facility
or other Assets relating to the Facility as a result of such an
audit or investigation or in connection with the recovery by
any governmental authority or administrative agency of any
overpayments made to Optionor for services performed prior to
Closing or any depreciation recapture applicable to the period
prior to Closing; (b) any reasonable costs of defense of, and
any judgment against Optionee with respect to, any litigation
relating to the operation of the Assets relating to the
Facility prior to the Closing; (c) any suit, claim or
proceeding of any nature seeking to recover damages for
personal injury, death or property damage due or alleged to be
due to occurrences in connection with the operation of the
Assets relating to the Facility prior to the Closing not
covered by insurance; and (d) any other liability, damage,
cost, claim, expense or assessment asserted against Optionee or
the Assets relating to the Facility as a result of, or with
respect to, Optionor's ownership or operation of the Assets
relating to the Facility prior to the Closing.
2. Indemnification of Optionor
Optionee shall defend, indemnify and hold harmless
Optionor and any affiliate of Optionor against all damages,
civil and criminal monetary penalties, losses and reasonable
expenses, including any reasonable attorneys' and other
professional fees (hereinafter referred to collectively as
"Liabilities") in connection with any matter arising out of or
related to any of the following: (a) any audit or investigation
by any governmental authority or administrative agency
(whenever conducted) concerning the operation of the Facility
or any other Assets relating to the Facility by Optionee after
the Closing or any amounts paid to Optionee with respect to any
period after the Closing; any assessments, adjustments
(including rate adjustments) or offsets made against Optionor
or the Facility or other Assets relating to the Facility as a
result of such an audit or investigation or in connection with
the recovery by any governmental authority or administrative
agency of any overpayments made to Optionee for services
performed after the Closing or any depreciation recapture
applicable to the period after the Closing; (b) any reasonable
costs of defense of, and any judgment against Optionor with
respect to, any litigation relating to the operation of the
Assets relating to the Facility after the Closing; (c) any
suit, claim or proceeding of any nature seeking to recover
damages for personal injury, death or property damage due or
alleged to be due to occurrences in connection with the
operation of the Assets relating to the Facility after the
Closing not covered by insurance; and (d) any other liability,
damage, cost, claim, expense or assessment asserted against
Optionor or the Assets relating to the Facility as a result of,
or with respect to, Optionee's ownership or operation of the
Assets relating to the Facility after the Closing.
VII. OPTIONOR'S PUT OPTION
A. Grant of Put Option
If Optionee has not exercised the
Option prior to the expiration of the Option Exercise Period,
Optionor shall, subject to the terms and conditions contained
in this Agreement, have the right to require Optionee to
purchase the Property (the "Put Option").
B. Exercise of Put Option
1. Optionor may exercise the Put
Option at any time within sixty (60) days after the expiration
of the Option Exercise Period.
2. Exercise of the Put Option
shall be accomplished by giving a Put Option Notice in the form
attached hereto as Exhibit A-2 within the Option Exercise
Period.
3. Upon exercise of the Put
Option, Optionee shall be obligated to purchase from Optionor
the Property including good and clear record and marketable fee
simple title to the Real Estate subject only to the Permitted
Encumbrances on the terms, conditions and provisions set forth
herein.
C. Closing Pursuant to Put Option
If the Put Option is timely
exercised by the Optionor, the closing of the sale of the
Property pursuant to the Put Option shall be pursuant to all of
the terms and conditions set forth in this Agreement governing
the closing of the sale of the Property under the Option,
including, without limitation, the Purchase Price, the time,
place, manner and delivery of documents required of the parties
for Closing, and the respective representations and warranties
of the parties.
VIII. MISCELLANEOUS
A. Successors and Assigns
All of the terms and provisions hereof shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns.
B. Governing Law
This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
C. Headings
Headings at the beginning of each numbered Article
and Section of this Agreement are solely for the convenience of
reference of the parties and are not a part of this Agreement.
D. Attorneys' Fees
If a breach or default by either party shall occur,
the breaching or defaulting party agrees to pay all costs,
expenses and charges, including reasonable attorneys' fees,
which may be incurred by the other in the enforcement of its
rights pursuant to this Agreement.
E. Equitable Remedies
In the event of a breach or threatened breach of this
Agreement by Optionor, the remedy at law in favor of Optionee
may be inadequate, and Optionee, in addition to all other
rights which may be available to it, shall accordingly have the
right of specific performance in the event of any breach, or
injunction in the event of any threatened breach, of this
Agreement by Optionor.
F. Counterparts
This Agreement may be executed in two or more
counterparts, each of which shall be an original but all of
which shall together constitute one and the same agreement.
G. Severability
Every provision of this Agreement is intended to be
severable. In the event that any term or provision hereof is
declared by a court of competent jurisdiction to be illegal or
invalid for any reason whatsoever, such illegality or
invalidity shall not affect the balance of the terms and
provisions hereof, which terms and provisions shall remain
binding and enforceable, and such unenforceable provision shall
be deemed reformed so as to give maximum permissible effect to
the intention of the parties as expressed herein.
H. Amendment
This Agreement can be modified or rescinded only by a
writing expressly referring to this Agreement and signed by all
of the parties.
I. Memorandum of Option
Optionor and Optionee each agree that neither will
record or file this document in any public office or Registry
of Deeds but will record a memorandum hereof to provide the
public with notice of the existence hereof. Optionee shall pay
the cost of recording of such memorandum.
J. Notices
All notice, report, demand or other instrument
authorized or required to be given or furnished under this
Agreement shall be deemed given or furnished (i) when addressed
to the party intended to receive the same, at the address of
such party set forth below and delivered at such address, by
hand to such party or (ii) when received if deposited in the
United States mail as first class registered or certified mail,
return receipt requested, postage paid; the return receipt
shall be conclusive evidence of delivery. The addresses of the
parties are as follows:
Optionor: Newall Assisted Living, Ltd.
5500 Northwest 69th Avenue
Lauderhill, Florida 33319
Attention: Stanley Rosenthal
Bruce Litwer, Esq.
and
Chancellor of Lauderhill II, Inc.
197 First Avenue
Needham, Mass. 02194
Attention: President
James M. Clary, III, Esq.
Optionee:
Chancellor of Lauderhill II, Inc.
197 First Avenue
Needham, Massachusetts 02194
Attention: President
James M. Clary, III, Esq.
with a copy to: Christopher J. Donovan, Esq.
McDermott, Will & Emery
75 State Street, Suite 1700
Boston, Massachusetts 02109
Either party may change the address to which any such notice,
report, demand or other instrument is to be delivered or
mailed, by furnishing written notice of such change to the
other party.
K. Assignment of Rights.
Subject to any required approval of the holder of the
Project Financing, if applicable, Optionee shall be entitled to
assign its right to exercise the Option granted herein to (i)
any entity controlled by, controlling or under common control
with Optionee or any entity to which Optionee can assign the
Lease or (ii) a real estate investment trust or similar
financing entity (a "REIT") in connection with the financing of
the purchase of the Property and the lease of the Property from
the REIT to Optionee or an affiliate thereof, provided that
Optionee shall give notice to Optionor of any such assignment
or (iii) to any other party with the consent of Optionor
exercised in its sole discretion.
L. No Further Encumbrance. Between
the date hereof and the expiration of the Option Exercise
Period, no contract for or on behalf of or affecting any
portion of the Property shall be negotiated or entered into by
Optionor which cannot be terminated without charge, cost,
penalty, or premium, and Optionor shall not enter into any
lease for, or further encumber (except any approved financing
due to a casualty under the Lease), any portion of the
Property.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
Optionee:
CHANCELLOR OF LAUDERHILL II, INC.
By: ______________________________
Name:
Title:
Optionor:
NEWALL-CHANCELLOR 69TH AVENUE ASSOCIATES, a Florida
joint venture
By: NEWALL ASSISTED LIVING, LTD.,
a Florida limited partnership,
a Joint Venturer
By:
Asliv, Inc., a Florida corporation, its General
Partner
By: __________________________
Name:
Title:
By: CHANCELLOR OF LAUDERHILL II,
INC., a Delaware corporation,
a Joint Venturer
By: __________________________
Name:
Title:
INDEX OF EXHIBITS AND SCHEDULES
Exhibit Description
A-1 Option Notice
A-2 Put Option Notice
B Bill of Sale
Schedule Description
A Legal Description of Real Estate
B Permitted Encumbrances
C Litigation
SCHEDULE A
LEGAL DESCRIPTION OF REAL ESTATE
A portion of Tract "A", BOULEVARD FOREST, according to the plat
thereof, as recorded in Plat Book 113, Page 39 of the Public
Records of Broward County, Florida, being more particularly
described as follows:
COMMENCING at the Northwest corner of Tract "A":
THENCE North 89 degrees 32'45" East, along the North line of said Tract
"A", a distance of 264.88 feet, to the POINT OF BEGINNING;
THENCE continue North 89 degrees 32'45" East, along said North line, a
distance of 825.12 feet;
THENCE South 00 degrees 27'15" East, a distance of 110.00 feet to a
point on the arc of a non-tangent curve concave to the South
(said point bears North 11 degrees 04'58" East from the radius point of
the next described curve);
THENCE Southwesterly, along the arc of said curve having a
radius of 90.00 feet, a delta of 64 degrees 00'00", and an arc distance
of 100.53 feet to a point of Tangency;
THENCE South 37 degrees 04'58" West, a distance of 96.87 feet to the
beginning of a curve concave to the North;
THENCE Westerly, along the arc of said curve having a radius of
174.81 feet, a delta of 80 degrees 17'56", and an arc distance of
244.99 feet to a Point of Reverse Curvature with a curve
concave to the South;
THENCE Westerly, along the arc of said curve having a radius of
500.00 feet, a delta of 49 degrees 30'00", and an arc distance of
431.97 feet to an intersection with a non-tangent curve concave
to the South (said point bears North 09 degrees 22'54" East from the
radius point of the next described curve);
THENCE Westerly, along the arc of said curve having a radius of
140.00 feet, a delta of 15 degrees 47'21", and an arc distance of 38.58
feet to a Point of Non-Tangency;
THENCE North 00 degrees 27'15" West, 244.39 feet to the POINT OF
BEGINNING;
Said lands lying in the City of Lauderhill, Broward County,
Florida.
SCHEDULE B
PERMITTED ENCUMBRANCES
1. Broward County property taxes, which are not yet due
and payable.
2. Easements, restrictions and dedications as shown on
Plat of BOULEVARD FOREST, recorded in Plat Book 113,
Page 39, together with Agreements for Amendment of
Notation on Plat filed January 12, 1989, in Official
Records Book 16110, page 46, and filed February 13,
1997, in Official Records Book 26027, page 97.
3. Restrictive Covenants filed October 1, 1969, in
Official Records Book 4037, page 435.
4. Restrictive Covenant filed April 23, 1987, in
Official Records Book 14373, page 917, together with
First Amendment filed July 24, 1987, in Official
Records Book 14652, page 125.
5. Easement granted to Southern Bell Telephone and
Telegraph Company filed March 27, 1987, in Official
Records Book 14471, page 363.
6. Declaration of Covenants, Conditions and Restrictions
for The Boulevard Forest filed June 11, 1987, in
Official Records Book 14523, page 215.
7. Easement granted to the City of Lauderhill, the
County of Broward, the State of Florida and the
United States Government filed June 14, 1989, in
Official Records Book 16519, page 835.
8. Road Impact Agreement in favor of Broward County
filed December 12, 1996, in Official Records Book
25767, page 821.
9. Recreational Impact Agreement filed February 13,
1997, in Official Records Book 26027, page 103.
10. Educational Impact Agreement in favor of Broward
County filed February 13, 1997, in Official Records
Book 26027, page 114.
ALL IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
SCHEDULE C
LITIGATION
NONE
EXHIBIT A-1
OPTION NOTICE
(date)
(to Optionor or successor)
address
Ladies and Gentlemen:
Reference is made to the Option to Purchase Agreement
dated August ____, 1997 (the "Option") between Newall-
Chancellor 69th Avenue Associates, a Florida joint venture
having an address of 5500 Northwest 69th Avenue, Lauderhill,
Florida 33319 ("Optionor") and Chancellor of Lauderhill II,
Inc. a Delaware corporation having an address of 197 First
Avenue, Needham, Massachusetts 02194 ("Optionee"). The
undersigned is the holder of Optionee's interest in the Option.
Pursuant to Section II.B. of the Option you are
advised that the Option is hereby exercised.
The date for closing of the transaction shall be
____________________.
Please refer to the Option with respect to your
obligations in preparation for settlement.
Very truly yours,
_________________________
(holder of Option)
EXHIBIT A-2
PUT OPTION NOTICE
(date)
(to Optionee or successor)
address
Ladies and Gentlemen:
Reference is made to the Option to Purchase Agreement
dated August ___, 1997 (the "Option") between Newall-Chancellor
69th Avenue Associates, a Florida joint venture having an
address of 5500 Northwest 69th Avenue, Lauderhill, Florida
33319 ("Optionor") and Chancellor of Lauderhill II, Inc. a
Delaware corporation having an address of 197 First Avenue,
Needham, Massachusetts 02194 ("Optionee"). The undersigned is
the holder of Optionor's interest in the Option.
Pursuant to Section VII.B. of the Option you are
advised that the Put Option is hereby exercised.
The date for closing of the transaction shall be
____________________.
Please refer to the Option with respect to your
obligations in preparation for settlement.
Very truly yours,
_________________________
(holder of Put Option)
EXHIBIT B
BILL OF SALE
