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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended December 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Period from ___________ to ______________.
Commission File No. 0-19815
CAREMATRIX CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 04-3069586
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
197 First Avenue, Needham, MA 02194
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 433-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, Par Value $.05 American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
On March 19, 1998, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $278,770,168. As of March 19, 1998, there
were outstanding 17,528,882 shares of registrant's Common Stock, $0.05 par
value.
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Document Incorporated by Reference
Portions of the Company's definitive Proxy Statement for its annual meeting of
shareholders which the Company intends to file within 120 days after the end of
the Company's fiscal year ended December 31, 1997 are incorporated by reference
into Part II hereof as provided therein.
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ITEM 1. BUSINESS
Overview
CareMatrix Corporation (the "Company") (formerly known as The Standish Care
Company, Inc.) is a provider of assisted living and other long-term care
services. As of December 31, 1997, the Company operated 25 facilities in nine
states with a capacity of 2,562 residents. Of these facilities, two are owned,
14 are leased and nine are managed. The Company's three year growth objective is
to open at least 25 to 30 facilities a year, with a total capacity of over 8,000
residents, and to acquire additional assisted living facilities or operations.
Currently, the Company is developing 69 facilities, of which 27 facilities are
under construction. The Company's strategy is to provide a full range of
assisted living and other long-term care and related services across a range of
pricing options.
The Company was incorporated in Delaware in October 1989. On October 4,
1996, twelve wholly-owned subsidiaries of the Company were merged into twelve
corporations (the "CareMatrix Affiliates"), owned primarily by Abraham, Andrew
and Michael Gosman (the "Merger"). The stockholders of CareMatrix Affiliates
received approximately 92% of the outstanding shares of Common Stock of the
Company. The managements of the Company and the CareMatrix Affiliates determined
that a merger of their companies would result in a stronger enterprise with
greater potential for expansion. Furthermore, they believed that the Merger
would combine a strong base of existing facilities in attractive markets with a
large number of facilities under development or construction, strengthen the
senior management team and improve the Company's access to equity and debt
capital. On October 14, 1996, the Company changed its name to CareMatrix
Corporation and effected the Split (as defined herein). The Merger was accounted
for as a reverse acquisition, whereby the CareMatrix Affiliates were treated as
the acquiror for accounting purposes.
The Company's principal place of business is 197 First Avenue, Needham,
Massachusetts 02194 and its telephone number at that address is (781) 433-1000.
Unless otherwise indicated herein or required by the context, references to the
"Company" include its subsidiaries.
Assisted Living Industry
The Company believes that the assisted living industry is evolving as the
preferred alternative to meet the growing demands for a cost effective setting
for those seniors who cannot live independently due to physical or cognitive
frailties but who do not require the more intensive medical attention provided
by a skilled nursing facility. According to industry estimates, the assisted and
independent living industries generated approximately $12 billion to $15 billion
in revenues in 1996.
Generally, assisted living represents a combination of housing and 24-hour
per day personal support services designed to assist seniors with the activities
of daily living ("ADLs"), which include bathing, eating, personal hygiene,
grooming, remembering medications, ambulating and dressing. Certain assisted
living facilities may offer higher levels of personal assistance for residents
with Alzheimer's disease or other forms of dementia.
The Company believes that a number of factors will allow assisted living
companies to continue as one of the fastest growing segments of senior care:
Consumer Preference. The Company believes that assisted living is
increasingly becoming the setting preferred by prospective residents as well as
their families, who are often the decision makers for seniors. Assisted living
is a cost effective alternative to other types of care, offering seniors greater
independence and enabling them to age in place in a residential setting.
Cost Effectiveness. The average annual cost for a patient in a skilled
nursing home can exceed $40,000. The average cost for a private pay patient in a
skilled nursing home can exceed $75,000 per year in certain markets. In
contrast, assisted living services are provided at a cost which is generally 30%
to 50% lower than skilled nursing facilities located in the same region.
Additionally, the Company also believes that the cost of assisted living
services compares favorably with home health care, particularly when costs
associated with housing, meals and personal care assistance are taken into
account.
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Demographics and Changing Family Dynamics. The target market for the
Company's services are persons generally 75 years and older, one of the fastest
growing segments of the U.S. population.
According to the U.S. Census Bureau, the portion of the U.S. population age
75 and older is expected to increase by 28.7%, from approximately 13.0 million
in 1990 to approximately 16.8 million by the year 2000, and the number of
persons age 85 and older, as a segment of the U.S. population, is expected to
increase by 43%, from approximately 3.0 million in 1990 to over 4.3 million by
the year 2000. Furthermore, the number of persons afflicted with Alzheimer's
disease is also expected to grow in the coming years. According to data
published by the Alzheimer's Association, this group will grow from the current
3.8 million people to 4.8 million, or an increase of 26.3%, by the year 2000. As
Alzheimer's disease and other forms of dementia are more likely to occur as a
person ages, the increasing life expectancy of seniors is expected to result in
a greater number of persons afflicted with Alzheimer's disease and other forms
of dementia in future years absent breakthroughs in medical research.
According to the U.S. Census Bureau, the median income of the elderly
population has been increasing. Accordingly, the Company believes that the
number of seniors (and their families) who are able to afford high-quality
senior residential services, such as those offered by the Company, has also
increased.
In addition, the number of two-income households has increased over the
last decade and the geographical separation of senior family members from their
adult children has risen with the geographic mobility of the U.S. population. As
a result, many families that traditionally would have provided the type of care
and services offered by the Company to senior family members are in less of a
position to do so.
Supply/Demand Imbalance. While the senior population is growing
significantly, the supply of skilled nursing beds per thousand is declining.
This imbalance may be attributed to a number of factors in addition to the aging
of the population. Many states, in an effort to maintain controls of Medicaid
expenditures on long-term care, have implemented more restrictive certificate of
need regulations or similar legislation that restricts the supply of licensed
skilled nursing facility beds. Additionally, acuity-based reimbursement systems
have encouraged skilled nursing facilities to focus on higher acuity patients.
The Company also believes that high construction costs and limits on government
reimbursement for the full cost of construction and start-up expenses also will
constrain the growth and supply of traditional skilled nursing beds. The Company
believes that these factors, taken in combination, result in relatively fewer
skilled nursing beds available for the increasing number of seniors who require
assistance with ADLs but do not require 24-hour medical attention.
Business Strategy
Provide a Full Range of Senior Residential Services. The Company expects
its existing and future assisted living facilities to serve as the foundation on
which it will provide a continuum of care for its seniors within targeted
cluster market regions. When such facilities are combined with supportive
independent living and skilled nursing/rehabilitation facilities and an
Alzheimer's care program, the Company's facilities will have the resources to
provide a less stressful transition for its residents who require a higher
degree of care to a more supportive environment suited to their evolving needs.
The Company believes that by combining different levels of care in a single
facility, on an integrated campus or in nearby facilities, it will gain an
advantage over those competitors that operate free-standing assisted living
facilities and do not have similar flexibility to allow their residents to age
in place.
Extend Average Length of Stay. Industry studies suggest that the length of
stay at assisted living facilities averages two to two and a half years. The
company believes that extending the average stay can have a significant positive
impact on earnings. Decreasing turnover lowers marketing costs, apartment
renovation costs and results in higher occupancy. By combining a focus on
hospitality and healthcare with larger apartment sizes we expect to attract
seniors earlier in the aging process. By building larger and more adaptable
facilities with different components, often within campus-style developments, we
strive to accommodate residents as they age in place leading to a longer length
of stay.
Provide Services across a Range of Pricing Options. In addition to
providing a broad range of services, the Company believes it will eventually be
able to serve nearly all income segments of the senior population by providing
these services over a range of pricing options. The Company provides, and is
developing models designed to provide, these services to both the moderate and
upper income markets. Also, the Company
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continually evaluates models intended to provide assisted living services for
lower income and Medicaid-eligible individuals.
Offer Personalized, Quality Care And Services. The Company's strategy
includes providing its residents with personalized, quality care and services.
The Company, through its facility-based staff, develops an individual care plan
for each resident based on professional assessments and family consultations. To
keep in step with a resident's evolving needs, the care plan is updated
regularly by the facility's healthcare and social service staff in conjunction
with the resident, the resident's physician and family members. The Company
maintains a quality assurance program with the goal of meeting and exceeding the
expectations of its residents and their families. The Company pays special
attention to recruitment, screening and training of all personnel assigned to
serve its residents and surveys its own facilities to ensure that its quality
standards are being maintained.
Develop Regional Cluster Markets. The Company seeks to be a leading
provider of assisted living services and related residential services in each of
its current and targeted cluster market regions. By positioning itself in such
cluster regions, the Company believes it can become the provider of choice in a
particular market through increased community familiarity. This strategy will
also help enable it to achieve operational management efficiencies within these
markets. The Company targets middle to upper income metropolitan and suburban
areas which have well-established populations of persons 75 years or older.
States currently targeted for cluster development include Arizona, California,
Connecticut, Florida, Illinois, Massachusetts, Michigan, New Jersey, New York,
Ohio and Pennsylvania.
Develop Hospital and Managed Care Relationships. The Company continues to
seek to develop relationships with regional hospital systems, managed care
organizations and other care providers to offer a full continuum of care in the
areas of assisted living, supportive independent living, Alzheimer's care and
skilled nursing/rehabilitative care.
Services Models
While providing services ranging from independent and supportive
independent living to skilled nursing/rehabilitative care, the primary focus of
the Company's efforts centers on the various assisted living service models
developed by the Company.
Assisted Living. The Company offers a full range of assisted living
services based on individual resident needs. The Company has found that resident
needs generally fall in one or more of the following categories: (i) those
requiring socialization and interaction with others but needing assistance with
only the instrumental activities of daily living (IADLs), (ii) those requiring
physical support or assistance with ADLs, and (iii) those who require assistance
due to Alzheimer's disease or other cognitive impairments.
Based on these resident needs, the Company has developed three service
models that can be implemented either individually or in combination with one
another within the same facility or in a campus setting.
Healthcare Services Model. This service model provides a lower cost
alternative for individuals needing lower acuity services than those
available in a skilled nursing facility. The Healthcare Services Model is
designed to meet the needs of two different market segments. This model
will provide long-term care services to moderate and upper income seniors
who are generally 75 years of age or older and require assistance with at
least two ADLs. In addition, it serves as a step-down provider of services,
where it will emphasize short-term stays in a variety of rehabilitative
situations and also provide pre-operative and post-operative care services.
In both instances, the need for these services is due primarily to physical
limitations rather than cognitive impairment. Personal care assistance with
ADLs is provided on a 24-hour basis and averages between one and two hours
per day for each resident.
Alzheimer's Model. Alzheimer's care services are provided for
residents with early or intermediate stage Alzheimer's disease in
specially-designed freestanding facilities or as distinct components
contained within an assisted living facility. Residents with Alzheimer's
disease or other forms of dementia require high levels of care and services
as a result of the decline of their cognitive abilities. Staffing is
generally 15% to 20% higher in order to meet the needs of this population
group. The Company generally charges monthly
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rates which are 20% to 40% higher for the Alzheimer's Model than the rates
for more traditional assisted living services.
Social Model. Within this model, the Company provides three meals
daily, housekeeping, personal laundry services, transportation, 24-hour
security, regular health screening and assessment as well as personal care
services. Additionally, there is a greater focus on resident interaction as
well as social and recreational activities.
Supportive Independent Living. Supportive independent living is provided
for seniors who do not yet need assistance with ADLs but who require a
residential environment that offers available health care services. The Company
provides this level of service in both moderate and upper income markets. The
Company believes that the availability of supportive independent living broadens
the market attractiveness of each facility or integrated campus by providing a
residential setting for those seniors who wish to maintain their independence
but desire a supportive environment. Services provided include daily meals,
transportation, social and recreational activities, linen, local transportation,
housekeeping and health care monitoring. Depending on government regulation,
personal care and medical services are available through either facility staff
or through home health care agencies. Residents generally pay a monthly rate to
cover all services, which is approximately 20% to 30% less than the rate for
more traditional assisted living services.
Skilled Nursing/Rehabilitation. In certain cluster market regions, the
Company provides skilled nursing/rehabilitative services within a skilled
nursing facility setting. These services include both short-term rehabilitation
and traditional long-term care and will be an important component of the
continuum of care provided by the Company within an integrated campus setting or
within cluster market regions. The short-term rehabilitation component addresses
the needs of patients requiring short-term rehabilitation or therapy services,
generally after a hospital stay.
Adaptability of Model
The company has focused on developing models which are adaptable to various
locations, income levels and aging in place (increased resident acuity).
Location. One of the most significant barriers to entry is the ability to
obtain zoning and planning approval. For this reason the company has developed
models which can be modified in size, unit count and exterior appearance to best
fit with local planning concerns and sensitivities. While these modifications
purposely change the external appearance and density to best conform to the
local market, the buildings are designed to preserve operating efficiencies and
program integrity.
Income Levels. The Company has developed models which can be adapted to
different income levels while again preserving operating efficiencies and
program integrity. Buildings in more affluent markets are enhanced by adding and
upgrading common space, enlarging unit sizes and using a higher level of finish
throughout the facility to maximize revenue. In more cost-sensitive markets, the
model is made more affordable through less elaborate common spaces, a higher
proportion of studio units and access to less expensive labor markets through
site location.
Aging in Place. The Company's new facilities are purposely built for
assisted living and senior housing. Each model, however, is designed so that
components or wings of the building can be converted over time to accommodate
higher acuity residents. Additionally, many individual units are designed in
such a way that smaller units can be combined to create larger apartments for
couples, individuals with caregivers or individuals with more income who desire
larger spaces. Likewise, many of the facility's two bedroom units are designed
so that they can be divided into two separate units to accommodate more
cost-sensitive residents.
Unit Mix and Size
The Company has and continues to conduct extensive consumer market research
in most of its markets. In response to that research, the Company has designed
most of its buildings with a wider range of apartment styles than more
traditional assisted living providers. Many assisted living providers offer
predominately one room studio apartments. While CareMatrix focuses on providing
a high level of health care related to supportive services, our research
suggests that potential residents are reluctant to sacrifice their privacy and
sense of choice. For this
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reason we have designed most of our buildings to offer a mix of studio, one
bedroom and two bedroom apartments. In addition, our studio apartments tend to
be larger than those of most traditional providers. We believe that this
approach will prove to be more effective in marketing, maximizing revenue and
enhancing resident satisfaction.
Company Operations
The Company centralizes many of its financial, administrative and
operational functions at its corporate headquarters. Such centralization allows
facility-based personnel to focus on resident care and ensures that Company-wide
policies and procedures are maintained. Corporate personnel with expertise in
administration, nursing, marketing, food service, social services, financial
management and plant maintenance directly assist and supervise personnel at the
facility level. The Company believes that these corporate resources enable each
facility to provide services to its residents in a more professional and cost
effective manner. The Company is also developing regional offices in certain
cluster market regions to enhance its ability to manage its development and
operational activities.
Facility Staffing. Each of the Company's facilities has an Administrator or
Executive Director responsible for the day-to-day operations of the facility.
The Administrator is supported by the Director of Resident Care, typically a
licensed nurse who oversees the nursing personnel and personal care assistants
and who is directly responsible for the day-to-day care of the residents. Other
key management personnel typically include a Social Services Director, a
Marketing Director, a Food Services Director, an Activities Director and a
Director of Environmental Services. Additionally, those facilities which offer
additional services, such as Alzheimer's care, also include a Director of
Specialty Services and additional management or medical staff as warranted.
The Company has attracted and continues to attract highly dedicated and
experienced personnel. The Company believes that education, training, staff
development and staff recognition enhance the effectiveness of its employees.
The Company provides training in all aspects of facility operations as well as
specialized training for programs offered. The Company also encourages
continuing education and provides a tuition reimbursement plan for its
employees. The Company believes it provides competitive wages and employee
benefits enabling it to attract and maintain qualified personnel. The Company
has developed employee recognition and incentive programs that increase employee
awareness of the importance of providing high quality care and services to
residents.
Financial Management. Corporate personnel oversee cash management, billing
and collection, accounts payable, payroll and all other financial and accounting
functions. The Company monitors and controls operating expenses for each of its
facilities through monthly budgeting, standardized management reporting and
centralized purchasing.
Quality Assurance. The Company's quality assurance program is intended to
achieve and maintain a high degree of resident and family satisfaction with the
care and services it provides. The Company coordinates the implementation of its
quality assurance program at each of its facilities through its corporate
personnel. The Company encourages resident and family participation and seeks
feedback from families and residents through surveys conducted on a regular
basis. In addition, facility inspections are conducted regularly by corporate
staff. These inspections review all aspects of operations, care and services
provided and the overall appearance and cleanliness of the facility.
Marketing. The Company's marketing efforts are implemented on a regional
and local level, all under the supervision of the corporate marketing staff.
This structure provides greater cost effectiveness through cost sharing and
ensures a consistency in the presentation of the Company to the various regional
market places. These efforts are intended to create awareness of the Company and
its services among prospective residents, their families, professional referral
sources and other key decision makers. The corporate marketing office develops
overall strategies to promote the Company and its service offerings throughout
the markets in which the Company is currently operating and has targeted. The
corporate marketing staff conducts regional and local market surveys of age and
income-qualified seniors to help ensure that the Company is meeting the needs
and demands of that marketplace. To further both market awareness of the Company
by prospective residents and to more accurately assess the needs and demands of
seniors, the Company conducts regional focus groups. Corporate personnel develop
the overall marketing strategies for each facility, produce all marketing
materials, maintain marketing databases, oversee direct mailings, place all
media advertising and support facility personnel in the initial development and
continuing implementation of marketing plans and sales for each facility.
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Corporate and local marketing offices commence marketing of each
newly-developed facility nine to 12 months prior to the scheduled facility
opening. Approximately six months prior to each facility opening, a marketing
director and marketing sales person are hired for each facility. They are
responsible for community outreach activities and community relations, the
coordination of referral activities, and providing information to prospective
residents and their families with respect to the Company's facilities and
services, and conducting facility tours.
Facilities
Three basic designs have been developed for the Company's existing and
future facilities: (i) the stand-alone assisted living facility, (ii) the
combined assisted living/supportive independent living facility, and (iii) the
stand-alone Alzheimer's care facility. The unit wings of the combined facilities
are designed in a modular fashion which allows for modification of the size of
the facility in increments of 12 units. This modular design allows for greater
development flexibility and encourages social interaction. Current designs
include facilities ranging in size from 63 to 168 units for stand-alone assisted
living facilities. Combined assisted living/supportive independent living
designs range from 124 to 148 units. The residential wings are accented by a
large living room centrally located and adjacent to elevators on each floor. The
Alzheimer's care facility design is generally smaller than the Company's other
facility designs to accommodate the cognitive limitation and needs of the
residents and closer, more supportive care programs. The design accommodates a
minimum of 32 units which house up to 40 residents and can be expanded to
include as many as 64 units, or 80 residents.
The Company occupies executive offices located in Needham, Massachusetts
under a lease expiring in 2001.
Development and Acquisition
Development Activities. The Company currently plans to develop at least 25
to 30 facilities a year with a total capacity of over 8,000 residents over the
next three years.
The Company's in-house market research and development staff has the
ability to target potential markets, perform the appropriate market studies,
identify zoning issues and determine the appropriate size and configuration of
facilities to develop and/or acquire. With respect to properties that it intends
to develop, the Company will coordinate all aspects of each project, including
obtaining the final permits and approvals, design, construction and capital
budgeting.
Facilities will be developed primarily in conjunction with: (i) related
party entities, (ii) joint ventures in which related parties have some level of
ownership, ranging from minority to majority ownership and (iii) third parties.
It is anticipated that a majority of the facilities developed in the next three
to four years may be for related party entities owned primarily by Abraham D.
Gosman, members of his immediate family and other members of the Company's
senior management. The Company expects that it will only enter into agreements
with entities that it believes have demonstrated the capabilities to obtain the
financing necessary to construct and own the facilities.
Generally, the Company will enter into development agreements whereby
construction financing is obtained by the related or third parties. The Company
expects that risks related to construction and the initial operation of the
facilities it develops will be borne primarily by related or third parties. The
Company expects that it will not enter into management agreements with these
parties until completion of the construction of such facilities or upon
acquisition of completed facilities. These management agreements would generally
be for a 10 year period, with annual fees approximating 5% of net revenues. The
Company also expects to have the option to convert such management agreements
into fair market value leases (which will be a negotiated percentage of total
project costs) for a fifteen-year initial term with two to four five-year fair
market value renewal options. There also may be an option to acquire the
facility at either fair market value or based on a percentage of Consumer Price
Index increases at the end of the initial term or option periods. The Company
expects to exercise the lease option at such time as the facilities reach
profitability. The related party may sell some of the developed facilities to
REITs or other financing sources; however, no such agreements are currently in
place. Any such sale would be subject to any management, lease or purchase terms
already in place.
The Company expects that its development projects for joint ventures and
third parties either will be turnkey projects or will result in either
management contracts or leases.
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The primary milestones in the development process are (i) site selection
and signing of a development contract, (ii) obtaining the permitting and
approvals necessary to commence construction and (iii) completion of
construction. Once a market has been identified, site selection and signing of a
development contract typically take approximately one to three months. Land
permitting generally takes five to 12 months, although it may take as long as
two years, and is typically the most difficult step in the development process
due to the Company's selection of sites in established communities which usually
require site rezoning. Facility construction normally takes 12 months. After a
facility receives a certificate of occupancy, residents usually begin to move in
immediately.
Acquisition Activities. In addition to its development activities, the
Company intends to continue to aggressively pursue acquisitions of existing
facilities, management agreements and/or leases to the extent that they
complement its growth strategy by helping to augment existing cluster markets or
to enter new markets. Such acquisitions will depend on a number of factors,
including the advantages of acquiring a facility versus leasing for its own
benefit, regional or local competition, reputation and quality of the facilities
and contribution of the facility to operating results. All potential
acquisitions are presented to the Company's Board of Directors or its Executive
Committee before authorization is provided for the Company to proceed.
Competition
Providers of assisted living services compete for residents primarily on
the basis of quality of care, reputation, physical appearance of the facilities,
price, services offered, family preferences, physician referrals and location.
Some of the Company's competitors operate on a not-for-profit basis or as
charitable organizations. Some of the Company's competitors are significantly
larger than the Company and have, or may obtain, greater resources than those of
the Company.
The long-term care industry generally is highly competitive, and the
Company expects that the assisted living business in particular will become more
competitive in the future. The Company will be competing with numerous other
companies providing similar long-term care alternatives such as home health
agencies, life care at home, community-based service programs, retirement
communities and convalescent centers. The Company expects that, as assisted
living receives greater attention, competition will grow from new market
entrants, including companies focused primarily on assisted living. Nursing
facilities that provide long-term care services are also a potential source of
competition for the Company.
The Company believes that there is moderate competition for less expensive
segments of the private market and for Medicaid-eligible residents in small
communities. Management's experience indicates that seniors who move into
assisted living facilities frequently choose facilities near their homes,
therefore, the Company's major competitors are other long-term care facilities
within the same geographic area as its facilities.
Government Funding
Assisted living residents or their families generally pay the cost of care
from their own financial resources. Depending on the nature of an individual's
health insurance program or long-term care insurance policy, the individual may
receive reimbursement for costs of care under an alternative care benefit.
Government funding for assisted living has been limited. Some state or local
governments offer housing subsidies for rent or housing-related services for low
income seniors. Others may provide subsidies in the form of additional payment
for those who receive Supplement Security Income (SSI). Medicaid provides
insurance for certain financially or medically needy persons, regardless of age,
and is funded jointly by federal, state and local governments. Medicaid
reimbursement varies from state to state.
In 1981, the Federal government approved a Medicaid waiver program called
Home and Community-Based Care which was designed to permit states to develop
programs specific to the health care and housing needs of the low-income elderly
eligible for nursing home placement (a Medicaid Waiver Program). Under a
Medicaid Waiver Program, states apply to the Health Care Financing
Administration for a waiver to use Medicaid funds to support community-based
options for low-income elderly who need long-term care. These waivers permit
states to reallocate a portion of Medicaid funding for nursing facility care to
other forms of care such as assisted living. In 1994, the federal government
implemented new regulations which empowered states to further expand their
Medicaid Waiver Programs and eliminated restrictions on the amount of Medicaid
funding states could allocate to community-based care, such as assisted living.
A limited number of states currently have such programs operating
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that allow them to pay for assisted living care. Without a Medicaid Waiver
Program, states can only use federal Medicaid funds for long-term care in
nursing facilities.
The Company expects that state Medicaid and Medicare reimbursement programs
will constitute an additional source of future revenues at its skilled nursing
and rehabilitation centers. Medicaid programs typically provide for fixed rate
payment to health care providers. Providers must accept reimbursement from
Medicaid as payment in full for all covered services rendered to Medicaid
patients. Medicare is a federally-funded and administered health insurance
program that provides coverage for a wide range of health care services,
including intensive rehabilitation, skilled nursing and certain related medical
services. With respect to skilled nursing and rehabilitation, Medicare is a
retrospective payment system in which each facility receives an interim payment
during the year, which is later adjusted to reflect actual allowable direct and
indirect costs of services based on the submission of a cost report at the end
of each year. There can be no assurance that either Medicaid or Medicare will
pay rates that recognize all of the Company's costs of providing services to
residents covered by those programs.
Government Regulation
The health care industry is subject to substantial Federal, state and local
regulation. The various layers of governmental regulation affect the Company's
business by controlling its growth, requiring licensure or certification of its
facilities, regulating the use of its facilities and controlling reimbursement
to the Company for services provided. Licensing, certification and other
applicable governmental regulations vary from jurisdiction to jurisdiction and
are revised periodically. It is not possible to predict the content or impact of
future legislation and regulations affecting the health care industry.
Many of the states in which the Company operates have adopted certificate
of need statutes applicable to the assisted living and skilled nursing services
provided by the Company. Such statutes provide generally that, prior to the
addition of new services or the making of certain capital expenditures exceeding
defined levels, a state agency must determine that a need exists for such
proposed activities. Failure to obtain the necessary state approval can result
in the inability to provide the service, operate the facility or complete the
addition or other change, and also can result in the imposition of sanctions or
adverse action in respect of the facility's license and reimbursement. To date,
the Company has generally not experienced any difficulty in obtaining such state
approvals where required.
The ability of the Company to operate profitably will depend in part upon
the Company obtaining and maintaining all necessary licenses, certificates of
need and other approvals and operating in compliance with applicable health care
regulations.
Some residents may require ancillary health services from time to time,
such as skilled nursing, therapy, pharmacy or other health services. In some
states, these services must be provided by persons or entities that are
specifically licensed or certified, as applicable, to provide such health care
services. The Company may from time to time enter into agreements with other
entities to provide ancillary services where it is not itself licensed or
certified to provide them.
In certain states, the Company's assisted living facilities are subject to
certain state regulations and licensing requirements. In order to qualify as a
state licensed facility and therefore eligible to receive Medicaid funding, the
Company's facilities must comply with regulations which address, among other
things, staffing, physical design, required services and resident profile. The
Company expects that it will obtain licenses in states as required. The
Company's residences are also subject to various local building codes and other
ordinances, including fire safety codes. These requirements vary from state to
state and are monitored, to varying degrees, by state agencies.
The laws of many states prohibit physicians from splitting fees with
non-physicians and prohibit non-physician entities from practicing medicine.
These laws vary from state to state and are enforced by the courts and by
regulatory authorities with broad discretion. Although the Company believes its
operations are in compliance with such laws, the Company's business operations
have not been the subject of judicial or regulatory interpretation. There can be
no assurance that review of the Company's business by courts or regulatory
authorities will not result in determinations that could adversely affect the
operations of the Company or that the health care regulatory
8
<PAGE>
environment will not change so as to restrict the Company's existing operations
or their expansion. In addition, the regulatory framework of certain
jurisdictions may limit the Company's expansion into such jurisdictions if the
Company is unable to modify its operational structure to conform with such
regulatory framework.
Federal and state anti-remuneration laws, such as the Medicare/Medicaid
anti-kickback law, govern certain financial arrangements among health care
providers and others who may be in a position to refer or recommend patients to
such providers. These laws prohibit, among other things, certain direct and
indirect payments that are intended to induce the referral of patients to, the
arranging for services by, or the recommending of, a particular provider of
health care items or services. The Medicare/Medicaid anti-kickback law has been
broadly interpreted to apply to certain contractual relationships between health
care providers and sources of patient referral. Similar state laws vary from
state to state, are sometimes vague and seldom have been interpreted by courts
or regulatory agencies. Violation of these laws can result in loss of licensure,
civil and criminal penalties, and exclusion of health care providers or
suppliers from participation in (i.e., furnishing covered items or services to
beneficiaries of) the Medicare and Medicaid programs. Although the Company does
not receive all of its total revenues from certain Medicaid waiver programs and
is otherwise not a Medicare or Medicaid provider or supplier, it is subject to
these laws because (i) the state laws typically apply regardless of whether
Medicare or Medicaid payments are at issue and (ii) as required and under some
state licensure laws, and for the convenience of its residents, some of the
Company's assisted living facilities maintain contracts with certain health care
providers and practitioners, including pharmacies, visiting nurse organizations
and hospices, through which the health care providers made their health care
items or services (some of which may be covered by Medicare or Medicaid)
available to the Company's residents. There can be no assurance that such laws
will be interpreted in a manner consistent with the practices of the Company.
In addition, the Company is subject to various Federal, state and local
environmental laws and regulations. Such laws and regulations often impose
liability whether or not the owner or operator knew of, or was responsible for,
the presence of hazardous or toxic substances. The costs of any required
remediation or removal of these substances could be substantial and the
liability of an owner or operator as to any property is generally not limited
under such laws and regulations and could exceed the property's value and the
aggregate assets of the owner or operator. The presence of these substances or
failure to remediate such contamination properly may also adversely affect the
owner's ability to sell or rent the property, or to borrow using the property as
collateral. Under these laws and regulations, an owner, operator or an entity
that arranges for the disposal of hazardous or toxic substances, such as
asbestos-containing materials, at a disposal site may also be liable for the
costs of any required remediation or removal of the hazardous or toxic
substances at the disposal site. In connection with the ownership or operation
of its properties, the Company could be liable for these costs, as well as
certain other costs, including governmental fines and injuries to persons or
properties.
The Company believes that the structure and composition of government, and
specifically health care, regulations will continue to change and, as a result,
regularly monitors developments in the law. The Company expects to modify its
agreements and operations from time to time as the business and regulatory
environment changes. While the Company believes it will be able to structure all
its agreements and operations in accordance with applicable law, there can be no
assurance that its arrangements will not be successfully challenged.
Insurance
Health care companies are subject to medical malpractice, personal injury
and other liability claims, which are customary risks inherent in the operation
of health facilities and generally covered by insurance. The Company maintains
property, liability and professional malpractice insurance policies in amounts
and with such coverages and deductibles which are deemed appropriate by
management, based upon historical claims, industry standards, and the nature and
risks of its business. The Company provides medical malpractice insurance for
its employee physicians and also requires that non-employee physicians
practicing at its facilities carry medical malpractice insurance to cover their
respective individual professional liabilities. The Company currently maintains
professional liability insurance and general liability insurance. The general
liability insurance is limited to $1.0 million per occurrence and $3.0 million
in the aggregate. The Company also has an umbrella excess liability protection
policy in the total amount of $20.0 million. There can be no assurance that a
future claim will not exceed available insurance coverages or that such
coverages will continue to be available for the same scope at reasonable premium
rates. Any substantial increase in the cost of such insurance or the
unavailability of any such coverages could have an adverse effect on the
Company's business.
9
<PAGE>
Employees
As of December 31, 1997, the Company had approximately 1,300 full-time
employees. In addition, administrators of certain managed facilities, while not
employees of the Company, are under the supervision of the Company. None of the
Company's employees is represented by a union. The Company considers its
employee relations to be good. Although the Company believes it is able to
employ sufficient skilled personnel to staff the facilities it operates or
manages, a shortage of skilled personnel in any of the geographic areas in which
it operates could adversely affect the Company's ability to recruit and retain
qualified employees and its operating expenses.
10
<PAGE>
ITEM 2. PROPERTIES
The following table sets forth certain information regarding facilities
owned, leased or managed by the Company at December 31, 1997:
<TABLE>
<CAPTION>
Owned/leased Resident
Facility Location Care level Capacity
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OWNED/LEASED
Connecticut
Westfield Court (2) Stamford Independent Living 165
Florida
Bailey Village (3) Gainesville Assisted Living 72
Brazilian Court (2) Palm Beach Senior Residential 101
Forest Trace at Inverrary (2) Lauderhill Assisted Living/ 324
Independent Living
Maryland
Annapolitan Care Center (2) Annapolis Assisted Living 84
Silver Spring (2) Silver Spring Skilled Nursing 138
Massachusetts
Avery Crossing (2) Needham Assisted Living/ 60
Independent Living
Avery Manor (2) Needham Skilled Nursing 142
CareMatrix of Dedham (2) Dedham Skilled Nursing/ 142
Alzheimer's Care
New Hampshire
Sunny Knoll Franklin Alzheimer's Care 32
North Carolina
Piedmont Village at Newton (2) Newton Assisted Living 39
Piedmont Village at Statesville (2) Statesville Assisted Living 75
Piedmont Village at Yadkinville (2) Yadkinville Assisted Living 50
Virginia
Dominion Village at Chesapeake (2) Chesapeake Assisted Living 54
Dominion Village at Poquoson (2) Poquoson Assisted Living 48
Dominion Village at Williamsburg (2) Williamsburg Assisted Living 58
-------------
1584
-------------
MANAGED (1)
Connecticut
The Cragganmore Southington Assisted Living/ 96
Alzheimer's Care
Stonybrook (4) Darien Assisted Living/ 86
Independent Living
Ridgefield (4) Ridgefield Skilled Nursing 120
Florida
Franco Miami Skilled Nursing 120
Massachusetts
Standish Village of Lower Mills (5) Boston Assisted Living/ 92
Alzheimer's Care
New Jersey
Chancellor Park at The Windrows (4) Princeton Assisted Living 83
Forrestal Skilled Nursing (4) Princeton Skilled Nursing 180
New York
Mayfair at Glen Cove (4) Glen Cove Senior Residential 80
Cambridge House on the Hudson (4) Ossining Senior Residential 121
-------------
978
-------------
2562
-------------
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
(1) Management contracts typically have a term of between 5 and 10 years.
(2) Operating lease.
(3) 100% owned by the Company, subject to mortgages securing debt in the
aggregate amount of $1.1 million.
(4) Managed for a related party.
(5) The Company holds a 30% interest in the corporate general partner, which
owns a 1% interest in the owner partnership.
In addition, the Company occupies executive offices located in Needham,
Massachusetts under a lease expiring in 2001.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to litigation in the ordinary course of business.
The Company does not believe that any such litigation will have a material
adverse effect on its business, financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
None.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY
HOLDER MATTERS
The Company's shares are traded on the American Stock Exchange under the
symbol CMD. The following table sets forth for the periods shown here the high
and low sales price for the shares. All prices have been adjusted to reflect the
one-for-five reverse split of the Company's common stock (see Note 1 of Notes to
Financial Statements).
<TABLE>
<CAPTION>
1997 1996
------------------- ------------- ------------- -------------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Quarter High Low Quarter High Low
------- ---- --- ------- ---- ---
First $19.375 $13.250 First $22.188 $14.375
Second $25.000 $16.125 Second $29.375 $10.625
Third $25.875 $20.250 Third $26.875 $17.500
Fourth $30.000 $25.000 Fourth $21.875 $11.625
</TABLE>
As of March 19, 1998, there were outstanding 17,528,882 shares of common
stock held by 104 holders of record. Included in the number of shareholders of
record are shares held in "nominee" or "street" name.
Dividends. The Company has not declared or paid any cash dividends on its
Common Stock since its inception and does not currently plan to declare or pay
any cash dividends on its Common Stock in the foreseeable future. Dividends may
be paid only out of legally available funds as proscribed by statute, subject to
the discretion of the Company's Board of Directors. In addition, the Company's
ability to pay cash dividends is restricted by the provisions of its Restated
Certificate of Incorporation pertaining to the Series A Preferred Stock. In that
regard, no dividends may be paid on any shares of Common Stock unless all
accumulated and unpaid dividends on the Series A Preferred Stock have been
declared and paid in full.
On August 18, 1997, the Company completed the private offering of
$100,000,000 aggregate principal amount of 6 1/4% Convertible Subordinated Notes
due 2004 (the "Notes"). The aggregate discounts and commissions related to the
Notes equaled $2,750,000. On October 1, 1997, the over-allotment with respect to
the Notes was completed whereby $15,000,000 aggregate principal amount of Notes
was issued. The aggregate discounts and commissions with respect to the
over-allotment option was $412,500. The initial purchasers of the Notes were
Robertson, Stephens & Company LLC, Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated, Salomon Brothers Inc. and Smith Barney Inc.
(collectively, the "Initial Purchasers"). The Notes were offered only (i) inside
the United States to "Qualified Institutional Buyers" (as defined in Rule 144A
under the Securities Act of 1933, as amended (the "Act")) in compliance with
Rule 144A of the Act, (ii) inside the United States to a limited number of other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Act) in reliance on Regulation D of the
12
<PAGE>
Act, and (iii) outside the United States to persons other than U.S. persons in
reliance on Regulation S of the Act. The Notes are convertible into shares of
the Company's common stock at a conversion price of $28.875 per share.
In connection with the exercise of warrants issued by the Company, the
following parties were issued shares of the Company's Common Stock pursuant to
an exemption from registration under Section 4(2) of the Act: (i) J. Edmund and
Company exercised a warrant on December 19, 1997 with respect to 8,060 shares of
Common Stock at an exercise price of $18.90 per share and (ii) Roger O. Peterkin
exercised a warrant on December 30, 1997 with respect to 4,000 shares of Common
Stock at an exercise price of $18.90 per share.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------------------------------
June 24, 1994
(inception) to
1997 1996 1995 December 31, 1994
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue......................... $ 73,193,088 $ 12,907,445 $ 2,484,857 $ 366,214
Net earning (loss)........................ $ 6,576,387 $ (6,645,614) $(7,206,243) $(2,555,352)
Diluted earning (loss) per common
share..................................... $ 0.38 $ (0.59) $ (0.72) $ (0.26)
BALANCE SHEET DATA:
Total assets.............................. $282,048,480 $108,065,144 $ 2,409,844 $ 330,323
Long-term obligations..................... $117,211,412(2) $ 10,109,037 $10,312,197 $ 2,729,791
Redeemable preferred stock................ $ 233,000 $ 250,000 $ -- $ --
Total stockholders' equity (deficit)..... $ 99,161,300 $ 88,035,557(1) $(9,761,595) $(2,555,352)
Cash dividend declared per
common share............................ $ -- $ -- $ -- $ --
</TABLE>
(1) In October 1996, the Company completed a secondary public offering of its
common stock. The Company sold 6,250,000 shares of Common Stock at $15 per
share, which resulted in net proceeds to the Company of approximately
$87,254,000.
(2) In August and October 1997, the Company issued a total of $115,000,000 of
6-1/4% Convertible Subordinated Notes.
Prior to the Merger (described below), the Company consisted of a
combination of business entities which were operated since their date of
inception (June 24, 1994) under common control by Abraham D. Gosman ("Mr.
Gosman"), who, together with his sons, Andrew D. Gosman and Michael M. Gosman,
owns a controlling interest in the Company, directly or through family limited
partnerships.
On October 4, 1996, twelve wholly-owned subsidiaries of The Standish Care
Company, Inc. ("Standish") were merged into the business entities controlled by
Mr. Gosman with the stockholders of the Company receiving approximately 92%
(10,000,000 shares) of Standish common stock (the "Merger"). Following the
Merger, Standish changed its name to CareMatrix Corporation. The Merger was
accounted for as a reverse acquisition, whereby the Company was treated as the
acquirer for accounting purposes. Accordingly, the financial history presented
is that of the Company prior to the Merger. In conjunction with the Merger, the
Company effected a one-for-five reverse stock split (the "Split") of the
Company's common stock. Accordingly, all common stock data presented herein,
including the retroactive restatement of the Company's historical
capitalization, has been adjusted to reflect this transaction and the Merger.
THE SELECTED FINANCIAL DATA SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OPERATIONS
On October 4, 1996, twelve wholly-owned subsidiaries of the Company
consummated a Merger with the CareMatrix Affiliates. In the Merger, the Company
acquired all of the assets and operations of the CareMatrix Affiliates and
issued 10,000,000 shares of its Common Stock (as adjusted to give effect to the
Split) to the stockholders of the CareMatrix Affiliates. The Merger was treated
as a "reverse acquisition" for accounting purposes, with the CareMatrix
Affiliates treated as the accounting acquiror, even though the Company was the
surviving parent corporation for legal purposes. In a reverse acquisition, the
accounting acquiror is treated as the surviving entity, even though the
Company's legal existence does not change, and the financial statements of the
Company reflect the historical financial statements of the CareMatrix
Affiliates. The Company, as the accounting acquiror, treats the Merger as a
purchase acquisition. The Merger was recorded using the historical cost basis
for the assets and liabilities of the CareMatrix Affiliates, and the estimated
fair value of the Company's assets and liabilities.
Overview
The Company is a leading provider of assisted living services to the
elderly. At December 31, 1997, the Company operated 25 facilities in nine states
with a capacity of 2,562 residents, including 16 facilities owned or leased by
the Company or in which is has ownership interests and nine facilities managed
for related or third parties. The Company provides assistance with the
activities of daily living and other personalized support services in a
residential setting for elderly residents who may not be able to live
independently but who do not need the level of medical care provided in a
skilled nursing facility. The Company also provides additional specialized care
and services to residents with certain low acuity medical needs and residents
with Alzheimer's disease or other forms of dementia. By offering this full range
of services, the Company is able to accommodate the changing needs of residents
as they age within a facility and develop further physical or cognitive
frailties.
The Company derives its revenues from three primary sources: (i) resident
fees for the delivery of independent and assisted living and other long-term
care services; (ii) management services income for management of facilities; and
(iii) fee income from the development and construction of facilities. Resident
fees typically are paid monthly by residents, their families or other
responsible parties. Resident fees and management fees are recognized as
revenues when services are provided. Development fee revenue is recognized on
the percentage of completion basis.
The Company classifies its operating expenses into the following
categories: (i) facility operating; (ii) facility lease expense; (iii) general
and administrative expenses, which primarily include headquarters and regional
staff expenses and other overhead costs; and (iv) depreciation and amortization.
In anticipation of its growth plans, the Company made significant investments in
its infrastructure in 1997 and 1996 through the addition of headquarters and
regional staff.
The following discussion, as well as other portions of this document,
includes certain statements which are or may be construed as forward looking
about the Company's business, sales and expenses, and operating and capital
requirements. Any such statements are subject to risks that could cause the
actual results or requirements to vary materially. All cross references to
"Notes" refer to the Notes to the Company's Financial Statements, included as a
part of this Annual Report on Form 10-K.
THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED
DECEMBER 31, 1996
REVENUES. Net revenues for 1997 increased by $60.3 million compared to
1996. The increase is due to increases of $39.8 million in resident operations
revenue, $15.4 million in development fee income and $5.1 million in management
fees.
Resident operations revenue increased $39.8 million primarily due to $24.2
million earned from facilities leased less than one year, $9.2 million earned
from one facility which is contributing a full year of revenue in 1997 compared
to three months in 1996, and $5.2 million from former Standish properties which
are contributing a full year in 1997 compared to three months in 1996.
Comparable facility revenue increased $1.2 million.
14
<PAGE>
THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED
DECEMBER 31, 1996 (continued)
Development fee income was $17.6 million in 1997 versus $2.2 million in
1996. The increase is primarily due to the higher number of projects in
development in 1997 compared to the number of projects in 1996. The Company
began its development operations in the fourth quarter of 1996.
Management fee revenue for 1997 increased by $5.1 million compared to 1996.
This increase is due to $3.1 million in fees earned for marketing and preopening
services related to development projects and $2.1 million earned from new
contracts partially offset by a decrease of $51,000 in fees as a result of three
properties changing from management contracts to leases.
FACILITY EXPENSES. Facility expenses increased by $36.8 million in 1997
compared to 1996. The increase in facility expenses is comprised of an increase
in lease expenses of $7.0 million and an increase in operating expenses of $29.8
million.
Facility operating expenses were $38.4 million in 1997 compared to $8.6
million in 1996, an increase of $29.8 million. The increase is primarily due to
$17.6 million of expenses from facilities leased less than one year, and $11.4
million from four facilities which were open for an entire year compared to
three months in 1996. Comparable facility operating expenses increased $553,000.
Facility lease expense was $8.5 million in 1997 compared to $1.5 million in
1996, an increase of $7.0 million. The increase is primarily due to $3.1 million
of expenses from facilities leased less than one year, $1.3 million from two
facilities which have a full year of lease expense compared to three months in
1996, $2.4 million from two facility leases entered into in January 1997, and
$200,000 from a former Standish property which was converted from a capital
lease to an operating lease in August 1997.
GENERAL AND ADMINISTRATIVE. General and administrative expenses in 1997
increased to $15.0 million from $8.3 million in 1996. As a percentage of
operating revenue, general and administrative expenses in 1997 declined to 20.5%
from 64.1% in 1996. The increase in expense is primarily due to an increase in
salary and benefits of $4.4 million for the hiring of additional corporate staff
in anticipation of the Company's growth, $800,000 for travel related expenses,
and $322,000 for advertising expenses.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization in 1997
increased by $1.7 million compared to 1996. The increase is primarily due to
$1.1 million of amortization of goodwill incurred as a result of the Merger,
$369,000 of amortization of lease acquisition costs, $144,000 of depreciation of
assets acquired from Standish, and $133,000 of depreciation of assets from
facilities leased less than one year.
INTEREST INCOME. Interest income increased by $4.8 million compared to
1996. The increase is primarily due to interest earned as a result of investing
cash balances for a full year from the secondary offering (see Note 10) and from
the net proceeds received in 1997 from the issuance of $115 million of
convertible debt (see Note 8).
INTEREST EXPENSE. Interest expense increased by $2.2 million compared to
1996. The increase is primarily due to interest expense of $2.6 million on the
convertible notes issued in 1997 (see Note 8) offset by a decrease of $875,000
in interest expense due to the Company's principal stockholder.
THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE
YEAR ENDED DECEMBER 31, 1995
The following discussion reviews the Company's results of operation for the
years ended December 31, 1996 and December 31, 1995. The CareMatrix Financial
Statements and the Notes thereto present the results of operations of the
entities that had been operated under common control on a combined basis prior
to the Merger.
15
<PAGE>
THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE
YEAR ENDED DECEMBER 31, 1995 (continued)
REVENUES. Net revenues for 1996 increased by $10.4 million compared to
1995. The increase is due to increases of $7.3 million in resident operations
revenue, $2.2 million in development fee income, and $900,000 in management
fees.
Resident operations revenue increased $7.3 million primarily due to an
incremental $6.9 million earned from one facility which is contributing a full
year of revenue in 1996, compared to five months in 1995, and from a facility
the Company began leasing in October 1996, and $1.6 million from Standish
properties which were included in the Company's results of operations after the
Merger in October 1996, offset by a decrease of $1.0 million from the closing of
the Company's outpatient rehabilitation facility in Atlanta, Georgia.
Development fee income was $2.2 million in 1996 as compared with $0 in 1995
as the Company did not begin development activity until after the Merger.
Management fee revenue for 1996 increased $900,000. This increase was due
to the recognition of fees in 1996 on two new third party management properties
in Florida which contributed $415,000 compared to $0 in the prior year, three
new related party management contracts entered into during 1996 and four
Standish management contracts which were included in the Company's results of
operations after the Merger in October 1996.
FACILITY EXPENSES. Facility expenses increased by $6.2 million compared to
1995. The $6.2 million increase consists of $7.1 million from the operation of
one facility for an entire year plus expenses from the Company's newly leased
facility and $1.2 million from former Standish properties which were included in
the Company's results of operations after the Merger in October 1996, offset by
a decrease of $2.2 million from the closing of the Company's outpatient
rehabilitation facility in Atlanta, Georgia.
GENERAL AND ADMINISTRATIVE. General and administrative expenses in 1996
increased to $8.2 million from $4.3 million in 1995. As a percentage of
operating revenue, general and administrative expenses in 1996 declined to 64%
from 175% in 1995. The increase in expense is primarily due to an increase in
salary and benefits expenses relating to the hiring of additional corporate
staff in anticipation of the Company's growth plans.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization in 1996
increased by $570,000 compared to 1995. The $570,000 increase is primarily due
to $250,000 of amortization of goodwill incurred as a result of the Merger,
$151,000 for a full year of depreciation and amortization on the Company's
leased facility and $104,000 for assets acquired from Standish.
INTEREST INCOME. The Company's interest income was $576,000 for 1996. No
interest income was recorded for 1995. The 1996 interest income was primarily
due to $507,000 earned as a result of investing the cash balances from the
proceeds of the secondary offering during the period of October 28, 1996 through
December 31, 1996.
INTEREST EXPENSE. Interest expense for 1996 increased to $1.1 million from
$544,000 in 1995. The $594,000 increase was primarily due to interest expense of
$430,000 to the Company's then principal stockholder and $190,000 of interest
expense of Standish. These increases were partially offset by a decrease of
$116,000 in interest expense for the closing of the Company's outpatient
rehabilitation facility.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at December 31, 1997 were $152.6 million compared
to $58.0 million at December 31, 1996, an increase of approximately $94.7
million. This increase is primarily due to the net proceeds received from the
Company's 1997 private offering of 6 1/4% Convertible Subordinated Notes
partially offset by costs incurred related to acquired leases, additions to
fixed assets, and increases in accounts receivable.
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (continued)
Cash used by operations was $2.3 million in 1997 compared to a $10.2
million in 1996. The decrease in the use of cash is primarily due to increased
earnings partially offset by increases in accounts receivable due to the leasing
of new facilities and an increase in development fees receivable.
Cash used in investing activities was $12.2 million in 1997 compared to
$5.5 million in 1996. The increase in cash used is due primarily to costs
associated with acquiring lease rights to new facilities and $1.9 million for
capital expenditures, primarily for renovations to existing facilities and the
upgrade of the Company's information systems.
Cash flow provided by financing activities was $109.2 million in 1997
compared to $73.5 million in 1996. This increase in cash provided is due
primarily to the net proceeds received from the convertible debt offering,
partially offset by $2.8 million of debt repayments.
The Company has made an initial review of issues related to the Year 2000
and does not expect that it will have a material impact on the Company's
business, operations, or financial condition. However, the Company could be
adversely impacted by the Year 2000 issue if its key suppliers and other third
parties do not address the issue successfully. The Company is addressing these
risks in order to reduce the impact on the Company.
The Company will require resources in the future to fund the planned
acquisition and development of additional assisted living, independent and
supportive independent and extended care facilities as well as its working
capital requirements. The Company expects to partially fund these resource
requirements with its cash on hand as well as related party or third-party
financing of facilities to be developed. Furthermore, the Company intends to
seek bank borrowings and other debt or equity financings to provide additional
sources of capital in the future.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are included under Part IV,
Item 14 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this Item will be contained in the Company's
Proxy Statement, which the Company intends to file within 120 days following the
end of the Company's year ended December 31, 1997 and such information is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by this Item will be contained in the Company's
Proxy Statement, which the Company intends to file within 120 days following the
end of the Company's year ended December 31, 1997 and such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this Item will be contained in the Company's
Proxy Statement, which the Company intends to file within 120 days following the
end of the Company's year ended December 31, 1997 and such information is
incorporated herein by reference.
17
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item will contained in the Company's
Proxy Statement, which the Company intends to file within 120 days following the
end of the Company's year ended December 31, 1997 and such information is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Applicable Schedules Thereto
Report of Independent Accountants....................................... F-1
Balance Sheets as of December 31, 1997 and 1996......................... F-2
Statements of Operations for the years ended
December 31, 1997, 1996 and 1995.................................... F-3
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995.................................... F-4
Statement of Changes in Stockholders' Equity (Deficit)
ended December 31, 1997, 1996 and 1995.............................. F-5
Notes to Consolidated Financial Statements.............................. F-6
Financial Statement Schedules...........................................F-16
Schedule II - Valuation and Qualifying Accounts
All other schedules omitted are not required, inapplicable or the
information required is furnished in the financial statements or notes therein.
(b) Reports on Form 8-K: None
(c) Exhibits: See Exhibit List immediately following the signature pages hereto
for a list of the exhibits filed with this Annual Report on Form 10-K.
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
CareMatrix Corporation:
We have audited the financial statements and the financial statement schedule of
CareMatrix Corporation listed in Item 14(a) of this Form 10-K. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CareMatrix
Corporation as of December 31, 1997 and 1996, and the consolidated results of
its operations and its cash flows for the year ended December 31, 1997 and 1996,
and the combined results of its operations and its cash flows for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
In addition, in our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects, the information required to be
included therein.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 6, 1998
F-1
<PAGE>
CAREMATRIX CORPORATION
CONSOLIDATED BALANCE SHEETS
as of December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
- ------ ------------------ ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 152,619,435 $ 57,966,360
Restricted cash 3,102,468 836,745
Receivables:
Accounts receivable, net of allowance for doubtful accounts of
$1,105,432 and $1,067,092 at December 31, 1997
and 1996, respectively 12,461,704 3,959,233
Accounts receivable -- related party 9,096,479 938,910
Other receivables 730,584 309,613
Prepaid expenses and other current assets 3,488,592 1,772,995
Assets held for sale -- 576,573
-------------- ------------
Total current assets 181,499,262 66,360,429
Lease acquisition costs, net 4,240,733 4,553,332
Property and equipment, net 4,650,823 9,503,011
Due from stockholder 2,622,383 356,740
Other long-term assets, net 17,262,630 1,329,974
Goodwill, net of accumulated amortization of $1,319,277 and $249,978 at
December 31, 1997 and 1996, respectively 21,772,649 25,961,658
-------------- ------------
Total assets $ 232,048,480 $108,065,144
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,000,000 $ 2,776,522
Accounts payable 3,819,719 1,346,140
Accrued compensation 1,103,308 693,120
Accrued liabilities 7,925,147 4,565,503
Other current liabilities 827,594 539,265
-------------- ------------
Total current liabilities 15,675,768 9,920,550
Long-term debt -- 8,903,156
Convertible subordinated notes 115,000,000 --
Other long-term liabilities 2,211,412 1,152,960
Minority interest -- 52,921
Commitments and contingencies
Stockholders' equity:
Preferred stock, stated at liquidation value of $10.00 per share, 23,300
and 25,000 shares issued and outstanding at December 31, 1997 and
1996, respectively 233,000 250,000
Common stock, par value $.05, authorized 75,000,000 shares,
17,261,893 and 17,111,649 shares issued and outstanding
at December 31, 1997 and 1996, respectively 863,095 855,582
Additional paid-in capital 107,896,027 103,337,184
Accumulated deficit (9,830,822) (16,407,209)
-------------- ------------
Total stockholders' equity 99,161,300 88,035,557
-------------- ------------
Total liabilities and stockholders' equity $ 232,048,480 $108,065,144
============== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
CAREMATRIX CORPORATION
STATEMENTS OF OPERATIONS
for the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Consolidated Combined
----------------------------------------- -----------------
Year Ended Year Ended Year Ended
December 31, 1997 December 31, 1996 December 31, 1995
------------------ ----------------- -----------------
<S> <C> <C> <C>
Revenue:
Resident operations $ 50,784,960 $ 10,419,567 $ 2,484,857
Resident operations -- related party 4,771,799 263,293 --
Development fee income 5,790,795 1,548,968 --
Development fee income -- related party 11,845,534 675,617 --
------------------- ----------------- ------------------
Total revenue 73,193,088 12,907,445 2,484,857
------------------- ----------------- ------------------
Expenses:
Facility operating expenses 38,385,616 8,556,340 3,268,369
Facility lease expense 4,501,279 1,230,902 645,702
Facility lease expense -- related party 4,013,918 291,677 --
Provision for asset write-down and
closure costs -- -- 894,872
General and administrative 15,003,514 3,167,252 --
General and administrative -- related party -- 5,105,845 4,335,655
Depreciation and amortization 2,315,189 573,091 2,931
------------------- ----------------- ------------------
Total expenses 64,219,516 18,925,107 9,147,529
------------------- ----------------- ------------------
Earnings (loss) from operations 8,973,572 (6,017,662) (6,662,672)
Other income (expense):
Interest income 5,421,078 576,244 --
Interest expense (3,357,716) (263,098) --
Interest expense -- related party -- (874,876) (543,571)
------------------- ----------------- ------------------
Total other expense 2,063,362 (561,730) (543,571)
------------------- ----------------- ------------------
Earnings (loss) before income taxes and
preferred dividends 11,036,934 (6,579,392) (7,206,243)
Income taxes 4,436,847 -- --
------------------- ----------------- ------------------
Earnings (loss) before preferred dividends 6,600,087 (6,579,392) (7,206,243)
Preferred dividends 23,700 66,222 --
------------------- ----------------- ------------------
Net earnings (loss) $ 6,576,387 $(6,645,614) $(7,206,243)
=================== ================= ==================
Basic shares outstanding 17,144,338 11,271,169 10,000,000
=================== ================= ==================
Basic earnings (loss) per share $ 0.38 $ (0.59) $ (0.72)
=================== ================= ==================
Diluted shares outstanding 17,536,173 11,271,169 10,000,000
=================== ================= ==================
Diluted earnings (loss) per common share $ 0.38 $ (0.59) $ (0.72)
=================== ================= ==================
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-3
<PAGE>
CAREMATRIX CORPORATION
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Consolidated Combined
---------------------------------------- -----------------
Year Ended Year Ended Year Ended
December 31, 1997 December 31, 1996 December 31, 1995
------------------ ----------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 6,576,387 $ (6,645,614) $ (7,206,243)
Noncash items included in net earnings (loss):
Issuance of stock to employees -- 1,200,000 --
Minority interest in net losses -- (12,151) --
Depreciation of fixed assets 644,237 247,301 2,931
Amortization of intangible assets 1,670,952 325,790 --
Accretion of deferred rent liability 48,336 10,240 --
Accretion of bargain purchase option 228,769 82,136 --
Provision for write-down of assets and
closure costs -- -- 894,872
Increase in accounts receivable (16,514,572) (3,912,003) (509,252)
Increase (decrease) in current liabilities 4,714,040 (165,196) 1,467,225
Other 328,630 (1,335,596) (697,397)
------------------ ----------------- -----------------
Net cash used by operating activities (2,303,221) (10,205,093) (6,047,864)
------------------ ----------------- -----------------
Cash flows from investing activities:
Additions to property and equipment (1,948,169) (1,549,592) (740,871)
Increase in assets held for sale (781,237) (288,583) --
(Increase)/decrease in other long-term assets (4,207,219) 107,125 --
Increase in current and long-term notes receivable (1,575,996) (1,057,813) --
Increase in restricted cash (1,623,374) (97,251) --
Increase in lease acquisition costs (2,087,568) (2,800,000) --
Cash acquired in merger -- 212,907 --
------------------ ----------------- -----------------
Net cash used by investing activities (12,223,563) (5,473,207) (740,871)
------------------ ----------------- -----------------
Cash flows from financing activities:
Advances of funds from stockholder -- 9,613,923 6,931,590
Redemption of preferred stock -- (1,400,000) --
Gross proceeds from secondary offering -- 93,750,000 --
Secondary offering expenses -- (6,496,234) --
Exercise of stock options and warrants, net 2,032,282 138,000 --
Repayments to stockholder (1,468,756) (21,700,000) --
Proceeds from issuance of convertible
subordinated notes, net 111,448,423 -- --
Repayment of debt (2,832,090) (405,672) --
------------------ ----------------- -----------------
Net cash provided by financing activities 109,179,859 73,500,017 6,931,590
------------------ ----------------- -----------------
Increase in cash and cash equivalents 94,653,075 57,821,717 142,855
Cash and cash equivalents, beginning of period 57,966,360 144,643 1,788
------------------ ----------------- -----------------
Cash and cash equivalents, end of period $ 152,619,435 $ 57,966,360 $ 144,643
================== ================= =================
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-4
<PAGE>
CAREMATRIX CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
for the years ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Preferred Stock
-----------------------------------------------
Common Stock Series A Series B
----------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1994 10,000,000 $ 500,000 -- $ -- -- $ --
Net loss
----------- --------- --------- --------- ------- -----------
Balance - December 31, 1995 10,000,000 500,000 -- -- -- --
Standish shares acquired upon merger 740,747 37,037 27,000 270,000 100 1,400,000
Shares issued upon secondary offering, net 6,250,000 312,500
Shares issued in connection with merger 107,408 5,370
Cost of stock issued to employees
Redemption of preferred stock (100) (1,400,000)
Conversion of preferred stock 1,494 75 (2,000) (20,000)
Exercise of stock options 12,000 600
Net loss
----------- --------- --------- --------- ------- -----------
Balance - December 31, 1996 17,111,649 855,582 25,000 250,000 -- --
Conversion of preferred stock 1,489 74 (1,700) (17,000)
Exercise of stock options 149,569 7,478
Income tax effect of stock option exercises
Repurchase of shares (12,874) (644)
Exercise of warrants 12,060 605
Change in measurement date of employee stock options
Issuance of warrants
Net earnings -- -- -- -- -- --
----------- --------- --------- --------- ------- -----------
Balance - December 31, 1997 17,261,893 $ 863,095 23,300 $ 233,000 -- $ --
=========== ========= ========= ========= ======= ===========
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-in Accumulated
Capital Deficit Total
------------- ------------------ --------------
<S> <C> <C> <C>
Balance - December 31, 1994 $ (500,000) $ (2,555,352) $(2,555,352)
Net loss (7,206,243) (7,206,243)
------------- --------------- -----------
Balance - December 31, 1995 (500,000) (9,761,595) (9,761,595)
Standish shares acquired upon merger 15,543,963 17,251,000
Share issued upon secondary offering, net 86,941,266 87,253,766
Shares issued in connection with merger (5,370) --
Cost of stock issued to employees 1,200,000 1,200,000
Redemption of preferred stock (1,400,000)
Conversion of preferred stock 19,925 --
Exercise of stock options 137,400 138,000
Net loss (6,645,614) (6,645,614)
------------- --------------- ------------
Balance - December 31, 1996 103,337,184 (16,407,209) 88,035,557
Conversion of preferred stock 16,926 --
Exercise of stock options 1,797,736 1,805,214
Income tax effect of stock option exercises 717,248 717,248
Repurchase of shares (644)
Exercise of warrants 227,111 227,716
Change in measurement date of employee stock options 1,154,750 1,154,750
Issuance of warrants 645,072 645,072
Net earnings 6,576,387 6,576,387
------------- --------------- -------------
Balance - December 31, 1997 $ 107,896,027 $ (9,830,822) $99,161,300
============= =============== =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-5
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS, ORGANIZATION AND PRESENTATION:
CareMatrix Corporation ("CareMatrix" or the "Company") develops, manages
and operates assisted living and various other health care facilities.
Prior to the Merger (described below), the Company consisted of a
combination of business entities which were operated since their date of
inception (June 24, 1994) under common control by Abraham D. Gosman ("Mr.
Gosman"), who, together with his sons, Andrew D. Gosman and Michael M. Gosman,
owns a controlling interest in the Company, directly or through family limited
partnerships.
On October 4, 1996, twelve wholly-owned subsidiaries of The Standish Care
Company, Inc. ("Standish") were merged into the business entities controlled by
Mr. Gosman with the stockholders of the Company receiving approximately 92%
(10,000,000 shares) of Standish common stock (the "Merger"). Following the
Merger, Standish changed its name to CareMatrix Corporation. The Merger was
accounted for as a reverse acquisition, whereby the Company was treated as the
acquirer for accounting purposes. Accordingly, the financial history presented
is that of the Company prior to the Merger. In conjunction with the Merger, the
Company effected a one-for-five reverse stock split (the "Split") of the
Company's common stock. Accordingly, all common stock data presented herein,
including the retroactive restatement of the Company's historical
capitalization, has been adjusted to reflect this transaction and the Merger.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ESTIMATES USED IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Estimates
are used when accounting for the collectibility of receivables and third party
settlements, depreciation and amortization, recognition of revenue on
development contracts, and contingencies.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid instruments with
maturities at the time of purchase of three months or less and whose cost
approximates market value due.
RESTRICTED CASH
Restricted cash is comprised primarily of security deposits received from
residents at the independent and assisted living facilities.
REVENUE
Revenue from resident operations consists primarily of resident fees from
the assisted living and other health care facilities. Resident fees are paid by
residents for housing, health care and related services and are recognized in
the period in which the Company provides the services. Revenue under certain
third-party payor agreements is subject to audit and retroactive adjustments.
Provisions for estimated third-party payor settlements and adjustments are
estimated in the period the related services are rendered and adjusted in future
periods as final settlements are determined.
F-6
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
Management fee revenues are included in resident operations and are
recognized in the period in which the Company provides services. The Company
normally receives fees based on a percentage of net revenues of the facilities
managed (generally approximating 5%), and in some cases receives fixed fees over
certain terms. On one related party arrangement, the Company is contractually
responsible for all revenues and expenses and therefore includes these amounts
in their results.
Development fee revenues are recognized on the percentage of completion
basis. The Company enters into development agreements with both related and
unrelated parties and the time required for fulfillment of obligations under
these agreements normally exceeds one year. Included in development fee income
is $3.1 million in 1997 and $525,000 in 1996 from development fees earned per
the terms of certain development agreements for work related to a 1996 contract.
THIRD-PARTY REIMBURSEMENT
For the years ended December 31, 1997, 1996 and 1995, approximately 25%,
59%, and 46%, respectively, of the Company's operating revenue was derived
primarily from the participation of the Company's nursing homes in Medicare and
Medicaid programs. Medicare compensates the Company on a "cost reimbursement"
basis. Medicaid compensates the Company for nursing services, patient care and
administrative and routine services based on interim payments and re-indexed
rate payments (final settlements) subject to ceilings. In addition to extensive
existing governmental health care regulation, there are numerous initiatives at
the federal and state levels for comprehensive reforms affecting the payment for
and availability of health care services. Legislative changes to federal or
state reimbursement systems could adversely and retroactively affect recorded
revenues.
PROPERTY AND EQUIPMENT
Additions are recorded at cost and depreciation is recorded principally by
use of the straight-line method for buildings, improvements and equipment over
their useful lives or, in the case of leasehold improvements, over the life of
the lease, if shorter. Maintenance and repairs are charged to expense as
incurred. Major renewals or improvements are capitalized.
GOODWILL
Goodwill represents the excess of the acquisition cost over the fair market
value of net assets acquired in purchase transactions and is being amortized
over 25 years from the date of acquisition.
INCOME TAXES
Prior to the Merger, the entities comprising the Company were S
Corporations or partnerships; accordingly, liabilities for income taxes were the
responsibility of the respective owners or partners. Provisions for income taxes
and deferred tax assets and liabilities entities have not been reflected for the
periods prior to the Merger as there was no taxable income on a combined basis.
LONG-LIVED ASSETS
The Company periodically assesses the recoverability of long-lived assets,
including property and equipment and intangibles, when there are indications of
potential impairment, based on estimates of undiscounted future cash flows. The
amount of impairment is calculated by comparing anticipated discounted future
cash flows with the carrying value of the related assets. In performing this
analysis, management considers such factors as current results, trends and
future prospects, in addition to other economic factors.
EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per common share is calculated based on net earnings
(loss) divided by the weighted average number of common shares outstanding
during the year. Diluted earnings (loss) per common share is computed assuming
the issuance or conversion of all potentially dilutive securities.
F-7
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
3. MERGERS AND ACQUISITIONS:
In October 1996, the Company completed a merger with Standish (the Merger,
see Note 1). The Company's shareholders received 10,000,000 shares of Standish
common stock in exchange for all of the shares of the Company. The Company
recorded approximately $26 million of goodwill related to the Merger.
During November 1994, the Company purchased the assets of an outpatient
rehabilitation facility in Atlanta, Georgia, for $702,106. In connection with
the purchase, the Company also assumed the lease obligation for the facility for
which the current lease term expires in August 1999. The acquisition was
accounted for as a purchase and $566,312 of such purchase price was recorded as
goodwill. During 1995, the Company ceased operations at this outpatient
rehabilitation facility and recorded a provision for closure in the amount of
$894,872, which approximated the remaining lease obligations.
4. ASSETS HELD FOR SALE:
In connection with the Merger, the Company initiated a plan to dispose of
certain of the acquired Standish facilities. The net assets associated with
these facilities and the estimated costs to dispose of the facilities have been
separately recorded on the balance sheet. A reserve for the disposal of these
assets in the amount of $39,597 is included in accrued liabilities in 1997.
The assets held for sale were comprised of one facility containing 72 beds
at December 31, 1997, and two facilities containing 179 beds at December 31,
1996. The net assets include fixed assets and various other operating assets and
current liabilities and associated long-term debt. The Company estimated the
fair market value of the facilities assuming an orderly disposal, less the costs
to sell the facilities as well as an estimate of the results of the facilities'
operations through the expected date of disposition. The Company disposed of one
of the facilities in 1997 and expects to dispose of the other during 1998.
During the years ended December 31, 1997, and December 31, 1996, the facilities
generated $303,501 and $190,984, respectively, of operating losses which have
been excluded from the Company's consolidated statement of operations and
accounted for as an adjustment to the carrying amount of the assets.
5. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
Estimated Useful
Life Years December 31, 1997 December 31, 1996
---------- ----------------- -----------------
<S> <C> <C> <C>
Land................................................ $ 42,900 $ 745,904
Buildings and improvements.......................... 30 - 32 1,156,512 6,239,673
Furniture and fixtures.............................. 5 - 7 1,664,028 1,388,790
Equipment........................................... 3 - 10 1,005,022 220,275
Computer software................................... 3 277,803 157,166
Leasehold improvements.............................. 4 - 20 1,181,209 1,001,436
--------------- -------------
Property and equipment.............................. 5,327,474 9,753,244
Accumulated depreciation............................ (676,651) (250,233)
--------------- -------------
Property and equipment, net......................... $4,650,823 $ 9,503,011
=============== =============
</TABLE>
Accumulated amortization for assets held under capitalized lease
obligations totaled $59,405 at December 31, 1996 (see Note 8 for the
renegotiation of lease terms related to these assets).
6. OTHER LONG TERM ASSETS
Other long term assets consists of the following at December 31, 1997 and
1996:
1997 1996
------------ ------------
Notes receivable $ 4,001,980 $ 1,248,200
Deferred financing costs 3,551,577 --
Deferred tax assets 2,999,443 --
Lease deposits 4,125,000 --
Other 2,920,372 93,080
------------ ------------
17,598,372 1,341,280
Accumulated amortization (335,742) (11,306)
------------ ------------
$ 17,262,630 $ 1,329,974
============ ============
F-8
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
7. ACCRUED LIABILITIES:
Accrued liabilities consist of the following at December 31, 1997 and 1996:
1997 1996
------------- --------------
Accrued consulting fees............ $ 230,525 $ 718,325
Accrued merger related costs....... 2,057,795 2,417,715
Accrued closure costs.............. 244,056 250,317
Accrued rent....................... 355,408 309,318
Accrued interest................... 2,736,243 131,056
Accrued taxes...................... 1,238,929 51,252
Other.............................. 1,062,191 687,520
------------- ------------
Total accrued liabilities.......... $7,925,147 $4,565,503
============= ============
8. DEBT:
Long-term debt consists of the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------------------ -------------------
<S> <C> <C>
a) Convertible subordinated notes, 6.25% interest, due in
August 2004, convertible to common stock at $28.875 per
share........................................................... $ 115,000,000 $ --
b) Convertible debentures, 8.5% interest, due in April 1998,
convertible to common stock at $15.00 per share................ 2,000,000 2,000,000
c) Capital lease obligations for healthcare facilities............. -- 6,915,272
Note payable, 9.5%, principal due April 1997...................... -- 1,100,000
Facility mortgage payable with interest equal to the bank base
rate plus 1.75% (10% at December 31, 1996), due April
1997, collateralized by real estate............................... -- 734,968
Other notes payable at varying interest rates...................... -- 929,438
----------------- ----------------
Subtotal........................................................... 117,000,000 11,679,678
Less current maturities............................................ (2,000,000) (2,776,522)
----------------- ----------------
Long-term debt..................................................... $ 115,000,000 $ 8,903,156
================= ================
</TABLE>
a) In August 1997, the Company completed a private offering of $100 million
6-1/4% Convertible Subordinated Notes (the "Notes") due August 15, 2004.
The aggregate discounts and commissions related to the Notes was $2.8
million. Interest is payable semi-annually in February and August. The
Notes are convertible into common stock of the Company at any time through
the close of business on the final maturity date of the Notes, unless
previously redeemed or repurchased, at a conversion price of $28.875 per
share, subject to adjustment under certain conditions. Prior to August 18,
2000, the Notes are not redeemable at the option of the Company.
Thereafter, the Notes are redeemable at the option of the Company, in whole
or in part, at declining redemption prices. The Notes are unsecured
obligations of the Company and are subordinated to all existing and future
Senior Indebtedness, as defined, and all
F-9
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
liabilities of the Company and its subsidiaries. The proceeds of the
offering will be used for general corporate purposes, including, but not
limited to, capital expenditures, working capital and acquisitions. In
October 1997, the over-allotment option on the Notes was exercised in full
and the Company received an additional $14.6 million in cash upon the
issuance of $15.0 million principal amount of Notes. The fair value of the
Notes at December 31, 1997 is estimated at $130.5 million based on the
quoted market price of the Notes at that date.
b) These debentures were converted into 133,333 shares of common stock in
February 1998. The fair value of these debentures was estimated as $3.8
million at December 31, 1997 based on the quoted price of the Company's
common stock at that date and $2.0 million at December 31, 1996 as the
conversion price exceeded the quoted market price of the Company's common
stock at that date.
c) In August 1997, the related lease agreement was renegotiated. The resulting
lease was classified as an operating lease and the net gain from the
elimination of the remaining balance of both the obligation and the related
capital lease assets was treated as an adjustment to the amount of goodwill
recorded in the Merger.
At December 31, 1997, the maturities of the notes and convertible
debentures over the next five fiscal years are $2.0 million in 1998 and $115.0
million in 2004.
Interest paid in the years ended December 31, 1997 and 1996, was $752,529
and $1,690,422, respectively.
9. INCOME TAXES:
Deferred income taxes reflect the net effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. A valuation allowance is
recognized if it is more likely than not that some portion of the deferred tax
assets will not be realized.
The Company's deferred tax assets and liabilities, included in prepaid
expenses and other current and long-term assets and other long-term liabilities
on the balance sheet, are comprised of the following at December 31, 1997 and
December 31, 1996:
<TABLE>
<CAPTION>
1997 1996
------------------- --------------------
<S> <C> <C>
Deferred tax assets
Accrued merger costs............................... $1,105,945 $1,490,400
Accrued consulting................................. 92,671 143,600
Intangible assets.................................. 92,156 0
Bad debt reserve................................... 388,685 367,000
Accrued vacation................................... 80,440 0
Net operating loss carryforwards................... 2,907,287 3,658,000
--------------- --------------
Deferred tax assets before valuation allowance..... 4,667,184 5,659,000
Valuation allowance................................ -- (5,659,000)
--------------- --------------
Net deferred tax asset............................. 4,667,184 --
Deferred tax liabilities
Fixed assets....................................... (104,032) --
--------------- --------------
$4,563,152 $ --
=============== ==============
</TABLE>
F-10
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
9. INCOME TAXES: (continued)
<TABLE>
<CAPTION>
1997 1996
------------------ --------------------
<S> <C> <C>
Rate reconciliation
Federal tax at statutory rate...................... 34.0% (34.0%)
State tax, net of federal benefit.................. 5.7% (6.0%)
Goodwill amortization.............................. 3.3% --
Utilization of net operating loss carryforwards.... (1.6%) --
Other.............................................. 0.7% --
Change in valuation allowance...................... (1.9%) 40.0%
--------------- ----------------
Net effective rate................................. 40.2% --%
=============== ================
</TABLE>
1997
-----------------
Tax provision
Current:
Federal....................................... $2,504,505
State......................................... 836,494
-----------------
3,340,999
-----------------
Deferred:
Federal....................................... 877,769
State......................................... 218,079
-----------------
1,095,848
----------------
Total.............................................. $4,436,847
================
During 1997, both the valuation allowance and goodwill were reduced by $5.1
million to reflect the utilization of deferred tax assets which were recorded as
part of the Merger. In 1997, the Company also recognized a tax benefit of
$539,000 to reflect the utilization of deferred tax assets existing at December
31, 1996 which related to post-Merger activity. Additionally, in 1997, a tax
benefit of $717,000 related to the exercise of employee stock options was
recognized as an addition to additional paid in capital.
The Company has net operating loss carryforwards of $7,232,056 which will
expire from 2004 to 2011. Utilization of the net operating loss is subject to
Internal Revenue Code Section 382 which limits the annual amount of the
pre-Merger loss carryforward which may be deducted annually.
The Company has paid federal income taxes of $1,215,000 and state income
taxes of $842,250 for the year ended December 31, 1997.
10. EQUITY:
COMMON STOCK
In October 1996, the Company completed a secondary public offering of its
Common Stock. The Company sold 6,250,000 shares of Common Stock at $15.00 per
share, which resulted in net proceeds to the Company of approximately
$87,254,000.
STOCK OPTIONS
In August 1996, the Company adopted a stock option plan for officers and
employees to purchase up to 1,200,000 shares of its Common Stock. In April 1997,
the number of shares available under this plan was increased to 1,600,000. The
Company also maintains a stock option plan for non-employee members of the Board
F-11
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
of Directors to purchase up to 36,000 shares of its Common Stock. Options
granted under these plans vest over three and four year periods and expire ten
years after the date of the grant. The total shares available under these plans
and the Company's Amended and Restated 1991 Combination Stock Option Plan are
2,036,000.
<TABLE>
<CAPTION>
Weighted average
Shares exercise price
-------------------- -----------------------
<S> <C> <C>
Outstanding at December 31, 1995............................. -- $ --
Granted...................................................... 533,400 12.09
Assumed in connection with the Merger........................ 207,740 13.87
Exercised.................................................... (12,000) 11.58
-------------- -------------
Outstanding at December 31, 1996............................. 729,140 12.62
Granted...................................................... 944,200 23.79
Exercised.................................................... (149,569) 12.07
Canceled..................................................... (62,286) 17.81
-------------- -------------
Outstanding at December 31, 1997............................. 1,461,485 $ 19.66
==============
</TABLE>
The number of shares available for the granting of options at December 31,
1997 was 418,446. The weighted average exercise price of options granted during
the year was $23.79.
<TABLE>
<CAPTION>
Options outstanding Shares exercisable
--------------------------------------------------------------------------------
Weighted
Range of Shares average Remaining contractual Weighted average
exercise prices outstanding exercise price life in months exercise price Number
- ----------------- ----------- --------------- --------------------- ----------------- --------
<S> <C> <C> <C> <C> <C>
$10.00 - $15.00 549,385 $12.64 104 $12.83 392,565
$15.01 - $22.50 424,600 $18.74 112 $21.52 5,600
$22.51 - $28.63 487,500 $28.37 119 ---
--------- --------------- --------------------- ----------------- --------
1,461,485 $19.66 112 $12.95 398,165
========= ========
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
its options. Accordingly, no compensation expense has been recognized for its
stock-based compensation plan. Had compensation cost for the Company's stock
options been determined based upon the fair value at the grant date consistent
with the methodology prescribed under FAS 123, the Company's net earnings in
1997 would have been reduced by $1,800,000, or $0.10 per share on a diluted
basis. In 1996, the Company's net loss would have been increased by
approximately $1,300,000, or $0.12 per share on a diluted basis. The fair value
of the options granted during 1997 is estimated as $8,600,000 on the date of
grant using the Black-Scholes valuation model with the following assumptions:
volatility of 38%, risk-free interest rates ranging from 5.95% to 6.68% and a
weighted average expected life of 4.0 years.
WARRANTS
In connection with the Merger, the Company assumed warrants issued by
Standish. During 1997, 14,808 warrants were issued at $16.55 per share and
50,000 warrants were issued at $13.125 per share. At December 31, 1997, there
were 323,942 warrants to purchase shares of the Company's common stock
outstanding with exercise prices ranging from $13.125 to $35.45. At December 31,
1997, all warrants were exercisable.
SERIES A PREFERRED STOCK
In connection with the Merger, the Company acquired the rights and
obligations of the Series A Cumulative Convertible Preferred Stock issued by
Standish prior to the Merger. The conversion price of the Convertible Preferred
Stock at December 31, 1997 was $11.33. The Convertible Preferred Stock is
redeemable by the Company at $10.00 per share, plus accrued but unpaid
dividends, under certain circumstances.
F-12
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
SERIES B PREFERRED STOCK
Also acquired in connection with the Merger was Series B Convertible
Preferred Stock. Prior to the Merger, Standish issued 100 shares of the $14,000
liquidation value preferred stock to Mr. Gosman in return for $1,400,000.
Subsequent to the Common Stock offering described above, this stock was redeemed
for $1,442,000 (including accrued dividends). No Series B Preferred Stock was
outstanding at either December 31, 1997 or December 31, 1996.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share has been computed in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per share." Accordingly, all
earnings (loss) per share information reflects the adoption of this statement.
<TABLE>
<CAPTION>
Year ended December 31, 1997
Earnings Shares Per Share
------------------- ------------------ -------------
<S> <C> <C> <C>
Basic earnings per share
Earnings available to common stockholders....... $6,576,387 17,144,338 $0.38
Effect of dilutive securities:
Stock options................................. -- 331,424 --
Warrants...................................... -- 60,411 --
----------------- ---------------- -------------
Diluted earnings per share....................... $6,576,387 17,536,173 $0.38
================= ================ =============
</TABLE>
For the years ended December 31, 1996 and 1995, basic loss per share was
the same as diluted loss per share as the impact of the exercise or conversion
of the Company's options, warrants, preferred stock and convertible debentures
would be antidilutive.
11. COMMITMENTS AND CONTINGENCIES:
COMMITMENTS
The Company leases various office space and certain equipment pursuant to
operating lease agreements. The Company also leases certain of its health care
facilities. These leases are generally for periods between five and fifteen
years plus renewal options.
Future minimum lease commitments at December 31, 1997, consisted of the
following:
1998................................................ $9,869,090
1999................................................ 9,860,667
2000................................................ 7,402,700
2001................................................ 7,456,998
2002................................................ 6,726,898
Thereafter.......................................... 30,384,028
-----------
$71,700,381
===========
The Company has provided letters of credit totalling $7.6 million at
December 31, 1997 related to management/ownership agreements for two of its
facilities.
CONTINGENCIES
The Company is subject to complaints, claims and litigation which have
risen in the normal course business. The Company does not believe that any such
litigation will have a material adverse effect on its business, financial
position or results of operations. In addition, the Company is subject to
compliance with laws and regulations of various governmental agencies. While no
regulatory inquiries have been made at the Company, compliance with these laws
and regulations is subject to future government review, interpretation or
actions which are unknown and unasserted at this time.
F-13
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
12. RELATED PARTY TRANSACTIONS:
As used herein, a "Chancellor Entity" is Chancellor Senior Housing Group,
Inc. or a company in which Mr. Gosman and/or members of the Company's senior
management and stockholders exercise significant control.
At December 31, 1997 and 1996, $8,237,086 and $675,617, respectively, of
development fees earned from projects contracted with Chancellor Entities or
joint ventures within which Chancellor Entities have certain interests were
recorded as a receivable.
At December 31, 1997 and 1996, $859,393 and $263,293, respectively, of
management fee revenues from certain Chancellor Entities were recorded as a
receivable.
In 1997, the Company purchased from a related party, for $2.1 million, a
subordinated loan related to a facility that it managed for a Chancellor Entity.
The loan has a face value of $2.4 million, bears interest at 8.5% and matures
November 2024. Payment of accrued interest on the note is subordinated to the
facility achieving certain financial performance measures.
In 1997, the Company entered into a management/lease contract with a
Chancellor Entity for a senior living facility in Florida. Under the terms of
the agreement, the Company is not required to make a lease payment until the
facility achieves certain financial performance measures. No lease payments were
made in 1997.
During 1997, the Company entered into four additional leases with
Chancellor entities. The lease terms are generally for 15 year periods plus
renewal options. The Company had been managing three of these facilities. In
connection with certain of these leases, the Company paid $1,800,000 to a
Chancellor Entity for the lease rights and paid $3.8 million to another
Chancellor Entity as a lease deposit.
During 1996, the Company purchased certain assets for use in its corporate
office and the rights to manage and lease two facilities from a Chancellor
Entity for $5,100,000. The Company was also assigned the rights to certain
development contracts and management agreements at no charge from certain
Chancellor Entities.
For the years ended December 31, 1996 and 1995, Continuum Care of
Massachusetts, Inc. whose principal stockholder is Mr. Gosman, provided
management, general and administrative services to the Company. Fees for these
services in the amount of $5,105,845 in 1996 and $4,335,655 in 1995, have been
included in the financial statements. Such fees were based on the discretion of
Continuum Care of Massachusetts, Inc. and may not be indicative of what they
would have been if the Company had performed these services internally or had
contracted for such services with unaffiliated entities.
The Company subleases a portion of its principal office space in Needham,
Massachusetts to Meditrust, a publicly traded real estate investment trust
company, of which Mr. Gosman is the Chairman of the Board and Chief Executive
Officer. Accordingly, general and administrative expenses in each of the years
included in the three-year period ended December 31, 1997, has been reduced by
$179,256 to reflect Meditrust's portion of the rent.
At December 31, 1995, the Company had borrowed $9,661,381 from Mr. Gosman.
Interest expense on such outstanding indebtedness at the prime rate of interest
during the years ended December 31, 1996 and 1995 was $874,876 and $543,571,
respectively. All principal and interest were repaid concurrent with the
secondary stock offering. Amounts included on the balance sheet in the Due from
stockholder account at December 31, 1997 and 1996 are primarily the result of
timing differences related to leases entered into with certain Chancellor
Entities.
F-14
<PAGE>
CAREMATRIX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
13. SUPPLEMENTAL CASH FLOW INFORMATION:
In 1996, the Company acquired certain assets and liabilities of Standish in
a non-cash transaction (the Merger). The assets and liabilities acquired had the
following non-cash impact on the balance sheet:
Current assets.................................. $1,259,559
Property, plant and equipment................... 7,470,703
Goodwill and other long-term assets............. 24,647,913
Current liabilities............................. (6,122,684)
Long-term debt.................................. (9,939,419)
Other long-term liabilities..................... (1,465,072)
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
--------------- --------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
FISCAL 1997
Total revenue $13,091,518 $14,930,479 $20,818,581 $24,352,510 $73,193,088
=============== =============== ================ =============== ===============
Total operating expenses $12,217,435 $13,414,709 $18,180,974 $20,406,398 $64,219,516
=============== =============== ================ =============== ===============
Net earnings $ 814,600 $ 1,228,364 $ 1,935,131 $ 2,598,292 $ 6,576,387
=============== =============== ================ =============== ===============
Diluted earnings per
share $ 0.05 $ 0.07 $ 0.11 $ 0.15 $ 0.38
=============== =============== ================ =============== ===============
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
--------------- --------------- ---------------- --------------- ---------------
FISCAL 1996
Total revenue $ 1,187,392 $ 1,201,678 $ 1,869,204 $ 8,649,171 $12,907,445
=============== =============== ================ =============== ===============
Total operating expenses $ 3,097,326 $ 2,493,840 $ 3,998,963 $ 9,334,978 $18,925,107
=============== =============== ================ =============== ===============
Net loss $(2,207,984) $(1,528,791) $(2,423,445) $ (485,394) $(6,645,614)
=============== =============== ================ =============== ===============
Diluted loss per
share $ (0.22) $ (0.15) $ (0.24) $ (0.03) $ (0.59)
=============== =============== ================ =============== ===============
</TABLE>
F-15
<PAGE>
CAREMATRIX CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Charged
beginning costs and to other Balance at end
Description of period expenses accounts Deductions of period
----------- ----------- ----------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at 12/31/95................... $ 247,706 $ -- $ -- $ -- $ 247,706
Allowance for doubtful accounts....... 247,706 62,729 756,657 -- 1,067,092
----------- ---------- --------- ----------- ----------------
Balance at 12/31/96.................. 247,706 62,729 756,657(A) -- 1,067,092
Allowance for doubtful accounts...... 1,067,092 317,588 -- 279,248(A) 1,105,432
----------- ---------- --------- ----------- ----------------
Balance at 12/31/97.................. $1,067,092 $317,588 $ -- $279,248 $1,105,432
=========== ========== ========= =========== ================
</TABLE>
(A) Primarily due to the acquisition of Standish Care Company.
F-16
<PAGE>
Exhibits. The following is a list of exhibits as required by Item 601 of
Regulation S-K under the Act.
Exhibit Description
2.01 Agreement and Plan of Merger dated as of July 3, 1996 by and among the
Company, 12 subsidiaries thereof and the CareMatrix Affiliates (with
certain exhibits and schedules attached thereto) (8)
2.02 Agreement and Plan of Merger by and among AMA New Jersey Development,
Inc., Standish Acquisition 12, Inc. and Company (9)
3.01 Corrected Third Restated Certificate of Incorporation of the Company
(*)
3.02 By-laws of the Company, as amended through December 9, 1996 (12)
4.01 Indenture, dated as of August 15, 1997, between the Company and State
Street Bank and Trust Company, providing for the terms and conditions
of up to $115,000,000 of the Notes (10)
10.01 Lease Agreement dated as of November 10, 1993 between Health Care
REIT, Inc. and Dominion Villages Inc. (4)
10.02 Lease Guaranty by the Company to Health Care REIT, Inc. dated November
10, 1993 related to the obligations of Dominion Villages, Inc. under
its Lease Agreement (4)
10.03 Lease/Purchase Agreement dated as of July 1, 1992 by and among Mark V.
Barrow, M.D. and Mary B. Barrow, Victoria Enterprises, Inc., and
Bailey Retirement Center, Inc. (6)
10.04 Warrants dated November 9, 1993, January 13, 1994, February 4, 1994,
March 1, 1994, May 25, 1995 and June 28, 1995 to purchase an aggregate
of 35,833 shares of the Company's Common Stock issued to Health Care
REIT, Inc. (7)
10.05 Adams Square Limited Partnership First Amended and Restated Limited
Partnership Agreement dated as of January 31, 1994 (with certain
exhibits attached) (7)
10.06 Second Amended and Restated Employment Agreement dated as of July 1,
1995 between the Company and Michael J. Doyle (7)
10.07 First Amendment to Second Amended and Restated Employment Agreement
dated as of March 1, 1996 between the Company and Michael J. Doyle (7)
10.08 Form of Third Amended and Restated Employment Agreement between the
Company and Michael J. Doyle which was executed on October 4, 1996 (8)
10.09 Employment Agreement dated as of July 1, 1995 between the Company and
Kenneth M. Miles (7)
10.10 First Amendment to Employment Agreement dated as of March 1, 1996
between the Company and Kenneth M. Miles (7)
10.11 Form of Amended and Restated Employment Agreement between the Company
and Kenneth M. Miles which was executed on October 4, 1996 (8)
10.12 Amended and Restated 1991 Combination Stock Option Plan, as amended
through June 19, 1997 (13)
10.13 1995 Non-Qualified Stock Option Plan for Non-Employee Directors ("1995
Non-Employee Directors' Plan") (7)
10.14 1996 Equity Incentive Plan, as amended through June 19, 1997 (13)
10.15 Warrants dated May 26, 1993 to purchase an aggregate of 15,000 shares
of the Company's Common Stock granted to Robert W. DeVore at a price
of $4.50 per share (7)
10.16 Form of Stock Option Exchange Agreements dated as of February 28, 1995
between the Company and each of Michael J. Doyle, and Kenneth M. Miles
relating to repricing of stock options (7)
10.17 Stock Option Agreement between the Company and Michael J. Doyle dated
February 28, 1995 for 50,000 shares of stock at a price of $2.00 per
share (7)
10.18 Stock Option Agreement between the Company and Kenneth M. Miles dated
February 28, 1995 for 4,500 shares of stock at $2.00 per share (7)
<PAGE>
Exhibit Description
10.19 Stock Option Agreement between the Company and Kenneth M. Miles dated
February 28, 1995 for 15,000 shares of stock at $2.00 per share (7)
10.20 Stock Option Agreement between the Company and Michael J. Doyle dated
as of July 1, 1995 for 50,000 shares of stock at a price of $2.38 a
share (7)
10.21 Stock Option Agreement between the Company and Kenneth M. Miles dated
as of July 1, 1995 for 35,000 shares of stock at a price of $2.38 a
share (7)
10.22 Form of Amended and Restated Stock Option Agreement between the
Company and Michael J. Doyle dated as of June 28, 1996 for 50,000
shares of the Company's Common Stock at a price of $2.94 a share (8)
10.23 Form of Amended and Restated Stock Option Agreement between the
Company and Kenneth M. Miles dated as of June 28, 1996 for 25,000
shares of the Company's Common Stock at a price of $2.94 a share (8)
10.24 Purchase Agreement dated as of January 28, 1993 between the Company
and Manold Company as representative and agent for the "Purchasers"
listed therein, relating to sale by the Company of subordinated bonds
on Senior Lifestyles, Inc. projects, 50,000 shares of the Company's
Common Stock and Stock Purchase Warrants to purchase an aggregate of
50,000 shares of the Company's Common Stock (3)
10.25 Form of Agreement dated as of March 21, 1996 by and between the
Company and Manold, as representative and agent for the "Purchasers"
listed therein, relating to the exchange of Bonds issued on behalf of
Senior Lifestyles, Inc. and registered in the name of the Company in
exchange for cash and subordinate bonds issued by the York County
Industrial Development Authority on behalf of Northwood Retirement
Community, Inc. (7)
10.26 Form of Pledge, Security, Escrow and Subordination Agreement between
the Company and The Manold Company dated as of March 21, 1996 (7)
10.27 $1,000,000 Promissory Note from Bailey Retirement Center, Inc. and the
Company to First Union National Bank of Florida dated January 26, 1994
(4)
10.28 Mortgage from Bailey Retirement Center, Inc. and the Company to First
Union National Bank of Florida dated January 26, 1994 (7)
10.29 $100,000 Promissory Note from Bailey Retirement Center, Inc. to Mark
V. Barrow, M.D. and Mary B. Barrow, dated January 26, 1994 (7)
10.30 Mortgage from Bailey Retirement Center, Inc. to Mark V. Barrow, M.D.
and Mary B. Barrow, dated January 26, 1994 (7)
10.31 Form of $150,000 Promissory Note from Bailey Retirement Center, Inc.
and the Company to First Union National Bank of Florida dated December
2, 1994 (7)
10.32 Mortgage from Bailey Retirement Center, Inc. and the Company to First
Union National Bank of Florida dated December 2, 1994 (7)
10.33 Warrant dated June 10, 1994 to purchase an aggregate of 50,000 shares
of the Company's Common Stock issued to Assisted Living of America,
Inc. n/k/a Emeritus Corp. (5)
10.34 Warrant dated June 10, 1994 to purchase an aggregate of 50,000 shares
of the Company's Common Stock issued to Daniel R. Baty (5)
10.35 Registration Rights Agreement dated June 10, 1994 between the Company,
Columbia Pacific Group, Inc. and Daniel R. Baty (5)
10.36 Stock Purchase Warrant dated February 13, 1992 to purchase an
aggregate of 67,000 shares of the Company's Common Stock issued to J.
Edmund & Co. (2)
10.37 Underwriter's Warrant Agreement dated as of August 31, 1993 issued to
RAS Securities Corp. (1)
<PAGE>
Exhibit Description
10.38 Draft of Warrants dated September 29, 1994 to purchase an aggregate of
37,500 Common Shares issued to The Equity Group, Inc. (7)
10.39 Warrants dated January 15, 1995 to purchase an aggregate of 30,000
shares of the Company's Common Stock issued to Neil Berkman Associates
(7)
10.40 Form of Indemnification Agreement for officers and directors (2)
10.41 Warrants dated July 30, 1996 to purchase an aggregate of 80,000 shares
of the Company's Common Stock issued to Abraham D. Gosman (8)
10.42 First Amendment to Warrant dated as of July 30, 1996 (9)
10.43 Registration Rights Agreement dated as of July 30, 1996 between the
Company and Abraham D. Gosman (8)
10.44 Employment Agreement dated July 29, 1996 by and between CareMatrix of
Massachusetts, Inc. and Marc H. Benson (9)
10.45 Lease Agreement concerning 197 First Avenue office space (9)
10.46 Assignment Agreement dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc. ("CMM") and Chancellor of Massachusetts, Inc.
(Tampa, Florida) (9)
10.47 Assignment Agreement dated July 3, 1996 by and between CMM and
Chancellor of Massachusetts, Inc. (Atlanta, Georgia) (9)
10.48 Assignment Agreement dated July 3, 1996 by and between CMM and
Chancellor of Massachusetts, Inc. (Boynton Beach, Florida) (9)
10.49 Management Agreement, dated as of June 30, 1996 between CMM and
Continuum Care of Dedham, Inc. (Dedham, Massachusetts) (9)
10.50 Management Agreement, dated as of July 1996 between CMM and Continuum
Care of Needham, Inc. (Needham, Massachusetts) (9)
10.51 Assignment Agreement, dated as of June 6, 1996 between CMM and
Continuum Care of West Bridgewater, Inc. (West Bridgewater,
Massachusetts) (9)
10.52 Assignment Agreement, dated as of June 6, 1996 between CMM and
Continuum Care of Massachusetts, Inc. (Auburn, Massachusetts) (9)
10.53 Assignment Agreement, dated as of June 6, 1996 between CMM and
Continuum Care of Massachusetts, Inc. (Plymouth, Massachusetts) (9)
10.54 Assignment Agreement, dated June 6, 1996 between CMM and Continuum
Care of Massachusetts, Inc. (Raynham, Massachusetts) (9)
10.55 Development Agreement, dated September 1, 1996 between CareMatrix of
Cypress Station, Inc. and Chancellor of Houston, Inc. (Houston, Texas)
(9)
10.56 Assignment Agreement, dated July 3, 1996 by and among AMA Funding
Corporation, CareMatrix of Massachusetts, Inc., and Chancellor of
Massachusetts, Inc. (Peoria, Arizona) (9)
10.57 Turnkey Construction Agreement, dated August 14, 1996 by and among
CMM, Atlantic on the Hudson, L.L.C. and Cambridge House Associates
General Partnership (Ossining, New York) (9)
10.58 Management Agreement, dated October 3, 1996 among CMM and The Mayfair
at Glen Cove, L.L.C. and Hassett-Belfer Senior Housing, L.L.C. (Glen
Cove, New York) (9)
10.59 Development Agreement, dated March 8, 1996 between CareMatrix of
Emerald Springs Inc./Netwest of Yuma, Inc. and Emerald Springs
Associates General Partnership (Yuma, Arizona) (9)
10.60 Development Agreement, dated August 18, 1996 between CareMatrix of
Amethyst Arbor, Inc./Netwest Development Corporation and Amethyst
Arbor Associates General Partnership (Peoria, Arizona) (9)
10.61 Assignment Agreement, dated as of June 6, 1996 between CCC of
Connecticut, Inc. and CareMatrix of Massachusetts, Inc. (Westfield
Court, Connecticut) (9)
<PAGE>
Exhibit Description
10.62 Assignment Agreement, dated July 3, 1996 by and between Chancellor of
Houston, Inc. and CareMatrix of Massachusetts, Inc. (Houston, Texas)
(9)
10.63 Assignment Agreement, dated July 3, 1996 by and between Continuum Care
of Massachusetts, Inc. and Chancellor of Massachusetts, Inc.
(Ridgefield, Connecticut) (9)
10.64 Assignment Agreement, dated June 6, 1996 by and between CCC of
Florida, Inc. and CareMatrix of Massachusetts, Inc. (Millbury,
Massachusetts) (9)
10.65 Assignment Agreement, dated July 3, 1996 by and among AMA Funding
Corporation, CareMatrix of Massachusetts, Inc. and Chancellor of
Massachusetts, Inc. (Tucson, Arizona) (9)
10.66 Management Agreement, dated August 14, 1996 by and among CMM and
Cambridge House Associates General Partnership (Ossining, New York)
(9)
10.67 Assignment Agreement, dated July 3, 1996 by and between CarePlex of
Southington, Inc., and Chancellor of Massachusetts, Inc. (Southington,
Connecticut) (9)
10.68 Assignment Agreement, dated July 3, 1996 by and among The CarePlex
Group, Inc., CareMatrix of Massachusetts, Inc. and Chancellor of
Massachusetts, Inc. (Deerfield Beach, Florida) (9)
10.69 Development Agreement, dated April 18, 1996 by and between Cheshire
Care, L.L.C. and CareMatrix Corporation (Cheshire, Connecticut) (9)
10.70 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc. and Chancellor of Massachusetts, Inc. (Atlanta,
Georgia) (9)
10.71 Purchase and Sale Agreement, dated May 1996 between CMM (f/k/a
CareMatrix Corporation) and Ensign-Bickford Realty Corporation (Avon,
Connecticut) (9)
10.72 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc. and Chancellor of Massachusetts, Inc. (Macon,
Georgia) (9)
10.73 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc. and Chancellor of Massachusetts, Inc. (Durham,
North Carolina) (9)
10.74 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc. and Chancellor of Massachusetts, Inc. (Livingston,
New Jersey) (9)
10.75 Assignment and Assumption of Management Agreement, dated July 3, 1996
by and between CCC of New Jersey, Inc. and CareMatrix of
Massachusetts, Inc. (Park Ridge, New Jersey) (9)
10.76 Agreement, dated July 3, 1996 by and between CCC of New Jersey, Inc.
and CareMatrix of Massachusetts (9)
10.77 Development Agreement, dated April 18, 1996 by and between Woodbridge
Care, L.L.C. and CareMatrix Corporation (9)
10.78 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc., and Chancellor of Massachusetts, Inc. (Glen Cove,
NY; Roslyn, NY; Great Neck, NY; Wallingford, CT) (9)
10.79 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc. and Chancellor of Massachusetts, Inc. (Bonita
Springs, Florida) (9)
10.80 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Massachusetts, Inc. and Chancellor of Massachusetts, Inc. (Jensen
Beach, Florida) (9)
10.81 Assignment Agreement, dated July 3, 1996 by and between CareMatrix of
Stony Brook, Inc. and CareMatrix of Massachusetts, Inc. (Darien,
Connecticut) (9)
10.82 Agreement of Sale, dated September 6, 1996 by and between Reston Land
Corporation and CMM (Reston, Virginia) (9)
10.83 Deposit Receipt and Sale Agreement, dated September 5, 1996 between
Bonita Bay Properties, Inc. and CMM (Bonita Bay, Florida) (9)
10.84 Global Services Agreement, dated September 1, 1996 between Chancellor
Senior Housing Group, Inc. and CMM (9)
<PAGE>
Exhibit Description
10.85 Master Agreement, dated effective December 31, 1996 between Company
and North Shore Health System (excluding exhibits) (12)
10.86 Management Agreement, dated as of December 20, 1996 between CareMatrix
of Massachusetts, Inc. and Brazilian Court, Inc. (12)
10.87 Facility Lease, dated as of December 16, 1996 between The Annapolitan
Care Center, Inc. and CareMatrix of Annapolis, Inc. (12)
10.88 First Amendment to Facility Lease, dated as of December 15, 1996
between The Annapolitan Care Center, Inc. and CareMatrix of Annapolis,
Inc. (12)
10.89 Office Lease, dated as of December 31, 1996 between Continuum Care of
Dedham, Inc. and Company (12)
10.90 Guaranty Agreement, dated November 25, 1996 between Company and Sylvan
Manor Health Care Center Limited Partnership (12)
10.91 Purchase Agreement, dated August 12, 1997, by and among the Company
and certain initial purchasers of the Company's 6 1/4% Convertible
Subordinated Notes (10)
10.92 Registration Rights Agreement, dated as of August 15, 1997, by and
among the Company and the Initial Purchasers (10)
10.93 Registration Agreement, dated as of October 23, 1997, by and between
the Company and BancAmerica Robertson Stephens (11)
10.94 Resignation Agreement by and between CareMatrix Corporation and
Michael J. Doyle, dated as of July 30, 1997 (*)
10.95 Resignation Agreement by and between CareMatrix Corporation and
Kenneth M. Miles, dated as of April 10, 1997 (*)
10.96 Warrant dated August 22, 1997 to purchase an aggregate of 11,131
shares of the Company's Common Stock issued to Health Care REIT, Inc.
(*)
10.97 Warrant dated September 18, 1997 to purchase an aggregate of 3,677
shares of the Company's Common Stock issued to Health Care REIT, Inc.
(*)
10.98 Management Agreement dated August 14, 1996 by and among
CareMatrix of Massachusetts, Inc. and Cambridge House
Associates General Partnership (12)
10.99 Management agreement dated October 3, 1996 by and among
CareMatrix of Massachusetts, Inc. and The Mayfair at Glen
Cove, LLC and Hassett-Belfer Senior Housing, LLC (12)
10.100 Management Agreement dated April 15, 1997 by and among CareMatrix
of Massachusetts, Inc. and CCC of New Jersey, Inc. (*)
10.101 Assignment Agreement dated January 1, 1997 by and between
CareMatrix of Massachusetts, Inc. and CCC of Massachusetts,
Inc. (*)
10.102 Lease dated August 20, 1997 between CareMatrix of Dedham,
Inc. and Continuum Care of Dedham, Inc. (*)
10.103 Lease dated June 2, 1997 between CareMatrix of Needham, Inc.
and Continuum Care of Needham, Inc. (*)
10.104 Sublease dated July 1, 1997 between CareMatrix of Lauderhill
I, Inc. and Chancellor of Lauderhill I, Inc. (*)
10.105 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Aberdeen, Inc. dated April 11, 1997 (*)
10.106 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated
September 26, 1997 (Bayport, New York) (*)
10.107 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Clearwater, Inc. dated December 4,
1997 (*)
10.108 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Dix Hills, Inc. dated December 30,
1997 (*)
10.109 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of East Longmeadow, Inc. dated December
4, 1997 (*)
10.110 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Easton, Inc. dated December 4, 1997 (*)
10.111 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Greenbelt, Inc. dated December 4, 1997
(*)
10.112 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Islandia, Inc. dated December 4, 1997
(*)
10.113 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Livingston, inc. dated December 4,
1997 (*)
10.114 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Middletown, Inc. dated September 26,
1997 (*)
10.115 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Senior Housing Group, Inc. dated
September 26, 1997 (Naples, Florida) (*)
10.116 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Watchung, Inc. dated December 4, 1997
(*)
10.117 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Westport, Inc. dated December 30, 1997
(*)
10.118 Turnkey Construction Contract between CarePlex of
Cragganmore, Inc. and The Cragganmore Associates Limited
Partnership dated October 3, 1996 (*)
10.119 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated April
11, 1997. (Atlanta, GA) (*)
10.120 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated July 25,
1997. (Cape Elizabeth, ME) (*)
10.121 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated April
11, 1997. (Durham, NC) (*)
10.122 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated April
11, 1997. (Ellicott City, MD) (*)
10.123 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated March
31, 1996. (Houston, TX) (*)
10.124 Assignment Agreement between CarePlex of Newton, Inc. and
CareMatrix of Massachusetts, Inc. dated July 3, 1996.
(Newton, MA; Lasell Village) (*)
10.125 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated
September 26, 1997. (Merrillville, IN) (*)
10.126 Development Agreement between CareMatrix of Massachusetts,
Inc. and CCC of New Jersey, Inc. dated July 15, 1996. (Park
Ridge, NJ) (*)
10.127 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated
September 26, 1997 (Pennington, NJ) (*)
10.128 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated July 25,
1997. (Pineville, NC) (*)
10.129 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated
September 26, 1997. (Reston, VA) (*)
10.130 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated
September 26, 1997. (Tamarac, FL) (*)
10.131 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated
September 26, 1997. (Upper Nyack, NY) (*)
10.132 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Deerfield Beach, Inc. dated March 19,
1997. (*)
10.133 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Stuart, Inc. dated January 10, 1977.
(*)
10.134 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated April
11, 1997. (Jenson Beach (Villas), FL) (*)
10.135 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor of Logan Square, Inc. dated April 11,
1997. (*)
10.136 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated April
11, 1997. (Ridgefield, CT) (*)
10.137 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated April
11, 1997. (Roswell, GA) (*)
10.138 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated April
11, 1997. (Saco, ME) (*)
10.139 Development Agreement between CareMatrix of Massachusetts,
Inc. and Chancellor Senior Housing Group, Inc. dated July 25,
1997. (Upper Providence, PA) (*)
10.140 Development Services Agreement between CareMatrix of Massachusetts,
Inc., Mayfair at Great Neck, LLC, and Hassett-Belfer Senior Housing &
Services, LLC dated December 5, 1997 (*)
10.141 Development Agreement between CareMatrix of Amber Lights,
Inc., Netwest Development Corporation and Amber Lights
Associates General Partnership dated December 10, 1996 (*)
10.142 Development Agreement between CareMatrix of Amethyst Arbor,
Inc., Netwest Development Corporation and Amethyst Arbor
Associates General Partnership dated August 28, 1996 (*)
21.00 Subsidiaries of the Company (*)
23.00 Consent of Coopers & Lybrand, L.L.P. (*)
27.1 Financial Data Schedule for fiscal year-end 1997(*)
27.2 Financial Data Schedule for fiscal year-end 1996(*)
- -----------------------------------
* Filed herewith
(1) Filed as an Exhibit to the Company's Registration Statement on Form S-1
(No. 33-64720)
(2) Filed as an Exhibit to the Company's Registration Statement on Form S-18
(No. 33-44966-B)
(3) Filed as an Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992
(4) Filed as an Exhibit to the Company's Report on Form 10-K dated for the
fiscal year ended December 31, 1993
(5) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended December 31, 1994
(6) Filed as an Exhibit to the Company's Report on Form 8-K dated July 20, 1992
(7) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended December 31, 1995
(8) Filed as an Exhibit to the Company's Registration Statement on Form S-4
(No. 333-5364)
(9) Filed as an Exhibit to the Company's Registration Statement on Form S-1
(No. 333-11455)
(10) Filed as an Exhibit to the Company's Registration Statement on Form S-3
filed by the Company on October 17, 1997 (No. 333-38113)
(11) Filed as an Exhibit to the Company's Registration Statement on Form S-3
filed by the Company on November 12, 1997 (No. 333-40015)
(12) Filed as an Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996
(13) Filed as an Exhibit to the Company's Proxy Statement dated May 2, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
CAREMATRIX CORPORATION
By: /s/ Robert M. Kaufman
---------------------------
Robert M. Kaufman
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed by the following persons in the capacities
and on the dates indicated:
<TABLE>
Signature Title Date
<S> <C> <C>
/s/ Robert M. Kaufman Robert M. Kaufman
- ---------------------- Chief Executive Officer
Robert M. Kaufman (Principal Accounting Officer) March 27, 1998
/s/ Abraham D. Gosman
- --------------------- Abraham D. Gosman
Abraham D. Gosman Chairman of the Board March 27, 1998
/s/ Andrew D. Gosman
- --------------------- Andrew D. Gosman
Andrew D. Gosman President and Director March 27, 1998
Michael M. Gosman
/s/ Michael M. Gosman Executive Vice President and
- ---------------------- Vice Chairman of the Board March 27, 1998
Michael M. Gosman
/s/ Donald J. Amaral
- --------------------- Donald J. Amaral
Director Director March 27, 1998
/s/ H. Loy Anderson, Jr.
- ------------------------ H. Loy Anderson, Jr.
Director Director March 27, 1998
/s/ Rev. Bedros Baharian
- ------------------------- Rev. Bedros Baharian
Director Director March 27, 1998
/s/ Robert Cataldo
- ------------------- Robert Cataldo
Director Director March 27, 1998
/s/ Stephen E. Ronai, Esq.
- --------------------------- Stephen E. Ronai, Esq.
Director Director March 27, 1998
</TABLE>
EXHIBIT 3.01
CORRECTED
THIRD
RESTATED
CERTIFICATE OF INCORPORATION
OF
CAREMATRIX CORPORATION
On January 3, 1997, CareMatrix Corporation, a Delaware corporation (the
"Corporation") filed its Third Restated Certificate of Incorporation which
integrated certain of the Corporation's previous filings with the Secretary of
State of the State of Delaware. The Company has set forth herein a corrected
version of its Third Restated Certificate of Incorporation which remedies the
following errors from the original filing:
1. In Article FOURTH, the total number of shares of stock the
Corporation shall have the authority to issue has been corrected to read
"Seventy-Five Million Three Hundred Forty-Five Thousand One Hundred Sixty-Eight
(75,345,168)." instead of 75,345,268.
2. The Article following Article FOURTH has been titled "Article
FIFTH." Section I, paragraph 1 of Article FIFTH has been revised to correct a
misspelling. Section II.A., paragraph 2(2) has been revised to correct a
misspelling. Section II.A., paragraph 6 has been revised to correct a
misspelling. Section II.B., paragraph 2 has been corrected by inserting a
semi-colon following clause (i) and a comma following clause (ii)(x). Section
II.B., paragraph 3(ii) has been revised to correct a cross-reference from
"5(ii)(1)" to "5(ii)(I)." Section II.B., paragraph 3(ii) has been revised to
correct a reference to read "Series A Convertible Preferred Stock" as opposed to
"Series A Preferred Stock." Section II.B., paragraph 4(ii) has been revised to
correct a misspelling. Section II.B., paragraph 5(ii) has been changed to
correct the capitalization of the word "Stock" in the lead-in clause and to make
the same such change in paragraph 5(ii)(G). Section II.B., paragraph 6 has been
corrected by deleting the last full sentence of the first paragraph, which was
to have been deleted when the following paragraph was added, and to correct the
references in the second paragraph to read "Corporation" as opposed to
"Company." Section II.B., paragraph 7(iii)(A) has been revised to change
"purchase" to "purchased."
3. In Article ELEVENTH, the reference to "This Article TWELFTH" has
been corrected to read "This Article ELEVENTH."
* * *
<PAGE>
THIRD RESTATED CERTIFICATE OF INCORPORATION
OF CAREMATRIX CORPORATION
AS CORRECTED
CareMatrix Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), filed its original certificate of incorporation in Delaware
under the "The Standish Care Company" on October 6, 1989. This Third Restated
Certificate of Incorporation was duly adopted in accordance with the provisions
of Section 245 of the General Corporation Law of the State of Delaware and only
restates and integrates and does not further amend the provisions of the
Corporation's certificate of incorporation as theretofore amended and
supplemented, and there is no discrepancy between those provisions and the
provisions of this Third Restated Certificate of Incorporation.
NOW THEREFORE, the certificate of incorporation of the Corporation, as
amended and restated herein, shall at the effective time of this Third Restated
Certificate of Incorporation read as follows:
FIRST: The name of the corporation is CareMatrix Corporation.
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is Corporation
Trust Center, 1209 Orange Street, Wilmington, County of New Castle; and the name
of the registered agent of the Corporation in the State of Delaware at such
address is The Corporation Trust Company.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the Corporation, shall be any lawful business, to promote any lawful
purpose, and to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have the authority to issue is Seventy-Five Million Three Hundred Forty-Five
Thousand One Hundred Sixty-Eight (75,345,168) shares, consisting of Seventy-Five
Million (75,000,000) shares of Common Stock, par value $.05 per share ("Common
Stock"), and Three Hundred Forty-Five Thousand One Hundred Sixty-Eight (345,168)
shares of Preferred Stock, par value $.01 per share.
FIFTH: The classes of stock of the Corporation authorized by Article
FOURTH shall have the voting powers, qualifications and relative participating,
optional or other special rights, and preferences, limitations and restrictions
as set forth in this Article FIFTH.
-2-
<PAGE>
SECTION I -- Common Stock
- -------------------------
1. General; Dividends and Liquidation. The dividend and liquidation
rights of the holders of the Common Stock of the Corporation ("Common Stock")
are set forth in subparagraphs 4 and 5 respectively under Section II(A) below
and as such are subject to and qualified by the rights of the holders of the
Preferred Stock as expressly set forth in this Article FIFTH or pursuant to the
resolution or resolutions providing for the issuance of any series thereof.
2. Voting. The holders of Common Stock shall be entitled to one vote
for each share held at all meetings of stockholders (and written actions in lieu
of meetings). There shall be no cumulative voting.
3. No Preemptive Rights. No holder of Common Stock shall have any
preemptive right to subscribe to any or all additional shares of stock of the
Corporation of any or all classes or series thereof, or to any securities of the
Corporation convertible into such stock solely by reason of the ownership or
holding of any Common Stock of the Corporation.
SECTION II -- Preferred Stock
- -----------------------------
A. Series and Designations
1. General. Of the 345,168 shares of Preferred Stock which the
Corporation has authority to issue, 119,500 shares are designated as "Series A
Cumulative Convertible Preferred Stock" with such voting powers, full or
limited, or no voting powers, and such preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, as expressly set forth in this Article FIFTH. The remaining shares of
Preferred Stock (the "Remaining Preferred Stock") may be issued from time to
time in one or more series of any number of shares fixed in the resolution or
resolutions providing for the issue of such stock adopted by the Board of
Directors pursuant to authority expressly vested in the Board of Directors by
the provisions of this Article FIFTH below. In the event that at any time the
Board of Directors shall have issued and designated one or more series of
Remaining Preferred Stock consisting of a number of shares less than all of the
authorized number of shares of Remaining Preferred Stock, the remaining
authorized shares of Remaining Preferred Stock shall be deemed to be shares of
an undesignated series of Remaining Preferred Stock until issued and designated
by the Board of Directors as being part of a series previously issued and
designated or a new series then being issued by the Board of Directors.
2. Authority to Issue and Designate Remaining Preferred Stock.
Authority is hereby expressly vested in the Board of Directors to issue from
time to time the Remaining
-3-
<PAGE>
Preferred Stock in one or more series of Remaining Preferred Stock and, to the
full extent now or hereafter permitted by this Article FIFTH and the laws of the
State of Delaware, to fix and determine in the resolution or resolutions
providing for the issue of such series, the voting powers, full or limited, or
no voting powers, and the designations, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof, including, but not limited to:
(1) the distinctive designation of such series and the number
of shares which shall constitute such series, which number may be
increased (but not above the total number of authorized shares of the
series) or decreased (but not below the number of shares thereof then
outstanding) from time to time by a resolution or resolutions of the
Board of Directors, all subject to the conditions or restrictions set
forth in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of any series of Remaining
Preferred Stock;
(2) the dividend rate payable on shares of such series, the
conditions and dates upon which such dividends shall be payable, the
preferences or relation which such dividends shall bear to the
dividends payable on any other class or classes or any other series of
stock (except as otherwise expressly provided in this Article FIFTH),
and whether such dividends shall be cumulative or non-cumulative and,
if cumulative, the date or dates from which dividends shall accumulate;
(3) whether the shares of such series shall be subject to
redemption by the Corporation and, if made subject to redemption, the
price or prices at which, and the terms and conditions on which, the
shares of such series may be redeemed by the Corporation;
(4) the amount or amounts payable upon the shares of such
series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation and the preferences or
relation which such payments shall bear to such payments made on any
other class or classes or any other series of stock (except as
otherwise expressly provided in this Article FIFTH);
(5) whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes of stock of the Corporation, or any series thereof, or for any
other series of the same class of stock of the Corporation or for debt
of the Corporation evidenced by an instrument of indebtedness, and, if
so convertible or exchangeable, the conversion price or prices, or the
rate or rates of exchange, and the adjustments thereof, if any, at
which such conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
(6) whether the holders of shares of such series shall have
any right or
-4-
<PAGE>
power to vote or to receive notice of any meeting of stockholders,
either generally or as a condition to specified corporate action; and
(7) any other preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions thereof as may be permitted by the laws of the State of
Delaware and as shall not be inconsistent with this Article FIFTH.
3. Reacquired Shares of Remaining Preferred Stock. Shares of Remaining
Preferred Stock which have been issued and reacquired in any manner by the
Corporation (excluding, until the Corporation elects to retire them, shares
which are held as treasury shares, but including shares redeemed, shares
purchased and retired and shares which have been converted into shares of Common
Stock) shall have the status of authorized but unissued shares of Remaining
Preferred Stock and may be reissued as a part of the series of which they were
originally a part or may be reissued as a part of another series of Remaining
Preferred Stock, all subject to the conditions or restrictions on issuance set
forth in the resolution or resolutions adopted by the Board of Directors
providing for the Issuance of any series of Remaining Preferred Stock.
4. Dividends. Except as otherwise provided in this Article FIFTH in
respect of the Preferred Stock, after payment shall have been made to the
holders of Preferred Stock of the full amount of dividends to which they shall
be entitled in this Article FIFTH, the holders of Common Stock shall be
entitled, to the exclusion of the holders of Preferred Stock of any and all
series, to receive such dividends as from time to time may be declared by the
Board of Directors.
5. Liquidation. Except as otherwise provided in this Article FIFTH in
respect of the Preferred Stock, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, after payment
shall have been made to the holders of Preferred Stock of the full amounts to
which they shall be entitled in this Article FIFTH in respect of, the holders of
Common Stock shall be entitled, to the exclusion of the holders of Preferred
Stock of any and all series, ratably according to the number of shares of Common
Stock held by them, all remaining assets of the Corporation available for
distribution to its stockholders.
6. No Preemptive Rights. The holders of Preferred Stock shall not have
any preemptive rights to subscribe to any or all additional issues of stock of
the Corporation of any or all classes or series thereof, or to any securities of
the Corporation convertible into such stock solely by reason of the ownership of
holding of any Preferred Stock of the Corporation, except to the extent such
rights shall be expressly provided for in the resolutions or resolutions
providing for the issuance thereof adopted by the Board of Directors pursuant to
authority expressly vested in the Board of Directors by the provisions of this
Article FIFTH above.
-5-
<PAGE>
B. Series A Cumulative Convertible Preferred Stock
1. Designation and Number. The designation of shares of Preferred Stock
fixed by this section shall be "Series A Cumulative Convertible Preferred Stock"
(hereinafter referred to as the "Series A Convertible Preferred Stock") and the
number of shares constituting such series shall be 119,500.
2. Rank. The Series A Convertible Preferred Stock shall rank: (i) prior
to all of the Corporation's Common Stock; (ii) prior to (x) any other class of
the Corporation's common stock hereafter authorized, (y) any other class of the
Corporation's stock hereafter authorized, however designated, that has the right
(subject to any prior right of any class or series of Remaining Preferred Stock)
to dividends or to participate in any distribution to stockholders of the assets
upon voluntary or involuntary liquidation, dissolution or winding up or of the
earnings of the Corporation without limit as to per-share amount, and (z) any
other class or series of capital stock of the Corporation hereafter created
either specifically ranking by its terms junior to the Series A Convertible
Preferred Stock or not specifically ranking by its terms senior to or on parity
with the Series A Convertible Preferred Stock (collectively with the Common
Stock, "Junior Securities"); (iii) subject to the provisions of subparagraph
4(ii) hereof, on parity with any Remaining Preferred Stock of the Corporation
hereafter created specifically ranking by its terms on parity with the Series A
Convertible Preferred Stock ("Parity Securities"); and (iv) subject to the
provisions of subparagraph 4(ii) hereof, junior to any Remaining Preferred Stock
of the Corporation hereafter created specifically ranking by its terms senior to
the Series A Convertible Preferred Stock ("Senior Securities"), in each case, as
to payment of dividends or as to distributions of assets to stockholders upon
liquidation, dissolution or winding up of the Corporation or otherwise, whether
voluntary or involuntary (all such distributions being referred to collectively
as "Distributions").
3. Dividends.
(i) The dividend rate of the Series A Convertible Preferred Stock
shall be computed at a rate of $1.00 per share per annum, as adjusted for stock
splits, stock dividends, recapitalizations, reclassifications and similar
events, from the date of issuance of the Series A Convertible Preferred Stock.
Dividends shall be payable quarterly in arrears out of funds legally available
as proscribed by statute on September 30, December 31, March 31 and June 30 of
each year, commencing September 30, 1993 (each, a "Series A Dividend Payment
Date"). Dividends on shares of Series A Convertible Preferred Stock shall be
cumulative and shall accrue (whether or not declared), without interest, from
the first day of the quarterly period in which such dividend may be payable as
herein provided, except with respect to the first quarterly dividend after the
date of issuance which shall accrue from the date of issuance of the Series A
Convertible Preferred Stock. On each Series A Dividend Payment Date all
dividends which shall have accrued on each share of Series A Convertible
Preferred Stock outstanding on the applicable record date shall accumulate and
be deemed to become "due."
-6-
<PAGE>
Any dividend which shall not be paid on the Series A Dividend Payment Date on
which it shall become due shall be deemed to be "past due" (a "Cumulated Series
A Dividend") until such Cumulated Series A Dividend shall have been paid.
(ii) The Board of Directors shall declare and pay current
dividends out of funds legally available as proscribed by statute (after giving
effect to the payment of all requisite dividends on Senior Securities). To the
extent that the Board of Directors shall fail to pay dividends on the Series A
Convertible Preferred Stock within 30 days of a Series A Dividend Payment Date
(whether or not funds are legally available therefor), the Conversion Price (as
defined in subparagraph 5(i) hereof) shall be adjusted as provided in
subparagraph 5(ii)(I) hereof. In addition in the event the Corporation shall
fail to pay dividends on the Series A Convertible Preferred Stock on four Series
A Dividend Payment Dates, whether or not consecutively, the holders of the
Series A Convertible Preferred Stock shall be entitled to the voting rights set
forth in subparagraph 4(iii) hereof.
(iii) In order to determine the holders of Series A Convertible
Preferred Stock entitled to receive dividends, the Corporation shall fix a
record date not more than 30 days prior to any Series A Dividend Payment Date.
If any such Series A Dividend Payment Date should fall on a day that is not a
Business Day, then the Corporation shall pay the applicable dividend on the next
succeeding Business Day. "Business Day" shall mean a day other than a Saturday,
Sunday or other day on which any national securities exchange or quotation
system on which the Common Stock of the Corporation is traded or quoted is
authorized or required by law to close.
(iv) The Corporation shall not: (A) pay or declare and set apart
for payment any dividends or Distributions on any of the Corporation's Junior
Securities, other than dividends payable in the form of additional shares of the
same Junior Security as that on which such dividend is declared or (B) redeem,
purchase or otherwise acquire any shares of Junior Securities or any right,
warrant or option to acquire any Junior Securities, unless full Cumulated Series
A Dividends have been, or contemporaneously are, paid or declared and set apart
for such payment on the Series A Convertible Preferred Stock.
(v) No full dividends shall be paid or declared and set apart for
payment on any class or series of Parity Securities for any period unless full
Cumulated Series A Dividends have been, or contemporaneously are, paid or
declared and set apart for such payment on the Series A Convertible Preferred
Stock for all dividend payment periods terminating on or prior to the date of
payment of such full Cumulated Series A Dividends. No full dividends shall be
paid or declared and set apart for payment on the Series A Convertible Preferred
Stock for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for payment on the Parity
Securities, for all dividend periods terminating on or prior to the date of
payment of such full Cumulated Series A Dividends. When dividends are not paid
in full upon the Series A Convertible Preferred Stock and the Parity Securities,
all
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dividends paid or declared and set apart for payment upon shares of Series A
Convertible Preferred Stock and the Parity Securities shall be paid or declared
and set apart for payment pro rata, so that the amount of dividends paid or
declared and set apart for payment per share on the Series A Convertible
Preferred Stock and the Parity Securities shall in all cases bear to each other
the same ratio that accrued and unpaid dividends per share on the shares of
Series A Convertible Preferred Stock and the Parity Securities bear to each
other (without taking into account the dividends so paid and those so declared
and set apart for payment).
4. Voting Rights.
(i) Except as may otherwise be provided herein or as required by
law the holders of the shares of Series A Convertible Preferred Stock ("Series A
Holders") shall not be entitled to vote in respect of such shares.
(ii) The affirmative vote, in person or by proxy, of the Series A
Holders of 66 2/3% of the outstanding shares of the Series A Convertible
Preferred Stock, voting as a single class, on a one-vote-per-share of Series A
Convertible Preferred Stock basis, shall be necessary for the Corporation to:
(a) amend, repeal or modify any provision of, or add any provision to, the
Corporation's Restated Certificate of Incorporation if such action would alter
or change the rights, preferences, privileges or powers of, or the restrictions
provided for the benefit of, the Series A Convertible Preferred Stock so as to
affect the Series A Convertible Preferred Stock adversely; (b) authorize, create
or issue any additional shares of Series A Convertible Preferred Stock, or
authorize or create shares of any class or series of stock having any preference
or priority as to dividends or any liquidation preference superior to or on a
parity with any such preference or priority of the Series A Convertible
Preferred Stock, or authorize, create or issue shares of any class or series or
any bonds, debentures, notes or other obligations convertible into or
exchangeable for, or having optional rights to purchase, any shares of the
Corporation having any such preference or priority or having rights similar to
the Series A Convertible Preferred Stock; (c) reclassify the shares of Common
Stock or any other Junior Securities into shares of Series A Convertible
Preferred Stock or into Senior Securities or Parity Securities; (d) merge with
or consolidate into any corporation, firm or entity, or sell, lease or otherwise
dispose of all or substantially all of its assets unless the Corporation is the
surviving entity; (e) authorize, create or issue any class or series of Senior
Securities; or (f) authorize create or issue any class or series of Parity
Securities; provided, however, that no such vote shall be required pursuant to
clause (e) or (f) in the event the Corporation shall then have the right to
redeem or purchase the Series A Convertible Preferred Stock and, prior to the
date of issuance of such new class or series of Senior Securities or Parity
Securities provision shall have been made for the redemption or purchase of all
of the outstanding shares of Series A Convertible Preferred Stock and such
redemption or purchase occurs on or prior to the date of issuance of such new
series or class of Senior Securities or Parity Securities.
(iii) In the event the Corporation shall fail to pay current
dividends on the
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Series A Convertible Preferred Stock on four Series A Dividend Payment Dates,
whether or not consecutively, the Series A Holders shall be entitled to vote, on
a one-vote-per-share of Series A Convertible Preferred Stock basis, with the
Holders of the Common Stock on all matters thereafter submitted to the Company's
stockholders, including election of directors. The Series A Holders shall
continue to be entitled to the foregoing right to vote notwithstanding the
subsequent payment of any or all of such dividends.
(iv) On all matters on which the Series A Convertible Preferred
Stock is entitled to vote by law, the Series A Holders shall be entitled to one
vote per share of Series A Convertible Preferred Stock, voting separately as a
single class.
5. Conversion Rights.
(i) Each share of Series A Convertible Preferred Stock may be
converted, at the option of each Series A Holder, at any time and from time to
time, into fully-paid and non-assessable shares of Common Stock, provided,
however, a Series A Holder's right to so convert shares of Series A Convertible
Preferred Stock shall terminate as to shares thereof that are redeemed by the
Corporation on the Redemption Date (as hereinafter defined) therefor as provided
in and subject to the terms and conditions of subparagraph 7(iii) hereof. The
number of shares of Common Stock to which the Series A Holder of each share of
Series A Convertible Preferred Stock shall be entitled upon conversion shall be
the product obtained by multiplying the number of shares of Series A Convertible
Preferred Stock to be converted by the Conversion Rate; in addition, the Series
A Holder shall be entitled upon conversion to receive cash in an amount equal to
all Cumulated Series A Dividends on each share of Series A Convertible Preferred
Stock so converted, provided there are funds legally available as proscribed by
statute. To the extent the Corporation shall not have funds legally available to
pay all such Cumulated Series A Dividends, the Corporation's obligation to make
such payment shall be deferred until the first date on which the Corporation
shall have funds legally available for all or a portion of such payment, which
shall then be made in whole or in part, as the case may be, until such Cumulated
Series A Dividends shall have been paid in full. The "Conversion Rate" shall be
(A) $10.00 divided by (B) the Conversion Price (as hereinafter defined). The
conversion price ("Conversion Price") shall be $5.00 and shall be adjusted from
time to time as set forth in subsection (ii) hereof. The Corporation shall not
issue fractional shares of Common Stock upon conversion of Series A Convertible
Preferred Stock but, in lieu thereof, shall pay to a Series A Holder cash in an
amount equal to such fraction multiplied by the Last Sale Price of the Common
Stock on the trading day prior to the date on which the shares are converted.
"Last Sale Price" shall mean the reported last sale price regular way or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers Automated Quotations
("NASDAQ") National Market System or Small-Cap System, as
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applicable, or if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on such NASDAQ National market System or
Small-Cap System, as applicable, the average of the closing bid and asked prices
in the over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors for that
purpose.
(ii) Procedure for Conversion. The Series A Convertible Preferred
Stock shall be converted into Common Stock in the following manner:
(A) Shares of Series A Convertible Preferred Stock
received by the Corporation in exchange for Common Stock shall be retired and
canceled and shall no longer be available for issuance.
(B) A Series A Holder shall give notice to the
Corporation by mail of its desire to convert all or a portion of the shares of
Series A Convertible Preferred Stock owned by such Series A Holder. Such notice
shall be accompanied by certificates, duly endorsed for conversion, evidencing
the number of shares of Series A Convertible Preferred Stock such Series A
Holder desires to convert, together with cash, if any, required by subparagraph
5(ii)(C) hereof. The Corporation will, as soon as practicable thereafter,
deliver to such Series A Holder or to such Series A Holder's nominee or
nominees, a certificate or certificates for the appropriate number of shares of
Common Stock, together with cash, as provided in subparagraph 5(i), with respect
to any fractional shares otherwise issuable upon conversion, and cash in an
amount equal to all Cumulated Series A Dividends on each share of Series A
Preferred Stock so converted, provided there are funds legally available as
proscribed by statute, and, in the event of a partial conversion, a certificate
representing the balance, if any, of the shares of Series A Convertible
Preferred Stock converted by the surrendered certificate or certificates but not
converted to Common Stock. To the extent the Corporation shall not have funds
legally available to pay all such Cumulated Series A Dividends, the
Corporation's obligation to make such payment shall be deferred until the first
date on which the Corporation shall have funds legally available for all or a
portion of such payment, which shall then be made in whole or in part, as the
case may be, until such Cumulated Series A Dividends shall have been paid in
full.
(C) In the event that shares of Series A Convertible
Preferred Stock are surrendered for conversion on any date during the period
from the close of business on a record date fixed for determining the Series A
Holders entitled to receive dividends to the opening of business on the
corresponding Series A Dividend Payment Date, the Series A Holder must also
deliver to the Corporation an amount equal to the dividend payable with respect
to such shares of Series A Convertible Preferred Stock on such Series A Dividend
Payment Date and shall continue to be entitled to receive such dividend on such
Series A Dividend Payment Date. In the event that the date on which the shares
are converted is the Series A Dividend Payment Date, such Series A Holder will
be entitled to receive the dividend
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payable with respect to such Series A Convertible Preferred Stock and shall not
be required to include any payment in the amount of the dividend payable with
respect to such converted shares of Series A Convertible Preferred Stock.
(D) If, prior to the date on which all shares of
Series A Convertible Preferred Stock are converted, the Corporation shall (1)
pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock, (2) subdivide its outstanding Common Stock, (3) combine its
outstanding Common Stock into a smaller number of shares of Common Stock or (4)
issue by reclassification of its Common Stock other securities of the
corporation, the Conversion Price in effect on the opening of business on the
record date for determining stockholders entitled to participate in such
transaction shall thereupon be adjusted, or, if necessary, the right to convert
shall be amended, such that the number of shares of Common Stock receivable upon
conversion of the shares of Series A Convertible Preferred Stock immediately
prior thereto shall be adjusted so that the Series A Holder shall be entitled to
receive, upon the conversion of such shares of Series A Convertible Preferred
Stock, the kind and number of shares of Common Stock or other securities of the
Corporation which it would have owned or would have been entitled to receive
after the happening of any of the events described above had the Series A
Convertible Preferred Stock been converted immediately prior to the happening of
such event or any record date with respect thereto. Any adjustment made pursuant
to this subparagraph 5(ii)(D) shall become effective immediately after the
effective date of such event and such adjustment shall be retroactive to the
record date, if any, for such event. Except as provided in this subparagraph
5(ii)(D), no adjustment with respect to any ordinary dividends (made out of
current earnings) on shares of Common Stock shall be made.
(E) Except in respect of transactions described in
subparagraph 5(ii)(D) above and except in respect of "Excluded Rights" as
described and defined in subparagraph 5(ii)(L) below, if, prior to the date on
which all shares of Series A Convertible Preferred Stock are converted, the
Corporation shall sell or issue Common Stock or rights, options, warrants or
convertible securities (or rights, options or warrants to purchase convertible
securities), other than Excluded Rights, containing the right to subscribe for
or purchase shares of Common Stock (collectively, "Rights"), and the sale or
issuance price per share of Common Stock (or in the case of Rights, the sum of
the consideration paid or payable for any such Right entitling the holder
thereof to acquire one share of Common Stock and such additional consideration
paid or payable upon exercise or conversion of any such right to acquire one
share of Common Stock) is less than $5.00, the Conversion Price shall thereupon
be adjusted such that the number of shares of Common Stock receivable upon
conversion of the Series A Convertible Preferred Stock shall be that number
determined by multiplying (1) the number of shares of Common Stock receivable
upon conversion of the shares of Series A Convertible Preferred Stock
immediately prior to such issuance or sale by (2) a fraction (not to be less
than one) with a numerator equal to the product of the number of shares of
Common Stock outstanding after giving effect to such sale or issuance (and
assuming, in the case of
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Rights that such Rights had been fully exercised or converted, as the came may
be) and $5.00 and a denominator equal to the sum of (x) the product of the
number of shares of Common Stock outstanding immediately before the date of
issuance or sale or the record date, as the case may be, multiplied by $5.00 and
(y) the aggregate consideration received or deemed to be received by the
Corporation for the shares of Common Stock to be so issued or sold or to be
purchased or subscribed for upon exercise of such Rights. For the purposes of
such adjustments, the Common Stock which the holders of any such Rights shall be
entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such issuance or sale or the record date, as the
case may be.
(F) Except in respect of transactions described in
subparagraph 5(ii)(D) above, if, prior to the date on which all shares of Series
A Convertible Preferred Stock are converted the Corporation shall declare,
order, pay or make a dividend or other distribution (including without
limitation any distribution of cash, other or additional stock or other
securities or property or options, by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement or
otherwise, but excluding dividends described in the last sentence of
subparagraph 5(ii)(D) on the Common Stock), then, in each case, the Conversion
Price shall thereupon be adjusted such that the number of shares of Common Stock
thereafter receivable upon the conversion of shares of Series A Convertible
Preferred Stock shall be determined by multiplying (1) the number of shares of
Common Stock theretofore receivable upon conversion of the shares of the Series
A Convertible Preferred Stock by (2) a fractions, of which the numerator shall
be the then Convertible Price on the record date for the determination of
stockholders entitled to receive such dividend or other distribution, and of
which the denominator shall be such Conversion Price on such date minus the
amount of such dividend or distribution applicable to one share of Common Stock.
The Board of Directors of the Corporation shall determine the amount of such
dividend or distribution allocable to one share of Common Stock and such
determination, if reasonable and based upon the Board of Directors' good faith
business judgment, shall be binding upon the Series A Holder. Such adjustment
shall be made whenever any such distribution is made and shall become effective
on the date of distribution retroactive to the record date for the determination
of stockholders entitled to receive such distribution.
(G) Upon the expiration of any Rights if such shall
not have been exercised, the Conversion Price, to the extent that shares of
Series A Convertible Preferred Stock have not been converted, shall, upon such
expiration, be readjusted and shall thereafter be such as they would have been
had they been originally adjusted (or had the original adjustment not been
required, as the case may be) on the basis of (1) the fact that the only shares
of Common Stock so issued were the shares of Common Stock, if any, actually
issued or sold upon the exercise of such Rights and (2) such shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Corporation (including for purposes hereof, any underwriting discounts or
selling commissions paid by the Corporation) for the issuance, sale or grant of
all such Rights, whether or not exercised; provided, however,
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that no such readjustment shall have the effect of increasing the Conversion
Price by a proportion (relative to the Conversion Price in effect immediately
prior to such readjustment) in excess of the inverse of the aggregate
proportional adjustment thereof made in respect of the issue, sale, grant or
assumption of such Rights.
If the consideration provided for in any Right or the additional
consideration, if any, payable upon the conversion or exchange of any Right
shall be reduced, or the rate at which any Right is exercisable or convertible
into or exchangeable for shares of Common Stock shall be increased, at any time
under or by reason of provisions with respect thereto designed to protect
against dilution, then, effective concurrently with each such change, the
Conversion Price then in effect shall first be adjusted to eliminate the effects
(if any) of the issuance (or deemed issuance) of such Right on the Conversion
Price and then readjusted as if such Right had been issued on the date of such
change with the terms in effect after such change, but only if as a result of
such adjustment the Conversion Price then in effect hereunder is thereby
reduced.
(H) If, prior to the date on which the shares of
Series A Convertible Preferred Stock are converted, the Corporation shall (1)
reorganize, reclassify or otherwise change the number of outstanding shares of
Common Stock, (2) consolidate with or merge with or into another person
resulting in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock, (3) sell or otherwise transfer all or
substantially all of the assets of the Corporation, then a Series A Holder shall
thereafter have the right to convert such shares of Series A Convertible
Preferred Stock into the kind and amount of stock, securities or assets, if any,
such Series A Holder would have been entitled to receive upon such
reorganization, reclassification, consolidation, merger, sale or transfer had
such Series A Holder converted its shares of Series A Convertible Preferred
Stock into Common Stock immediately prior to such transaction, all subject to
further adjustments as provided herein.
(I) Notwithstanding anything to the contrary in this
paragraph 5, if the Corporation shall fail to pay dividends on the Series A
Convertible Preferred Stock within 30 days of a Series A Dividend Payment Date
(whether or not funds are legally available therefor), the Conversion Price
shall thereupon be reduced by $.25 but not below the then par value of the
shares of Common Stock issuable upon conversion of the Convertible Preferred
Stock.
(J) For the purposes of this paragraph 5: (x) the
consideration for the issue or sale of any additional shares of Common Stock
shall, irrespective of the accounting treatment of such consideration, be deemed
to be the consideration actually received by the Corporation and (1) insofar as
it consists of cash, be computed at the net amount of cash received by the
Corporation, plus any expenses paid or incurred by the Corporation and any
commissions or compensation paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in connection with
such issue or sale, (2) insofar
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as it consists of property (including securities) other than cash be computed at
the fair value thereof at the time of such issue or sale, as determined in good
faith by the Board of Directors of the Corporation, and (3) in case additional
shares of Common Stock are issued or sold together with other stock or
securities or other assets of the Corporation for a consideration which covers
both, be the portion of such consideration so received, computed as provided in
clauses (1) and (2) above, allocable to such additional shares of Common Stock,
all as determined in good faith by the Board of Directors of the Corporation;
(y) additional shares of Common Stock deemed to have been issued pursuant to
subparagraph 5(ii)(G), relating to Rights, shall be deemed to have been issued
for a consideration per share determined by dividing (1) the total amount, if
any, received by the Corporation as consideration for the issue, sale or grant
of the Rights in question, less the value of the Rights not actually received by
the Corporation as consideration therefor, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provisions contained therein for a subsequent adjustment
of such consideration to protect against dilution) payable to the Corporation
upon the exercise in or the conversion or exchange of such Rights or, in the
case of Rights which are rights, options or warrants for convertible securities,
the exercise of such Rights for convertible securities and the conversion or
exchange of such convertible securities, in each case computing such
consideration as provided in the foregoing clause (x) of this subparagraph
5(ii)(J)(5), by (2) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number to protect against dilution)
issuable upon the exercise conversion or exchange of such Rights; and (z)
additional shares of Common Stock deemed to have been issued pursuant to
subparagraphs 5(ii)(D) and (F), relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no consideration. For the purposes of
this paragraph 5, the term "Common Stock" shall mean (i) the class of stock
designated as Common Stock in the Restated Certificate of Incorporation of the
Corporation as may be amended as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value or from par value to no par
value, or from no par value to par value.
(K) No adjustment in the Conversion Price shall be
required unless such adjustment (plus any adjustments not previously made by
reason of this subparagraph 5(ii)(K)), would require an increase or decrease of
at least one and one-half percent (1 1/2%) in the Conversion Rate; provided,
however, that any adjustments which by reason of this subparagraph 5(ii)(K) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this subparagraph 5(ii)(K) shall
be made to the nearest cent.
(L) Notwithstanding anything to the contrary in this
paragraph 5, no adjustments shall be made (1) upon conversion of the Series A
Convertible Preferred Stock, (2) upon exercise of options granted or to be
granted (the "Stock Options") under the Corporation's Restated 1991 Combination
Stock Option Plan as now or hereafter adopted or
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amended from time to time to purchase up to an aggregate of 285,000 shares of
Common Stock, and (3) upon the exercise of warrants outstanding on the date
hereof (together with the Stock Options, the "Excluded Rights") to purchase up
to 206,000 shares of Common Stock at a weighted average exercise price of $6.62
per share (subject to anti-dilution adjustments in accordance with the terms of
such warrants as in effect on the date hereof).
(M) Whenever the Conversion Price is adjusted
pursuant to any of the foregoing provisions of this paragraph 5, the Corporation
shall forthwith prepare a written statement signed by the president or any vice
president and the treasurer or any assistant treasurer or the secretary or any
assistant secretary of the Corporation setting forth the adjusted Conversion
Rate determined as provided in this paragraph 5, and in reasonable detail the
facts requiring such adjustment. The certificate shall set forth such adjustment
or readjustment, showing in detail the facts upon which such adjustment or
readjustment is based including a statement of (a) the consideration received or
deemed to be received by the Corporation for any additional shares of Common
Stock issued or sold or deemed to have been issued or sold, (b) the Conversion
Price for the Series A Convertible Preferred Stock as then in effect, (c) the
number of additional shares of Common Stock, and (d) the type and amounts if
any, of other property which at the time would be received upon conversion of
the Series A Convertible Preferred Stock. Such statement shall be filed among
the permanent records of the Corporation and a copy thereof shall be furnished
to any Series A Holder requesting the same, in writing, and at all reasonable
times during business hours be open to inspection by the Series A Holders.
Within 10 days of the event requiring an adjustment to the Conversion Price, the
Corporation shall also cause a notice, at its expense, stating that such an
adjustment has been made and setting forth the adjusted conversion rate, to be
mailed, first-class, postage prepaid, to all then Series A Holders of record at
their addresses as the same appear on the stock records of the Corporation.
(N) If a Series A Holder has delivered notice to the
Corporation of its desire to convert all or a portion of its shares of Series A
Convertible Preferred Stock, and certificates, duly endorsed for conversion in
respect of such shares and cash, if any, required by subparagraph 5(ii)(C)
hereof, then all shares of Series A Convertible Preferred Stock so tendered to
the Corporation shall be deemed to be no longer outstanding and, notwithstanding
the failure of the Corporation to issue the Common Stock, such Series A Holder
shall be deemed, for all purposes, to be a holder of the number of shares of
Common Stock into which the shares of Series A Convertible Preferred Stock such
Series A Holder is entitled to receive pursuant to the terms of this paragraph 5
in each case as of the close of business on the date on which such conversion
notice is delivered. In the event such Series A Holder has delivered notice to
the Corporation of his desire to convert all or a portion of his shares of
Series A Convertible Preferred Stock, such Series A Holder shall retain the
right to receive all Cumulated Series A Dividends payable on the shares so
converted, as provided in this paragraph 5, notwithstanding any such conversion.
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(O) The Corporation shall not, by amendment of its
Restated Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation but
shall at all times in good faith assist in the carrying out of all the
provisions of this paragraph 5. The Corporation shall at all times reserve and
keep available out of its authorized but unissued Common Stock the full number
of shares of Common Stock deliverable upon the conversion of all the then
outstanding shares of Series A Convertible Preferred Stock and shall take all
such action and obtain all such permits or orders as may be necessary to enable
the Corporation to validly and legally issue fully paid and non-assessable
shares of Common Stock upon the conversion of Series A Convertible Preferred
Stock. The Corporation shall obtain prior to or concurrently with the first
issuance of the Series A convertible Preferred Stock, and shall use its best
efforts to maintain for as long as any shares of Series A Convertible Preferred
Stock shall be outstanding, the authorization for the listing of shares of
Common Stock issuable upon conversion of the Series A Convertible Preferred
Stock on the NASDAQ National market System or Small-Cap System, as applicable.
The Corporation shall, pay any and all transfer stamp and other like taxes that
may be payable in respect of the issuance or delivery of shares of Common Stock
on conversion of the Series A Convertible Preferred Stock.
(P) In the event of any taking by the Corporation of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in previous
quarters) or other distribution the Corporation shall mail to each record holder
of Series A Convertible Preferred Stock, or their designated nominee, at least
20 days prior to the date the record is to be taken, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend or
distribution. The Corporation shall also provide notice to other holders (other
than record holders) upon receipt by the Corporation of a written request
therefor and which shall include a statement of such holder's beneficial
interest in the Corporation's Series A Convertible Preferred Stock.
6. Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
amount that shall be paid to a Series A Holder of each share of Series A
Convertible Preferred Stock shall be $10.00 and an additional sum equal to all
Cumulated Series A Dividends on a share of Series A Convertible Preferred Stock,
subject to appropriate adjustment to reflect any stock split, stock dividend,
combination, recapitalization or reorganization (hereinafter called the
"Liquidation Price"), and no more. Upon any liquidation, dissolution or winding
up of the Corporation, the Series A Holders will be entitled to be paid after
payment or provision for payment of the debts and other liabilities of the
Corporation and after payment or provision for payment is made upon any Senior
Securities, but before any Distribution or payment is made upon any Junior
Securities an amount in cash equal to the aggregate Liquidation Price of all
shares outstanding
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and the Series A Holders will not be entitled to an further payment. If, upon
any such liquidation, dissolution or winding up of the Corporation, the
Corporation's assets to be distributed among the Series A Holders and the
holders of Parity Securities (the "Parity Holders") are insufficient to permit
payment to such Series A Holders and the Parity Holders of the aggregate amount
which they are entitled to be paid, then the available assets to be distributed
will be distributed ratably among such Series A Holders and Parity Holders based
upon the aggregate Liquidation Price of the Series A Convertible Preferred Stock
and the aggregate liquidation preference of any Parity Securities held by each
such Series A Holder and Parity Holder, respectively. The Corporation will mail
written notice of such liquidation, dissolution or winding up not less than 60
days prior to the payment date stated therein, to each Series A Holder of
record.
A consolidation or merger of the Corporation with or into any other
corporation or entity (whether or not the Corporation is the surviving entity
if, after the merger or consolidation, more than 50% of the stock of the
Corporation is owned by persons who were not stockholders of the Corporation
prior to the merger or Consolidation), or a sale of all or substantially all of
the assets of the Corporation, shall be deemed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this paragraph 6.
7. Redemption.
(i) Time of Redemption. The Corporation may, at its option,
redeem the Series A Convertible Preferred Stock, in whole and not in part, out
of funds legally available therefor, by action of the Board of Directors, at any
time on or after September 1, 1996 at a redemption price of $10.00 per share,
plus all Cumulated Series A Dividends on a share of Series A Convertible
Preferred Stock, upon notice and in the manner set forth in, and subject to the
conditions of, this paragraph 7; provided, the current market price of the
Common Stock (the closing sale price as reported by the NASDAQ National Market
System or Small-Cap System, as applicable, or if not traded thereon, the high
bid price as reported by NASDAQ or, if not quoted thereon, the high bid price in
the National Quotation Bureau sheet listing for the Common Stock) equals or
exceeds 150% of the Conversion Price then in effect for 20 consecutive trading
days ending no more than 10 days prior to the date of notice of redemption.
(ii) Priority of Redemption. None of the Shares of any class or
series of Parity Securities shall be redeemed, repurchased or otherwise acquired
unless full Cumulated Series A Dividends have been, or contemporaneously are,
paid or declared and set apart for such payment on the Series A Convertible
Preferred Stock for all dividend payment periods terminating on or prior to the
date of payment of such full Cumulated Series A Dividends. None of the shares of
Series A Convertible Preferred Stock shall be redeemed, repurchased or otherwise
acquired unless full cumulative dividends have been, or contemporaneously are,
paid or declared and set apart for payment on the Parity Securities, for all
dividend periods
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terminating on or prior to the Redemption Date of the Series A Convertible
Preferred Stock.
(iii) Procedures for Redemption. The Series A Convertible Preferred
Stock shall be redeemed pursuant to subparagraph 7(i) above in the following
manner:
(A) Shares of Series A Convertible Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation shall be retired
and cancelled and shall no longer be available for issuance.
(B) In the event of a redemption of shares of Series
A Convertible Preferred Stock pursuant to subparagraph 7(i), notice of
redemption of all shares of Series A Convertible Preferred Stock shall be given
by the Corporation not less than 30 nor more than 60 days prior to the Business
Day designated in such notice (the "Redemption Date"), by mail postage prepaid
to Series A Holders at their respective addresses then appearing on the records
of the Corporation and shall also be published, on or about the date of such
mailing, in the National Edition of the Wall Street Journal. Such notice of
redemption shall specify the Redemption Date and the redemption price plus the
Cumulated Series A Dividends on a share of Series A Convertible Preferred Stock,
if any (the "Redemption Price"), and the place or places of payment. The
conversion rights of the Series A Holders shall continue until the Redemption
Date (provided no default by the Corporation in the payment of the Redemption
Price shall have occurred and be continuing, and in the event of any such
default the Series A Holders' conversion rights shall continue until such shares
are actually redeemed or converted) and such notice shall state the then
effective Conversion Price and that the right of Series A Holders to exercise
their conversion rights shall terminate at the close of business on the
Redemption Date (provided no default by the Corporation in the payment of the
Redemption Price shall have occurred and be continuing). On or before the
Redemption Date, each Series A Holder shall surrender to the Corporation or its
designated agent, at such place as it may designate in the redemption notice,
certificates, duly endorsed for transfer, evidencing the number of shares of
Series A Convertible Preferred Stock held by such Series A Holder. Upon such
surrender, the Series A Holder shall be entitled to receive payment of the
Redemption Price without interest.
(C) If on the Redemption Date (1) notice of
redemption has been mailed or delivered as provided herein, (2) the Corporation
has deposited with an independent payment agent funds necessary to pay the
amount due for all shares of Series A Convertible Preferred Stock subject to
such redemption, and (3) all such funds are available for the sole purpose of
paying such amount then, unless the Corporation defaults on the payment of the
Redemption Price, all shares of Series A Convertible Preferred Stock subject to
redemption shall, whether or not the certificates for such shares have been
surrendered for cancellation, be deemed to be no longer outstanding for any
purpose and all rights with respect to such shares shall cease, except the right
of the Series A Holder to receive the Redemption Price without interest;
provided, however, that the Corporation shall not have to so redeem any shares
of
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Series A Convertible Preferred Stock which have been converted to Common Stock
prior to the date of such redemption. If the Corporation shall not have funds
legally available for redemption of shares to be redeemed pursuant to
subparagraph 7(i) on the Redemption Date, the notice of redemption shall be null
and void and at such time as the Corporation shall have funds legally available
for redemption of such shares and shall determine to redeem the Series A
Convertible Preferred Stock on the terms and conditions set forth in
subparagraph 7(i), a new notice of redemption to Series A Holders shall be
required to effect such redemption.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided that:
1. The business of the Corporation shall be conducted by the officers
of the Corporation under the supervision of the Board of Directors.
2. The number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the By-Laws. No
election of Directors need be by written ballot.
3. The Board of Directors of the Corporation may adopt, amend or repeal
the By-
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Laws of the Corporation at any time after the original adoption of the By-Laws
according to Section 109 of the General Corporation Law of the State of
Delaware; provided, however, that any amendment to provide for the
classification of directors of the Corporation for staggered terms pursuant to
the provisions of subsection (d) of Section 141 of the General Corporation Law
of the State of Delaware shall be set forth in an amendment to this Restated
Certificate of Incorporation, in an initial By-Law, or in a By-Law adopted by
the stockholders of the Corporation entitled to vote.
NINTH: The Corporation may, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which a person indemnified may be entitled under any By-Law,
agreement, vote of stockholders or disinterested Directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be
Director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
TENTH: From time to time any of the provisions of this Restated
Certificate of Incorporation may be amended, altered or repeated, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the Corporation by
this Restated Certificate of Incorporation are granted subject to the provisions
of this Article TENTH.
ELEVENTH: No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this paragraph (b) of
this Article ELEVENTH shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such Director occurring prior to such amendment.
TWELFTH:
(a) Any direct or indirect purchase or other acquisition in one or more
transactions by the Corporation or any Subsidiary of any of the outstanding
Voting Stock of any class from
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any one or more individuals or entities known by the Corporation to be a Related
Person, who has beneficially owned such security or right for less than two
years prior to the date of such purchase or other acquisition, at a price in
excess of the Fair Market Value shall, except as hereinafter provided, require
the affirmative vote of the holders of at least two-thirds of the shares of
Voting Stock, voting as a single class, excluding any votes cast with respect to
shares of Voting Stock beneficially owned by such Related Person. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified by law or any agreement
with any national securities exchange, or otherwise, but no such affirmative
vote shall be required with respect to any purchase or other acquisition of
securities made as part of (i) a tender or exchange offer by the Corporation to
purchase securities of the same class made on the same terms to all holders of
such securities and complying with the applicable requirements of the Exchange
Act and the rules and regulations thereunder, or any successor rule or
regulation or (ii) pursuant to an open-market purchase program conducted in
accordance with the requirements of Rule 10b-18 promulgated by the Securities
and Exchange Commission pursuant to the Exchange Act or any successor rule or
regulation.
(b) A majority of the Continuing Directors shall have the power and
duty to determine, on the basis of information known to them after reasonable
inquiry, all facts necessary to determine compliance with this Article TWELFTH
including, without limitation, (i) whether a person is a Related Person, (ii)
the number of shares of Voting Stock beneficially owned by any person and (iii)
whether a price is in excess of Fair Market Value.
(c) Nothing contained in this Article TWELFTH shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
(d) Notwithstanding anything contained in this Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Voting Stock, voting together as a
single class, shall be required to alter, change, amend, repeal or adopt any
provision inconsistent with this Article TWELFTH.
THIRTEENTH: The Board of Directors of the Corporation, when evaluating
any offer of another Person to (a) purchase or exchange any securities or
property for any outstanding equity securities of the Corporation, (b) merge or
consolidate the Corporation with another corporation, or (c) purchase or
otherwise acquire all or substantially all of the properties and assets of the
Corporation, shall in connection with the exercise of its judgment in
determining what is in the beat interests of the Corporation and its
stockholders, give due consideration not only to the price or other
consideration being offered, but also to all other relevant factors, including
but without limitation, the interests of the Corporation's employees, suppliers,
creditors and customers, the economy of the state, region and nation, community
and societal considerations, and the long-term and shortterm interests of the
Corporation and its stockholders, including the possibility that these interests
may be best served by the continued independence of the Corporation.
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FOURTEENTH:
Definitions
The following definitions shall apply for the purpose of Articles
TWELFTH and THIRTEENTH only:
(a) "Affiliate" shall have the meaning given such term in Rule 12b-2
under the Exchange Act.
(b) "Associate" shall have the meaning given such term in Rule 12b-2
under the Exchange Act.
(c) "Continuing Director" shall mean any member of the Board of
Directors who is not an Affiliate of any Related Person and who was a member of
the Board of Directors prior to the time that any such Related Person became a
Related Person, and any successor of a Continuing Director who is unaffiliated
with any Related Person and is recommended to succeed a Continuing Director by a
majority of the Continuing Directors then on the Board of Directors.
Notwithstanding the above, a majority of the then existing Continuing Directors
can deem a new director to be a Continuing Director, even though such person is
Affiliated with a Related Person.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, from time to time.
(e) "Fair Market Value" shall mean: (i) in the case of stock, the
highest closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the principal United States
securities exchange registered under the Exchange Act on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use or, if no
such quotations are available, the fair market value on the date in question of
a share of such stock as determined by the Board of Directors in good faith; and
(ii) in the case of property other than cash or stock, the fair market value of
such property on the date in question as determined by the Board of Directors in
good faith.
(f) "Person" shall mean any individual, firm, corporation or other
entity.
(g) "Related Person" shall mean any Person (other than the Corporation,
any
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Subsidiary or any individual who was a stockholder of the Corporation on October
3, 1991 which, together with such Person's Affiliates and Associates and with
any other Person (other than the Corporation, any Subsidiary or any individual
who was a stockholder of the Corporation on October 3, 1991) with which such
Person or they have entered into any agreement, arrangement or understanding
with respect to acquiring, holding or disposing of Voting Stock, acquires
beneficial ownership (as defined in Rule 13d-3 of the Exchange Act, except that
such term shall include any Voting Stock which such person has the right to
acquire, whether or not such right may be exercised within 60 days), directly or
indirectly of more than 5% of the voting power of the outstanding Voting Stock
after October 3, 1991.
(h) "Subsidiary" shall mean any corporation in which a majority of the
capital stock entitled to vote generally in the election of directors is owned,
directly or indirectly, by the Corporation.
(i) "Voting Stock" shall mean all of the then outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors.
IN WITNESS WHEREOF, the undersigned President of CareMatrix Corporation
has signed this Third Restated Certificate of Incorporation this 22nd day of
October, 1997.
/s/ Robert M. Kaufman
----------------------------
Robert M. Kaufman, President
ATTEST:
/s/ James M. Clary, III
- ------------------------
James M. Clary, III
379996
EXHIBIT 10.94
RESIGNATION AGREEMENT
THIS RESIGNATION AGREEMENT is dated as of July 30, 1997 by and between
Michael J. Doyle ("Doyle") and CareMatrix Corporation, a Delaware corporation
("CareMatrix"), who, in consideration of the mutual covenants and agreements
contained herein, hereby act and agree as follows:
1. Resignation. As of the Effective Date, Doyle hereby resigns from his
position as Chief Executive Officer and from any and all other positions of
employment with CareMatrix and any and all partially or wholly-owned
subsidiaries thereof, and all payments and benefits due to Doyle and obligations
of either CareMatrix or Doyle under the Third Amended and Restated Employment
Agreement dated October 4, 1996 by and between CareMatrix (f/k/a The Standish
Care Company, Inc.) and Doyle (the "Employment Agreement"), shall immediately
cease and the Employment Agreement is hereby terminated.
2. Severance Payment. (a) CareMatrix shall pay to Doyle (i) on the
Effective Date (as defined herein), a lump sum payment equal to TWO HUNDRED
SIXTY-FIVE THOUSAND SIX HUNDRED FORTY-SEVEN DOLLARS AND TWENTY-TWO CENTS
($265,647.22) (the "First Installment") and (ii) on January 2, 1998, a lump sum
payment equal to TWO HUNDRED SEVENTY THOUSAND THREE HUNDRED NINETY-FOUR DOLLARS
AND SEVENTY CENTS ($270,394.70) (the "Second Installment"). The First
Installment and the Second Installment shall be subject to any and all
appropriate withholding obligations. As used herein, "Severance Period" shall
mean the period from the Effective Date until October 4, 1999.
(b) Notwithstanding the foregoing, CareMatrix shall have the
right to offset any and all unpaid principal and interest on the Promissory Note
dated March 21, 1997 by Doyle to CareMatrix (the "Note") against the Second
Installment. If, following the offset of the Note against the Second
Installment, if there is no outstanding balance then due on the Note, the Note
shall be canceled and the Stock Pledge Agreement dated March 21, 1997 with
respect thereto shall be terminated. In no event shall any provision of this
Agreement impair or prohibit Doyle's right to make any prepayments as permitted
under the Note.
3. Continuation of Benefits. (a) Commencing on the Effective Date and
continuing until the earlier of (i) Doyle's acceptance of new employment
providing comparable healthcare coverage for Doyle and his immediate family or
(ii) October 4, 1999, CareMatrix will continue to provide Doyle all medical,
dental, long term disability and term life insurance benefits (collectively, the
"Benefits") in effect as of the Effective Date. To the extent any new employer
of Doyle does not provide at least comparable coverage as the Benefits, Doyle
shall be entitled to continue to receive such of the Benefits as are not so
provided by his new employer until the earlier of (I) the date on which such
benefits are made available by Doyle's new employer or (II) October 4, 1999.
Doyle's aggregate employee contribution to the medical, dental, disability and
life insurance plans (collectively, the "Insurance Contributions"), through
October 4, 1999, shall be deducted in equal parts from each Installment Payment.
In the event Doyle desires to terminate any of the insurance benefits for which
Doyle has already paid CareMatrix, Doyle shall provide CareMatrix with written
notice indicating when he desires the benefits to terminate (the "Notice") and
CareMatrix shall reimburse Doyle for the period of time when Doyle will not be
covered by insurance, but for which Doyle has already paid, as described in the
Notice. From and after the termination of Doyle's healthcare coverage with
CareMatrix, Doyle will be entitled to continuation of such health benefits under
the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"), unless
Doyle shall have accepted new employment by the end of the applicable period of
time for which such benefits are available under COBRA, in which event Doyle
shall look to his new employer for healthcare benefits.
<PAGE>
(b) Doyle shall retain the right to contribute to CareMatrix's
401(k) program (the "401(k) Program") during the Severance Period to the extent
permitted by the terms of the 401(k) Program and by applicable law. Upon request
from Doyle, CareMatrix shall use its best efforts to expedite the withdrawal of
Doyle's funds from the 401(k) Program.
4. Stock Options. The parties mutually agree that, as of the date
hereof, Doyle has outstanding, fully-vested stock options (the "Options") to
purchase (i) 100,000 shares of Common Stock of CareMatrix, par value $.05 per
share (the "Common Stock"), at an exercise price of $14.70 per share (the "1996
Grant"), (ii) 10,000 shares of Common Stock at an exercise price of $11.90 per
share (the "1995 Grant"), and (iii) 10,000 shares of Common Stock at an exercise
price of $10.00 per share (the "1993 Grant"). CareMatrix and Doyle acknowledge
that of such 100,000 shares granted pursuant to the 1996 Grant, only 6,802 of
such shares were deemed ISOs under the Amended and Restated 1991 Combination
Stock Option Plan (the "Plan"), and, therefore, 93,198 of such shares are
non-qualified stock options. Each of the options granted pursuant to the 1993
Grant and the 1995 Grant were intended to be ISOs under the Plan. Any
non-qualified Options which would terminate prior to October 4, 1999 are hereby
extended to and shall be exercisable until October 4, 1999. CareMatrix agrees to
promptly reimburse and indemnify Doyle from any loss or damage to Doyle as a
result of any action taken by CareMatrix pursuant to the terms of any agreement
relating the 1996 Grant, the 1995 Grant or the 1993 Grant either to cancel or
terminate any Option after the Effective Date and prior to October 4, 1999;
provided, however, that the termination or cancellation of any Option by
operation of law or the terms of the Plan, as in effect on the Effective Date,
without further action by CareMatrix, shall not be deemed to be a basis for
reimbursement and indemnification pursuant to this sentence. CareMatrix agrees
to make available to Doyle the use of its cashless exercise program with respect
to all or a portion of the Options.
5. Fixtures. Following the Effective Date, Doyle shall be entitled to
retain any fixtures that he brought into his office at CareMatrix corporate
headquarters from his previous office space in Burlington, Massachusetts.
6. Public Statements. Neither CareMatrix nor Doyle will make any
statements nor take any action to disparage the other, including any employee,
officer or executive officer of CareMatrix or member of the Board of Directors
of CareMatrix, at anytime whatsoever.
7. References. CareMatrix hereby agrees that, upon the written request
of Doyle, it shall provide positive references to any potential employers of
Doyle.
8. Proprietary Information. During the course of his employment as an
officer and director of CareMatrix, Doyle had access to and gained knowledge
with respect to all of the activities and lines of business of CareMatrix
including, without limitation, the planning, development, management and
operation of independent living and assisted living facilities, nursing homes
and other health care facilities, CareMatrix's research and development
techniques with respect to such facilities, projects and programs, the
preparation of market and demand and cost containment studies, project
evaluation methods, facility development programs, management techniques related
to all aspects of such facilities, projects and programs and related businesses
and other valuable and confidential information relating to the business and
activities of CareMatrix (the "Confidential Information"). The parties
acknowledge that unauthorized disclosure or misuse of the Confidential
Information could cause irreparable damage to CareMatrix. The parties also agree
that covenants by Doyle (i) not to make unauthorized disclosures of the
Confidential Information and (ii) not to use the Confidential Information in a
business in competition with that of CareMatrix, are essential to the growth and
stability of the business of CareMatrix. Accordingly, Doyle
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agrees that, during the Severance Period, Doyle shall not use or disclose to
anyone any Confidential Information obtained by him in the course of his
employment with CareMatrix.
9. Indemnification. CareMatrix hereby agrees to defend, indemnify and
hold harmless Doyle, to the maximum extent permitted by applicable law and the
governing documents of CareMatrix, against any loss, liability, cost or expense,
in the event that Doyle is made, or is threatened to be made, a party to any
action, suit or proceeding (whether civil, criminal, administrative or
investigative), by reason of his association with CareMatrix or any affiliates
thereof or predecessor thereto or any of its affiliates, or for any acts or
omissions taken or omitted to be taken by Doyle in the good faith reasonable
belief that such acts or omissions were within the scope of his duties as an
officer and/or director of CareMatrix; provided, however, that no such
indemnification or defense of Doyle shall be available to Doyle where any such
acts or omissions constitute bad faith, gross negligence or willful misconduct
by Doyle.
10. Non-competition. (a) During the Severance Period, Doyle will not,
without the express written consent of CareMatrix, directly or indirectly,
engage in, participate in, or assist, as owner, part-owner, partner, director,
officer, trustee, employee, agent or consultant, or in any other capacity, any
business organization the business or activities of which are substantially
similar to or directly competitive with any business or activity conducted by
CareMatrix, including, without limitation, the planning, development,
management, operation, leasing and acquisition of, or providing consulting
services pertaining to, independent living facilities, assisted living
facilities, nursing homes and other health care facilities or a home health care
program for the elderly, or small retirement living projects within twenty (20)
miles of CareMatrix headquarters, any CareMatrix regional office or any
assisted-living facility or community operated by CareMatrix or planned to be
operated by CareMatrix prior to the Effective Date.
(b) In addition, during the Severance Period, Doyle will not
(i) attempt to hire any director, officer, employee or agent of CareMatrix, (ii)
assist in an attempted hiring by any other person, (iii) encourage any person to
terminate his or her employment or business relationship with CareMatrix, (iv)
encourage any customer or supplier of CareMatrix to terminate its relationship
with CareMatrix, (v) obtain, assist in obtaining, for Doyle's own benefit any
customer of CareMatrix, or (vi) encourage any customer or supplier not to enter
in or renew a business relationship with CareMatrix.
(c) Doyle acknowledges and agrees that the foregoing
territorial, time and other limitations are reasonable and properly required for
the adequate protection of the business and affairs of CareMatrix, and in the
event that any of territorial, time or other limitations is found to be
unreasonable by a court of competent jurisdiction, Doyle agrees and submits to
the reduction of such territorial, time or other limitations to such an area,
period or otherwise as the court may determine to be reasonable. In the event
that any limitation under this Section 10 is found to be unreasonable or
otherwise invalid in whole or in part in any jurisdiction, Doyle agrees that
such limitation shall be and remain valid in other jurisdictions.
(d) Doyle acknowledges warrants and agrees that the
restrictive covenants contained in this Section 10 are necessary for the
protection of CareMatrix's legitimate business interests and are reasonable in
scope and content.
(e) Nothing in paragraphs (a) through (d) of this Section 10
shall preclude Doyle from making passive investments of more than 5% of a class
of securities of any business enterprise registered under the Securities
Exchange Act of 1934 the business or activities of which are substantially
similar to or directly competitive with CareMatrix as proscribed under Section
10(a) above.
11. Transition. For a period of ninety (90) days following the Effective
Date of this
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Agreement, Doyle hereby covenants and agrees to cooperate with and
assist CareMatrix in the transition of any business or business-related matters
following his resignation pursuant this Agreement, and Doyle may utilize
CareMatrix's support staff to the extent reasonably necessary to provide such
transitional assistance.
12. WAIVER AND RELEASE BY DOYLE. (a) In consideration of the foregoing
waiver and release by CareMatrix pursuant to this Agreement and other good and
valuable consideration, Doyle hereby on behalf of himself, his executors, heirs,
administrators, assigns and anyone else claiming by, through or under him,
waives, releases, covenants not to sue and forever discharges CareMatrix, all
affiliates of, and all present and former officers, directors, agents, employees
and representatives of CareMatrix, and their respective successors and assigns
(hereinafter collectively referred to as the "Employer Releasees") of, from and
with respect to any and all debts, demands, actions, causes of action, suits,
covenants, contracts, agreements, promises, torts, damages, claims, demands and
liabilities whatsoever of any name and nature, both in law and in equity
(hereinafter "Employee Claims") which he now has or ever had against each or any
of the Employer Releasees by reason of any matter, cause or thing whatsoever
from the beginning of the world to the date of the signing of this Agreement,
including, but not limited to, any Employee Claims arising out of, based upon or
connected with his employment by any Employer Releasee, and/or the compensation
and working conditions for that employment and any Employee Claims that might
exist under federal, state or local laws, including, but not limited to, any
Employee Claims based on race, national origin, handicap, color, age, sex or
Chapter 151B of the Massachusetts General Laws or his resignation pursuant to
this Agreement.
(b) The waiver and release in this Section 12 includes,
without limitation, any Employee Claims Doyle might otherwise have had based on
promises, contracts or laws regarding unfair or bad faith conduct, and state and
federal statutory protections against discrimination in employment specifically
including, among all the others, any rights or Employee Claims that he may have
under: Title VII of the Civil Rights Act of 1964, which prohibits discrimination
in employment based on race, color, national origin, religion or sex; and/or the
Equal Pay Act, which prohibits paying men and women unequal pay for equal work;
and/or the Americans with Disabilities Act, which prohibits discrimination
against the handicapped. The waiver and release also applies to any Employee
Claims Doyle may have under applicable state law governing discrimination in
employment and applies to any Employee Claims that may now exist whether or not
now known to Doyle.
(c) Doyle represents, covenants and agrees that he has not and
will not bring any federal or state lawsuit or file any administrative or other
Employee Claim for any act or omission prior to the Effective Date of the
Agreement against any Employer Releasee based on his employment with any
Employer Releasee.
13. WAIVER AND RELEASE BY CAREMATRIX. (a) In consideration of the
foregoing covenants and agreements, CareMatrix hereby on behalf of itself and
anyone else claiming by, through or under it or any predecessor or affiliate
thereof, effective on the Effective Date, waive, release, covenant not to sue
and forever discharge Doyle and his respective successors and assigns
(hereinafter "Doyle Releasees") of, from and with respect to any and all debts,
demands, actions, causes of action, suits, covenants, contracts, agreements,
promises, torts, damages, claims, demands and liabilities whatsoever of any name
and nature, both in law and in equity (hereinafter "Employer Claims") which they
now have, ever had or may in the future have against each or any of the Doyle
Releasees by reason of any matter, cause or thing whatsoever from the beginning
of the world to the date of the signing of this Agreement, including, but not
limited to, any Employer Claims arising out of, based upon or connected with
Doyle's employment by or services rendered to CareMatrix, or any predecessor or
affiliate thereof, and/or the
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compensation for that employment or service and any Employer Claims that might
exist under Federal, state or local laws.
(b) Notwithstanding anything to the contrary contained in this
Agreement, CareMatrix does not waive or release Doyle of any obligations due
under the Note, including, without limitation, the payment of all principal and
interest due thereunder.
14. No Waiver as to this Agreement. Notwithstanding the foregoing, in no
event shall Doyle or CareMatrix be deemed to have waived or released any claims
with respect to the enforcement of the terms of this Agreement or any rights or
obligations granted or due to any party hereunder.
15. Effective Date. The "Effective Date," as used herein, shall be the
date on which this Agreement has been executed by both Doyle and CareMatrix.
16. Notices. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be (as elected by the person
giving such notice) hand delivered by messenger or overnight courier service or
mailed by U.S. certified mail (postage prepaid), return receipt requested,
addressed to the parties as follows:
If to CareMatrix: CareMatrix Corporation
197 First Avenue
Needham, MA 02194
Attn: General Counsel
If to Doyle: Michael J. Doyle
9 Glen Garry Road
Winchester, MA 01890
or to such other address as any party may designate by notice complying with the
terms hereof. Each such notice shall be deemed delivered (a) on the date
delivered if by personal or overnight delivery, or (b) on the date upon which
the return receipt is signed, delivery is refused, or the notice is designated
by the postal authorities as not deliverable, as the case may be, if mailed. Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by registered or certified mail to the
principal office of the recipient.
17. Severability. Each section and paragraph hereof shall be considered
severable, and if for any reason any section or paragraph is determined to be
invalid under current or future law, such invalidity shall not impair the
operations of or otherwise affect the valid portions of this Agreement
18. Confidentiality. The existence and settlement of all Employee Claims
and Employer Claims and any allegations related thereto released by Doyle and
CareMatrix (as the case may be) shall be confidential and neither Doyle nor
CareMatrix shall disclose any information about the existence, nature and
settlement of such Employee Claims and Employer Claims and any allegations
related thereto to anyone other than such party's lawyer, all of who shall be
bound by this confidentiality provision.
19. Acknowledgment of Doyle. Doyle acknowledges that he has read and
understands this
-5-
<PAGE>
Agreement, that he has consulted an attorney specifically with respect to this
Agreement, and that he has voluntarily executed this Agreement.
20. Entire Agreement This is the complete agreement between the parties
and it supersedes any and all written and/or oral promises and/or
representations made between the parties prior to the execution of this
Agreement. There are no other promises, understandings or agreements between the
parties other than the agreements specifically stated in this document, and
Doyle confirms that no other promises or understandings have been relied on by
him in deciding to sign this agreement. The Agreement may not be modified in any
manner by either party except in a writing agreed to and signed by both parties.
21. Governing Law. This Agreement shall be deemed to have been made
within the Commonwealth of Massachusetts and shall be interpreted and construed
and enforced in accordance with the laws of the Commonwealth of Massachusetts
and before the Courts of the Commonwealth of Massachusetts.
[Remainder of page intentionally left blank]
-6-
<PAGE>
READ THIS AGREEMENT CAREFULLY. IT IS A LEGALLY BINDING AGREEMENT
WHICH INCLUDES A WAIVER AND RELEASE OF LEGAL RIGHTS.
WITNESS the execution hereof as an agreement under seal this ___ day of
___________, 1997.
Witness:
/s/ /s/
- ------------------------------ ----------------------------------
Michael J. Doyle
Witness: CAREMATRIX CORPORATION
/s/ By: /s/
- ------------------------------ ---------------------------------
Its:
-7-
MILES RESIGNATION AGREEMENT EXHIBIT 10.95
RESIGNATION AGREEMENT
THIS RESIGNATION AGREEMENT (the "Agreement") is made as of the 10th day
of April, 1997, by and between CareMatrix Corporation, a Delaware corporation
(the "Company"), and Kenneth M. Miles ("Miles").
W I T N E S S E T H
WHEREAS, Miles is currently employed by the Company;
WHEREAS, Miles' employment by the Company is evidenced by an Amended and
Restated Employment Agreement, dated as of October 4, 1996 (the "Employment
Agreement"); and
WHEREAS, Miles desires to terminate the Employment Agreement and resign
from the Company to pursue other opportunities, effective as of April 1, 1997
(the "Resignation Date").
NOW THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00)
and other good and valuable consideration, including the promises and covenants
contained herein, the receipt and sufficiency of which is hereby acknowledged by
each of the parties hereto, the parties agree as follows:
1. Recitals. The foregoing recitals are true and correct and are
incorporated herein by reference.
2. Resignation.
(a) Miles hereby resigns from the Company, such resignation to be effective
at 11:59 p.m. on the Resignation Date. Miles agrees to promptly execute all
documentation that the Company may reasonably request to confirm such
resignation. All reimbursable expenses of Miles incurred on behalf of the
Company prior to the Resignation Date shall be reimbursed to Miles subject to
the existing corporate policies regarding such reimbursement, together with any
accrued and unused vacation days.
(b) Any and all press releases, announcements or other communications
concerning or mentioning the resignation of Miles from the Company shall be
subject to the prior approval of Miles, other than statements, announcements or
other communications in the ordinary course; provided, however, that if Miles
makes any statements concerning the reasons for or terms of his resignation from
the Company that result in adverse publicity for any related entity, then the
Company shall have the right to make any responses deemed necessary to protect
its interest.
(c) Neither the Company nor Miles will make any statements nor take any
action to disparage the other, including any executive officer of the Company or
member of the Board of Directors of the Company (the "Board"), at anytime
whatsoever.
(d) The Company shall not contest any claim that Miles may make for
unemployment compensation.
3. Severance Payment. On the Resignation Date, the Company shall pay to
Miles a lump sum severance payment equal to one (1) year of Miles' base salary,
at his current salary rate of One Hundred Twenty-Five Thousand Dollars ($
125,000) per annum, less State, Federal, Social Security and Medicare
withholdings and Insurance Contributions (as defined below) (the "Severance
Payment"). In addition, the Company shall pay to Miles a lump sum payment equal
to Miles' current car allowance for one (1) year, which in the aggregate equals
Six Thousand Dollars ($ 6,000).
<PAGE>
4. Stock Options. As of the date of this Agreement, Miles currently has
unexercised stock options for 60,900 shares of the Company's common stock (the
"Options"). The Company represents and warrants that all of Miles' Options are
vested and the resale of such Options are registered under the Securities Act of
1933, as amended. The Company shall cause the exercise period with respect to
such Options to be extended such that the Options shall be exercisable at any
time on or before October 31, 1998.
5. Benefits.
(a) Savings Plan. Subject to the terms of the applicable plans and Federal
and State laws and regulations, Miles shall have the right to receive a return
of all vested contributions of the Company (if any), to the 401(k) plan
maintained by the Company. The Company agrees to process promptly any requests
by Miles to roll over Miles' 401(k) savings account to a new account.
(b) Insurance Coverage. Commencing on the Resignation Date and continuing
until the earlier of (i) Miles' accepting new employment providing healthcare
coverage for Miles and his immediate family or (ii) March 31, 1998, the Company
will continue to provide Miles all medical, dental, long term disability and
term life insurance benefits in effect as of the Resignation Date. Miles'
employee contribution to the medical, dental, disability and life insurance
plans (collectively, the "Insurance Contributions") through March 31, 1998,
shall be deducted from the Severance Payment as set forth in Section 3 of this
Agreement. In the event Miles desires to terminate any of the insurance benefits
for which Miles has already paid the Company, Miles shall provide the Company
with written notice indicating when he desires the benefits to terminate (the
"Notice") and the Company shall reimburse Miles for the period of time when
Miles will not be covered by insurance, but for which Miles has already paid, as
described in the Notice. From and after the termination of Miles' healthcare
coverage with the Company, Miles will be entitled to continuation of such health
benefits under the Consolidated Omnibus Budget Reconciliation Act of 1986
(COBRA), unless Miles shall have accepted new employment by the end of the
applicable period of time for which such benefits are available under COBRA, in
which event Miles shall look to his new employer for healthcare benefits.
6. References. The Company agrees to respond to any oral or written
employment inquiries from any person regarding Miles' status, position and/or
employment relationship or employment history with the Company in a positive
manner and will, if asked, confirm Miles' dates of employment, his position as
Senior Vice President of Finance and compensation level (including salary,
bonuses and stock options).
7. Non-Competition. The Company shall waive all of the non-competition
provisions set forth in the Employment Agreement (specifically those set forth
in Section 11 thereof), except as provided in Section 8 hereof.
8. Protection of Proprietary Information. During the course of his
employment as an officer of the Company, Miles had access to and gained
knowledge with respect to all of the activities and lines of business the
Company entered, including, without limitation, the planning, development,
management and operation of independent living and assisted living facilities,
nursing homes and other health care facilities, the Company's research and
development techniques with respect to such facilities, projects and programs,
the preparation of market and demand and cost containment studies, project
evaluation methods, facility development programs, management techniques related
to all aspects of such facilities, projects and programs and related businesses
and other valuable and confidential information relating to the business and
activities of the Company (the "Confidential Information"). The parties
acknowledge that unauthorized disclosure or misuse of the Confidential
Information could cause irreparable damage to the Company. The parties also
agree that covenants by Miles not to make unauthorized disclosures of the
Confidential Information and not to use the Confidential Information in a
business in competition with that of the Company are essential to the growth and
stability of the business of the Company. Accordingly,
<PAGE>
Miles agrees that, for a period of one (1) year after the Resignation Date,
Miles shall not use or disclose to anyone any Confidential Information obtained
by him in the course of his employment with the Company. Nothing contained in
this Section 8 shall be deemed to prohibit or restrict Miles from entering into,
owning, participating in or otherwise being involved with a business in
competition with the Company.
9. Remedies. In the event of any breach or threatened breach by Miles of
the provisions of Section 8 of this Agreement, the Company shall be entitled to
an injunction restraining such breach in addition to, and not to the exclusion
of, other remedies or relief. Nothing herein shall be construed as prohibiting
either party from pursuing any other remedies available to him or it for any
other breach or threatened breach of this Agreement by the other party,
including the recovery of damages from the other party.
10. Indemnification. The Company hereby agrees to defend, indemnify and
hold harmless Miles to the maximum extent permitted by applicable law and the
governing documents of the Company against any loss, liability, cost or expense,
in the event that Miles is made, or is threatened to be made, a party to any
action, suit or proceeding (whether civil, criminal, administrative or
investigative), for any acts or omissions taken or omitted to be taken by Miles
in the good faith reasonable belief that such acts or omissions were within the
scope of his duties as an employee of the Company, except for acts or omissions
which constitute bad faith, gross negligence or willful misconduct by Miles.
11. Waiver and Release.
(a) In consideration of the promises and covenants of the parties set forth
herein, the Company and Miles hereby, on behalf of themselves, their executors,
heirs, administrators, successors, assigns, and anyone else claiming, by,
through or under Miles or the Company, waive, release, covenant not to sue and
forever discharge each other, their respective parent and subsidiary companies,
successors, present and former officers, directors, agents, employees and
representatives (hereinafter referred to collectively, with Miles and the
Company, as the "Releasees") of, from and with respect to any and all debts,
demands, actions, causes of action, suits, covenants, contracts, agreements,
promises, torts, damages, claims, demands and liabilities whatsoever of any name
and nature, both in law and in equity (hereinafter the "Claims") which either
Miles or the Company now has or ever had against each other or any of the
Releasees by reason of any matter, cause or thing whatsoever from the beginning
of the world to the date of the signing of this Agreement, including, but not
limited to, any Claims arising out of, based upon or connected with Miles'
employment by the Company, the compensation and working conditions for the
employment and/or the termination of that employment and any Claims that might
exist under federal, state or local laws, including, but not limited to, any
Claims based on race, national origin, handicap, color, age or sex.
(b) The waiver and release contained in this Section 11 includes any claims
that Miles or the Company might otherwise have had based on promises, contracts,
laws regarding unfair or bad faith conduct and wrongful discharge, and state and
federal statutory protections against discrimination in employment, specifically
including, among all the others, any rights or claims that Miles or the Company
may have under (i) the Age Discrimination in Employment Act of 1967, as amended
(29 USC ss. 621), which prohibits age discrimination in employment, except that
this Agreement does not release any claims under that Act that may arise after
the signing of this Agreement, (ii) Title VII of the Civil Rights Act of 1964,
which prohibits paying men and women unequal pay for equal work and/or, (iii)
the Americans with Disabilities Act, which prohibits discrimination against the
handicapped. The waiver and release also applies to any claims Miles or the
Company may have under applicable state law governing discrimination in
employment and applies to any claims that may now exist whether or not now known
to Miles or the Company. Miles understands and acknowledges that he has been
advised to consult with an attorney prior to executing this Agreement, and he
acknowledges that he has been given the opportunity to consider this Agreement
for a period of twenty-one (21) days; that he has the right to revoke the
Agreement within seven (7) days of the date he signs it by providing written
notice to the Company; and
<PAGE>
that the Agreement shall not become effective or enforceable as to the release
of such rights until the eighth (8th) day following the date on which this
Agreement is signed by Miles.
(c) Notwithstanding anything in this Section 11 or any other provision of
this Agreement to the contrary, in no event shall Miles or the Company be deemed
to have waived or released any Claims with respect to any rights or obligations
created under this Agreement. Further, nothing in this Section 11 shall be
deemed to limit the provisions of Section 10 of this Agreement in any respect.
12. Confidentiality.
(a) Miles agrees that the provisions, terms and conditions of this
Agreement are to be held in strict confidence. Miles further agrees not to
disclose the fact that the benefits described in this Agreement were offered to
him, and/or the terms of this Agreement and/or the terms of the benefits
provided to him under this Agreement to anyone, unless compelled by legal
process, except his immediate family, his attorney(s), accountant(s) and
outplacement personnel, provided they likewise agree not to disclose said
information to anyone.
(b) The Company agrees that the provisions, terms and conditions of this
Agreement are to be held in strict confidence. The Company further agrees not to
disclose the fact that the benefits described in this Agreement were offered to
Miles, and/or the terms of this Agreement and/or the terms of the benefits
provided to Miles under this Agreement to anyone, unless compelled by legal
process, except that such disclosure may be made to certain employees, servants,
agents or persons affiliated with the Company on a need-to-know basis, as
determined by the Company.
13. Notices. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be (as elected by the person
giving such notice) hand delivered by messenger or overnight courier service or
mailed by U.S. certified mail (postage prepaid), return receipt requested,
addressed to the parties as follows:
If to the Company: CareMatrix Corporation
197 First Avenue
Needham, MA 02194
Attn: President
If to Miles: Kenneth M. Miles
34 Old Stage Road
Chelmsford, MA 01824
or to such other address as any party may designate by notice complying with the
terms hereof. Each such notice shall be deemed delivered (a) on the date
delivered if by personal or overnight delivery, or (b) on the date upon which
the return receipt is signed, delivery is refused, or the notice is designated
by the postal authorities as not deliverable, as the case may be, if mailed. Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by registered or certified mail to the
principal office of the recipient.
14. Severability. Each section and paragraph hereof shall be considered
severable, and if for any reason any section or paragraph is determined to be
invalid under current or future law, such invalidity shall not impair the
operations of or otherwise affect the valid portions of this Agreement.
15. Entire Agreement. This instrument contains the entire agreement of the
parties and supersedes all other agreements, oral or written, between the
parties. It may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
<PAGE>
16. Governing Law. This Agreement shall be governed, construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts.
17. Enforcement Costs. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable fees of attorneys, paralegals, and legal assistants, court
costs and all expenses even if not taxable as court costs (including, without
limitation, all such fees, costs and expenses incident to appeals), together
with any sales tax thereon, incurred in that action or proceeding, in addition
to any other relief to which such party or parties may be entitled.
18. Interpretation. The terms of this Agreement have been negotiated by the
parties, and this Agreement shall not be construed or interpreted more strictly
against one party than another on the grounds that the Agreement or any draft
thereof was prepared by a party or its counsel.
19. Time of Essence. Time is of the essence of each covenant and obligation
of each party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the due execution hereof
as of the date and year first above written.
WITNESSES: CAREMATRIX CORPORATION
By:
- ------------------------- -------------------------------
Name: Name:
Title:
- ------------------------- -----------------------------------
Name: Kenneth M. Miles
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT AND
APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
No. 7 11,131 Warrants
Warrant to Purchase Common Stock
CareMatrix Corporation
This Warrant Certificate certifies that Health Care REIT, Inc., or
registered assigns, is the registered holder of 11,131 Warrants (the "Warrants")
to purchase Common Stock, $.05 par value per share (the "Common Stock"), of
CareMatrix Corporation, a Delaware corporation (the "Company"). Each Warrant
entitles the holder to receive from the Company upon exercise one fully paid and
nonassessable share of Common Stock (a "Warrant Share") at the initial exercise
price of $16.55 (the "Exercise Price") upon surrender of this Warrant
Certificate and payment of the Exercise Price at the principal offices of the
Company at 197 First Avenue, Needham, Massachusetts 02194, subject to the
conditions set forth herein and in the Warrant Agreement referred to herein.
This Warrant Certificate is being issued by the Company in connection with
lease financing by Health Care REIT, Inc. in the amount of $14,350,000 to
Chancellor of Ellicott, Inc., an affiliate of the Company owned primarily by
Abraham D. Gosman (the "Lease Financing").
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued or to be issued pursuant to a Warrant
Agreement dated as of November 10, 1993 (the "Warrant Agreement"), duly executed
and delivered by the Company, then named The Standish Care Company, which
Warrant Agreement as in effect on the date of issuance hereof is hereby
incorporated by reference in and made part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them in whole or in part by surrendering this Warrant Certificate, with the form
of election to purchase hereon properly completed and executed together with
payment of the Exercise Price in cash, at the office of the Company designated
for such purpose before 5:30 p.m., Boston time, on August ___, 2002, subject to
extension as provided in the Warrant Agreement.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common
<PAGE>
Stock issuable upon the exercise of each Warrant shall also be adjusted. No
fractions of a share of Common Stock will be issued upon the exercise of any
Warrant, but the Company will pay the cash value thereof determined as provided
in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration and sale
rights with respect to the Warrants and the Warrant Shares. Said rights are set
forth in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate for the purpose of any exercise
hereof, of any distribution to the holder(s) hereof, and for all other purposes.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights as a stockholder of the Company.
IN WITNESS WHEREOF, CareMatrix Corporation has caused this Warrant
Certificate to be signed by its President and by its Secretary as of the date
indicated below.
Dated: CAREMATRIX CORPORATION
Original Date of Issuance: By ____________________________
(Reissued Certificates Only) President
By ____________________________
Secretary
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT AND
APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
No. 8 3,677 Warrants
Warrant to Purchase Common Stock
CareMatrix Corporation
This Warrant Certificate certifies that Health Care REIT, Inc., or
registered assigns, is the registered holder of 3,677 Warrants (the "Warrants")
to purchase Common Stock, $.05 par value per share (the "Common Stock"), of
CareMatrix Corporation, a Delaware corporation (the "Company"). Each Warrant
entitles the holder to receive from the Company upon exercise one fully paid and
nonassessable share of Common Stock (a "Warrant Share") at the initial exercise
price of $16.55 (the "Exercise Price") upon surrender of this Warrant
Certificate and payment of the Exercise Price at the principal offices of the
Company at 197 First Avenue, Needham, Massachusetts 02194, subject to the
conditions set forth herein and in the Warrant Agreement referred to herein.
This Warrant Certificate is being issued by the Company in connection with
construction/term loan financing by Health Care REIT, Inc. in the amount of
$16,756,643 to Chancellor of ARI, Inc., an affiliate of the Company. Warrants
are being issued only with respect to $4,780,000 of such financing amount
pursuant to the terms and conditions of a letter agreement between the Company
and Health Care REIT, Inc. dated June 3, 1997.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued or to be issued pursuant to a Warrant
Agreement dated as of November 10, 1993 (the "Warrant Agreement"), duly executed
and delivered by the Company, then named The Standish Care Company, which
Warrant Agreement as in effect on the date of issuance hereof is hereby
incorporated by reference in and made part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them in whole or in part by surrendering this Warrant Certificate, with the form
of election to purchase hereon properly completed and executed together with
payment of the Exercise Price in cash, at the office of the Company designated
for such purpose before 5:30 p.m., Boston time, on September ___, 2002, subject
to extension as provided in the Warrant Agreement.
<PAGE>
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall also be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration and sale
rights with respect to the Warrants and the Warrant Shares. Said rights are set
forth in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate for the purpose of any exercise
hereof, of any distribution to the holder(s) hereof, and for all other purposes.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights as a stockholder of the Company.
IN WITNESS WHEREOF, CareMatrix Corporation has caused this Warrant
Certificate to be signed by its President and by its Secretary as of the date
indicated below.
Dated: CAREMATRIX CORPORATION
Original Date of Issuance: By ____________________________
(Reissued Certificates Only) President
By ____________________________
Secretary
Exhibit 10.100
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT (the "Agreement") is dated as of the 15 day of
April, 1997, by and among CareMatrix of Massachusetts, Inc ., a Delaware
corporation, with its principal place of business in Needham, Massachusetts
("Manager"), and CCC of New Jersey, Inc. , a Delaware corporation, with its
principal place of business in Needham, Massachusetts (the "Owner").
WHEREAS, the Owner is the owner and operator of a one hundred eighty (180)
bed skilled nursing facility located in Princeton, New Jersey (the "Facility");
WHEREAS, the 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, the Manager has represented that it is experienced in the
management of similar health care facilities, is knowledgeable as to the state
and federal requirements governing the licensure, operation, accreditation and
reimbursement of health care facilities and that the owners and employees of
Manager are qualified health care professionals;
WHEREAS, based upon the Manager's representations set forth herein, the
Owner has determined that the hiring of the Manager is cost-effective and
consistent with the Owner's desire to provide high quality care to the patients
at the Facility at the lowest cost;
WHEREAS, the Owner has determined that the services to be provided by the
Manager will augment the services provided by it and the employees of the
Facility so as to increase productivity;
WHEREAS, the Owner has determined that the hiring of the Manager on the
terms and conditions hereinafter set forth will not prevent the Owner from
exercising ultimate control over the policies and operations of the Facility;
and
WHEREAS, the 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 hereto agree as follows:
1. General Duties. The Owner engages the Manager to manage, supervise and
operate the Facility with the objective of providing quality care to patients of
the Facility and to carry out the general duties with respect to the Facility
under the general supervision and direction of the Owner which include, but are
not limited to, the following:
Supervise on behalf of the Owner, the performance of all such administrative
functions as may be necessary in the management of the Facility; select, hire
(or contract with), train, supervise, monitor the performance of, and
discipline, promote, terminate or fire (subject to the rights of the Owner under
Section 2.1 of this Agreement to approve the hiring, disciplining and
termination of the Administrator, and Director of Nursing Services) all
personnel involved in the administration and day-to-day operation of the
Facility, including, without limitation, management, medical, nursing and other
health care personnel, custodial, food service, cleaning, maintenance and other
operational personnel, and secretarial or bookkeeping personnel, each of whom
shall be employees of the Owner; provide centralized accounting, billing,
purchasing and bill payment functions for the Facility; establish systems of
accounts and supervise the maintenance of ledgers and other primary accounting
records by the personnel of the Facility; supervise the financial affairs of the
Facility; establish and supervise the implementation of operating and capital
budgets, including those required to establish reimbursement rates with respect
to state or federal entitlement programs as well as self-pay rates; prepare and
maintain true, complete and accurate records necessary for the preparation of
such operating budgets; determine which items of cost and expense properly
relate to patient care; establish and administer financial controls over the
operation of the Facility, develop and establish financial standards and norms
by which the income, costs and operations of the Facility may be evaluated;
serve as advisor and consultant in connection with policy decisions to be made
by the Owner; furnish reports to the Owner as the Owner may reasonably request
and provide the Owner with economic and statistical data in connection with or
relative to the operations of the Facility; represent the Facility in its
day-to-day dealings with regulatory and rate-setting authorities (including
preparation and submission of reports for reimbursement), creditors, patients,
personnel, agents for collection, and insurers; act as agent for the Owner in
disbursing or collecting the funds of the Facility and in paying the debts and
fulfilling the obligations of the Facility; coordinate and supervise a marketing
plan for the Facility to insure that the Facility obtains full occupancy as soon
as possible and, after the Facility has achieved full occupancy, assist in the
development of an annual marketing plan and budget to maintain the patient
census at a proper level; and do all other things necessary or proper for the
daily operation and management of the Facility, including everything necessary
to ensure compliance with the rules and regulations all applicable governmental
agencies, with Medicare and Medicaid requirements applicable to nursing homes,
and with any other local, state, federal or JCAHO requirements governing or
applicable to nursing facilities. In addition, in order to plan for future
operations and to establish long range policies and goals for the Facility, the
Manager will, under the general supervision of the Owner, meet on at least a
monthly basis with Owner's representatives and the Administrator to review
financial and operational statistics of the Facility. The Administrator also
will attend monthly regional administrator meetings and educational programs.
The Manager further agrees that it will:
(i) perform its duties and responsibilities hereunder in compliance with all
applicable laws, subject to the responsibilities of the Owner as the licensee of
the Facility;
(ii) supervise and direct the management and operation of the Facility,
exercising the degree of care used by an experienced management company, given
the financial resources available to the Facility, the location of the Facility,
the restrictions of applicable laws, and other existing circumstances; and
(iii) consult with the Owner and keep the Owner advised as to all major
policy and business matters relating to the Facility.
1.1 Opinion of Counsel. The Manager shall have the duty to consult
with counsel for the Owner whenever questions arise as to the meaning and
interpretation of the phrase "relating to patient care" as such phrase is used
above with reference to the submission of expenses for reimbursement pursuant to
applicable state or federal statutes or regulations relating to entitlement
programs. The Manager shall be entitled to rely upon any such opinion when
rendered by counsel.
2. Specific Duties. Without limiting the generality of the foregoing, the
Manager shall have the following specific duties:
2.1 Employees. The Manager shall recruit, evaluate, select, and
hire, on behalf of the Owner, a qualified and properly licensed Administrator
who shall be responsible for the functional operation of the Facility and
supervision of personnel at the Facility on a day-to-day basis, as well as all
on-site medical, nursing, custodial, food service, cleaning, maintenance,
secretarial and bookkeeping personnel for the day-to-day operations of the
Facility. The Administrator and all such other personnel shall be employees of
the Owner, and the Owner shall retain full responsibility for payment of their
wages, salaries and other compensation and benefits. The Manager shall, subject
to approval by the Owner, establish necessary and desirable personnel policies
and procedures, wage structures and staff schedules. The Manager, subject to
approval by Owner, shall have authority to hire, discipline, promote and
discharge employees of the Owner who participate in the day-to-day operation and
administration of the Facility. Both the Manager and the Owner must approve the
hiring and/or firing of the Administrator, the Executive Director and the
Director of Nursing Services, which approval shall not be unreasonably withheld
or delayed. The Manager shall: (i) maintain payroll records and prepare weekly
and monthly payrolls, withholding taxes and Social Security taxes; (ii) prepare
and submit all required state and federal tax or benefit returns required with
respect to employees, including, without limitation, the returns required by
FICA, FUTA and all applicable unemployment compensation laws; (iii) maintain in
force all required levels of workers' compensation insurance; and (iv) prepare
and submit to the Owner any certificates of payroll expenses as may be
reasonably requested. The Manager shall not be liable to any employee of the
Facility for wages, salaries and other compensation and benefits, or to the
Owner, unless the Manager was specifically required to obtain the approval of
the Owner before committing to a salary or benefit and such approval was not
obtained. The Manager shall not be liable to the Owner or others for any action
or omission on the part of any employee of the Owner of the Facility, unless the
employee was acting under the express direction of the Manager or unless such
employee was following an express policy or procedure of the Manager, which
policy or procedure is subsequently determined to be incorrect. The Manager
shall provide the Owner with monthly reports of all hiring, disciplinary
actions, promotions and firings at the Facility for the month.
2.2 Purchasing. The Manager shall purchase, for the account of the
Owner, all necessary foodstuffs, supplies, materials, appliances, tools and
equipment necessary for the operation of the Facility. The Manager shall arrange
contracts on behalf of the Owner for electricity, gas, telephone, cable
television and any other utility or service necessary for the operation of the
Facility. The Manager shall, on behalf of the Owner, contract for and supervise
the making of any necessary repairs, alterations, and improvements to the
Facility; provided that in the case of any capital expenditure, alteration or
improvement, the cost of which exceeds Three Thousand ($3,000) Dollars, the
Manager shall obtain the prior written approval of the Owner; and provided
further, that no such prior written approval shall be required if the
expenditure is made under circumstances reasonably requiring emergency action
(so long as the Manager attempts to notify the Owner on a concurrent basis). The
Manager shall prepare and submit to the Owner any certificates of purchasing
expenses incurred for the Facility as may be reasonably requested.
2.3 Collection of Accounts. The Manager shall prepare and submit
bills and collect for the account of the Owner any and all moneys owing to the
Owner, whether from patients or third party payors such as Medicare or Medicaid.
2.4 Bookkeeping. The Manager shall establish and maintain a record
and bookkeeping system for the operation and conduct of business of the Facility
in accordance with generally accepted accounting principles consistently applied
and in accordance with all requirements of Medicare and Medicaid or other third
party payors. Books and records at the Facility may be maintained by an employee
of the Owner under the supervision of the Manager. Full books of account with
entries of all receipts and expenditures related to the operation of the
Facility shall be maintained at the offices of the Manager and shall at all
times be open for inspection by representatives of the Owner. The Manager shall
be responsible for filing all local, state and federal tax returns relating to
the operation of the Facility, with the exception of corporate income tax and
pension returns, and shall be responsible for penalties, interest, and audit
costs arising out of late, inaccurate, or incomplete filings or the Manager's
failure to file such tax returns provided, however, that the Owner makes
available sufficient funds for payment of any taxes due).
2.5 Financial Reports. The Manager shall furnish to the Owner the
following financial reports:
(a) as soon as possible and not later than thirty (30) days after
the close of each calendar month, a balance sheet as of the end of the month and
a statement of income and retained earnings for the month and for the
year-to-date, together with a comparison to the budget and a detailed statement
of receipts, disbursements, accounts payable and accounts receivable as of the
end of such monthly period; provided, however, that the computer services
charges connected with the preparation of such information shall not be an
expense of the Owner;
(b) as soon as possible, and not later than sixty (60) days after
the close of each fiscal year, a year-end compilation report, including a
balance sheet as of the end of such year and a statement of income and retained
earnings;
(c) as soon as possible after the close of the year for rate-setting
purposes and not later than the applicable deadline, a year-end cost report
showing cost and expenditures relating to patient care; such report shall be, in
all respects, in compliance with the requirements of Medicare, Medicaid or any
other third party payor to whom the Owner may be obligated to furnish reports
and in a form suitable for submission to the state or such third party payor;
(d) such other and further reports or calculations as may be
required under any financing terms in accordance with the deadlines set forth in
any financing agreements encumbering the Facility (any such financing agreement
or agreements are collectively referred to herein as a "Financing Agreement").
2.6 Patients. In accordance with the provisions of all applicable
state and federal statutes, as amended from time to time, the Manager shall use
its best efforts to maintain the patient census at the Facility in such numbers
and in such a manner as, in the Manager's judgment, will tend to maintain the
financial stability of the Facility and will comply with the covenants in any
Financing Agreement. The Manager shall recommend to the Owner programs for
implementation with third party payors, such as insurers, federal agencies and
state and local agencies, for care of patients with special medical, care, or
rehabilitation needs on a contract basis, all for the purposes of, in the
opinion of the Manager, improving the financial stability of the Facility;
provided, however, that any such agreement providing for any discount of the
Facility's standard rate shall require the Owner's prior written approval.
However, the Manager shall not introduce any additional function or service into
the Facility's program of health care without first obtaining the consent of the
Owner and any regulatory approvals required by law.
2.7 Budgets. The Manager shall prepare and submit for approval by
the Owner the following: (a) as soon as possible and not later than thirty (30)
days before the close of each fiscal year, or on such earlier date as may be
required under any Financing Agreement, a detailed written capital and operating
budget for the next succeeding fiscal year, broken down by month and showing
projected expenditures and projected revenues for such budget period; and (b)
such other budgets as may be reasonably required of the Owner under any
Financing Agreement or by regulatory authorities showing, inter alia, projected
ordinary and extraordinary expenditures and protected revenues for such budget
period.
2.8 Certification, Licenses and Accreditation. The Manager shall
prepare on behalf of the Owner all reports and materials, and follow all
procedures necessary, to obtain and/or maintain all federal and state
certificates, licenses and accreditation necessary to maintain the Facility as a
long-term facility and nursing home.
2.9 Liaison with Agencies. To the extent desired by the Owner, the
Manager shall represent the Owner in all formal or informal proceedings before
all state and federal agencies engaged in the regulation, payment, rate-setting,
and/or licensing of long-term care facilities and nursing homes. The Owner
reserves the right to approve all settlements prior to their finalization.
2.10 Insurance. The Manager shall obtain, at the Owner's expense, on
behalf of the Owner and with the Owner's prior approval, all necessary
liability, fire and extended coverage, workers' compensation, and malpractice
insurance covering the Facility, its equipment, the employees of the Owner, and
the employees of Manager, if any, who relate to the operations of the Facility,
which policies of insurance shall name the Owner and the Manager as coinsured
and which policies shall comply with the terms of any Financing Agreement. The
Owner shall bear the expense of the above with respect to the Owner's employees,
equipment and the Facility. The Manager shall bear the expense of the above with
respect to the Manager's employees, if any. Such insurance shall be written by a
responsible insurance company or companies reasonably satisfactory to the Owner
in kinds and amounts and a certificate of insurance shall by provided to the
Owner. The Owner shall retain the right to designate any insurance agent or
agency of its choice through which such insurance shall be obtained.
2.11 Technical and Professional Services. The Manager may, with the
prior approval of the Owner and at the Owner's expense, secure such engineering,
legal, and other specialized technical and professional services as may be
necessary to advise or represent the Owner in connection with any matter
involving or arising out of the ownership and operation of the Facility or the
conduct of affairs of the Facility.
2.12 Marketing. The Manager shall agree to coordinate and supervise
the agreed upon marketing plan for the Facility during the fill-up phase (the
"Marketing Plan"). Monthly statistical census analysis reports will be generated
by the Manager and delivered to the Owner. The Manager will recommend
adjustments in the Marketing Plan as needed to achieve full occupancy. For
purposes of this Agreement, the Facility will be considered to have achieved
full occupancy when ninety percent (90%) of its licensed beds have been occupied
for a continuous thirty (30) day period. The Manager will assist the management
staff in the continued development and coordination of advertising and
promotional materials, internal and external public relations programs, sales
and staff development programs, and customer satisfaction programs. The Manager
shall assist the Facility's management staff to develop a yearly Marketing Plan
and budget based upon the Facility's yearly census program and image.
2.13 Administrative. The Manager shall:
(i) recommend the establishment of, and implement and
supervise procedures to provide staff review of all operational areas, which
status shall be reviewed in regularly scheduled quarterly meetings and at other
meetings as may be deemed necessary or desirable by the Owner or the
Administrator; and
(ii) provide on-going review and monitoring of all of the
Facility's compliance with applicable regulatory requirements for licensure
reimbursement, which status shall be reviewed in regularly scheduled quarterly
meetings and at other meetings as may be deemed necessary or desirable by the
Owner.
2.14 Plant and Maintenance.
(i) attention shall be given to preventive maintenance (this
item may be provided by outside parties if economically feasible) and, to the
extent deemed feasible by the Manager and the Owner, the services of regular
maintenance employees shall be used; and
(ii) The Manager shall make recommendations to the Owner
regarding entering into contracts with qualified independent contractors for the
maintenance and repair of air conditioning systems and laundry equipment and for
extraordinary repairs beyond the capability of regular maintenance employees.
3. Management Fee.
As compensation for the services to be rendered by the Manager
during the term of this Agreement, the Manager shall pay itself, at its
principal office given below (or at such other place as the Manager may from
time to time designate in writing), and at the times hereinafter specified, a
monthly management fee (the "Management Fee") during the terms of this Agreement
equal to five (5%) percent of Net Revenues (as defined below). The Management
Fee will be paid in equal monthly installments 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.
"Net Revenues" as used herein shall mean Gross Revenues (defined below) less
all contractual adjustments for Medicaid and Medicare thereto.
"Gross Revenues" as used herein shall mean and include all revenues received
or receivable 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 patients directly or indirectly
connected with the Facility or the provision of all such goods and services, and
will include, without limitation, such billings to all governmental payors,
including Medicare and Medicaid, such billings to self-paying patients, and such
billings to all other third-party insurance carriers and the gross dollar amount
billed from non-patient care activity but nevertheless arising from the
operation of the Facility including, but not limited to, all revenues received
or receivable by reason of all rooms, beds and other facilities subleased or
goods sold at the Facility, including, without limitation, all revenues received
from any subletting, licensing or other arrangements with third parties relating
to the possession or use of any part of the Facility.
4. Expenses.
4.1 Manager Expenses. The Manager shall bear the following expenses
incurred by it in the management of the business and properties of the Facility:
(a) Salary and expenses (including, without limitation,
payroll taxes, costs of employee benefit plans, travel, insurance, and fidelity
bonds) all of personnel employed by the Manager to carry out all
responsibilities detailed above.
(b) Salary and expenses (including, without limitation,
payroll taxes, cost of employee benefit plans, travel, insurance, and fidelity
bonds) of financial and accounting personnel employed by the Manager to maintain
accounting books and records of the Facility, except as provided below.
4.2 Owner Expenses. Except as otherwise expressly provided herein,
the Owner shall bear all of the expenses of operating the Facility and rendering
patient care not assumed by the Manager, and without limiting the generality of
the foregoing, it is specifically agreed that the following expenses of the
Facility shall not be borne by the Manager:
(a) Fees and expenses of independent professional persons
expressly retained by the Owner, or retained by the Manager for the account of
the Owner with the prior permission of the Owner, for any purpose; salary, other
compensation or benefits and expenses of administrative, medical, nursing and
other health care personnel; custodial, food service, cleaning, maintenance,
operational, secretarial and bookkeeping personnel employed to administer the
day-to-day operations of the Facility and to perform health care and related
services in the day-to-day operations of the Facility's business.
(b) Interest and discounts on indebtedness incurred or
assumed by the Owner.
(c) Taxes, imposts, levies or other charges on the existence,
operation, receipts, income or property of the Owner, provided, however, that
all interest and penalties incurred as a result of the Manager's failure to
timely file all returns which the Manager is required to file pursuant to this
Agreement, or to make timely payment of all taxes, levies, imposts, or other
charges, to the extent that sufficient funds were available to the Manager as of
the date such payments were due, shall be the responsibility of the Manager.
(d) Medical supplies and equipment, food, fuel, kitchen and
food service equipment, linens, beds, furniture, clothing and all other supplies
and equipment used in supplying nursing home care and services to patients.
(e) Expenses connected directly or indirectly with the
design, acquisition, disposition or ownership of real and personal property
devoted, used, or consumed in the business of the Facility, including, without
limitation, purchase and/or construction of the land and buildings used for such
purpose, maintenance, repair and improvement of property, all real estate and
personal property taxes assessed, premiums for property and liability insurance
on property owned by the Owner, brokerage commissions, and fees and expenses of
consultants, managers, or agents retained directly by the Owner.
(f) The Management Fee.
(g) Legal fees and related expenses pertaining to the
acquisition, sale, mortgaging or leasing of property, litigation and proceedings
relating to rates and charges at the Facility, any other litigation or
proceedings to which the Owner is a party. However, such fees shall not include
those fees resulting from or arising out of negligence by the Manager.
In the event that there are insufficient funds available to the Manager to pay
expenses which the Manager is authorized to incur and pay hereunder, including,
without limitation, any taxes to be paid on behalf of the Owner by the Manager,
the Manager shall promptly notify the Owner of the amount necessary to cure and
the reason for such deficit.
4.3 Deposit and Disbursement of Funds.
(i) The Manager shall establish and administer the overall
rate structure of the Facility and shall supervise the issuance of bills and the
collection of accounts as the true and lawful attorney-in-fact for the Owner.
The Manager shall take possession of and endorse the name of the Owner on all
notes, checks, money orders, insurance payments, and any other instruments
received in payment of accounts described below.
(ii) The Manager shall establish such accounts for the
Facility in the Manager's name, separate from all other accounts and funds of
the Manager, with a bank or banks whose deposits are insured by the Federal
Deposit Insurance Corporation ("FDIC") or with a savings and loan institution or
institutions whose deposits are insured by the Federal Savings and Loan
Insurance Corporation ("FSLIC") as it deems necessary or desirable. The Manager,
on behalf of the Owner, shall use reasonable efforts to collect (using legal
counsel approved by the Owner, if necessary) all sums due and owing to the Owner
in connection with the operation of the Facility, whether from patients, third
party payors or others. The Manager and the Owner shall deposit into such
accounts all monies furnished by the Owner as working funds and all receipts and
monies arising from the operation of the Facility or otherwise received by the
Owner or by the Manager for or on the behalf of the Owner.
(iii) Draws on such accounts may be made by the sole
signature of an authorized representative of the Manager (or by wiring
instructions from such authorized representative of the Manager) and shall be
paid to the Manager to reimburse the Manager for payments made pursuant to this
Agreement by the Manager from its own accounts. The Owner hereby appoints the
Manager, for the term of this Agreement, as the Owner's true and lawful
attorney-in-fact to withdraw, by writing checks against such accounts, funds for
reimbursement of all amounts payable pursuant to this Agreement in connection
with the operation of the Facility. The Owner agrees to execute from time to
time any additional documents required by any bank wherein such documents are
held to effectuate all powers of attorney referred to herein. The Manager shall
make disbursements and payments from such accounts, on behalf and in the name of
the Owner, in such amounts and at such times as are deemed by the Manager to be
appropriate or required in connection with, first, payments required by any
Financing Agreement, and second, payments of ownership, maintenance and
operating expenses of the Facility and the other costs, expenses and
expenditures provided for in this Agreement including the Management Fee.
5. Duty of Manager. The Manager shall render the services called for
hereunder in the utmost good faith and the Manager acknowledges that it is
acting in a fiduciary capacity with respect to the Owner and owes the Owner the
highest duty of care.
6. Relationship of the Parties. The Owner and the Manager are neither
partners nor joint venturers with each other, and nothing herein shall be
construed so as to make them such partners or joint venturers or impose on any
of them any liability as partners or joint venturers. All dealings between the
Owner and the Manager are at arms length as between non-related parties.
7. Term and Termination.
7.1 Period of the Term. This Agreement shall continue for an initial
term of ten (10) years commencing on ____________ (the "Commencement Date"), and
ending on ______________. Thereafter, this Agreement shall be renewed
automatically for three (3) additional five (5) year terms unless the Owner
sends the Manager written notice no less than ninety (90) days prior to the then
applicable Expiration Date that it does not wish to have the Agreement renew
beyond the then applicable Expiration Date. As used herein the term "Expiration
Date" shall mean the later of ___________, or the date to which this Agreement
has been extended as provided in this Section 7.1.
7.2 Termination for Cause. Either party may terminate this Agreement
for "cause" by delivering thirty (30) days written notice to the other. "Cause"
shall include, but not be limited to, each of the following:
(i) the violation by either party of any material provision
in, or obligation imposed by, this Agreement which violation shall not have been
cured to the reasonable satisfaction of the other party within thirty (30) days
following the date on which written notice of termination has been received by
the party who has violated a material provision or obligation imposed by this
Agreement;
(ii) any illegal or improper act engaged in by either party
in the operation of the Facility;
(iii) if either 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
(iv) if the Owner is required, pursuant to the terms and
conditions of any Financing Agreement, to retain new management for the
Facility.
7.3 Termination for Failure to Pay Fee on a Timely Basis. In
addition to the provisions of Section 7.2 above, the Manager may terminate this
Agreement upon thirty (30) days written notice of the Owner's failure to pay the
Management Fee when due unless the Owner cures the payment default within thirty
(30) days after receiving written notice from the Manager.
7.4 Termination Arising from Unresolved Dispute. In the event that a
dispute arises between the parties regarding the interpretation of a material
provision of this Agreement or the performance by one of the parties of an
obligation hereunder, and the parties are unable to reach a mutual agreement
regarding the dispute within thirty (30) days of written notice of an unresolved
dispute given by one of the parties to the other, which notice shall describe
the nature of the dispute, any party may elect to terminate this Agreement by
giving one hundred twenty (120) days written notice to the other of its intent
to terminate. Unless the parties reach mutual agreement regarding the matter in
dispute within such one hundred twenty (120) day period, this Agreement shall
terminate on midnight of the one hundred twentieth (120th) day following the
other parties receipt of notice of termination and all obligations due and owing
hereunder shall forever cease, except to the extent that a right or obligation
has accrued prior to the termination date. The right of a party to terminate
this Agreement pursuant to this section shall be in addition to, and not to the
exclusion of, any other remedies, whether at law or in equity, of the parties
hereunder.
8. Indemnification. The Owner shall indemnify the Manager and hold it
harmless of, for, and against all costs, claims, damages or expenses, including
reasonable attorney's fees (collectively "Costs"), incurred or suffered by the
Manager and arising out of acts performed within the scope of this Agreement.
Notwithstanding the foregoing, the Owner shall not have any obligation to
indemnify the Manager or hold it harmless of, from, and against Costs incurred
or suffered by the Manager as a result of the Manager's fraud, willful
misconduct, or gross negligence, or for Costs incurred or suffered by the
Manager as a result of the Manager's failure to submit proper reports to the
appropriate regulatory agencies, to keep true, accurate and complete records or
to obtain any necessary opinion of counsel as required by Section 1.1 of this
Agreement. The Manager shall indemnify the Owner and hold it harmless of, from
and against all Costs incurred or suffered by the Owner as a result of any of
the Manager's fraud, willful misconduct, or negligence, or as a result of the
Manager's failure to submit proper reports to the appropriate regulatory
agencies, to keep true, accurate and complete records or to obtain any necessary
opinion of counsel as required by Section 1.1 of this Agreement.
9. 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"), the 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 the Manager's
books, documents, and records necessary to verify the nature and extent of the
costs of services provided to the 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.
The provision of this Section 9 shall apply only if this Agreement is
covered by the Act and such provisions shall become void and shall be of no
further force or effect if, at the time a request is made, this Agreement is not
subject to the Act. The Manager agrees that if it carries out any of the duties
of this Agreement through a subcontract with a related organization which
subcontract has a value or cost of $10,000 or more over a twelve (12) month
period, the Manager will obtain an identical access requirement in such
subcontract.
10. Fidelity Bond. The Manager agrees to obtain a fidelity bond, employee
dishonesty insurance policy or other similar coverage, in form and amount
satisfactory to the Owner, covering those employees reasonably required to by
covered by the Owner.
11. Amendments. This Agreement shall not be changed modified, terminated, or
discharged, in whole or in part, except by an instrument in writing signed by
the Owner and the Manager, their respective successors or assigns, or otherwise
as provided herein. The Manager agrees to make any reasonable modifications to
the Agreement as may be required by the holder of any Financing Agreement. Such
modifications shall be in writing and signed by the Owner and the Manager.
12. Governing Law. The provisions of this Agreement shall be governed by,
construed, and interpreted in accordance with the laws of the Commonwealth of
Massachusetts. 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.
13. Assignment. Neither the Owner nor the Manager will assign its interests
in this Agreement without the prior written consent of the other, which consent
shall not be unreasonably withheld, delayed or conditioned.
14. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties and to their respective successors and assigns.
15. 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.
16. 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 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 Owner: CCC of New Jersey, Inc.
197 First Avenue
Needham, MA 02194
Attention: James M. Clary, III, Esq.
As to Manager: CareMatrix of Massachusetts, Inc.
197 First Avenue
Needham, MA 02194
Attention: President
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 to the office or address of the addressee.
17. 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 the Owner. Trade names, ideas and documents,
forms and development material not developed specifically for the Facility are
to be considered proprietary and will remain the property of the Manager. 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 the Manager. All financial management
forms, documents and software systems including, but not limited to, bookkeeping
manuals, financial forms, financial spreadsheets, database or word processing
forms, and financial accounting packages are and will remain the property of the
Manager. Upon termination of this Agreement, the Owner shall have the option to
purchase operational material belonging to the Manager, except for the financial
accounting packages, at a mutually agreed upon price.
18. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
19. Delivery of Management Services. Notwithstanding anything contained in
this Agreement to the contrary, with the prior written consent of the Owner
(which consent shall not be unreasonably withheld, delayed or conditioned) the
Manager shall have the right to engage another management company which provides
management services to similar skilled nursing facilities to perform all or a
portion of the Manager's duties and obligations under this Agreement. The Owner
acknowledges and agrees that Vanguard Health Services, Inc. would be an
acceptable management company to provide all or a portion of the services to be
provided by the Manager under this Agreement.
20. Lease Option. The Owner hereby agrees that so long as the Manager is not
in default in the performance of any duty or any obligation hereunder, the
Manager shall have the option to lease the Facility at any time during the term
of this Agreement (including any extension thereof) by providing the Owner with
at least ninety (90) days prior written notice of such election. Within thirty
(30) days after receipt of the Manager's notice to lease, the parties shall
enter into a lease agreement containing mutually agreeable terms and conditions
(the "Lease"), which shall include, without limitation, a ten (10) year initial
term (with three (3) 5-year renewal terms) and rental payments equal to the fair
market value as determined immediately prior to the initial term of the Lease
and immediately prior to any renewal terms.
IN WITNESS WHEREOF, the parties have executed this Management Agreement as
of the date first set forth above.
WITNESS: CAREMATRIX OF
MASSACHUSETTS,
_______________________ By: _____________________________
Name: Name:
Title:
WITNESS: CCC OF NEW JERSEY, INC.
________________________ By: _______________________
Name: Name:
Title:
Exhibit 10.101
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (the "Agreement") is effective as of the 1st
day of January, 1997, by and between CCC of Massachusetts, Inc. ("Assignor") and
CareMatrix of Massachusetts, Inc. ("Assignee").
WITNESSETH:
WHEREAS, Assignor and CCC of Connecticut, Inc. have entered into a
certain Management Agreement dated as of June 23, 1994, a copy of which is
attached hereto as Exhibit A, relating to management services to be provided at
the Laurelwood Rehabilitation and Skilled Nursing Center, located in Ridgefield,
Connecticut (the "Management Agreement").
WHEREAS, Assignor desires to assign its rights and obligations under
the Management Agreement to Assignee and Assignee desires to assume such rights
and obligations.
NOW THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Assignor and Assignee hereby agree as follows:
1. Assignor hereby grants, bargains, sells, assigns and transfers to
Assignee all of Assignor's right, title and interest in, and all contractual and
other rights under the Management Agreement.
2. Assignee hereby accepts this assignment and hereby agrees to assume
all of Assignor's rights, title, interest, duties and obligations under the
Management Agreement.
3. This Agreement may be executed by facsimile and in counterparts,
each of which shall constitute an original document.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
ASSIGNOR:
CCC OF MASSACHUSETTS, INC.
By: __________________________
Name:
Title:
ASSIGNEE:
CAREMATRIX OF
MASSACHUSETTS, INC.
By: __________________________
Name:
Title:
CONSENTED TO:
CCC OF CONNECTICUT, INC.
By: _______________________
Name:
Title:
Exhibit 10.102
FACILITY LEASE AGREEMENT
This FACILITY LEASE AGREEMENT ("Lease") is dated as of the day of
August, 1997 and is between CONTINUUM CARE OF DEDHAM, INC. ("Lessor"), a
Delaware corporation having its principal office at 197 First Avenue, Needham
Heights, Massachusetts 02194, and CAREMATRIX OF DEDHAM, INC. ("Lessee"), a
Delaware corporation, having its principal office at 197 First Avenue, Needham
Heights, Massachusetts 02194.
ARTICLE 1
LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, the Lessor leases to the Lessee and the Lessee rents and
leases from the Lessor all of the Lessor's rights and interests in and to the
following real and personal property (collectively, the "Leased Property"):
(a) the real property described in EXHIBIT A attached hereto (the
"Land");
(b) all buildings, structures, Fixtures (as hereinafter defined) and
other improvements of every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines, and parking
areas and roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances of every nature and
description now or hereafter relating to or benefiting any or all of the Land
and the Leased Improvements; and
(d) all equipment, machinery, building fixtures, and other items of
property (whether realty, personalty or mixed), including all components
thereof, now or hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire and theft protection
equipment, and built-in oxygen and vacuum systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto, but specifically excluding all items included within the
category of Tangible Personal Property (as hereinafter defined) which are not
permanently affixed to or incorporated in the Leased Property (collectively, the
"Fixtures");
The Leased Property is leased in its present condition, AS IS, without
representation or warranty of any kind, express or implied, by the Lessor and
subject to: (i) the rights of parties in possession; (ii) the existing state of
title including all covenants, conditions, Liens (as hereinafter defined) and
other matters of record (including, without limitation, the matters set forth in
EXHIBIT B); (iii) all applicable laws and (iv) all matters, whether or not of a
similar nature, which would be disclosed by an inspection of the Leased Property
or by an accurate survey thereof.
1.2 Term. The term of this Lease shall consist of: the "Initial Term",
which shall commence on August , 1997 (the "Commencement Date") and end on
August , 2007 (the "Expiration Date"); provided, however, that this Lease may be
sooner terminated as hereinafter provided. In addition, the Lessee shall have
the option(s) to extend the Term (as hereinafter defined) as provided for in
Section 1.3.
1.3 Extended Terms. Provided that this Lease has not been previously
terminated, and as long as there exists no Lease Default (as hereinafter
defined) at the time of exercise and on the last day of the Initial Term or the
then current Extended Term (as hereinafter defined), as the case may be, the
Lessee is hereby granted the option to extend the Initial Term of this Lease for
three (3) additional periods (collectively, the "Extended Terms") as follows:
three (3) successive five (5) year periods for a maximum Term, if all such
options are exercised, which ends on August , 2022. The Lessee's extension
options shall be exercised by the Lessee by giving written notice to the Lessor
of each such extension at least one hundred eighty (180) days, but not more than
three hundred sixty (360) days, prior to the termination of the Initial Term or
the then current Extended Term, as the case may be. The Lessee shall have no
right to rescind any such notice once given. The Lessee may not exercise its
option for more than one Extended Term at a time. During each effective Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect, except that the Base Rent (as hereinafter defined) for each such
Extended Term shall be adjusted as set forth in Section 3.2.
ARTICLE 2
DEFINITIONS AND RULES OF CONSTRUCTION
2.1 Definitions. For all purposes of this Lease and the other Lease
Documents (as hereinafter defined), except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular and (ii) all references in this Lease or any of the other
Lease Documents to designated "Articles", "Sections" and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease or the
other applicable Lease Document.
Accounts: As defined in the UCC.
Accreditation Body: All Persons now or hereafter having or claiming
jurisdiction over the accreditation, certification, evaluation or operation of
the Facility.
Additional Charges: As defined in Article 3.
Additional Land: As defined in Section 9.3.
Affiliate: With respect to any Person (i) any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person, (ii) any other Person that owns, beneficially, directly or
indirectly, five percent (5%) or more of the outstanding capital stock, shares
or equity interests of such Person or (iii) any officer, director, employee,
general partner or trustee of such Person, or any other Person controlling,
controlled by, or under common control with, such Person (excluding trustees and
Persons serving in a fiduciary or similar capacity who are not otherwise an
Affiliate of such Person); provided, however, that notwithstanding the
foregoing, in no event shall any of the following entities be deemed to be an
Affiliate of the Lessee: (i) PhyMatrix Corp., a Delaware corporation and its
wholly-owned Subsidiaries and (ii) Sun Healthcare Group, Inc., a Delaware
corporation. For the purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities,
partnership interests or other equity interests.
Appurtenant Agreements: Collectively, all instruments, documents and
other agreements that now or hereafter create any utility, access or other
rights or appurtenances benefiting or relating to the Leased Property.
Award: All compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
Bankruptcy Code: Subsection 365(h) of the United States Bankruptcy Code,
11 U.S.C. '365(h), as the same may hereafter be amended and including any
successor provision thereto.
Base Rent: As defined in Article 3.
Business Day: Any day which is not a Saturday or Sunday or a public
holiday under the laws of the United States of America, the Commonwealth of
Massachusetts, the State or the state in which the Lessor's depository bank is
located.
Capital Additions: Collectively, all new buildings and additional
structures annexed to any portion of any of the Leased Improvements and material
expansions of any of the Leased Improvements which are constructed on any
portion of the Land during the Term, including, without limitation, the
construction of a new wing or new story, the renovation of any of the Leased
Improvements on the Leased Property in order to provide a functionally new
facility that is needed or used to provide services not previously offered and
any expansion, construction, renovation or conversion or in order to (i)
increase the bed or unit capacity of the Facility, (ii) change the purpose for
which such beds or units are utilized and/or (iii) change the utilization of any
material portion of any of the Leased Improvements.
Capital Addition Cost: The cost of any Capital Addition made by the
Lessee whether paid for by the Lessee or the Lessor. Such cost shall include all
costs and expenses of every nature whatsoever incurred directly or indirectly in
connection with the development, permitting, construction and financing of a
Capital Addition as reasonably determined by, or to the reasonable satisfaction
of, the Lessor.
CARF: The Commission on Accreditation of Rehabilitation Facilities.
Cash Flow: The Consolidated Net Income (or Consolidated Net Loss),
arising solely from the operation of the Leased Property, before federal and
state income taxes for any period plus (i) the amount of the provision for
depreciation and amortization actually deducted on the books of the applicable
Person for the purposes of computing such Consolidated Net Income (or
Consolidated Net Loss) for the period involved, plus (ii) Rent.
Casualty: As defined in Section 13.1.
Champus: The Civilian Health and Medical Program of the Uniform Service,
a program of medical benefits covering retirees and dependents of members or
former members of a uniformed service provided, financed and supervised by the
United States Department of Defense and established by 10 USC "1071 et seq.
Chattel Paper: As defined in the UCC.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: As defined in Section 1.2.
Condemnation: With respect to the Leased Property or any interest
therein or right accruing thereto or use thereof (i) the exercise of any
Governmental Authority, whether by legal proceedings or otherwise, by a
Condemnor or (ii) a voluntary sale or transfer by the Lessor to any Condemnor,
either under threat of Condemnation or Taking or while legal proceedings for
Condemnation or Taking are pending.
Condemnor: Any public or quasi-public authority, or private corporation
or individual, having the power of condemnation.
Consolidated and Consolidating: The consolidated and consolidating
accounts of the relevant Person and its Subsidiaries consolidated in accordance
with GAAP.
Consolidated Financials: For any fiscal year or other accounting period
for any Person and its consolidated Subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP, and disclosing all
liabilities of such Person and its consolidated Subsidiaries, including, without
limitation, contingent liabilities.
Consultants: Collectively, the architects, engineers, inspectors,
surveyors and other consultants that are engaged from time to time by the Lessor
to perform services for the Lessor in connection with this Lease.
Contracts: All agreements (including, without limitation, Provider
Agreements and Patient Admission Agreements), contracts, (including without
limitation, construction contracts, subcontracts, and architects' contracts,)
contract rights, warranties and representations, franchises, and records and
books of account benefiting, relating to or affecting the Leased Property or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession, or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacement
and substitutions therefor, now or hereafter issued by or entered into with any
Governmental Authority, Accreditation Body or Third Party Payor or maintained or
used by any member of the Leasing Group or entered into by any member of the
Leasing Group with any third Person.
Current Management Agreement: That certain Services Agreement, dated as
of July 15, 1996, by and between the Lessor, CareMatrix of Massachusetts, Inc.
and Prism Care Centers, Inc. (formerly known as Vanguard Health Services, Inc.),
as amended by Assignment Agreement and First Amendment to Services Agreement of
even date by and among the Lessor, the Lessee, CareMatrix of Massachusetts, Inc.
and Prism Care Centers, Inc.
Date of Taking: The date the Condemnor has the right to possession of
the property being condemned.
Debt Service: All payments due and payable under any promissory note
secured by a Fee Mortgage, including, without limitation, principal, interest,
additional interest and any other costs, expenses and late charges incurred by
the Lessor as a result of any failure by Lessee to satisfy, on a timely basis,
the obligations set forth under Section 3.2, but specifically excluding any
so-called "balloon payments" due at the maturity thereof and all costs and
expenses incurred in connection with any refinancing thereof.
Debt Service Rental Payments: As defined in Section 3.2.
Documents: As defined in the UCC.
Encumbrance: As defined in Section 20.3.
Environmental Enforcement Actions: Collectively, all actions or orders
instituted, threatened or required by any Governmental Authority and all claims
made or threatened by any Person against Lessee or the Leased Property (or any
other occupant, prior occupant or prior owner thereof or any other Person),
arising out of or in connection with any of the Environmental Laws or the
assessment, monitoring, clean-up, containment, remediation or removal of, or
damages caused or alleged to be caused by, any Hazardous Substances (i) located
on or under the Leased Property, (ii) emanating from the Leased Property or
(iii) generated, stored, transported, utilized, disposed of, managed or released
by Lessee or any other occupant of the Leased Property.
Environmental Laws: Collectively, all Legal Requirements applicable to
(i) environmental conditions on, under or emanating from the Leased Property and
(ii) the generation, storage, transportation, utilization, disposal, management
or release (whether or not on, under or from the Leased Property) of Hazardous
Substances by the Lessee.
ERISA: The Employment Retirement Income Security Act of 1974, as
amended.
Event of Default: As defined in Article 16.
Expiration Date: As defined in Section 1.2.
Extended Terms: As defined in Section 1.3.
Facility: Collectively, the Medical Office Building and the Skilled
Nursing Facility.
Failure to Perform: As defined Article 16.
Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Additions) minus the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by the Lessee had been
constructed.
Fair Market Rental Value: As defined in EXHIBIT 3.
Fair Market Value of the Capital Addition: The amount by which the Fair
Market Value of the Leased Property upon the completion of a particular Capital
Addition exceeds the Fair Market Value of the Leased Property just prior to the
construction of the particular Capital Addition.
Fair Market Value of the Leased Property: The fair market value of the
Leased Property, including all Capital Additions, and including the Land and all
other portions of the Leased Property, and (a) assuming the same is unencumbered
by this Lease, (b) determined in accordance with the appraisal procedures set
forth in Section 18.2 or in such other manner as shall be mutually acceptable to
the Lessor and the Lessee (including, without limitation, as a negotiated
percentage of total project costs) and (c) not taking into account any reduction
in value resulting from any Lien to which the Leased Property is subject and
which Lien the Lessee or the Lessor is otherwise required to remove at or prior
to closing of the transaction. However, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment provisions and other terms and conditions of
any Lien on the Leased Property which is not so required or agreed to be removed
shall be taken into account in determining the Fair Market Value of the Leased
Property. The Fair Market Value of the Leased Property shall be determined as
the overall value based on due consideration of the "income" approach, the
"comparable sales" approach, and the "replacement cost" approach.
Fair Market Value of the Material Structural Work: The amount by which
the Fair Market Value of the Leased Property upon the completion of any
particular Material Structural Work exceeds the Fair Market Value of the Leased
Property just prior to the construction of the applicable Material Structural
Work.
Fee Mortgage: As defined in Section 20.3.
Fee Mortgagee: As defined in Section 20.3.
Financing Party: Any Person who is or may be participating with the
Lessor in any way in connection with the financing of any Capital Addition.
Fiscal Quarter: Each of the three (3) month periods commencing on
January 1st, April 1st, July 1st and October 1st.
Fiscal Year: The twelve (12) month period from January 1st to December
31st.
Fixtures: As defined in Article 1.
GAAP: Generally accepted accounting principles, consistently applied
throughout the relevant period.
General Intangibles: As defined in the UCC.
Governmental Authorities: Collectively, all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures, and
offices of any nature whatsoever of any government, quasi-government unit or
political subdivision, whether with a federal, state, county, district,
municipal, city or otherwise and whether now or hereinafter in existence.
Gross Revenues: Collectively, all revenues generated by reason of the
operation of the Leased Property (including any Capital Additions), whether or
not directly or indirectly received or to be received by the Lessee, including,
without limitation, all revenues received or receivable for the use of, or
otherwise by reason of, all rooms, beds, units and other facilities provided,
meals served, services performed, space or facilities subleased or goods sold on
or from the Leased Property and further including, without limitation, except as
otherwise specifically provided below, any consideration received under any
subletting, licensing, or other arrangements with any Person relating to the
possession or use of the Leased Property and all revenues from all ancillary
services provided at or relating to the Leased Property; provided, however, that
Gross Revenues shall not include non-operating revenues such as interest income
or gain from the sale of assets not sold in the ordinary course of business; and
provided, further, that there shall be excluded or deducted (as the case may be)
from such revenues:
(i) contractual allowances (relating to any period during the Term of
this Lease and thereafter until the Rent hereunder is paid in full) for billings
not paid by or received from the appropriate Governmental Agencies or Third
Party Payors,
(ii) allowances according to GAAP for uncollectible accounts,
(iii) all proper patient and/or resident billing credits and adjustments
according to GAAP relating to health care accounting,
(iv) federal, state or local sales, use, gross receipts and excise taxes
and any tax based upon or measured by said Gross Revenues which is added to or
made a part of the amount billed to the patient, resident or other recipient of
such services or goods, whether included in the billing or stated separately,
(v) provider discounts for hospital or other medical facility
utilization contracts,
(vi) the cost of any federal, state or local governmental program
imposed specially to provide or finance indigent patient and/or resident care
(other than Medicare, Medicaid and the like), and
(vii) deposits refundable to residents of the Facility.
To the extent that the Leased Property is subleased or occupied by an
Affiliate of the Lessee, Gross Revenues calculated for all purposes of this
Lease shall include the Gross Revenues of such Sublessee with respect to the
premises demised under the applicable Sublease (i.e., the Gross Revenues
generated from the operations conducted on such subleased portion of the Leased
Property) and the rent received or receivable from such Sublessee pursuant to
such Subleases shall be excluded from Gross Revenues for all such purposes. As
to any Sublease between the Lessee and a non-Affiliate of the Lessee, only the
rental actually received by the Lessee from such non-Affiliate shall be included
in Gross Revenues.
Guarantor: CareMatrix Corporation, a Delaware corporation.
Guaranty: The Guaranty of even date executed by the Guarantor in favor
of the Lessor.
Hazardous Substances: Collectively, (a) any Ahazardous material,@
Ahazardous substance,@ Ahazardous waste,@ Aoil,@ Aregulated substance,@ Atoxic
substance,@ Arestricted hazardous waste@, Aspecial waste@ or words of similar
import as defined under any of the Environmental Laws; (b) asbestos in any form;
(c) urea formaldehyde foam insulation; (d) polychlorinated biphenyls; (e) radon
gas; (f) flammable explosives; (g) radioactive materials; (h) any chemical,
containment, solvent, material, pollutant or substance that may be dangerous or
detrimental to the Leased Property, the environment, or the health and safety of
the patients and other occupants of the Leased Property or of the owners or
occupants of any other real property nearby the Leased Property and (i) any
substance, the generation, storage, transportation, utilization, disposal,
management, release or location of which, on, under or from the Leased Property
is prohibited or otherwise regulated pursuant to any of the Environmental Laws.
Notwithstanding the foregoing, the term Hazardous Substances as defined
herein shall not include (i) pharmaceuticals and cleaning agents of the types
and in the quantities and concentrations normally stocked by health care
providers similar to the Facility, (ii) oil in de minimis amounts typically
associated with the use of certain portions of the Leased Property for driving
and parking motor vehicles or (iii) medical wastes generated at the Facility;
provided that the foregoing are used, stored, transported and/or disposed of in
accordance with all Legal Requirements.
Impositions: Collectively, all taxes (including, without limitation, all
capital stock and franchise taxes of the Lessor, all ad valorem, property,
sales, use, single business, gross receipts, transaction privilege, rent or
similar taxes), assessments (including, without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term), ground
rents, water and sewer rents, water charges or other rents and charges, excises,
tax levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), transfer taxes and recordation taxes imposed as
a result of this Lease or any extensions hereof, and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of either or both of the
Leased Property and the Rent (including all interest and penalties thereon due
to any failure in payment by the Lessee), which at any time prior to, during or
in respect of the Term hereof and thereafter until the Leased Property is
surrendered to the Lessor as required by the terms of this Lease, may be
assessed or imposed on or in respect of or be a Lien upon (a) the Lessor or the
Lessor's interest in the Leased Property, (b) the Leased Property or any rent
therefrom or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, sales from, or activity conducted on, or in
connection with, the Leased Property or the leasing or use of the Leased
Property. Notwithstanding the foregoing, nothing contained in this Lease shall
be construed to require the Lessee to pay (1) any tax based on net income
(whether denominated as a franchise or capital stock or other tax) imposed on
the Lessor or any other Person, except the Lessee or its successors, (2) any net
revenue tax of the Lessor or any other Person, except the Lessee and its
successors, (3) any tax imposed with respect to the sale, exchange or other
disposition by the Lessor of the Leased Property or the proceeds thereof, or (4)
except as expressly provided elsewhere in this Lease, any principal or interest
on any Encumbrance on the Leased Property; provided, however, the provisos set
forth in clauses (1) and (2) of this sentence shall not be applicable to the
extent that any tax, assessment, tax levy or charge which the Lessee is
obligated to pay pursuant to the first sentence of this definition and which is
in effect at any time during the Term hereof is totally or partially repealed,
and a tax, assessment, tax levy or charge set forth in clause (1) or (2) is
levied, assessed or imposed expressly in lieu thereof. In computing the amount
of any franchise tax or capital stock tax which may be or become an Imposition,
the amount payable by the Lessee shall be equitably apportioned based upon all
properties owned by the Lessor that are located within the particular
jurisdiction subject to any such tax.
Indebtedness: The total of all obligations of a Person, whether current
or long-term, which in accordance with GAAP would be included as liabilities
upon such Person's balance sheet at the date as of which Indebtedness is to be
determined, and shall also include (i) all capital lease obligations and (ii)
all guarantees, endorsements (other than for collection of instruments in the
ordinary course of business), or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement contingent
or otherwise to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
Indemnified Parties: As defined in Section 12.2.
Initial Appraisers: As defined in EXHIBIT 3.
Initial Term: As defined in Section 1.2.
Instruments: As defined in the UCC.
Insurance Requirements: All terms of any insurance policy required by
this Lease, all requirements of the issuer of any such policy with respect to
the Leased Property and the activities conducted thereon and the requirements of
any insurance board, association or organization or underwriters' regulations
pertaining to the Leased Property.
Land: As defined in Article 1.
Lease: As defined in the preamble of this Lease.
Lease Default: The occurrence of any default or breach of condition
continuing beyond any applicable notice and/or grace periods under this Lease
and/or any of the other Lease Documents.
Lease Documents: Collectively, this Lease, the Guaranty, the Pledge
Agreement, the Security Agreement, the Permits Assignment and any and all other
instruments, documents, certificates or agreements now or hereafter (i) executed
or furnished by any member of the Leasing Group in connection with the
transactions evidenced by this Lease and/or any of the foregoing documents
and/or (ii) evidencing or securing any of the Lessee's obligations relating to
the Leased Property, including, without limitation, the Lessee's obligations
hereunder.
Lease Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings (other than the Lessor's
obligations) under this Lease and the other Lease Documents.
Leased Improvements: As defined in Article 1.
Leased Property: As defined in Article 1.
Leasing Group: Collectively, the Lessee, the Guarantor, any Sublessee
and any Manager.
Legal Requirements: Collectively, all statutes, ordinances, by-laws,
codes, rules, regulations, restrictions, orders, judgments, decrees and
injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision, and other land use and health-care licensing
statutes, ordinances, by-laws, codes, rules and regulations), whether now or
hereafter enacted, promulgated or issued by any Governmental Authority,
Accreditation Body or Third Party Payor affecting the Lessor, any member of the
Leasing Group or the Leased Property or the ownership, construction,
development, maintenance, management, repair, use, occupancy, possession or
operation thereof or the operation of any programs or services in connection
with the Leased Property, including, without limitation, any of the foregoing
which may (i) require repairs, modifications or alterations in or to the Leased
Property, (ii) in any way affect (adversely or otherwise) the use and enjoyment
of the Leased Property or (iii) require the assessment, monitoring, clean-up,
containment, removal, remediation or other treatment of any Hazardous Substances
on, under or from the Leased Property. Without limiting the foregoing, the term
Legal Requirements includes all Environmental Laws and shall also include all
Permits and Contracts issued or entered into by any Governmental Authority, any
Accreditation Body and/or any Third Party Payor and all Permitted Encumbrances.
Lessee: As defined in the preamble of this Lease and its successors and
assigns.
Lessee's Election Notice: As defined in Section 14.3.
Lessor: As defined in the preamble of this Lease and its successors and
assigns.
Lessor Entities: Collectively, Lessor and any other Affiliate of Lessor
which may now or hereafter be a party to any Related Party Agreement.
Lien: With respect to any real or personal property, any mortgage,
easement, restriction, lien, pledge, collateral assignment, hypothecation,
charge, security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether or not choate, vested or perfected.
Limited Parties: As defined in Section 11.5; provided, however, in no
event shall the term Limited Parties include any Person in its capacity as a
shareholder of a public entity, unless such shareholder is a member of the
Leasing Group or an Affiliate of any member of the Leasing Group.
Managed Care Plans: All health maintenance organizations, preferred
provider organizations, individual practice associations, competitive medical
plans, and similar arrangements.
Management Agreement: Any agreement, whether written or oral, between
the Lessee or any Sublessee and any other Person pursuant to which the Lessee or
such Sublessee provides any payment, fee or other consideration to any other
Person to operate or manage the Facility, including, without limitation, the
Current Management Agreement.
Manager: Any Person who has entered into a Management Agreement with the
Lessee or any Sublessee.
Material Structural Work: Any (i) structural alteration, (ii) structural
repair or (iii) structural renovation to the Leased Property that would require
(a) the design and/or involvement of a structural engineer and/or architect
and/or (b) the issuance of a Permit.
Medicaid: The medical assistance program established by Title XIX of the
Social Security Act (42 USC "1396 et seq.) and any statute succeeding thereto.
Medical Office Building: The approximately 40,000 square foot medical
office building known as The Dedham Medical Office Building (together with
related parking and other amenities).
Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 USC "1395 et seq.) and
any statute succeeding thereto.
Meditrust Loan Documents: As defined in Section 24.14.
MMI Loan: As defined in Section 24.14.
MOB Loan: That certain loan in the original principal amount of ELEVEN
MILLION THREE HUNDRED SIXTY THOUSAND DOLLARS ($11,360,000) made by Meditrust
Mortgage Investments, Inc. to the Lessor.
MOB Rent Coverage Ratio: The ratio of (a) Cash Flow from the Medical
Office Building for each applicable period to (b) the total of all Debt Service
Rental Payments relating to the MOB Loan paid or payable during each period or
accrued for such period.
Monthly Deposit Date: As defined in Section 4.6.
Net Income (or Net Loss): The net income (or net loss, expressed as a
negative number) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with GAAP.
Obligations: Collectively, the Lease Obligations and the Related Party
Obligations.
Officer's Certificate: A certificate of the Lessee signed on behalf of
the Lessee by the Chairman of the Board of Directors, the President, any Vice
President or the Treasurer of the Lessee, or another officer authorized to so
sign by the Board of Directors or By-Laws of the Lessee, or any other Person
whose power and authority to act has been authorized by delegation in writing by
any of the Persons holding the foregoing offices.
Overdue Rate: On any date, a rate of interest per annum equal to the
greater of: (i) a variable rate of interest per annum equal to one hundred
twenty percent (120%) of the Prime Rate, or (ii) eighteen percent (18%) per
annum; provided, however, in no event shall the Overdue Rate be greater than the
maximum rate then permitted under applicable law to be charged by the Lessor.
Patient Admission Agreements: All contracts, agreements and consents
executed by or on behalf of any patient or other Person seeking services at the
Facility, including, without limitation, assignments of benefits and guarantees.
PBGC: Pension Benefit Guaranty Corporation.
Permits: Collectively, all permits, licenses, approvals, qualifications,
rights, variances, permissive uses, accreditations, certificates,
certifications, consents, agreements, contracts, contract rights, franchises,
interim licenses, permits and other authorizations of every nature whatsoever
required by, or issued under, applicable Legal Requirements benefiting, relating
or affecting the Leased Property or the construction, development, maintenance,
management, use or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacements
and substitutions therefor, now or hereafter required or issued by any
Governmental Authority, Accreditation Body or Third Party Payor to any member of
the Leasing Group, or maintained or used by any member of the Leasing Group, or
entered into by any member of the Leasing Group with any third Person.
Permits Assignment: The Collateral Assignment of Permits and Contracts
of even date granted by the Lessee to the Lessor.
Permitted Encumbrances: Collectively, those agreements, covenants and
Liens to which this Lease is expressly subject, whether presently existing, as
are listed on EXHIBIT B or which may hereafter be created in accordance with the
terms hereof.
Permitted Prior Security Interests: As defined in Section 6.1.
Person: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land trust, business trust, unincorporated organization,
unincorporated association, Governmental Authority or other entity of any kind
or nature.
Plans and Specifications: As defined in Section 13.1.
Pledge Agreement: The Stock Pledge Agreement of even date by and among
the Guarantor, the Lessee and the Lessor.
Primary Intended Use: The use of the Facility as a (a) skilled nursing
facility with 142 beds or such additional number of beds as may hereafter be
permitted under this Lease and (b) medical office building with approximately
40,000 square feet of space, and such ancillary uses as are permitted by law and
may be necessary in connection therewith or incidental thereto.
Prime Rate: The variable rate of interest per annum from time to time
announced by the Reference Bank as its prime rate of interest and in the event
that the Reference Bank no longer announces a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any other major bank or other financial institution reasonably
selected by the Lessor.
Principal Place of Business: As defined in Section 10.1.
Proceeds: As defined in the UCC.
Provider Agreements: All participation, provider and reimbursement
agreements or arrangements now or hereafter in effect for the benefit of the
Lessee or any Sublessee in connection with the operation of the Facility
relating to any right of payment or other claim arising out of or in connection
with the Lessee's or such Sublessee's participation in any Third Party Payor
Program.
Purchaser: As defined in Section 11.5.
Receivables: Collectively, all (i) Instruments, Documents, Accounts,
Proceeds, General Intangibles and Chattel Paper and (ii) rights to payment for
goods sold or leased or services rendered by the Lessee or any other party,
whether now in existence or arising from time to time hereafter and whether or
not yet earned by performance, including, without limitation, obligations
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness.
Reference Bank: Fleet Bank of Connecticut, N.A.
Related Parties: Collectively, each Person that may now or hereafter be
a party to any Related Party Agreement other than the Lessor Entities.
Related Party Agreement: Any agreement, document or instrument now or
hereafter evidencing or securing any Related Party Obligation.
Related Party Default: The occurrence of a default or breach of
condition continuing beyond the expiration of any applicable notice and grace
periods, if any, under the terms of any Related Party Agreement.
Related Party Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings due to, or made for the
benefit of, Lessor or any of the other Lessor Entities by Lessee or any other
member of the Leasing Group or any of their respective Affiliates; whether such
indebtedness, covenants, liabilities, obligations, agreements and/or
undertakings are direct or indirect, absolute or contingent, liquidated or
unliquidated, due or to become due, joint, several or joint and several, primary
or secondary, now existing or hereafter arising.
Rent: Collectively, the Base Rent, the Additional Charges and all other
sums payable under this Lease and the other Lease Documents.
Rent Insurance Proceeds: As defined in Section 13.8.
Resident Agreements: Collectively, all Subleases now or hereafter
executed or entered into by or on behalf of any Person allowing such Person to
reside at the Facility.
Retainage: As defined in Section 13.1.
Security Agreement: The Security Agreement of even date herewith by and
between the Lessee and the Lessor.
Skilled Nursing Facility: The 142-bed skilled nursing facility known as
The Dedham Nursing Home (together with related parking and other amenities).
SNF Conversion Date: As defined in the Meditrust Loan Documents.
SNF Loan: That certain loan in the original principal amount of SEVEN
MILLION THREE HUNDRED SIXTY THOUSAND DOLLARS ($7,360,000) made by Meditrust
Mortgage Investments, Inc. to the Lessor.
SNF Rent Coverage Ratio: The ratio of (a) Cash Flow from the Skilled
Nursing Facility for each applicable period to (b) the total of all Debt Service
Rental Payments relating to the SNF Loan paid or payable during such period or
accrued for such period.
State: The state or commonwealth in which the Leased Property is
located.
Sublease: Collectively, all subleases, licenses, use agreements,
concession agreements, tenancy at will agreements, room rentals, rentals of
other facilities of the Leased Property and all other occupancy agreements of
every kind and nature (but excluding Patient Admission Agreements), whether oral
or in writing, now in existence or subsequently entered into by the Lessee,
encumbering or affecting the Leased Property.
Sublessee: Any sublessee, licensee, concessionaire, tenant or other
occupant under any of the Subleases, but excluding any resident of the Facility
under any Resident Agreement.
Subsidiary or Subsidiaries: With respect to any Person, any corporation
or other entity of which such Person, directly, or indirectly, through another
entity or otherwise, owns, or has the right to control or direct the voting of,
fifty percent (50%) or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances).
Surrounding Property: Any real property that abuts the Leased Property
or any portion thereof.
Taking: A taking or voluntary conveyance during the Term of the Leased
Property, or any interest therein or right accruing thereto, or use thereof, as
the result of, or in settlement of, any Condemnation or other eminent domain
proceeding affecting the Leased Property whether or not the same shall have
actually been commenced.
Tangible Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, and other personal property owned or leased (pursuant to
equipment leases) by the Lessee and used in connection with the operation of the
Leased Property.
Term: Collectively, the Initial Term and each Extended Term which has
become effective pursuant to Section 1.3, as the context may require, unless
earlier terminated pursuant to the provisions hereof.
Third Appraiser: As defined in EXHIBIT 3.
Third Party Payor Programs: Collectively, all third party payor programs
in which the Lessee or any Sublessee presently or in the future may participate,
including without limitation, Medicare, Medicaid, Champus, Blue Cross and/or
Blue Shield, Managed Care Plans, other private insurance plans and employee
assistance programs.
Third Party Payors: Collectively, Medicare, Medicaid, Blue Cross and/or
Blue Shield, private insurers and any other Person which presently or in the
future maintains Third Party Payor Programs.
UCC: The Uniform Commercial Code as in effect from time to time in the
Commonwealth of Massachusetts.
Unavoidable Delays: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto.
United States Treasury Securities: The uninsured treasury securities
issued by the United States Federal Reserve Bank.
Unsuitable For Its Primary Intended Use: As used anywhere in this Lease,
the term "Unsuitable For Its Primary Intended Use" shall mean that, by reason of
Casualty, or a partial or temporary Taking by Condemnation, in the good faith
judgment of the Lessor, the Facility cannot be operated on a commercially
practicable basis for the Primary Intended Use, taking into account, among other
relevant factors, the number of usable beds and/or units affected by such
Casualty or partial or temporary Taking.
Work: As defined in Section 13.1.
Work Certificates: As defined in Section 13.1.
2.2 Rules of Construction. The following rules of construction shall
apply to the Lease and each of the other Lease Documents: (a) references to
"herein", "hereof" and "hereunder" shall be deemed to refer to this Lease or the
other applicable Lease Document, and shall not be limited to the particular text
or section or subsection in which such words appear; (b) the use of any gender
shall include all genders and the singular number shall include the plural and
vice versa as the context may require; (c) references to the Lessor's attorneys
shall be deemed to include, without limitation, special counsel and local
counsel for the Lessor; (d) reference to attorneys' fees and expenses shall be
deemed to include all costs for administrative, paralegal and other support
staff; (e) references to Leased Property shall be deemed to include references
to all of the Leased Property and references to any portion thereof; (f)
references to the Lease Obligations shall be deemed to include references to all
of the Lease Obligations and references to any portion thereof; (g) references
to the Obligations shall be deemed to include references to all of the
Obligations and references to any portion thereof; (h) the term "including",
when following any general statement, will not be construed to limit such
statement to the specific items or matters as provided immediately following the
term "including" (whether or not non-limiting language such as "without
limitation" or "but not limited to" or words of similar import are also used),
but rather will be deemed to refer to all of the items or matters that could
reasonably fall within the broadest scope of the general statement; (i) any
requirement that financial statements be Consolidated in form shall apply only
to such financial statements as relate to a period during any portion of which
the relevant Person has one or more Subsidiaries; (j) all accounting terms not
specifically defined in the Lease Documents shall be construed in accordance
with GAAP and (k) all exhibits annexed to any of the Lease Documents as
referenced therein shall be deemed incorporated in such Lease Document by such
annexation and/or reference.
ARTICLE 3
RENT
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures.
During the Initial Term, the Lessee will pay to the Lessor, in lawful money of
the United States of America, at the Lessor's address set forth herein or at
such other place or to such other Person as the Lessor from time to time may
designate in writing, the aggregate amount of Debt Service payments due and
payable with respect to any calendar year and that is payable in advance in
equal, consecutive monthly installments due on the first day of each calendar
month (subject to adjustment in accordance with any adjustment to Debt Service),
except with respect to the Base Rent due for the month of August, 1997, which
shall be due and payable concurrently with the execution hereof.
The Base Rent due and payable hereunder for any fractional month during
the Term shall be prorated accordingly.
3.2 Rent During Extension Terms. During each Extension Term, the Lessee
shall pay to the Lessor Base Rent per annum, determined as of the first day of
the applicable Extension Term, that is equal to the greater of: (a) an amount
equal to the Debt Service due from the Lessor to the holder of any Fee Mortgage
encumbering the Leased Property during the applicable period (the "Debt Service
Rental Payments"), (b) the Fair Market Rental Value, as determined in accordance
with EXHIBIT 3 attached hereto and (c) the Base Rent in effect (i) during the
Initial Term, for the first Extension Term or (ii) during the immediately
preceding Extension Term, for all remaining Extension Terms. During each
Extension Term, the Base Rent shall continue to be payable in arrears on the
first day of each calendar month; provided, however, that in the event that the
terms of any promissory note secured by any Fee Mortgage requires Debt Service
from the Lessor to be paid on any basis other than monthly in arrears, the
Lessee's obligation to make monthly payments of the Debt Service Rental Payments
shall be adjusted accordingly to coincide with the schedule of payments. The
Lessor reserves the right to refinance any Fee Mortgage now or hereafter
encumbering the Leased Property and no such refinancing will limit or otherwise
affect the Lessee's obligation to make the Debt Service Rental Payments;
provided, that the terms and conditions of any such refinancing reflect the
terms and conditions that are then customary and prevailing for commercial loan
transactions secured by real property of similar value and nature to the Leased
Property.
The Lessee will pay to the Lessor, in lawful money of the United States
of America, at the Lessor's address set forth herein or at such other place or
to such other Person as the Lessor from time to time may designate in writing,
Base Rent determined in accordance with clause (b) or (c) above. The Lessee will
pay the Debt Service Rental Payments, in lawful money of the United States of
America, directly to the applicable Fee Mortgagee (at the address that the
Lessor shall from time to time designate in writing to the Lessee).
3.3 Intentionally Omitted.
3.4 Additional Charges. Subject to the rights to contest as set forth in
Article 15, in addition to the Base Rent, (a) the Lessee will also pay and
discharge as and when due and payable all Impositions, all amounts, liabilities
and obligations under the Appurtenant Agreements due from or payable by the
owner of the Leased Property, all amounts, liabilities and obligations under the
Permitted Encumbrances due from or payable by the owner of the Leased Property
and all other amounts, liabilities and obligations which the Lessee assumes or
agrees to pay under this Lease, and (b) in the event of any failure on the part
of the Lessee to pay any of those items referred to in clause (a) above, the
Lessee will also promptly pay and discharge every fine, penalty, interest and
cost which may be added for non-payment or late payment of such items (the items
referred to in clauses (a) and (b) above being referred to herein collectively
as the "Additional Charges"), and the Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease, by statute or
otherwise, in the case of non-payment of the Additional Charges, as well as the
Base Rent. To the extent that the Lessee pays any Additional Charges to the
Lessor pursuant to any requirement of this Lease, the Lessee shall be relieved
of its obligation to pay such Additional Charges to any other Person to which
such Additional Charges would otherwise be due.
3.5 Intentionally Omitted.
3.6 Net Lease. The Rent shall be paid absolutely net to the Lessor, so
that this Lease shall yield to the Lessor the full amount of the installments of
Base Rent and Additional Charges throughout the Term.
3.7 No Lessee Termination or Offset.
3.7.1 No Termination. Except as may be otherwise specifically and
expressly provided in this Lease, the Lessee, to the extent not prohibited by
applicable law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the consent of the Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent, nor
shall the respective obligations of the Lessor and the Lessee be otherwise
affected by reason of (a) any Casualty or any Taking of the Leased Property, (b)
the lawful or unlawful prohibition of, or restriction upon, the Lessee's use of
the Leased Property or the interference with such use by any Person (other than
the Lessor, except to the extent permitted hereunder) or by reason of eviction
by paramount title; (c) any claim that the Lessee has or might have against the
Lessor, (d) any default or breach of any warranty by the Lessor or any of the
other Lessor Entities under this Lease or any other Lease Document or any
Related Party Agreement, (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting the Lessor or any assignee or transferee of the Lessor or
(f) any other cause whether similar or dissimilar to any of the foregoing, other
than a discharge of the Lessee from any of the Lease Obligations as a matter of
law.
3.7.2 Waiver. The Lessee to the fullest extent not prohibited by
applicable law, hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or (b) entitle the Lessee to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by the Lessee hereunder, except as
otherwise specifically and expressly provided in this Lease.
3.7.3 Independent Covenants. The obligations of the Lessor and the
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by the Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or (except in those instances
where the obligation to pay expressly survives the termination of this Lease) by
termination of this Lease other than by reason of an Event of Default.
3.8 Abatement of Rent Limited. There shall be no abatement of Rent on
account of any Casualty, Taking or other event, except that in the event of a
partial Taking or a temporary Taking as described in Section 14.3, the Base Rent
shall be abated as follows: (a) in the case of such a partial Taking, Base Rent
then due during the Lease Year in which such Taking occurs shall be reduced to
equal the product of (i) the then current Base Rent multiplied by (ii) the
difference between one minus a fraction the numerator of which is the Award, the
denominator of which is the Fair Market Value of the Leased Property, and (b) in
the case of such a temporary Taking, by reducing the Base Rent for the period of
such a temporary Taking, by the net amount of the Award received by the Lessor.
For the purposes of this Section 3.8, the "net amount of the Award
received by the Lessor" shall mean the Award paid to the Lessor on account of
such Taking, minus all costs and expenses incurred by the Lessor in connection
therewith, and minus any amounts paid to or for the account of the Lessee to
reimburse for the costs and expenses of reconstructing the Facility following
such Taking in order to create a viable and functional Facility under all of the
circumstances.
ARTICLE 4
IMPOSITIONS; TAXES; UTILITIES;
INSURANCE PAYMENTS
4.1 Payment of Impositions.
4.1.1 Lessee To Pay. Subject to the provisions of Section 4.1.2 and
Article 15, the Lessee will pay or cause to be paid all Impositions before any
fine, penalty, interest or cost may be added for non-payment, such payments to
be made directly to the taxing authority where feasible, and the Lessee will
promptly furnish the Lessor copies of official receipts or other satisfactory
proof evidencing payment not later than the last day on which the same may be
paid without penalty or interest. Subject to the provisions of Article 15 and
Section 4.1.2, the Lessee's obligation to pay such Impositions shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof.
4.1.2 Installment Elections. If any such Imposition may, at the option
of the taxpayer, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), the Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term hereof (subject to the Lessee's right to contest pursuant to the
provisions of Section 4.1.5 below) as the same respectively become due and
before any fine, penalty, premium, further interest or cost may be added
thereto.
4.1.3 Returns and Reports. The Lessor, at its expense, shall, to the
extent permitted by applicable law, prepare and file all tax returns and reports
as may be required by Governmental Authorities in respect of the Lessor's net
income, gross receipts, franchise taxes and taxes on its capital stock, and the
Lessee, at its expense, shall, to the extent permitted by applicable laws and
regulations, prepare and file all other tax returns and reports in respect of
any Imposition as may be required by Governmental Authorities. The Lessor and
the Lessee shall, upon request of the other, provide such data as is maintained
by the party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports. In the event that
any Governmental Authority classifies any property covered by this Lease as
personal property, the Lessee shall file all personal property tax returns in
such jurisdictions where it may legally so file. The Lessor, to the extent it
possesses the same, and the Lessee, to the extent it possesses the same, will
provide the other party, upon request, with cost and depreciation records
necessary for filing returns for any portion of Leased Property so classified as
personal property. Where the Lessor is legally required to file personal
property tax returns, if the Lessee notifies the Lessor of the obligation to do
so in each year at least thirty (30) days prior to the date any protest must be
filed, the Lessee will be provided with copies of assessment notices so as to
enable the Lessee to file a protest.
4.1.4 Refunds. If no Lease Default shall have occurred and be
continuing, any refund due from any taxing authority in respect of any
Imposition paid by the Lessee shall be paid over to or retained by the Lessee.
If a Lease Default shall have occurred and be continuing, at the Lessor's
option, such funds shall be paid over to the Lessor and/or retained by the
Lessor and applied toward the Obligations in accordance with the Lease Documents
and/or any Related Party Agreement.
4.1.5 Protest. Upon giving notice to the Lessor, at the Lessee's option
and sole cost and expense, and subject to compliance with the provisions of
Article 15, the Lessee may contest, protest, appeal, or institute such other
proceedings as the Lessee may deem appropriate to effect a reduction of any
Imposition and the Lessor, at the Lessee's cost and expense as aforesaid, shall
fully cooperate in a reasonable manner with the Lessee in connection with such
protest, appeal or other action.
4.2 Notice of Impositions. The Lessor shall give prompt notice to the
Lessee of all Impositions payable by the Lessee hereunder of which the Lessor at
any time has knowledge, but the Lessor's failure to give any such notice shall
in no way diminish the Lessee's obligations hereunder to pay such Impositions.
4.3 Adjustment of Impositions. Impositions imposed in respect of the
period during which the expiration or earlier termination of the Term occurs
shall be adjusted and prorated between the Lessor and the Lessee, whether or not
such Impositions are imposed before or after such expiration or termination, and
the Lessee's obligation to pay its prorated share thereof shall survive such
expiration or termination.
4.4 Utility Charges. The Lessee will pay or cause to be paid all charges
for electricity, power, gas, oil, water, telephone and other utilities used in
the Leased Property during the Term and thereafter until the Lessee surrenders
the Leased Property in the manner required by this Lease.
4.5 Insurance Premiums. The Lessee will pay or cause to be paid all
premiums for the insurance coverage required to be maintained pursuant to
Article 12 during the Term, and thereafter until the Lessee yields up the Leased
Property in the manner required by this Lease. All such premiums shall be paid
annually in advance and the Lessee shall furnish the Lessor with evidence
satisfactory to the Lessor that all such premiums have been so paid prior to the
commencement of the Term and thereafter at least thirty (30) days prior to the
due date of each premium which thereafter becomes due. Notwithstanding the
foregoing, the Lessee may pay such insurance premiums to the insurer in monthly
installments so long as the applicable insurer is contractually obligated to
give the Lessor not less than a thirty (30) days notice of non-payment and so
long as no Lease Default has occurred and is continuing. In the event of the
failure of the Lessee either to comply with the insurance requirements in
Article 12, or to pay the premiums for such insurance, or to deliver such
policies or certificates thereof to the Lessor at the times required hereunder,
the Lessor shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums therefor, which premiums shall be a demand
obligation of the Lessee to the Lessor.
4.6 Deposits.
4.6.1 Lessor's Option. At the option of the Lessor, which may be
exercised at any time, the Lessee shall, upon written request of the Lessor, on
the first day on the calendar month immediately following such request, and on
the first day of each calendar month thereafter during the Term (each of which
dates is referred to as a "Monthly Deposit Date"), pay to and deposit with the
Lessor a sum equal to one-twelfth (1/12th) of the Impositions to be levied,
charged, filed, assessed or imposed upon or against the Leased Property within
one (1) year after said Monthly Deposit Date and a sum equal to one-twelfth
(1/12th) of the premiums for the insurance policies required pursuant to Article
12 which are payable within one (1) year after said Monthly Deposit Date. If the
amount of the Impositions to be levied, charged, assessed or imposed or
insurance premiums to be paid within the ensuing one (1) year period shall not
be fixed upon any Monthly Deposit Date, such amount for the purpose of computing
the deposit to be made by the Lessee hereunder shall be estimated by the Lessor
with an appropriate adjustment to be promptly made between the Lessor and the
Lessee as soon as such amount becomes determinable. In addition, the Lessor may,
at its option, from time to time require that any particular deposit be greater
than one-twelfth (1/12th) of the estimated amount payable within one (1) year
after said Monthly Deposit Date, if such additional deposit is required in order
to provide to the Lessor a sufficient fund from which to make payment of all
Impositions on or before the next due date of any installment thereof, or to
make payment of any required insurance premiums not later than the due date
thereof.
4.6.2 Use of Deposits. The sums deposited by the Lessee under this
Section 4.6 shall be held by the Lessor and shall be applied in payment of the
Impositions or insurance premiums, as the case may be, when due. Any such
deposits may be commingled with other assets of the Lessor, and shall be
deposited by the Lessor at such bank as the Lessor may, from time to time
select, and the Lessor shall not be liable to the Lessee or any other Person (a)
based on the Lessor's (or such bank's) choice of investment vehicles, (b) for
any consequent loss of principal or interest or (c) for any unavailability of
funds based on such choice of investment. Furthermore, the Lessor shall bear no
responsibility for the financial condition of, nor any act or omission by, the
Lessor's depository bank. The income from such investment or interest on such
deposit shall be paid to the Lessee on a semi-annual basis as long as no Lease
Default has occurred and is then continuing, and as long as no fact or
circumstance exists which, with the giving of notice and/or the passage of time,
would constitute a Lease Default. The Lessee shall give not less than ten (10)
days prior written notice to the Lessor in each instance when an Imposition or
insurance premium is due, specifying the Imposition or premium to be paid and
the amount thereof, the place of payment, and the last day on which the same may
be paid in order to comply with the requirements of this Lease. If the Lessor,
in violation of its obligations under this Lease, does not pay any Imposition or
insurance premium when due, for which a sufficient deposit exists, the Lessee
shall not be in default hereunder by virtue of the failure of the Lessor to pay
such Imposition or such insurance premium and the Lessor shall pay any interest
or fine assessed by virtue of the Lessor's failure to pay such Imposition or
insurance premium.
4.6.3 Deficits. If for any reason any deposit held by the Lessor under
this Section 4.6 shall not be sufficient to pay an Imposition or insurance
premium within the time specified therefor in this Lease, then, within ten (10)
days after demand by the Lessor, the Lessee shall deposit an additional amount
with the Lessor, increasing the deposit held by the Lessor so that the Lessor
holds sufficient funds to pay such Imposition or premium in full (or in
installments as otherwise provided for herein), together with any penalty or
interest due thereon. The Lessor may change its estimate of any Imposition or
insurance premium for any period on the basis of a change in an assessment or
tax rate or on the basis of a prior miscalculation or for any other good faith
reason; in which event, within ten (10) days after demand by the Lessor, the
Lessee shall deposit with the Lessor the amount in excess of the sums previously
deposited with the Lessor for the applicable period which would theretofore have
been payable under the revised estimate.
4.6.4 Other Properties. If any Imposition shall be levied, charged,
filed, assessed, or imposed upon or against the Leased Property, and if such
Imposition shall also be a levy, charge, assessment, or imposition upon or for
any other real or personal property that does not constitute a part of the
Leased Property, then the computation of the amounts to be deposited under this
Section 4.6 shall be based upon the entire amount of such Imposition and the
Lessee shall not have the right to apportion any deposit with respect to such
Imposition.
4.6.5 Transfers. In connection with any assignment of the Lessor's
interest under this Lease, the original the Lessor named herein and each
successor in interest shall have the right to transfer all amounts deposited
pursuant to the provisions of this Section 4.6 then in its possession to such
assignee (as the subsequent holder of the Lessor's interest in this Lease) and
upon such transfer, the original the Lessor named herein or the applicable
successor in interest transferring the deposits shall thereupon be completely
released from all liability with respect to such deposits so transferred and the
Lessee shall look solely to said assignee, as the subsequent holder of the
Lessor's interest under this Lease, in reference thereto. The original the
Lessor named herein or the applicable successor in interest transferring the
deposits shall provide written notice to the Lessee of such transfer.
4.6.6 Security. All amounts deposited with the Lessor pursuant to the
provisions of this Section 4.6 shall be held by the Lessor as additional
security for the payment and performance of the Obligations and, upon the
occurrence of any Lease Default, the Lessor may, in its sole and absolute
discretion, apply said amounts towards payment or performance of such
Obligations.
4.6.7 Return. Upon the expiration or earlier termination of this Lease,
provided, that, all of the Lease Obligations have been fully paid and performed,
any sums then held by the Lessor under this Section 4.6 shall be refunded to the
Lessee; unless a Related Party Default has occurred, in which event such sums
may be applied toward the Obligations.
4.6.8 Receipts. The Lessee shall deliver to the Lessor copies of all
notices, demands, claims, bills and receipts in relation to the Impositions and
insurance premiums immediately upon receipt thereof by the Lessee.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY
5.1 Ownership of the Leased Property. The Lessee acknowledges that the
Leased Property is the property of the Lessor and that, subject to the Permitted
Encumbrances, the Lessee has only the right to the exclusive possession and use
of the Leased Property upon the terms and conditions of this Lease.
5.2 Personal Property; Removal and Replacement of Personal Property.
5.2.1 Lessee To Equip Facility. The Lessee, at its sole cost and
expense, shall install, affix or assemble or place on the Leased Property,
sufficient items of Tangible Personal Property, to enable the Leased Property to
be operated, in accordance with the requirements of this Lease for the Primary
Intended Use, and such Tangible Personal Property and replacements thereof,
shall be at all times the property of the Lessee.
5.2.2 Sufficient Personal Property. The Lessee shall maintain, during
the entire Term, the Tangible Personal Property in good order and repair and
shall provide at its expense all necessary replacements thereof, as may be
necessary in order to operate the Leased Property in compliance with all
applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended Use.
In addition, the Lessee shall (a) furnish all necessary replacements of obsolete
items of the Tangible Personal Property during the Term, unless the Lessee
provides the Lessor with an explanation (reasonably acceptable to the Lessor) as
to why such Tangible Personal Property is no longer required in connection with
the operation of the Leased Property and (b) at least once a year, and more
frequently if requested by the Lessor, deliver to the Lessor, a detailed
inventory of all such Tangible Personal Property.
5.2.3 Removal and Replacement; Lessor's Option to Purchase. The Lessee
shall not remove from the Leased Property any one or more items of Tangible
Personal Property (whether now owned or hereafter acquired), the fair market
value of which exceeds TWENTY-FIVE THOUSAND DOLLARS ($25,000), individually or
ONE HUNDRED THOUSAND DOLLARS ($100,000.00) collectively, except if such Tangible
Personal Property is simultaneously suitably replaced or the Lessee provides the
Lessor with an explanation (reasonably satisfactory to the Lessor) as to why
such Tangible Personal Property is no longer required in connection with the
operation of the Leased Property. At its sole cost and expense, the Lessee shall
restore the Leased Property to the condition required by Article 8, including
repair of all damage to the Leased Property caused by the removal of the
Tangible Personal Property, whether effected by the Lessee or the Lessor. Upon
the expiration or earlier termination of this Lease, the Lessor shall have the
option, which may be exercised prior to or within sixty (60) days following such
expiration or termination, of (a) acquiring the Tangible Personal Property
(pursuant to a bill of sale and assignments of any equipment leases, all in such
forms as are reasonably satisfactory to the Lessor) upon payment of its book
value (the Lessee's cost, minus depreciation), but not in excess of its fair
market value or (b) requiring the Lessee to remove the Tangible Personal
Property. If the Lessor exercises its option to purchase the Tangible Personal
Property, the price to be paid by the Lessor shall be (i) reduced by the amount
of all payments due on any equipment leases or any other Permitted Prior
Security Interests assumed by the Lessor and (ii) applied to the Lease
Obligations before any payment to the Lessee. If the Lessor requires the removal
of the Tangible Personal Property, then all of the Tangible Personal Property
that is not removed by the Lessee within ten (10) days following such request
shall be considered abandoned by the Lessee and may be appropriated, sold,
destroyed or otherwise disposed of by the Lessor upon first giving notice
thereof to the Lessee, without any payment to the Lessee and without any
obligation to account therefor.
ARTICLE 6
SECURITY FOR LEASE OBLIGATIONS
6.1 Security for Lessee's Obligations.
6.1.1 Security. In order to secure the payment and performance of all of
the Obligations, the Lessee agrees to provide or cause there to be provided,
among other things, the following security:
(a) a first lien and exclusive security interest in the Tangible
Personal Property and certain other Collateral as more particularly provided for
in the Security Agreement;
(b) a first lien and exclusive pledge of all of the capital stock of the
Lessee all as more particularly set forth in the Pledge Agreements. If any
Person other than the Lessee shall ever operate the Facility, a pledge of all
capital stock of, or partnership or other ownership interests, in such Person
shall also be provided pursuant to a pledge and security agreement substantially
similar to the Pledge Agreements; and
(c) a first lien and exclusive pledge and assignment of, and security
interest in, all Permits and Contracts, as more particularly provided for in the
Permits Assignment.
Notwithstanding anything to the contrary set forth herein, in no event
shall the Lessee be required to grant to the Lessor any security interest in
Receivables; provided, however, upon any Lease Default or the expiration or
earlier termination of this Lease, the Lessee shall provide the Lessor with
copies of its books and records relating to Receivables, even if excluded from
the security granted to the Lessor, so as to facilitate continuity of patient
and/or resident care and billing.
6.1.2 Purchase-Money Security Interests and Equipment Leases.
Notwithstanding any other provision hereof regarding the creation of Liens, but
subject to Section 11.3.2, the Lessee may grant priority purchase money security
interests in items of Tangible Personal Property or lease Tangible Personal
Property from equipment lessors without the consent of the Lessor as long as the
total amount of the obligations of the Lessee outstanding in connection
therewith do not exceed ONE HUNDRED THOUSAND DOLLARS ($100,000) in the aggregate
and the Lessee may grant purchase money security interests in Tangible Personal
Property and lease Tangible Personal Property from equipment lessors in excess
of such limit, as long as, in each instance, (i) the secured party or equipment
lessor enters into an intercreditor agreement with, and satisfactory to, the
Lessor, pursuant to which, without limiting the foregoing, (x) the Lessor shall
be afforded the option of curing defaults and the option of succeeding to the
rights of the Lessee and (y) the Lessor's security interest in Tangible Personal
Property shall be subordinated to the security interest granted to such secured
party, (ii) all of the terms, conditions and provisions of the purchase money
security agreements or equipment leases evidencing the financing arrangement are
reasonably acceptable to the Lessor, (iii) promptly after the execution thereof,
the Lessee provides to the Lessor true and complete copies, as executed, of all
such purchase money security agreements and equipment leases (and all amendments
thereto) and (iv) no such purchase money security interest or equipment lease
shall be cross-defaulted or cross-collateralized with any other obligation.
Security interests granted by the Lessee in full compliance with the provisions
of this Section 6.1.2 are referred to as APermitted Prior Security Interests.@
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS
7.1 Condition of the Leased Property. The Lessee acknowledges receipt
and delivery of possession of the Leased Property and that the Lessee has
examined and otherwise has acquired knowledge of the condition of the Leased
Property prior to the execution and delivery of this Lease and has found the
same to be in good order and repair and satisfactory for its purposes hereunder.
The Lessee is leasing the Leased Property "AS-IS" in its present condition. The
Lessee waives any claim or action against the Lessor in respect of the condition
of the Leased Property. THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, EITHER AS TO ITS FITNESS FOR
ANY PARTICULAR PURPOSE OR USE, ITS DESIGN OR CONDITION OR OTHERWISE, OR AS TO
DEFECTS IN THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT;
IT BEING AGREED THAT ALL RISKS RELATING TO THE DESIGN, CONDITION AND/OR USE OF
THE LEASED PROPERTY ARE TO BE BORNE BY THE LESSEE. THE LESSEE HEREBY ASSUMES ALL
RISK OF THE PHYSICAL CONDITION OF THE LEASED PROPERTY, THE SUITABILITY OF THE
LEASED PROPERTY FOR THE LESSEE'S PURPOSES, AND THE COMPLIANCE OR NON-COMPLIANCE
OF THE LEASED PROPERTY WITH ALL APPLICABLE REQUIREMENTS OF LAW, INCLUDING BUT
NOT LIMITED TO ENVIRONMENTAL LAWS AND ZONING OR LAND USE LAWS.
Upon the request of the Lessor, at any time and from time to time during
the Term, the Lessee shall engage one (1) or more independent professional
consultants, engineers and inspectors, qualified to do business in the State and
acceptable to the Lessor to perform any environmental and/or structural
investigations and/or other inspections of the Leased Property and the Facility
as the Lessor may reasonably request in order to detect (a) any structural
deficiencies in the Leased Improvements or the utilities servicing the Leased
Property or (b) the presence of any condition that (i) may be harmful or present
a health hazard to the patients and/or residents and other occupants of the
Leased Property or (ii) constitutes a breach or violation of any of the Lease
Documents. In the event that the Lessor reasonably determines that the results
of such testing or inspections are unsatisfactory, within thirty (30) days of
notice from the Lessor, the Lessee shall commence such appropriate remedial
actions as may be reasonably requested by the Lessor to correct such
unsatisfactory conditions and, thereafter, shall diligently and continuously
prosecute such remedial actions to completion within the time limits prescribed
in this Lease or the other Lease Documents.
7.2 Use of the Leased Property; Compliance; Management.
7.2.1 Obligation to Operate. The Lessee shall continuously operate the
Leased Property in accordance with the Primary Intended Use and maintain its
qualifications for licensure and accreditation as required by all applicable
Legal Requirements and Insurance Requirements.
7.2.2 Permitted Uses. During the entire Term, the Lessee shall use the
Leased Property, or permit the Leased Property to be used, only for the Primary
Intended Use. The Lessee shall not use the Leased Property or permit the Leased
Property to be used for any other use without the prior written consent of the
Lessor, which consent may be withheld in the Lessor's sole and absolute
discretion.
7.2.3 Compliance With Insurance Requirements. No use shall be made or
permitted to be made of the Leased Property and no acts shall be done which will
cause the cancellation of any insurance policy covering the Leased Property, nor
shall the Lessee, any Manager or any other Person sell or otherwise provide to
any patients and/or residents, other occupants or invitees therein, or permit to
be kept, used or sold in or about the Leased Property, any article which may be
prohibited by any Legal Requirement or by any of the Insurance Requirements.
Furthermore, the Lessee shall, at its sole cost and expense, take whatever other
actions that may be necessary to comply with and to insure that the Leased
Property complies with all Insurance Requirements.
7.2.4 No Waste. The Lessee shall not commit or suffer to be committed
any waste on, in or under the Leased Property, nor shall the Lessee cause or
permit any nuisance thereon.
7.2.5 No Impairment. The Lessee shall neither suffer nor permit the
Leased Property to be used in such a manner as (a) might reasonably tend to
impair the Lessor's title thereto or (b) may reasonably make possible a claim or
claims of adverse usage or adverse possession by the public or of implied
dedication of the Leased Property.
7.2.6 No Liens. Except as permitted pursuant to Section 6.1.2, the
Lessee shall not permit or suffer any Lien to exist on the Tangible Personal
Property and shall in no event cause, permit or suffer any Lien to exist with
respect to the Leased Property other than as set forth in Section 11.5.2.
7.3 Compliance with Legal Requirements. The Lessee covenants and agrees
that the Leased Property shall not be used for any unlawful purpose and that the
Lessee, at its sole cost and expense, will promptly (a) comply with, and shall
cause every other member of the Leasing Group to comply with, all Legal
Requirements relating to the use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural change in any of the Leased Property or interfere with the use and
enjoyment of the Leased Property and (b) procure, maintain and comply with (in
all material respects), and shall cause every other member of the Leasing Group
to procure, maintain and comply with (in all material respects), all Contracts
and Permits necessary or desirable in order to operate the Leased Property for
the Primary Intended Use, and for compliance with all of the terms and
conditions of this Lease. Unless a Lease Default has occurred or any event has
occurred which, with the passage of time and/or the giving of notice would
constitute a Lease Default, the Lessee may, upon prior written notice to the
Lessor, contest any Legal Requirement to the extent permitted by, and in
accordance with, Article 15.
7.4 Management Agreements. From and after the Commencement Date, neither
the Lessee, nor any Sublessee (other than any Sublessee that is not an Affiliate
of the Lessee) shall enter into any Management Agreement, without the prior
written approval of the Lessor, in each instance, which approval shall not be
unreasonably withheld. The Lessee shall not, without the prior written approval
of the Lessor, in each instance, which approval shall not be unreasonably
withheld, agree to or allow: (a) any change in the Manager or change in the
ownership or control of the Manager, (b) any change in the Management Agreement,
(c) the termination of any Management Agreement (other than in connection with
the exercise by the Lessee of any of its remedies under the Management Agreement
as a result of any default by the Manager thereunder), (d) any assignment by the
Manager of its interest under the Management Agreement or (e) any material
amendment of the Management Agreement. In addition, the Lessee and every
Sublessee (other than any Sublessee that is not an Affiliate of the Lessee)
shall, at their sole cost and expense, promptly and fully perform or cause to be
performed every covenant, condition, promise and obligation of the licensed
operator of the Leased Property under any Management Agreement.
Each Management Agreement shall provide that the Lessor shall be
provided notice of any defaults thereunder and, at the Lessor's option, an
opportunity to cure such default. The Lessee and any Sublessee (other than any
Sublessee that is not an Affiliate of the Lessee) shall furnish to the Lessor,
within three (3) days after receipt thereof, or after the mailing or service
thereof by the Lessee or such Sublessee, as the case may be, a copy of each
notice of default which the Lessee or such Sublessee shall give to, or receive
from any Person, based upon the occurrence, or alleged occurrence, of any
default in the performance of any covenant, condition, promise or obligation
under any Management Agreement.
Whenever and as often as the Lessee or any Sublessee (other than any
Sublessee that is not an Affiliate of the Lessee) shall fail to perform,
promptly and fully, at its sole cost and expense, any covenant, condition,
promise or obligation on the part of the licensed operator of the Leased
Property under and pursuant to any Management Agreement, the Lessor, or a
lawfully appointed receiver of the Leased Property, may, at their respective
options (and without any obligation to do so), after five (5) days' prior notice
to the Lessee (except in the case of an emergency) enter upon the Leased
Property and perform, or cause to be performed, such work, labor, services, acts
or things, and take such other steps and do such other acts as they may deem
advisable, to cure such defaulted covenant, condition, promise or obligation,
and any amount so paid or advanced by the Lessor or such receiver and all costs
and expenses reasonably incurred in connection therewith (including, without
limitation, attorneys' fees and expenses and court costs), shall be a demand
obligation of the Lessee to the Lessor or such receiver, and, the Lessor shall
have the same rights and remedies for failure to pay such costs on demand as for
the Lessee's failure to pay any other sums due hereunder.
ARTICLE 8
REPAIRS; RESTRICTIONS
8.1 Maintenance and Repair.
8.1.1 Lessee's Responsibility. The Lessee, at its sole cost and expense,
shall keep the Leased Property and all private roadways, sidewalks and curbs
appurtenant thereto which are under the Lessee's control in good order and
repair (whether or not the need for such repairs occurs as a result of the
Lessee's use, any prior use, the elements or the age of the Leased Property or
such private roadways, sidewalks and curbs or any other cause whatsoever) and,
subject to Articles 9, 13 and 14, the Lessee shall promptly, with the exercise
of all reasonable efforts, undertake and diligently complete all necessary and
appropriate repairs, replacements, renovations, restorations, alterations and
modifications thereof of every kind and nature, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition (concealed or otherwise) existing prior to
the commencement of, or during, the Term and thereafter until the Lessee
surrenders the Leased Property in the manner required by this Lease. In
addition, the Lessee, at its sole cost and expense, shall make all repairs,
modifications, replacements, renovations and alterations of the Leased Property
(and such private roadways, sidewalks and curbs) that are necessary to comply
with all applicable Legal Requirements and Insurance Requirements so that the
Leased Property can be legally operated for the Primary Intended Use. All
repairs, replacements, renovations, alterations, and modifications required by
the terms of this Section 8.1 shall be (a) performed in a good and workmanlike
manner in compliance with all Legal Requirements, Insurance Requirements and the
requirements of Article 9 hereof, using new materials well suited for their
intended purpose and (b) consistent with the operation of the Leased Property in
a first class manner. The Lessee will not take or omit to take any action the
taking or omission of which might materially impair the value or the usefulness
of the Leased Property for the Primary Intended Use. To the extent that any of
the repairs, replacements, renovations, alterations or modifications required by
the terms of this Section 8.1 constitute Material Structural Work, the Lessee
shall obtain the Lessor's prior written approval (which approval shall not be
unreasonably withheld) of the specific repairs, replacements, renovations,
alterations and modifications to be performed by or on behalf of the Lessee in
connection with such Material Structural Work. Notwithstanding the foregoing, in
the event of a bona fide emergency during which the Lessee is unable to contact
the appropriate representatives of the Lessor, the Lessee may commence such
Material Structural Work as may be necessary in order to address such emergency
without the Lessor's prior approval, provided, however, that the Lessee shall
immediately thereafter advise the Lessor of such emergency and the nature and
scope of the Material Structural Work commenced and shall obtain the Lessor's
approval of the remaining Material Structural Work to be completed.
8.1.2 No Lessor Obligation. The Lessor shall not, under any
circumstances, be required to build or rebuild any improvements on the Leased
Property (or any private roadways, sidewalks or curbs appurtenant thereto), or
to make any repairs, replacements, renovations, alterations, restorations,
modifications, or renewals of any nature or description to the Leased Property
(or any private roadways, sidewalks or curbs appurtenant thereto), whether
ordinary or extraordinary, structural or non-structural, foreseen or unforeseen,
or to make any expenditure whatsoever with respect thereto in connection with
this Lease, or to maintain the Leased Property (or any private roadways,
sidewalks or curbs appurtenant thereto) in any way.
8.1.3 Lessee May Not Obligate Lessor. Nothing contained herein nor any
action or inaction by the Lessor shall be construed as (a) constituting the
consent or request of the Lessor, express or implied, to any contractor,
subcontractor, laborer, materialman or vendor to or for the performance of any
labor or services for any construction, alteration, addition, repair or
demolition of or to the Leased Property or (b) giving the Lessee any right,
power or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Lessor for the payment thereof
or to make any agreement that may create, or in any way be the basis for, any
right, title or interest in, or Lien or claim against, the estate of the Lessor
in the Leased Property. Without limiting the generality of the foregoing, the
right title and interest of the Lessor in and to the Leased Property shall not
be subject to liens or encumbrances for the performance of any labor or services
or the furnishing of any materials or other property furnished to the Leased
Property at or by the request of the Lessee or any other Person other than the
Lessor. The Lessee shall notify any contractor, subcontractor, laborer,
materialman or vendor providing any labor, services or materials to the Leased
Property of this provision.
8.2 Encroachments; Title Restrictions. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other Lien now or hereafter affecting the
Leased Property, or shall impair the rights of others under any easement,
right-of-way or other Lien to which the Leased Property is now or hereafter
subject, then promptly upon the request of the Lessor, the Lessee shall, at its
sole cost and expense, subject to the Lessee's right to contest the existence of
any encroachment, violation or impairment as set forth in Article 15, (a) obtain
valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment or (b)
make such alterations to the Leased Improvements, and take such other actions,
as the Lessee in the good faith exercise of its judgment deems reasonably
practicable, to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements. Notwithstanding the foregoing, the Lessee shall, in any event,
take all such actions as may be reasonably necessary in order to be able to
continue the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and to the extent that the Leased Improvements were
operated prior to the assertion of such encroachment, violation or impairment
and nothing contained herein shall limit the Lessee's obligations to operate the
Leased Property in accordance with its Primary Intended Use. Any such alteration
made pursuant to the terms of this Section 8.2 shall be completed in conformity
with the applicable requirements of Section 8.1 and Article 9. The Lessee's
obligations under this Section 8.2 shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any policy of title or
other insurance.
ARTICLE 9
MATERIAL STRUCTURAL WORK AND
CAPITAL ADDITIONS
9.1 Lessor's Approval. Without the prior written consent of the Lessor,
which consent may be withheld by the Lessor, in its sole and absolute
discretion, the Lessee shall make no Capital Addition or Material Structural
Work to the Leased Property (including, without limitation, any change in the
size, bed and/or unit capacity of the Facility), except as may be otherwise
expressly required pursuant to Article 8.
9.2 General Provisions as to Capital Additions and Certain Material
Structural Work. As to any Capital Addition or Material Structural Work (other
than such Material Structural Work that is required to be performed pursuant to
the terms of Section 8.1) for which the Lessor has granted its prior written
approval, the following terms and conditions shall apply unless otherwise
expressly set forth in the Lessor's written approval.
9.2.1 No Liens. The Lessee shall not be permitted to create any Lien on
the Leased Property in connection with any Capital Addition or Material
Structural Work.
9.2.2 Lessee's Proposal Regarding Capital Additions and Material
Structural Work. If the Lessee desires to undertake any Capital Addition or
Material Structural Work, the Lessee shall submit to the Lessor in writing a
proposal setting forth in reasonable detail any proposed Capital Addition or
Material Structural Work and shall provide to the Lessor copies of, or
information regarding, the applicable plans and specifications, Permits,
Contracts and any other materials concerning the proposed Capital Addition or
Material Structural Work, as the case may be, as the Lessor may reasonably
request. Without limiting the generality of the foregoing, each such proposal
pertaining to any Capital Addition shall indicate the approximate projected cost
of constructing such Capital Addition, the use or uses to which it will be put
and a good faith estimate of the change, if any, in the Gross Revenues that the
Lessee anticipates will result from the construction of such Capital Addition.
9.2.3 Lessor's Options Regarding Capital Additions and Material
Structural Work. The Lessor shall have the options of: (a) denying permission
for the construction of the applicable Capital Addition or Material Structural
Work, (b) offering to finance the construction of the Capital Addition or
Material Structural Work pursuant to Section 9.3, (c) allowing the Lessee to pay
for or separately finance the construction of the Capital Addition or Material
Structural Work, subject to compliance with the terms and conditions of Section
9.2.1, Section 9.4, Section 13.1, all Legal Requirements and all other
requirements of this Lease and to such other terms and conditions as the Lessor
may in its discretion impose or (d) any combination of the foregoing. Unless the
Lessor notifies the Lessee in writing of a contrary election within forty-five
(45) days of the Lessee's request, the Lessor shall be deemed to have denied the
request for the Capital Addition or Material Structural Work.
9.2.4 Lessor May Elect to Finance Capital Additions or Material
Structural Work. If the Lessor elects to offer financing for the proposed
Capital Addition or Material Structural Work, the provisions of Section 9.3
shall apply.
9.2.5 Legal Requirements; Quality of Work. All Capital Additions and/or
Material Structural Work shall be performed in full compliance with all
applicable Legal Requirements and shall be performed in a good and workmanlike
manner.
9.3 Capital Additions and Material Structural Work Financed by Lessor.
9.3.1 Lessee's Financing Request. The Lessee may request that the Lessor
provide or arrange financing for a Capital Addition or Material Structural Work
by providing to the Lessor such information about the Capital Addition or
Material Structural Work as he Lessor may reasonably request, including, without
limitation, all information referred to in Section 9.2 above. The Lessee
understands, however, that the Lessor shall be under no obligation to agree to
such request. Nevertheless, the Lessor shall use reasonable efforts to notify
the Lessee, within forty-five (45) days of receipt of such information, as to
whether the Lessor will finance the proposed Capital Addition or Material
Structural Work and, if so, the terms and conditions upon which it would do so,
including the terms of any amendment to this Lease (including, without
limitation, an increase in Base Rent based on the Lessor's then existing terms
and prevailing conditions to compensate the Lessor for the additional funds
advanced by it). The Lessee may withdraw its request by notice to the Lessor at
any time before such time as the Lessee accepts the Lessor's terms and
conditions. All advances of funds for any such financing shall be made in
accordance with the Lessor's then standard construction loan requirements and
procedures, which may include, without limitation, the requirements and
procedures applicable to Work under Section 13.1.
9.3.2 Lessor's General Requirements. If the Lessor agrees to finance the
proposed Capital Addition or Material Structural Work and the Lessee accepts the
Lessor's proposal therefor, in addition to all other items which the Lessor or
any applicable Financing Party may reasonably require, the Lessee shall provide
to the Lessor the following:
(a) prior to any advance of funds, (i) any information, opinions,
certificates, Permits or documents reasonably requested by the Lessor or any
applicable Financing Party which are necessary to confirm that the Lessee will
be able to use the Capital Addition upon the completion thereof or the
applicable portion of the Facility upon the completion of the Material
Structural Work in accordance with the Primary Intended Use and (ii) evidence
satisfactory to the Lessor and any applicable Financing Party that all Permits
required for the construction and use of the Capital Addition or the applicable
portion of the Facility have been obtained, are in full force and effect and are
not subject to appeal, except only for those Permits which cannot in the normal
course be obtained prior to commencement or completion of the construction;
provided, that the Lessor and any applicable Financing Party are furnished with
reasonable evidence that the same will be available in the normal course of
business without unusual condition;
(b) prior to any advance of funds, an Officer's Certificate and, if
requested, a certificate from the Lessee's architect, setting forth in
reasonable detail the projected (or actual, if available) Capital Addition Cost
or the cost of the Material Structural Work;
(c) bills of sale, instruments of transfer and other documents required
by the Lessor so as to vest title to the Capital Addition or the applicable
Material Structural Work in the Lessor free and clear of all Liens, and
amendments to this Lease and any recorded notice or memorandum thereof, duly
executed and acknowledged, in form and substance reasonably satisfactory to the
Lessor, providing for any changes required by the Lessor including, without
limitation, changes in the Base Rent and the legal description of the Land;
(d) upon payment therefor, a deed conveying to the Lessor title to any
land acquired for the purpose of constructing the Capital Addition or the
applicable Material Structural Work ("Additional Land") free and clear of any
Liens except those approved by the Lessor;
(e) upon completion of the Capital Addition or the Material Structural
Work, a final as-built survey thereof reasonably satisfactory to the Lessor, if
required by the Lessor;
(f) during and following the advance of funds and the completion of the
Capital Addition or the Material Structural Work, endorsements to any
outstanding policy of title insurance covering the Leased Property satisfactory
in form and substance to the Lessor and any Financing Party (i) updating the
same without any additional exception except as may be reasonably permitted by
the Lessor, (ii) if applicable, including the Additional Land in the premises
covered by such title insurance policy and (iii) increasing the coverage thereof
by an amount equal to any amount paid by the Lessor for the Additional Land plus
the Fair Market Value of the Capital Addition or the Fair Market Value of the
Material Structural Work (except to the extent covered by the owner's policy of
title insurance referred to in subparagraph (g) below);
(g) simultaneous with the initial advance of funds, if appropriate, (i)
an owner's policy of title insurance insuring fee simple title to any Additional
Land conveyed to the Lessor pursuant to subparagraph (d) free and clear of all
Liens except those approved by the Lessor and (ii) a lender's policy of title
insurance reasonably satisfactory in form and substance to any applicable
Financing Party;
(h) following the completion of the Capital Addition or the Material
Structural Work, if reasonably deemed necessary by the Lessor, an appraisal of
the Leased Property by an M.A.I. appraiser acceptable to the Lessor, which
states that the Fair Market Value of the Leased Property upon completion of the
Capital Addition or the Material Structural Work exceeds the Fair Market Value
of the Leased Property prior to the commencement of the construction of such
Capital Addition or Material Structural Work by an amount not less than one
hundred twenty-five percent (125%) of the Capital Addition Cost or the cost of
the Material Structural Work; and
(i) during or following the advancement of funds, prints of
architectural and engineering drawings relating to the Capital Addition or the
Material Structural Work and such other materials, including, without
limitation, endorsements to the title insurance policies (insuring the Lessor
and any applicable Financing Party with respect to the Leased Property)
contemplated by subsection (f) above, opinions of counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the board of directors of the
Lessee authorizing the execution and delivery of the lease amendment and any
other documents and instruments as may be reasonably required by the Lessor and
any applicable Financing Party.
9.3.3 Payment of Costs. By virtue of making a request to finance a
Capital Addition or any Material Structural Work, whether or not such financing
is actually consummated, the Lessee shall be deemed to have agreed to pay, upon
demand, all costs and expenses reasonably incurred by the Lessor and any Person
participating with the Lessor in any way in the financing of the Capital
Addition or Material Structural Work, including, but not limited to (a) fees and
expenses of their respective attorneys, (b) all photocopying expenses, if any,
(c) the amount of any filing, registration and recording taxes and fees, (d)
documentary stamp taxes and intangible taxes and (e) title insurance charges and
appraisal fees.
9.4 General Limitations. Without in any way limiting the Lessor's
options with respect to proposed Capital Additions or Material Structural Work:
(a) no Capital Addition or Material Structural Work shall be completed that
could, upon completion, significantly alter the character or purpose or detract
from the value or operating efficiency of the Leased Property, or significantly
impair the revenue-producing capability of the Leased Property, or adversely
affect the ability of the Lessee to comply with the terms of this Lease, (b) no
Capital Addition or Material Structural Work shall be completed which would tie
in or connect any Leased Improvements on the Leased Property with any other
improvements on property adjacent to the Leased Property (and not part of the
Land covered by this Lease) including, without limitation, tie-ins of buildings
or other structures or utilities, unless the Lessee shall have obtained the
prior written approval of the Lessor, which approval may be withheld in the
Lessor's sole and absolute discretion and (c) all proposed Capital Additions and
Material Structural Work shall be architecturally integrated and consistent with
the Leased Property.
9.5 Non-Capital Additions. The Lessee shall have the obligation and
right to make repairs, replacements and alterations which are not Capital
Additions as required by the other Sections of this Lease, but in so doing, the
Lessee shall always comply with and satisfy the conditions of Sections 9.2.1,
9.2.5 and 9.4, mutatis, mutandis. The Lessee shall have the right, from time to
time, to make additions, modifications or improvements to the Leased Property
which do not constitute Capital Additions or Material Structural Work as it may
deem to be desirable or necessary for its uses and purposes, subject to the same
limits and conditions imposed under Sections 9.2.1, 9.2.5 and 9.4. The cost of
any such repair, replacement, alteration, addition, modification or improvement
shall be paid by the Lessee and the results thereof shall be included under the
terms of this Lease and become a part of the Leased Property, without payment
therefor by the Lessor at any time. Notwithstanding the foregoing, all such
additions, modifications and improvements which affect the structure of any of
the Leased Improvements, or which involve the expenditure of more than FIFTY
THOUSAND DOLLARS ($50,000.00), shall be undertaken only upon compliance with the
provisions of Section 13.1, all Legal Requirements and all other applicable
requirements of this Lease; provided, however, that in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such additions,
modifications and improvements as may be necessary in order to address such
emergency without the Lessor's prior approval, as long as the Lessee immediately
thereafter advises the Lessor of such emergency and the nature and scope of the
additions, modifications and improvements performed and obtains the Lessor's
approval of the remaining work to be completed.
ARTICLE 10
WARRANTIES AND REPRESENTATIONS
10.1 Representations and Warranties. The Lessee hereby represents and
warrants to, and covenants and agrees with, the Lessor that:
10.1.1 Existence; Power; Qualification.
The Lessee is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. The Lessee has all requisite corporate
power to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted and is duly qualified to transact
business and is in good standing in each jurisdiction where such qualification
is necessary or desirable in order to carry out its business as presently
conducted and as proposed to be conducted;
10.1.2 Valid and Binding. The Lessee is duly authorized to make and
enter into all of the Lease Documents to which the Lessee is a party and to
carry out the transactions contemplated therein. All of the Lease Documents to
which the Lessee is a party have been duly executed and delivered by the Lessee,
and each is a legal, valid and binding obligation of the Lessee, enforceable in
accordance with its terms.
10.1.3 Single Purpose. The Lessee is, and during the entire time that
this Lease remains in force and effect shall be, engaged in no business, trade
or activity other than the operation of the Leased Property for the Primary
Intended Use.
10.1.4 No Violation. The execution, delivery and performance of the
Lease Documents and the consummation of the transactions thereby contemplated
shall not result in any breach of, or constitute a default under, or result in
the acceleration of, or constitute an event which, with the giving of notice or
the passage of time, or both, could result in default or acceleration of any
obligation of any member of the Leasing Group under any of the Permits or
Contracts or any other contract, mortgage, lien, lease, agreement, instrument,
franchise, arbitration award, judgment, decree, bank loan or credit agreement,
trust indenture or other instrument to which any member of the Leasing Group is
a party or by which any member of the Leasing Group or the Leased Property may
be bound or affected and do not violate or contravene any Legal Requirement.
10.1.5 Consents and Approvals. Except as already obtained or filed, as
the case may be, no consent or approval or other authorization of, or exemption
by, or declaration or filing with, any Person and no waiver of any right by any
Person is required to authorize or permit, or is otherwise required as a
condition of the execution and delivery of any of the Lease Documents by any
member of the Leasing Group and the performance of such member's obligations
thereunder or as a condition to the validity (assuming the due authorization,
execution and delivery by the Lessor of the Lease Documents to which it is a
party).
10.1.6 No Liens or Insolvency Proceedings. Each member of the Leasing
Group is financially solvent and there are no actions, suits, investigations or
proceedings including, without limitation, outstanding federal or state tax
liens, garnishments or insolvency or bankruptcy proceedings, pending or, to the
best of the Lessee's knowledge and belief, threatened:
(a) against or affecting any member of the Leasing Group, which if
adversely resolved to such member of the Leasing Group, would materially
adversely affect the ability of any of the foregoing to perform their respective
obligations under the Lease Documents; or
(b) which may involve or affect the validity, priority or enforceability
of any of the Lease Documents, at law or in equity, or before or by any
arbitrator or Governmental Authority.
10.1.7 No Burdensome Agreements. The Lessee is a party to any agreement
the terms of which now have, or, as far as can be reasonably foreseen, may have,
a material adverse affect on its respective financial condition or business or
on the operation of the Leased Property.
10.1.8 Commercial Acts. The Lessee's performance of and compliance with
the obligations and conditions set forth herein and in the other Lease Documents
will constitute commercial acts done and performed for commercial purposes.
10.1.9 Adequate Capital, Not Insolvent. After giving effect to the
consummation of the transactions contemplated by the Lease Documents, each
member of the Leasing Group:
(a) will be able to pay its debts as they become due;
(b) will have sufficient funds and capital to carry on its business as
now conducted or as contemplated to be conducted (in accordance with the terms
of the Lease Documents);
(c) will own property having a value both at fair valuation and at
present fair salable value greater than the amount required to pay its debts as
they become due; and
(d) will not be rendered insolvent as determined by applicable law.
10.1.10 Not Delinquent. No member of the Leasing Group is delinquent or
claimed to be delinquent under any obligation for the payment of borrowed money.
10.1.11 No Affiliate Debt. The Lessee has not created, incurred,
guaranteed, endorsed, assumed or suffered to exist any liability (whether direct
or contingent) for borrowed money from the Guarantor (or any of its Affiliates)
or any Affiliate of the Lessee that is not fully subordinated to the Lease
Obligations pursuant to the Affiliated Party Subordination Agreement.
10.1.12 Taxes Current. Each member of the Leasing Group has filed all
federal, state and local tax returns which are required to be filed as to which
extensions are not currently in effect and have paid all taxes, assessments,
impositions, fees and other governmental charges (including interest and
penalties) which have become due pursuant to such returns or pursuant to any
assessment or notice of tax claim or deficiency received by each such member of
the Leasing Group. No tax liability has been asserted by the Internal Revenue
Service against any member of the Leasing Group or any other federal, state or
local taxing authority for taxes, assessments, impositions, fees or other
governmental charges (including interest or penalties thereon) in excess of
those already paid.
10.1.13 Intentionally Omitted.
10.1.14 Pending Actions, Notices and Reports.
(a) There is no action or investigation pending or, to the best
knowledge and belief of the Lessee, threatened, anticipated or contemplated
(nor, to the knowledge of the Lessee, is there any reasonable basis therefor)
against or affecting any member of the Leasing Group (or any Affiliate thereof)
before any Governmental Authority, Accreditation Body or Third Party Payor which
could prevent or hinder the consummation of the transactions contemplated hereby
or call into question the validity of any of the Lease Documents or any action
taken or to be taken in connection with the transactions contemplated thereunder
or which in any single case or in the aggregate might result in any material
adverse change in the business, prospects, condition, affairs or operations of
any such member of the Leasing Group or the Leased Property (including, without
limitation, any action to revoke, withdraw or suspend any Permit necessary or
desirable for the operation of the Leased Property in accordance with its
Primary Intended Use and any action to transfer or relocate any such Permit to a
location other than the Leased Property) or any material impairment of the right
or ability of any such member of the Leasing Group to carry on its operations as
proposed to be conducted or which may materially adversely impact reimbursement
to any such member of the Leasing Group for services rendered to beneficiaries
of Third Party Payor Programs.
(b) Neither the Facility nor any member of the Leasing Group has
received any notice of any claim, requirement or demand of any Governmental
Authority, Accreditation Body, Third Party Payor or any insurance body having or
claiming any licensing, certifying, supervising, evaluating or accrediting
authority over the Leased Property to rework or redesign the Leased Property,
its professional staff or its professional services, procedures or practices in
any material respect or to provide additional furniture, fixtures, equipment or
inventory or to otherwise take action so as to make the Leased Property conform
to or comply with any Legal Requirement; and
(c) The most recent utilization reviews relating to the Leased Property
by all applicable Third Party Payors, Accreditation Bodies and Governmental
Authorities and reviews or scrutiny by any managed care or utilization review
companies have not had a material adverse impact on the utilization of beds,
units or programs at any of the Leased Property. No claims or assertions have
been made in any utilization review that any of the practices or procedures used
at the Leased Property are improper or inappropriate other than such claims or
assertions which singly and in the aggregate will not have a material adverse
impact on the Leased Property.
10.1.15 Compliance with Legal Requirements. The Lessee has obtained all
Permits that are necessary or desirable to operate the Leased Property in
accordance with its Primary Intended Use and all such Permits are in full force
and effect.
10.1.16 Intentionally Omitted.
10.1.17 Intentionally Omitted.
10.1.18 Intentionally Omitted.
10.1.19 Rate Limitations. Except as disclosed on EXHIBIT C, the State
currently imposes no restrictions or limitations on rates which may be charged
to private pay patients and/or residents receiving services at the Facility.
10.1.20 Free Care. Except as disclosed on EXHIBIT D, there are no
Contracts, Permits or Legal Requirements which require that a percentage of
beds, slots or units in any program at the Facility be reserved for Medicaid or
Medicare eligible patients and/or residents or that the Facility provide a
certain amount of welfare, free or charity care or discounted or government
assisted patient and/or resident care.
10.1.21 No Proposed Changes. The Lessee has no actual knowledge of any
Legal Requirements which have been enacted, promulgated or issued within the
eighteen (18) months preceding the date of this Lease or any proposed Legal
Requirements currently pending in the State which may materially adversely
affect rates at the Facility (or any program operated in conjunction with the
Facility) or may result in the likelihood of increased competition at the
Facility or the imposition of Medicaid, Medicare, charity, free care, welfare or
other discounted or government assisted patients at the Facility or require that
the Lessee or the Facility obtain a certificate of need, Section 1122 approval
or the equivalent, which the Lessee or the Facility does not currently possess.
10.1.22 ERISA. No employee pension benefit plan maintained by any member
of the Leasing Group has any accumulated funding deficiency within the meaning
of the ERISA, nor does any member of the Leasing Group have any material
liability to the PBGC established under ERISA (or any successor thereto) in
connection with any employee pension benefit plan (or other class of benefit
which the PBGC has elected to insure), and there have been no "reportable
events" (not waived) or "prohibited transactions" with respect to any such plan,
as those terms are defined in Section 4043 of ERISA and Section 4975 of the
Internal Revenue Code of 1986, as now or hereafter amended, respectively.
10.1.23 No Broker. No member of the Leasing Group nor any of their
respective Affiliates has dealt with any broker or agent in connection with the
transactions contemplated by the Lease Documents.
10.1.24 No Improper Payments. No member of the Leasing Group nor any of
their respective Affiliates has:
(a) made any contributions, payments or gifts of its funds or property
to or for the private use of any government official, employee, agent or other
Person where either the payment or the purpose of such contribution, payment or
gifts is illegal under the laws of the United States, any state thereof or any
other jurisdiction (foreign or domestic);
(b) established or maintained any unrecorded fund or asset for any
purpose or has made any false or artificial entries on any of its books or
records for any reason;
(c) made any payments to any Person with the intention or understanding
that any part of such payment was to be used for any other purpose other than
that described in the documents supporting the payment; or
(d) made any contribution, or has reimbursed any political gift or
contribution made by any other Person, to candidates for public office, whether
federal, state or local, where such contribution would be in violation of
applicable law.
10.1.25 Nothing Omitted. Neither this Lease, nor any of the other Lease
Documents, nor any certificate, agreement, statement or other document,
including, without limitation, any financial statements concerning the financial
condition of any member of the Leasing Group, furnished to or to be furnished to
the Lessor or its attorneys in connection with the transactions contemplated by
the Lease Documents, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to
prevent all statements contained herein and therein from being misleading. There
is no fact within the special knowledge of the Lessee which has not been
disclosed herein or in writing to the Lessor that materially adversely affects,
or in the future, insofar as the Lessee can reasonably foresee, may materially
adversely affect the business, properties, assets or condition, financial or
otherwise, of any member of the Leasing Group or the Leased Property.
10.1.26 No Margin Security. The Lessee is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System). The Lessee is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
10.1.27 No Default. No event or state of facts which constitutes, or
which, with notice or lapse of time, or both, could constitute, a Lease Default
has occurred and is continuing.
10.1.28 Principal Place of Business. The principal place of business and
chief executive office of the Lessee is located at 197 First Avenue, Needham,
Massachusetts 02194 (the "Principal Place of Business").
10.1.29 Intentionally Omitted.
10.1.30 Intellectual Property. The Lessee is duly licensed or authorized
to use all (if any) copyrights, rights of reproduction, trademarks, trade-names,
trademark applications, service marks, patent applications, patents and patent
license rights, (all whether registered or unregistered, U.S. or foreign),
inventions, franchises, discoveries, ideas, research, engineering, methods,
practices, processes, systems, formulae, designs, drawings, products, projects,
improvements, developments, know-how and trade secrets which are used in or
necessary for the operation of the Facility in accordance with its Primary
Intended Use, without conflict with or infringement of any, and subject to no
restriction, lien, encumbrance, right, title or interest in others.
10.1.31 Management Agreements. There is no Management Agreement in force
and effect as of the date hereof, other than the Current Management Agreement.
10.2 Continuing Effect of Representations and Warranties. All
representations and warranties contained in this Lease and the other Lease
Documents shall constitute continuing representations and warranties which shall
remain true, correct and complete throughout the Term. Notwithstanding the
provisions of the foregoing sentence but without derogation from any other terms
and provisions of this Lease, including, without limitation, those terms and
provisions containing covenants to be performed or conditions to be satisfied on
the part of the Lessee, the representations and warranties contained in Sections
10.1.6, 10.1.7, 10.1.10, 10.1.14, 10.1.19, 10.1.20, 10.1.21, 10.1.22, 10.1.28,
and in the second sentence of Section 10.1.12, shall not constitute continuing
representations and warranties throughout the Term.
ARTICLE 11
FINANCIAL AND OTHER COVENANTS
11.1 Status Certificates. At any time, and from time to time, upon
request from the Lessor, the Lessee shall furnish to the Lessor, within ten (10)
Business Days' after receipt of such request, an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications) and the dates to which the Rent has been paid. Any Officer's
Certificate furnished pursuant to this Section shall be addressed to any
prospective purchaser or mortgagee of the Leased Property as the Lessor may
request and may be relied upon by the Lessor and any such prospective purchaser
or mortgagee of the Leased Property.
11.2 Financial Statements; Reports; Notice and Information.
11.2.1 Obligation To Furnish. The Lessee will furnish and shall cause to
be furnished to the Lessor the following statements, information and other
materials:
(a) Annual Statements. Within ninety (90) days after the end of each of
their respective fiscal years, (i) a copy of the Consolidated Financials for
each of (x) the Lessee and (y) any Sublessee for the preceding fiscal year,
certified and audited by, and with the unqualified opinion of, independent
certified public accountants acceptable to the Lessor and certified as true and
correct by the Lessee or the applicable Sublessee, as the case may be (and,
without limiting anything else contained herein, the Consolidated Financials for
the Lessee and for each such Sublessee shall include a detailed balance sheet
for Leased Property as of the last day of such fiscal year and a statement of
earnings from the Leased Property for such fiscal year showing, among other
things, all rents and other income therefrom and all expenses paid or incurred
in connection with the operation of the Leased Property); (ii) separate
statements, certified as true and correct by the Lessee and each Sublessee,
stating whether, to the best of the signer's knowledge and belief after making
due inquiry, the Lessee or such Sublessee, as the case may be, is in default in
the performance or observance of any of the terms of this Lease or any of the
other Lease Documents and, if so, specifying all such defaults, the nature
thereof and the steps being taken to immediately remedy the same; (iii) a copy
of all letters from the independent certified accountants engaged to perform the
annual audits referred to above, directed to the management of the Lessee or any
Sublessee, as the case may be, regarding the existence of any reportable
conditions or material weaknesses and (iv) a statement certified as true and
correct by the Lessee setting forth all Subleases as of the last day of such
fiscal year, the respective areas demised thereunder, the names of the
Sublessees thereunder, the respective expiration dates of such Subleases, the
respective rentals provided for therein, and such other information pertaining
to such Subleases as may be reasonably requested by the Lessor.
(b) Monthly Statements of Lessee. Within twenty (20) days after the end
of each calendar month during the pendency of this Lease, (i) an unaudited,
detailed month and year to date income and expense statement for the Leased
Property which shall include a comparison to corresponding budget figures,
occupancy statistics (including the actual number of patients, the number of
beds available and total patient days for such month) for the skilled nursing
facility included within the definition of the Facility and patient mix
breakdowns (for each patient day during such month classifying patients by the
type of care required and source of payment) for such skilled nursing facility
included within the definition of the Facility and (ii) an express written
calculation showing the compliance or non-compliance, as the case may be, with
the specific financial covenants set forth in Section 11.3 for the applicable
period, including, with respect to the calculation of the Lessee's MOB Rent
Coverage Ratio and Lessee's SNF Rent Coverage Ratio, a schedule substantially in
the form attached hereto as EXHIBIT E.
(c) Quarterly Statements. Within twenty (20) days after the end of each
of their respective Fiscal Quarters, unaudited Consolidated Financials for the
Lessee certified as true and correct by the Lessee.
(d) Permits and Contracts. Promptly after the issuance or the execution
thereof, as the case may be, true and complete copies of (i) all Permits which
constitute operating licenses for the Facility issued by any Governmental
Authority having jurisdiction over health care matters and (ii) Contracts
(involving payments in the aggregate in excess of $100,000 per annum),
including, without limitation, all Provider Agreements.
(e) Contract Notices. Promptly after the receipt thereof, true and
complete copies of any notices, consents, terminations or statements of any kind
or nature relating to any of the Contracts (involving payments in the aggregate
in excess of $100,000 per annum) other than those issued in the ordinary course
of business.
(f) Permit or Contract Defaults. Promptly after the receipt thereof,
true and complete copies of all surveys, follow-up surveys, licensing surveys,
complaint surveys, examinations, compliance certificates, inspection reports,
statements (other than those statements that are issued in the ordinary course
of business), terminations and notices of any kind (other than those notices
that are furnished in the ordinary course of business) issued or provided to the
Lessee or any Sublessee that is an Affiliate of the Lessee by any Governmental
Authority, Accreditation Body or any Third Party Payor, including, without
limitation, any notices pertaining to any delinquency in, or proposed revision
of, the Lessee's or any such Sublessee's obligations under the terms and
conditions of any Permits or Contracts now or hereafter issued by or entered
into with any Governmental Authority, Accreditation Body or Third Party Payor
and the response(s) thereto made by or on behalf of the Lessee or any such
Sublessee.
(g) Official Reports. Upon completion or filing thereof, complete copies
of all applications (other than those that are furnished in the ordinary course
of business), notices (other than those that are furnished in the ordinary
course of business), statements, annual reports, cost reports and other reports
or filings of any kind (other than those that are furnished in the ordinary
course of business) provided by the Lessee or any Sublessee that is an Affiliate
of the Lessee to any Governmental Authority, Accreditation Body or any Third
Party Payor with respect to the Leased Property.
(h) Other Information. With reasonable promptness, such other
information as the Lessor may from time to time reasonably request respecting
(i) the financial condition and affairs of each member of the Leasing Group and
the Leased Property and (ii) the licensing and operation of the Leased Property;
including, without limitation, audited financial statements, certificates and
consents from accountants and all other financial and licensing/operational
information as may be required or requested by any Governmental Authority.
(i) Default Conditions. As soon as possible, and in any event within
five (5) days after the occurrence of any Lease Default, or any event or
circumstance which, with the giving of notice or the passage of time, or both,
could constitute a Lease Default, a written statement of the Lessee setting
forth the details of such Lease Default, event or circumstance and the action
which the Lessee proposes to take with respect thereto.
(j) Official Actions. Promptly after the commencement thereof, notice of
all actions, suits and proceedings before any Governmental Authority or
Accreditation Body which could have a material adverse effect on (i) any member
of the Leasing Group to perform any of its obligations under any of the Lease
Documents or (ii) the Leased Property.
(k) Audit Reports. Promptly after receipt, a copy of all audits or
reports submitted to any member of the Leasing Group by any independent public
accountant in connection with any annual, special or interim audits of the books
of any such member of the Leasing Group and, if requested by the Lessor, any
letter of comments directed by such accountant to the management of any such
member of the Leasing Group.
(l) Adverse Developments. Promptly after the Lessee acquires knowledge
thereof, written notice of:
(i) the potential termination of any Permit or Provider Agreement
necessary for the operation of the Leased Property;
(ii) any loss, damage or destruction to or of the Leased Property
in excess of FIFTY THOUSAND DOLLARS ($50,000) (regardless of whether the same is
covered by insurance);
(iii) any material controversy involving the Lessee or any
Sublessee and (x) Facility administrator or Facility employee of similar stature
or (y) any labor organization;
(iv) any controversy that calls into question the eligibility of
the Lessee or the Facility for the participation in any Medicaid, Medicare or
other Third Party Payor Program;
(v) any refusal of reimbursement by any Third Party Payor which,
singularly or together with all other such refusals by any Third Party Payors,
could have a material adverse effect on the financial condition of the Lessee or
any Sublessee; and
(vi) any fact within the special knowledge of any member of the
Leasing Group, or any other development in the business or affairs of any member
of the Leasing Group, which may be materially adverse to the business,
properties, assets or condition, financial or otherwise, of any member of the
Leasing Group or the Leased Property.
(m) Responses To Inspection Reports. Within thirty (30) days after
receipt of an inspection report relating to the Leased Property from the Lessor,
a written response describing in detail prepared plans to address concerns
raised by the inspection report.
(n) Public Information. Upon the completion or filing, mailing or other
delivery thereof, complete copies of all financial statements, reports, notices
and proxy statements, if any, sent by any member of the Leasing Group (which is
a publicly held corporation) to its shareholders and of all reports, if any,
filed by any member of the Leasing Group (which is a publicly held corporation)
with any securities exchange or with the Securities Exchange Commission.
(o) Annual Budgets. At least thirty (30) days prior to the end of each
Fiscal Year, the Lessee, any Sublessee and/or any Manager shall submit to the
Lessor a preliminary annual financial budget for the Facility for the next
Fiscal Year, a preliminary capital expenditures budget for the Facility for the
next Fiscal Year and a report detailing the capital expenditures made in the
then current Fiscal Year and on or before the end of the first month of each
Fiscal Year, the Lessee, any applicable Sublessee and/or any Manager shall
submit to the Lessor revised finalized versions of such budgets and report.
11.2.2 Responsible Officer. Any certificate, instrument, notice, or
other document to be provided to the Lessor hereunder by any member of the
Leasing Group shall be signed by an executive officer of such member (in the
event that any of the foregoing is not an individual), having a position of Vice
President or higher and with respect to financial matters, any such certificate,
instrument, notice or other document shall be signed by the chief financial
officer of such member.
11.2.3 No Material Omission. No certificate, instrument, notice or other
document, including without limitation, any financial statements furnished or to
be furnished to the Lessor pursuant to the terms hereof or of any of the other
Lease Documents shall contain any untrue statement of a material fact or shall
omit to state any material fact necessary in order to prevent all statements
contained therein from being misleading.
11.2.4 Confidentiality. The Lessor shall afford any information received
pursuant to the provisions of the Lease Documents the same degree of
confidentiality that the Lessor affords similar information proprietary to the
Lessor; provided, however, that the Lessor does not in any way warrant or
represent that such information received from any member of the Leasing Group
shall remain confidential (and shall not be liable in any way for any subsequent
disclosure of such information by any Person that the Lessor has provided such
information in accordance with the terms hereof) and provided, further, that the
Lessor shall have the unconditional right to (a) disclose any such information
as the Lessor deems necessary or appropriate in connection with any sale,
transfer, conveyance, participation or assignment of the Leased Property or any
of the Lease Documents or any interest therein and (b) use such information in
any litigation or arbitration proceeding between the Lessor and any member of
the Leasing Group. Without limiting the foregoing, the Lessor may also utilize
any information furnished to it hereunder as and to the extent (i) counsel to
the Lessor determines that such utilization is necessary pursuant to 15 U.S.C.
77a-77aa or 15 U.S.C. 78a-78jj and the rules and regulations promulgated
thereunder, (ii) the Lessor is required or requested by any Governmental
Authority to disclose any such information and/or (iii) the Lessor is requested
to disclose any such information by any of its lenders or potential lenders. The
Lessor shall not be liable in any way for any subsequent disclosure of such
information by any Person to whom the Lessor provided such information in
accordance with the terms hereof. Nevertheless, in connection with any such
disclosure, the Lessor shall inform the recipient of any such information of the
confidential nature thereof. The Lessor shall observe any prohibitions or
limitations on the disclosure of any such information under applicable
confidentiality law or regulations, to the extent that the same are applicable
to such information, including, without limitation, any duly enacted "Patients'
Bill of Rights" or similar legislation, including such limitations as may be
necessary to preserve the confidentiality of the facility-patient/resident
relationship and the physician-patient privilege.
11.3 Financial Covenants. The Lessee covenants and agrees that,
throughout the Term and as long as the Lessee is in possession of the Leased
Property:
11.3.1 Rent Coverage Ratio of Lessee. For each fiscal quarter, the
Lessee shall maintain, with respect to the Medical Office Building, a MOB Rent
Coverage Ratio equal to or greater than 1.0 to 1 and for each fiscal quarter,
commencing with the seventh fiscal quarter after the SNF Conversion Date, the
Lessee shall maintain, with respect to the Skilled Nursing Facility, a SNF Rent
Coverage Ratio equal to or greater than 1.3 to 1.
11.3.2 No Indebtedness. The Lessee shall not create, incur, assume or
suffer to exist any liability for borrowed money except (i) Indebtedness to the
Lessor under the Lease Documents and, (ii) Impositions allowed pursuant to the
provisions of the Lease, (iii) unsecured normal trade debt incurred upon
customary terms in the ordinary course of business, (iv) Indebtedness created in
connection with any financing of any Capital Addition, provided, that each such
financing has been approved by the Lessor in accordance with the terms of
Article 9 hereof, (v) Indebtedness to any Affiliate, provided, that, such
Indebtedness is fully subordinated to the Lease Obligations pursuant to the
Affiliated Party Subordination Agreement and (vi) other Indebtedness of the
Lessee in the aggregate amount not to exceed TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000) incurred, for the exclusive use of the Leased Property, on account of
purchase money indebtedness or finance lease arrangements, each of which shall
not exceed the fair market value of the assets or property acquired or leased
and shall not extend to any assets or property other than those purchased or
leased and purchase money security interests in equipment and equipment leases
which comply with the provisions of Section 6.1.2.
11.3.3 No Guaranties. The Lessee shall not assume, guarantee, endorse,
contingently agree to purchase or otherwise become directly or contingently
liable (including, without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise to invest in any debtor or otherwise to assure any creditor against
loss) in connection with any Indebtedness of any other Person, except by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
11.4 Affirmative Covenants. The Lessee covenants and agrees that
throughout the Term and any periods thereafter that the Lessee remains in
possession of the Leased Property:
11.4.1 Maintenance of Existence. If the Lessee is a corporation, trust
or partnership, during the entire time that this Lease remains in full force and
effect, the Lessee shall keep in effect its existence and rights as a
corporation, trust or partnership under the laws of the state of its
incorporation or formation and its right to own property and transact business
in the State.
11.4.2 Materials. Except as provided in Section 6.1.2, the Lessee shall
not suffer the use in connection with any renovations or other construction
relating to the Leased Property of any materials, fixtures or equipment intended
to become part of the Leased Property which are purchased upon lease or
conditional bill of sale or to which the Lessee does not have absolute and
unencumbered title, and the Lessee covenants to cause to be paid punctually all
sums becoming due for labor, materials, fixtures or equipment used or purchased
in connection with any such renovations or construction, subject to the Lessee's
right to contest to the extent provided for in Article 15.
11.4.3 Compliance With Legal Requirements And Applicable Agreements. The
Lessee and the Leased Property and all uses thereof shall comply with (i) all
Legal Requirements, (ii) all Permits and Contracts, (iii) all Insurance
Requirements, (iv) the Lease Documents, (v) the Permitted Encumbrances and (vi)
the Appurtenant Agreements.
11.4.4 Books And Records. The Lessee shall cause to be kept and
maintained, and shall permit the Lessor and its representatives to inspect at
all reasonable times, accurate books of accounts in which complete entries will
be made in accordance with GAAP reflecting all financial transactions of the
Lessee (showing, without limitation, all materials ordered and received and all
disbursements, accounts payable and accounts receivable in connection with the
operation of the Leased Property).
11.4.5 Participation in Third Party Payor Programs. The Lessee and each
Sublessee shall participate in all Third Party Payor Programs (which would be
participated in by a prudent operator in the good faith exercise of commercially
reasonable business judgment), in accordance with all requirements thereof
(including, without limitation, all applicable Provider Agreements), and shall
remain eligible to participate in such Third Party Payor Programs, all as shall
be necessary for the prudent operation of the Facility in the good faith
exercise of commercially reasonable business judgment.
11.4.6 Conduct of its Business. The Lessee will maintain, and cause any
Sublessee and any Manager, as applicable, to maintain, experienced and competent
professional management with respect to its business and with respect to the
Leased Property. The Lessee, any Sublessee and any Manager shall conduct, in the
ordinary course, the operation of the Facility, and the Lessee and any such
Sublessee shall not enter into any other business or venture during the Term or
such time as the Lessee or any such Sublessee is in possession of the Leased
Property.
11.4.7 Address. The Lessee shall provide the Lessor thirty (30) days'
prior written notice of any change of its Principal Place of Business from its
current Principal Place of Business. The Lessee shall maintain all books and
records relating to its business, solely at its Principal Place of Business and
at the Leased Property. The Lessee shall not (a) remove any books or records
relating to the Lessee's business from either the Leased Property or the
Lessee's Principal Place of Business or (b) relocate its Principal Place of
Business until after receipt of a certificate from the Lessor, signed by an
officer thereof, stating that the Lessor has, to its satisfaction, obtained all
documentation that it deems necessary or desirable to obtain, maintain, perfect
and confirm the first priority security interests granted in the Lease
Documents.
11.4.8 Subordination of Affiliate Transactions. Without limiting the
provisions of any other Section of this Lease or the Affiliated Party
Subordination Agreement, any payments to be made by the Lessee to (a) any member
of the Leasing Group (or any Affiliate of any such member of the Leasing Group)
or (b) any Affiliate of the Lessee, in connection with any transaction between
the Lessee and such Person, including, without limitation, the purchase, sale or
exchange of any property, the rendering of any service to or with any such
Person (including, without limitation, all allocations of any so-called
corporate or central office costs, expenses and charges of any kind or nature)
or the making of any loan or other extension of credit or the making of any
equity investment, shall be subordinate to the complete payment and performance
of the Lease Obligations; provided, however, that all such subordinated payments
may be paid at any time unless: (x) after giving effect to such payment, the
Lessee shall be unable to comply with any of its obligations under any of the
Lease Documents or (y) a Lease Default has occurred and is continuing and has
not been expressly waived in writing by the Lessor or an event or state of facts
exists, which, with the giving of notice or the passage of time, or both, would
constitute a Lease Default.
11.4.9 Inspection. At reasonable times and upon reasonable notice, the
Lessee shall permit the Lessor, any Fee Mortgagee and their respective
authorized representatives (including, without limitation, the Consultants) to
inspect the Leased Property as provided in Section 7.1 above.
11.4.10 Additional Property. In the event that at any time during the
Term, the Lessee holds the fee title to or a leasehold interest in any real
property and/or personal property which is used as an integral part of the
operation of the Leased Property (but is not subject to this Lease), the Lessee
shall (i) provide the Lessor with prior notice of such acquisition and (ii)
shall take such actions and enter into such agreements as the Lessor shall
reasonably request in order to grant the Lessor a first priority mortgage or
other security interest in such real property and personal property, subject
only to the Permitted Encumbrances and other Liens reasonably acceptable to the
Lessor.
11.5 Additional Negative Covenants. The Lessee covenants and agrees
that, throughout the Term and such time as the Lessee remains in possession of
the Leased Property:
11.5.1 Restrictions Relating to Lessee. Except as may otherwise be
expressly provided in any of the Lease Documents, the Lessee shall not, without
the prior written consent of the Lessor, in each instance, which consent may be
withheld in the sole and absolute discretion of the Lessor:
(a) convey, assign, hypothecate, transfer, dispose of or encumber, or
permit the conveyance, assignment, transfer, hypothecation, disposal or
encumbrance of all or any part of any legal or beneficial interest in this
Lease, its other assets or the Leased Property; provided, however, that this
restriction shall not apply to (i) the Permitted Encumbrances that may be
created after the date hereof pursuant to the Lease Documents; (ii) Liens
created in accordance with Section 6.1.2 against Tangible Personal Property
securing Indebtedness permitted under Section 11.3.2(v) relating to equipment
leasing or financing for the exclusive use of the Leased Property; (iii) the
sale, conveyance, assignment, hypothecation, lease or other transfer of any
material asset or assets (whether now owned or hereafter acquired), the fair
market value of which equals or is less than FIFTY THOUSAND DOLLARS ($50,000),
individually, or TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) collectively;
(iv) without limitation as to amount, the disposition in the ordinary course of
business of any obsolete, worn out or defective fixtures, furnishings or
equipment used in the operation of the Leased Property provided that the same
are replaced with fixtures, furnishings or equipment of equal or greater utility
or value or the Lessee provides the Lessor with an explanation (reasonably
satisfactory to the Lessor) as to why such fixtures, furnishings or equipment is
no longer required in connection with the operation of the Leased Property; (v)
without limitation as to amount, any sale of inventory by the Lessee in the
ordinary course of business and (vi) subject to the terms of the Pledge
Agreement and the Affiliated Party Subordination Agreement, distributions to the
shareholders of the Lessee;
(b) permit the use of the Facility for any purpose other than the
Primary Intended Use; or
(c) liquidate, dissolve or merge or consolidate with any other Person.
11.5.2 No Liens. The Lessee will not directly or indirectly create or
allow to remain and will promptly discharge at its expense any Lien, title
retention agreement or claim upon or against the Leased Property (including the
Lessee's interest therein) or the Lessee's interest in this Lease or any of the
other Lease Documents, or in respect of the Rent, excluding (a) this Lease and
any permitted Subleases, (b) the Permitted Encumbrances, (c) Liens which are
consented to in writing by the Lessor, (d) Liens for those taxes of the Lessor
which the Lessee is not required to pay hereunder, (e) Liens of mechanics,
laborers, materialmen, suppliers or vendors for sums either not yet due or being
contested in strict compliance with the terms and conditions of Article 15, (f)
any Liens which are the responsibility of the Lessor pursuant to the provisions
of Article 20, (g) Liens for Impositions which are either not yet due and
payable or which are in the process of being contested in strict compliance with
the terms and conditions of Article 15 and (h) involuntary Liens caused by the
actions or omissions of the Lessor.
11.5.3 Limits on Affiliate Transactions. The Lessee shall not enter into
any transaction with any Affiliate, including, without limitation, the purchase,
sale or exchange of any property, the rendering of any service to or with any
Affiliate and the making of any loan or other extension of credit, except in the
ordinary course of, and pursuant to the reasonable requirements of, the Lessee's
business and upon fair and reasonable terms no less favorable to the Lessee than
would be obtained in a comparable arms'-length transaction with any Person that
is not an Affiliate.
11.5.4 Best Efforts To Maximize. The Lessee covenants that the operation
of the Facility shall be conducted in a manner consistent with the prevailing
standards and practices recognized in the health care and medical office
building industries as those customarily utilized by first class business
operations. Subject to any applicable Legal Requirements, the members of the
Leasing Group shall use their best efforts to maximize the Facility's Gross
Revenues, and to that end, but without limiting the foregoing, (a) a full staff
of employees shall be maintained at the Facility and (b) a maximum amount of
space in the Facility shall be devoted to revenue producing activities, with
respect to the Skilled Nursing Facility, and only such part thereof shall be
devoted for office, storage and non-revenue producing purposes as shall be
reasonably necessary.
11.5.5 No Default. The Lessee shall not commit any default or breach
under any of the Lease Documents.
11.5.6 Intentionally Omitted.
11.5.7 Intentionally Omitted.
11.5.8 ERISA. The Lessee shall not establish or permit any Sublessee to
establish any new pension or defined benefit plan or modify any such existing
plan for employees subject to ERISA, which plan provides any benefits based on
past service without the advance consent of the Lessor to the amount of the
aggregate past service liability thereby created.
11.5.9 Forgiveness of Indebtedness. The Lessee will not waive, or permit
any sublessee or Manager which is an Affiliate to waive any debt or claim,
except in the ordinary course of its business.
11.5.10 Value of Assets. Except as disclosed in the financial statements
provided to the Lessor as of the date hereof, the Lessee will not write up (by
creating an appraisal surplus or otherwise) the value of any assets of the
Lessee above their cost to the Lessee, less the depreciation regularly allowable
thereon.
11.5.11 Changes in Fiscal Year and Accounting Procedures. The Lessee
shall not, without the prior written consent of the Lessor, in each instance,
which consent may be withheld in the Lessor's reasonable discretion (a) change
its fiscal year or capital structure or (b) change, alter, amend or in any
manner modify, except in accordance with GAAP, any of its current accounting
procedures related to the method of revenue recognition, billing procedures or
determinations of doubtful accounts or bad debt expenses nor will the Lessee
permit any of its Subsidiaries to change its fiscal year or suffer or permit any
circumstance to exist in which any Subsidiary is not wholly-owned, directly or
indirectly, by the Lessee.
ARTICLE 12
INSURANCE AND INDEMNITY
12.1 General Insurance Requirements. During the Term of this Lease and
thereafter until the Lessee surrenders the Leased Property in the manner
required by this Lease, the Lessee shall at its sole cost and expense keep the
Leased Property and the Tangible Personal Property located thereon and the
business operations conducted on the Leased Property insured as set forth below.
12.1.1 Types and Amounts of Insurance. The Lessee's insurance shall
include the following:
(a) property loss and physical damage insurance on an all-risk basis
(with only such exceptions as the Lessor may in its reasonable discretion
approve) covering the Leased Property (exclusive of Land) for its full
replacement cost, which cost shall be reset once a year at the Lessor's option,
with an agreed-amount endorsement and a deductible not in excess of TEN THOUSAND
DOLLARS ($10,000.00). Such insurance shall include, without limitation, the
following coverages: (i) increased cost of construction, (ii) cost of
demolition, (iii) the value of the undamaged portion of the Facility and (iv)
contingent liability from the operation of building laws, less exclusions
provided in the normal "All Risk" insurance policy. During any period of
construction, such insurance shall be on a builder's-risk, completed value,
non-reporting form with permission to occupy;
(b) flood insurance (if the Leased Property or any portion thereof is
situated in an area which is considered a flood risk area by the U.S. Department
of Housing and Urban Development or any other Governmental Authority that may in
the future have jurisdiction over flood risk analysis) in limits reasonably
acceptable to the Lessor;
(c) boiler and machinery insurance (including related electrical
apparatus and components) under a standard comprehensive form, providing
coverage against loss or damage caused by explosion of steam boilers, pressure
vessels or similar vessels, now or hereafter installed on the Leased Property,
in limits reasonably acceptable to the Lessor;
(d) earthquake insurance (if deemed necessary by the Lessor) in limits
and with deductibles reasonably acceptable to the Lessor;
(e) intentionally omitted;
(f) business interruption and/or rent loss insurance in an amount equal
to the annual Base Rent due hereunder plus the aggregate sum of the Impositions
relating to the Leased Property due and payable during one year;
(g) comprehensive general public liability insurance including coverages
commonly found in the Broad Form Commercial Liability Endorsements with amounts
not less than FIVE MILLION DOLLARS ($5,000,000) per occurrence with respect to
bodily injury and death and THREE MILLION DOLLARS ($3,000,000) for property
damage and with all limits based solely upon occurrences at the Leased Property
without any other impairment;
(h) professional liability insurance in an amount not less than TEN
MILLION DOLLARS ($10,000,000) for each medical incident;
(i) physical damage insurance on an all-risk basis (with only such
exceptions as the Lessor in its reasonable discretion shall approve) covering
the Tangible Personal Property for the full replacement cost thereof and with a
deductible not in excess of one percent (1%) of the full replacement cost
thereof;
(j) Workers' Compensation and Employers' Liability Insurance providing
protection against all claims arising out of injuries to all employees of the
Lessee or of any Sublessee (employed on the Leased Property or any portion
thereof) in amounts equal for Workers' Compensation, to the statutory benefits
payable to employees in the State and for Employers' Liability, to limits of not
less than ONE HUNDRED THOUSAND DOLLARS ($100,000) for injury by accident, ONE
HUNDRED THOUSAND DOLLARS ($100,000) per employee for disease and FIVE HUNDRED
THOUSAND DOLLARS ($500,000) disease policy limit; and
(k) such other insurance as the Lessor from time to time may reasonably
require and also, as may from time to time be required by applicable Legal
Requirements and/or by any Fee Mortgagee.
12.1.2 Insurance Company Requirements. All such insurance required by
this Lease or the other Lease Documents shall be issued and underwritten by
insurance companies licensed to do insurance business by, and in good standing
under the laws of, the State and which companies have and maintain a rating of
A-X or better by A.M. Best Co.
12.1.3 Policy Requirements. Every policy of insurance from time to time
required under this Lease or any of the other Lease Documents (other than
worker's compensation) shall name the Lessor as owner, loss payee, secured party
(to the extent applicable) and additional named insured as its interests may
appear. If an insurance policy covers properties other than the Leased Property,
then the Lessor shall be so named with respect only to the Leased Property.
Each such policy, where applicable or appropriate, shall:
(a) include an agreed amount endorsement and loss payee, additional
named insured and secured party endorsements, in forms acceptable to the Lessor
in its sole and absolute discretion;
(b) include mortgagee, secured party, loss payable and additional named
insured endorsements reasonably acceptable to each Fee Mortgagee;
(c) provide that the coverages may not be canceled or materially
modified except upon thirty (30) days' prior written notice to the Lessor and
any Fee Mortgagee;
(d) be payable to the Lessor and any Fee Mortgagee notwithstanding any
defense or claim that the insurer may have to the payment of the same against
any other Person holding any other interest in the Leased Property;
(e) be endorsed with standard noncontributory clauses in favor of and in
form reasonably acceptable to the Lessor and any Fee Mortgagee;
(f) expressly waive any right of subrogation on the part of the insurer
against the Lessor, any Fee Mortgagee or the Leasing Group; and
(g) otherwise be in such forms as shall be reasonably acceptable to the
Lessor and any Fee Mortgagee.
12.1.4 Notices; Certificates and Policies. The Lessee shall promptly
provide to the Lessor copies of any and all notices (including notice of
non-renewal), claims and demands which the Lessee receives from insurers of the
Leased Property. At least ten (10) days prior to the expiration of any insurance
policy required hereunder, the Lessee shall deliver to the Lessor certificates
and evidence of insurance relating to all renewals and replacements thereof,
together with evidence, satisfactory to the Lessor, of payment of the premiums
thereon. The Lessee shall deliver to the Lessor original counterparts or copies
certified by the insurance company to be true and complete copies, of all
insurance policies required hereunder not later than the earlier to occur of (a)
thirty (30) days after the effective date of each such policy and (b) ten (10)
days after receipt thereof by the Lessee.
12.1.5 Lessor's Right to Place Insurance. If the Lessee shall fail to
obtain any insurance policy required hereunder by the Lessor, or shall fail to
deliver the certificate and evidence of insurance relating to any such policy to
the Lessor, or if any insurance policy required hereunder (or any part thereof)
shall expire or be canceled or become void or voidable by reason of any breach
of any condition thereof, or if the Lessor determines that such insurance
coverage is unsatisfactory by reason of the failure or impairment of the capital
of any insurance company which wrote any such policy, upon demand by the Lessor,
the Lessee shall promptly obtain new or additional insurance coverage on the
Leased Property, or for those risks required to be insured by the provisions
hereof, satisfactory to the Lessor, and, at its option, the Lessor may obtain
such insurance and pay the premium or premiums therefor; in which event, any
amount so paid or advanced by the Lessor and all costs and expenses incurred in
connection therewith (including, without limitation, attorneys' fees and
expenses and court costs), shall be a demand obligation of the Lessee to the
Lessor, payable as an Additional Charge.
12.1.6 Payment of Proceeds. All insurance policies required hereunder
(except for general public liability, professional liability and workers'
compensation and employers liability insurance) shall provide that in the event
of loss, injury or damage, subject to the rights of any Fee Mortgagee, all
proceeds shall be paid to the Lessor alone (rather than jointly to the Lessee
and the Lessor). The Lessor is hereby authorized to adjust and compromise any
such loss with the consent of the Lessee or, following any Lease Default,
whether or not cured, without the consent of the Lessee, and to collect and
receive such proceeds in the name of the Lessor and the Lessee, and the Lessee
appoints the Lessor (or any agent designated by the Lessor) as the Lessee's
attorney-in-fact with full power of substitution, to endorse the Lessee's name
upon any check in payment thereof. Subject to the provisions of Article 13, such
insurance proceeds shall be applied first toward reimbursement of all costs and
expenses reasonably incurred by the Lessor in collecting said insurance
proceeds, then toward payment of the Lease Obligations or any portion thereof,
then due and payable, in such order as the Lessor determines, and then in whole
or in part toward restoration, repair or reconstruction of the Leased Property
for which such insurance proceeds shall have been paid.
12.1.7 Irrevocable Power of Attorney. The power of attorney conferred on
the Lessor pursuant to the provisions of this Section 12.1, being coupled with
an interest, shall be irrevocable for as long as this Lease is in effect or any
Lease Obligations are outstanding, shall not be affected by any disability or
incapacity which the Lessee may suffer and shall survive the same. Such power of
attorney, is provided solely to protect the interests of the Lessor and shall
not impose any duty on the Lessor to exercise any such power, and neither the
Lessor nor such attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its gross
negligence or willful misconduct.
12.1.8 Blanket Policies. Notwithstanding anything to the contrary
contained herein, the Lessee's obligations to carry the insurance provided for
herein may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by the Lessee and its Affiliates;
provided, however, that the coverage afforded to the Lessor shall not be reduced
or diminished or otherwise be different from that which would exist under a
separate policy meeting all other requirements of this Lease by reason of the
use of such blanket policy of insurance, and provided, further that the
requirements of this Section 12.1 are otherwise satisfied.
12.1.9 No Separate Insurance. The Lessee shall not, on the Lessee's own
initiative or pursuant to the request or requirement of any other Person, take
out separate insurance concurrent in form or contributing in the event of loss
with the insurance required hereunder to be furnished by the Lessee, or increase
the amounts of any then existing insurance by securing an additional policy or
additional policies, unless (a) all parties having an insurable interest in the
subject matter of the insurance, including the Lessor, are included therein as
additional insureds and (b) losses are payable under said insurance in the same
manner as losses are required to be payable under this Lease. The Lessee shall
immediately notify the Lessor of the taking out of any such separate insurance
or of the increasing of any of the amounts of the then existing insurance by
securing an additional insurance policy or policies.
12.1.10 Assignment of Unearned Premiums. The Lessee hereby assigns to
the Lessor all rights of the Lessee in and to any unearned premiums allocable to
the Leased Property on any insurance policy required hereunder to be furnished
by the Lessee which may become payable or are refundable after the occurrence of
an Event of Default hereunder. In the event that this Lease is terminated for
any reason (other than the purchase of the Leased Property by the Lessee), the
insurance policies required to be maintained hereunder, including all right,
title and interest of the Lessee thereunder, shall become the absolute property
of the Lessor.
12.2 Indemnity.
12.2.1 Indemnification. Except with respect to the gross negligence or
willful misconduct of the Lessor or any of the other Indemnified Parties, as to
which no indemnity is provided, the Lessee hereby agrees to defend with counsel
acceptable to the Lessor, indemnify and hold harmless the Lessor and each of the
other Indemnified Parties from and against all damages, losses, claims,
liabilities, obligations, penalties, causes of action, costs and expenses
(including, without limitation, attorneys' fees, court costs and other expenses
of litigation) suffered by, or claimed or asserted against, the Lessor or any of
the other Indemnified Parties, directly or indirectly, based on, arising out of
or resulting from (a) the use and occupancy of the Leased Property or any
business conducted therein, (b) any act, fault, omission to act or misconduct by
(i) any member of the Leasing Group, (ii) any Affiliate of the Lessee or (iii)
any employee, agent, licensee, business invitee, guest, customer, contractor or
sublessee of any of the foregoing parties, relating to, directly or indirectly,
the Leased Property, (c) any accident, injury or damage whatsoever caused to any
Person, including, without limitation, any claim of malpractice, or to the
property of any Person in or about the Leased Property or outside of the Leased
Property where such accident, injury or damage results or is claimed to have
resulted from any act, fault, omission to act or misconduct by any member of the
Leasing Group or any Affiliate of the Lessee or any employee, agent, licensee,
contractor or sublessee of any of the foregoing parties, (d) any Lease Default,
(e) any claim brought or threatened against any of the Indemnified Parties by
any member of the Leasing Group or by any other Person on account of (i) the
Lessor's relationship with any member of the Leasing Group pertaining in any way
to the Leased Property and/or the transaction evidenced by the Lease Documents
and/or (ii) the Lessor's negotiation of, entering into and/or performing any of
its obligations and/or exercising any of its right and remedies under any of the
Lease Documents, (f) any attempt by any member of the Leasing Group or any
Affiliate of the Lessee to transfer or relocate any of the Permits to any
location other than the Leased Property and/or (g) the enforcement of this
indemnity. All amounts which become payable by the Lessee under this Section
12.2.1 shall be a demand obligation of the Lessee to the Lessor, payable as an
Additional Charge. The indemnity provided for in this Section 12.2.1 shall
survive any termination of this Lease. Notwithstanding anything to the contrary
contained in this Section 12.2.1, no payment for any indemnified claim brought
or threatened against any of the Indemnified Parties shall be due unless and
until the earlier to occur of (x) an agreement by the relevant parties to settle
the claim at issue or (y) a final decision is issued by a court of competent
jurisdiction in favor of the applicable Indemnified Parties and all appeal
periods have lapsed or been exhausted.
12.2.2 Indemnified Parties. As used in this Lease the term "Indemnified
Parties" shall mean Lessor, any Fee Mortgagee and their respective successors,
assigns, employees, servants, agents, attorneys, officers, directors,
shareholders, partners and owners.
12.2.3 Limitation on Lessor Liability. Neither the Lessor nor any
Affiliate of the Lessor shall be liable to any member of the Leasing Group or
any Affiliate of any member of the Leasing Group, or to any other Person
whatsoever for any damage, injury, loss, compensation, or claim (including, but
not limited to, any claim for the interruption of or loss to any business
conducted on the Leased Property) based on, arising out of or resulting from any
cause whatsoever, including, but not limited to, the following: (a) repairs to
the Leased Property, (b) interruption in use of the Leased Property; (c) any
accident or damage resulting from the use or operation of the Leased Property or
any business conducted thereon; (d) the termination of this Lease by reason of
Casualty or Condemnation, (e) any fire, theft or other casualty or crime, (f)
the actions, omissions or misconduct of any other Person, (g) damage to any
property, or (h) any damage from the flow or leaking of water, rain or snow. All
Tangible Personal Property and the personal property of any other Person on the
Leased Property shall be at the sole risk of the Lessee and the Lessor shall not
in any manner be held responsible therefor. Notwithstanding the foregoing, the
Lessor shall not be released from liability for any injury, loss, damage or
liability suffered directly by the Lessee to the extent caused directly by the
gross negligence or willful misconduct of the Lessor, its servants, employees or
agents acting within the scope of their authority on or about the Leased
Property or in regards to the Lease; provided, however, that in no event shall
the Lessor, its servants, employees or agents have any liability based on any
loss with respect to or interruption in the operation of any business at the
Leased Property or for any indirect or consequential damages.
12.2.4 Risk of Loss. During the Term of this Lease, the risk of loss or
of decrease in the enjoyment and beneficial use of the Leased Property in
consequence of any damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
levies or executions of Liens (other than those created by the Lessor in
accordance with the provisions of Article 20) is assumed by the Lessee and, in
the absence of the gross negligence or willful misconduct as set forth in
Section 12.2.3, the Lessor shall in no event be answerable or accountable
therefor (except for the obligation to account for insurance proceeds and Awards
to the extent provided for in Articles 13 and 14) nor shall any of the events
mentioned in this Section entitle the Lessee to any abatement of Rent (except
for an abatement, if any, as specifically provided for in Section 3.8).
ARTICLE 13
FIRE AND CASUALTY
13.1 Restoration Following Fire or Other Casualty.
13.1.1 Following Fire or Casualty. In the event of any damage or
destruction to the Leased Property by reason of fire or other hazard or casualty
(a "Casualty"), the Lessee shall give immediate written notice thereof to the
Lessor and, subject to the terms of this Article 13, the Lessee shall proceed
with reasonable diligence, in full compliance with all applicable Legal
Requirements, to perform such repairs, replacement and reconstruction work
(referred to herein as the "Work") to restore the Leased Property to the
condition it was in immediately prior to such damage or destruction and to a
condition adequate to operate the Facility for the Primary Intended Use and in
compliance with Legal Requirements. All Work shall be performed and completed in
accordance with all Legal Requirements and the other requirements of this Lease
within one hundred and twenty (120) days following the occurrence of the damage
or destruction plus a reasonable time to compensate for Unavoidable Delays
(including for the purposes of this Section, delays in obtaining Permits and in
adjusting insurance losses), but in no event beyond two-hundred and seventy
(270) days following the occurrence of the Casualty.
13.1.2 Procedures. In the event that any Casualty results in
non-structural damage to the Leased Property in excess of FIFTY THOUSAND DOLLARS
($50,000) or in any structural damage to the Leased Property, regardless of the
extent of such structural damage, prior to commencing the Work, the Lessee shall
comply with the following requirements:
(a) The Lessee shall furnish to the Lessor complete plans and
specifications for the Work (collectively, the "Plans and Specifications"), for
the Lessor's approval, in each instance, which approval shall not be
unreasonably withheld. The Plans and Specifications shall bear the signed
approval thereof by an architect, licensed to do business in the State,
reasonably satisfactory to the Lessor and shall be accompanied by a written
estimate from the architect, bearing the architect's seal, of the entire cost of
completing the Work, and to the extent feasible, the Plans and Specifications
shall provide for Work of such nature, quality and extent, that, upon the
completion thereof, the Leased Property shall be at least equal in value and
general utility to its value and general utility prior to the Casualty and shall
be adequate to operate the Leased Property for the Primary Intended Use;
(b) The Lessee shall furnish to the Lessor certified or photostatic
copies of all Permits and Contracts required by all applicable Legal
Requirements in connection with the commencement and conduct of the Work;
(c) The Lessee shall furnish to the Lessor a cash deposit or a payment
and performance bond sufficient to pay for completion of and payment for the
Work in an amount not less than the architect's estimate of the entire cost of
completing the Work, less the amount of property insurance proceeds, if any,
then held by the Lessor and which the Lessor shall be required to apply toward
restoration of the Leased Property as provided in Section 13.2;
(d) The Lessee shall furnish to the Lessor such insurance with respect
to the Work (in addition to the insurance required under Section 12.1 hereof) in
such amounts and in such forms as is reasonably required by the Lessee; and
(e) The Lessee shall not commence any of the Work until the Lessee shall
have complied with the requirements set forth in clauses (a) through (d)
immediately above, as applicable, and, thereafter, the Lessee shall perform the
Work diligently, in a good and workmanlike fashion and in good faith in
accordance with (i) the Plans and Specifications referred to in clause (a)
immediately above, (ii) the Permits and Contracts referred to in clause (b)
immediately above and (iii) all applicable Legal Requirements and other
requirements of this Lease; provided, however, that in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such Work as may be
necessary in order to address such emergency without the Lessor's prior
approval, as long as the Lessee immediately thereafter advises the Lessor of
such emergency and the nature and scope of the Work performed and obtains the
Lessor's approval of the remaining Work to be completed.
13.1.3 Disbursement of Insurance Proceeds. If, as provided in Section
13.2, the Lessor is required to apply any property insurance proceeds toward
repair or restoration of the Leased Property, then as long as the Work is being
diligently performed by the Lessee in accordance with the terms and conditions
of this Lease, the Lessor shall disburse such insurance proceeds from time to
time during the course of the Work in accordance with and subject to
satisfaction of the following provisions and conditions. The Lessor shall not be
required to make disbursements more often than at thirty (30) day intervals. The
Lessee shall submit a written request for each disbursement at least ten (10)
Business Days in advance and shall comply with the following requirements in
connection with each disbursement:
(a) Prior to the commencement of any Work, the Lessee shall have
received the Lessor's written approval of the Plans and Specifications (which
approval shall not be unreasonably withheld) and the Work shall be supervised by
an experienced construction manager with the consultation of an architect or
engineer qualified and licensed to do business in the State.
(b) Each request for payment shall be accompanied by (x) a certificate
of the architect or engineer, bearing the architect's or engineer's seal, and
(y) a certificate of the general contractor, qualified and licensed to do
business in the State, that is performing the Work (collectively, the "Work
Certificates"), each dated not more than ten (10) days prior to the application
for withdrawal of funds, and each stating:
(i) that all of the Work performed as of the date of the
certificates has been completed in compliance with the approved Plans and
Specifications, applicable Contracts and all applicable Legal Requirements;
(ii) that the sum then requested to be withdrawn has been paid by
the Lessee or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other Persons, whose names and addresses shall be
stated therein, who have rendered or furnished certain services or materials for
the Work, and the certificate shall also include a brief description of such
services and materials and the principal subdivisions or categories thereof and
the respective amounts so paid or due to each of said Persons in respect thereof
and stating the progress of the Work up to the date of said certificate;
(iii) that the sum then requested to be withdrawn, plus all sums
previously withdrawn, does not exceed the cost of the Work insofar as actually
accomplished up to the date of such certificate;
(iv) that the remainder of the funds held by the Lessor will be
sufficient to pay for the full completion of the Work in accordance with the
Plans and Specifications;
(v) that no part of the cost of the services and materials
described in the applicable Work Certificate has been or is being made the basis
of the withdrawal of any funds in any previous or then pending application; and
(vi) that, except for the amounts, if any, specified in the
applicable Work Certificate to be due for services and materials, there is no
outstanding indebtedness known, after due inquiry, which is then due and payable
for work, labor, services or materials in connection with the Work which, if
unpaid, might become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar Lien upon the Leased Property.
(c) The Lessee shall deliver to the Lessor satisfactory evidence that
the Leased Property and all materials and all property described in the Work
Certificates are free and clear of Liens, except (i) Liens, if any, securing
indebtedness due to Persons (whose names and addresses and the several amounts
due them shall be stated therein) specified in an applicable Work Certificate,
which Liens shall be discharged upon disbursement of the funds then being
requested, (ii) any Fee Mortgage and (iii) the Permitted Encumbrances. The
Lessor shall accept as satisfactory evidence of the foregoing lien waivers in
customary form from the general contractor and all subcontractors performing the
Work, together with an endorsement of its title insurance policy (relating to
the Leased Property) in form acceptable to the Lessor, dated as of the date of
the making of the then current disbursement, confirming the foregoing.
(d) If the Work involves alteration or restoration of the exterior of
any Leased Improvement that changes the footprint of any Leased Improvement, the
Lessee shall deliver to the Lessor, upon the request of the Lessor, an
"as-built" survey of the Leased Property dated as of a date within ten (10) days
prior to the making of the first and final advances (or revised to a date within
ten (10) days prior to each such advance) showing no encroachments other than
such encroachments, if any, by the Leased Improvements upon or over the
Permitted Encumbrances as are in existence as of the date hereof.
(e) The Lessee shall deliver to the Lessor (i) an opinion of counsel
(satisfactory to the Lessor both as to counsel and as to the form of opinion)
prior to the first advance opining that all necessary Permits for the repair,
replacement and/or restoration of the Leased Property have been obtained and
that the Leased Property, if repaired, replaced or rebuilt in accordance, in all
material respects, with the approved Plans and Specifications and such Permits,
shall comply with all applicable Legal Requirements and (ii) an architect's
certificate (satisfactory to the Lessor both as to the architect and as to the
form of the certificate) prior to the final advance, certifying that the Leased
Property was repaired, replaced or rebuilt in accordance, in all material
respects, with the approved Plans and Specifications and complies with all
applicable Legal Requirements, including, without limitation, all Permits
referenced in the foregoing clause (i).
(f) There shall be no Lease Default or any state of facts or
circumstance existing which, with the giving of notice and/or the passage of
time, would constitute any Lease Default.
The Lessor, at its option, may waive any of the foregoing requirements in whole
or in part in any instance. Upon compliance by the Lessee with the foregoing
requirements (except for such requirements, if any, as the Lessor may have
expressly elected to waive), and to the extent of (x) the insurance proceeds, if
any, which the Lessor may be required to apply to restoration of the Leased
Property pursuant to the provisions of this Lease and (y) all other cash
deposits made by the Lessee, the Lessor shall make available for payment to the
Persons named in the Work Certificate the respective amounts stated in said
certificate(s) to be due, subject to a retention of ten percent (10%) as to all
hard costs of the Work (the "Retainage"). It is understood that the Retainage is
intended to provide a contingency fund to assure the Lessor that the Work shall
be fully completed in accordance with the Plans and Specifications and the
requirements of the Lessor. Upon the full and final completion of all of the
Work in accordance with the provisions hereof, the Retainage shall be made
available for payment to those Persons entitled thereto.
Upon completion of the Work, and as a condition precedent to making any further
advance, in addition to the requirements set forth above, the Lessee shall
promptly deliver to the Lessor:
(i) written certificates of the architect or engineer, bearing the
architect's or engineer's seal, and the general contractor, certifying that the
Work has been fully completed in a good and workmanlike manner in material
compliance with the Plans and Specifications and all Legal Requirements;
(ii) an endorsement of its title insurance policy (relating to the
Leased Property) in form reasonably acceptable to the Lessor insuring the Leased
Property against all mechanic's and materialman's liens accompanied by the final
lien waivers from the general contractor and all subcontractors;
(iii) a certificate by the Lessee in form and substance reasonably
satisfactory to the Lessor, listing all costs and expenses in connection with
the completion of the Work and the amount paid by the Lessee with respect to the
Work; and
(iv) a temporary certificate of occupancy (if obtainable) and all other
applicable Permits and Contracts (that have not previously been delivered to the
Lessor) issued by or entered into with any Governmental Authority with respect
to the Leased Property and the Primary Intended Use and by the appropriate Board
of Fire Underwriters or other similar bodies acting in and for the locality in
which the Leased Property is situated; provided, that within thirty (30) days
after completion of the Work, the Lessee shall obtain and deliver to the Lessor
a permanent certificate of occupancy for the Leased Property.
Upon completion of the Work and delivery of the documents required
pursuant to the provisions of this Section 13.1, the Lessor shall pay the
Retainage to the Lessee or to those Persons entitled thereto and if there shall
be insurance proceeds or cash deposits, other than the Retainage, held by the
Lessor in excess of the amounts disbursed pursuant to the foregoing provisions,
then provided that no Lease Default has occurred and is continuing, nor any
state of facts or circumstances which, with the giving of notice and/or the
passage of time would constitute a Lease Default, the Lessor shall pay over such
proceeds or cash deposits to the Lessee.
No inspections or any approvals of the Work during or after construction
shall constitute a warranty or representation by the Lessor, or any of its
agents or Consultants, as to the technical sufficiency, adequacy or safety of
any structure or any of its component parts, including, without limitation, any
fixtures, equipment or furnishings, or as to the subsoil conditions or any other
physical condition or feature pertaining to the Leased Property. All acts,
including any failure to act, relating to the Lessor are performed solely for
the benefit of the Lessor to assure the payment and performance of the Lease
Obligations and are not for the benefit of the Lessee or the benefit of any
other Person.
13.2 Disposition of Insurance Proceeds.
13.2.1 Proceeds To Be Released to Pay For Work. In the event of any
Casualty, except as provided for in Section 13.2.2, the Lessor shall release
proceeds of property insurance held by it to pay for the Work in accordance with
the provisions and procedures set forth in this Article 13, only if:
(a) all of the terms, conditions and provisions of Sections 13.1 and
13.2.1 are satisfied;
(b) there does not then exist any Lease Default or any state of facts or
circumstance which, with the giving of notice and/or the passage of time, would
constitute such a Lease Default;
(c) The Lessee demonstrates to the Lessor's satisfaction that the Lessee
has the financial ability to satisfy the Lease Obligations during such repair or
restoration; and
(d) no Sublease material to the operation of the Facility immediately
prior to such damage or taking shall have been canceled or terminated, nor
contain any still exercisable right to cancel or terminate, due to such Casualty
if and to the extent that the income from such Sublease is necessary in order to
avoid the violation of any of the financial covenants set forth in this Lease or
otherwise to avoid the creation of an Event of Default.
13.2.2 Proceeds Not To Be Released. If, as the result of any Casualty,
the Leased Property is damaged to the extent it is rendered Unsuitable For Its
Primary Intended Use and if either: (a) the Lessee, after exercise of diligent
efforts, cannot within a reasonable time (not in excess of ninety (90) days)
obtain all necessary Permits in order to be able to perform all required Work
and to again operate the Facility for its Primary Intended Use within two
hundred and seventy (270) days from the occurrence of the damage or destruction
in substantially the manner as immediately prior to such damage or destruction
or (b) such Casualty occurs during the last twenty-four (24) months of the Term
and would reasonably require more than nine (9) months to obtain all Permits and
complete the Work, then the Lessee may either (i) acquire the Leased Property
from the Lessor for a purchase price equal to the Fair Market Value of the
Leased Property minus the Fair Market Added Value, with the Fair Market Value
and the Fair Market Added Value to be determined as of the day immediately prior
to such Casualty and prior to any other Casualty which has not been fully
repaired, restored or replaced, in which event, the Lessee shall be entitled
upon payment of the full purchase price to receive all property insurance
proceeds (less any costs and expenses incurred by the Lessor in collecting the
same), or (ii) terminate this Lease, in which event (subject to the provisions
of the last sentence of this Section 13.2.2) the Lessor shall be entitled to
receive and retain the insurance proceeds; provided, however, that the Lessee
shall only have such right of termination effective upon payment to the Lessor
of all Rent and other sums due under this Lease and the other Lease Documents
through the date of termination plus an amount, which when added to the sum of
(1) the Fair Market Value of the Leased Property as affected by all unrepaired
or unrestored damage due to any Casualty (and giving due regard for delays,
costs and expenses incident to completing all repair or restoration required to
fully repair or restore the same) plus (2) the amount of insurance proceeds
actually received by the Lessor (net of costs and expenses incurred by the
Lessor in collecting the same) equals (3) the Fair Market Value of the Leased
Property minus the Fair Market Added Value, with the Fair Market Value and the
Fair Market Added Value to be determined as of the day immediately prior to such
Casualty and prior to any other Casualty which has not been fully repaired. Any
acquisition of the Leased Property pursuant to the terms of this Section 13.2.2
shall be consummated in accordance with the provisions of Article 18, mutatis,
mutandis. If such termination becomes effective, the Lessor shall assign to the
Lessee any outstanding insurance claims.
13.2.3 Lessee Responsible for Short-Fall. If the cost of the Work
exceeds the amount of proceeds received by the Lessor from the property
insurance required under Article 12 (net of costs and expenses incurred by the
Lessor in collecting the same), the Lessee shall be obligated to contribute any
excess amount needed to repair or restore the Leased Property and pay for the
Work. Such amount shall be paid by the Lessee to the Lessor together with any
other property insurance proceeds for application to the cost of the Work.
13.3 Tangible Personal Property. All insurance proceeds payable by
reason of any loss of or damage to any of the Tangible Personal Property shall
be paid to the Lessor as secured party, subject to the rights of the holders of
any Permitted Prior Security Interests, and, thereafter, provided that no Lease
Default, nor any fact or circumstance which with the giving of notice and/or the
passage of time could constitute a Lease Default, has occurred and is
continuing, the Lessor shall pay such insurance proceeds to the Lessee to
reimburse the Lessee for the cost of repairing or replacing the damaged Tangible
Personal Property, subject to the terms and conditions set forth in the other
provisions of this Article 13, mutatis mutandis.
13.4 Restoration of Certain Improvements and the Tangible Personal
Property. If the Lessee is required or elects to restore the Facility, the
Lessee shall either (a) restore (i) all alterations and improvements to the
Leased Property made by the Lessee and (ii) the Tangible Personal Property or
(b) replace such alterations and improvements and the Tangible Personal Property
with improvements or items of the same or better quality and utility in the
operation of the Leased Property.
13.5 No Abatement of Rent. In no event shall any Rent abate as a result
of any Casualty.
13.6 Termination of Certain Rights. Any termination of this Lease
pursuant to this Article 13 shall cause any right of the Lessee to extend the
Term of this Lease, granted to the Lessee herein and any right of the Lessee to
purchase the Leased Property contained in this Lease to be terminated and to be
without further force or effect.
13.7 Waiver. The Lessee hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction to the Leased
Property due to any Casualty which the Lessee is obligated to restore or may
restore under any of the provisions of this Lease.
13.8 Application of Rent Loss and/or Business Interruption Insurance.
All proceeds of rent loss and/or business interruption insurance (collectively,
"Rent Insurance Proceeds") shall be paid to the Lessor and dealt with as
follows:
(a) if the Work has been promptly and diligently commenced by the Lessee
and is in the process of being completed in accordance with this Lease and no
fact or condition exists which constitutes, or which with the giving of notice
and/or the passage of time would constitute, a Lease Default, the Lessor shall
each month pay to the Lessee out of the Rent Insurance Proceeds a sum equal to
that amount, if any, of the Rent Insurance Proceeds paid by the insurer which is
allocable to the rental loss and/or business interruption for the preceding
month minus an amount equal to the sum of the Rent due hereunder for such month
plus any Impositions relating to the Leased Property then due and payable;
(b) if the Work has not been promptly and diligently commenced by the
Lessee or is not in the process of being completed in accordance with this
Lease, the Rent Insurance Proceeds shall be applied to any Rent then due, and,
to the extent sufficient therefor, an amount equal to Base Rent, Impositions and
insurance premiums payable for the next twelve (12) months, as reasonably
projected by the Lessor, shall be held by the Lessor as security for the Lease
Obligations and applied to the payment of Rent as it becomes due; and
(c) if such Rent Insurance Proceeds received by the Lessor (net of costs
and expenses incurred by the Lessor in collecting the same) exceed the amounts
required under clauses (a) and (b) above, the excess shall be paid to the
Lessee, provided no fact or circumstance exists which constitutes, or with
notice, or passage of time, or both, would constitute, a Lease Default.
Notwithstanding the foregoing, the Lessor may at its option use or release the
Rent Insurance Proceeds to pay for the Work and, if a Lease Default exists, the
Lessor may apply all such insurance proceeds towards the Lease Obligations or
hold such proceeds as security therefor.
13.9 Obligation To Account. Upon the Lessee's written request, which may
not be made not more than once in any three (3) month period, the Lessor shall
provide the Lessee with a written accounting of the application of all insurance
proceeds received by the Lessor.
ARTICLE 14
CONDEMNATION
14.1 Parties' Rights and Obligations. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease,
the rights and obligations of the parties shall be determined by this Article
14.
14.2 Total Taking. If there is a permanent Taking of all or
substantially all of the Leased Property, this Lease shall terminate on the Date
of Taking.
14.3 Partial or Temporary Taking. If there is a Permanent Taking of a
portion of the Leased Property, or if there is a temporary Taking of all or a
portion of the Leased Property, this Lease shall remain in effect so long as the
Leased Property is not thereby rendered permanently Unsuitable For Its Primary
Intended Use or temporarily Unsuitable For Its Primary Intended Use for a period
not likely to, or which does not, exceed two hundred and seventy (270) days. If,
however, the Leased Property is thereby so rendered permanently or temporarily
Unsuitable For Its Primary Intended Use: (a) the Lessee shall have the right to
restore the Leased Property, at its own expense, (subject to the right under
certain circumstances as provided for in Section 14.5 to receive the net
proceeds of an Award for reimbursement) to the extent possible, to substantially
the same condition as existed immediately before the partial or temporary Taking
or (b) the Lessee shall have the right to acquire the Leased Property from the
Lessor (i) upon payment of all Rent due through the date that the purchase price
is paid, for a purchase price equal to the Fair Market Value of the Leased
Property minus the Fair Market Added Value, with the Fair Market Value of the
Leased Property and the Fair Market Added Value to be determined as of the day
immediately prior to such partial or temporary Taking and (ii) in accordance
with the terms and conditions set forth in Article 18; in which event, this
Lease shall terminate upon payment of such purchase price and the consummation
of such acquisition. Notwithstanding the foregoing, the Lessor may overrule the
Lessee's election under clause (a) or (b) and instead either (1) terminate this
Lease as of the date when the Lessee is required to surrender possession of the
portion of the Leased Property so taken or (2) compel the Lessee to keep the
Lease in full force and effect and to restore the Leased Property as provided in
clause (a) above, but only if the Leased Property may be operated for at least
eighty percent (80%) of the licensed bed capacity of the Facility if operated in
accordance with its Primary Intended Use. The Lessee shall exercise its election
under this Section 14.3 by giving the Lessor notice thereof ("Lessee's Election
Notice") within sixty (60) days after the Lessee receives notice of the Taking.
The Lessor shall exercise its option to overrule the Lessee's election under
this Section 14.3 by giving the Lessee notice of the Lessor's exercise of its
rights under Section 14.3 within thirty (30) days after the Lessor receives the
Lessee's Election Notice. If, as the result of any such partial or temporary
Taking, this Lease is not terminated as provided above, the Lessee shall be
entitled to an abatement of Rent, but only to the extent, if any, provided for
in Section 3.8, effective as of the date upon which the Leased Property is
rendered Unsuitable For Its Primary Intended Use.
14.4 Restoration. If there is a partial or temporary Taking of the
Leased Property and this Lease remains in full force and effect pursuant to
Section 14.3, the Lessee shall accomplish all necessary restoration and the
Lessor shall release the net proceeds of such Award to reimburse the Lessee for
the actual reasonable costs and expenses thereof, subject to all of the
conditions and provisions set forth in Article 13 as though the Taking was a
Casualty and the Award was insurance proceeds. If the cost of the restoration
exceeds the amount of the Award (net of costs and expenses incurred in obtaining
the Award), the Lessee shall be obligated to contribute any excess amount needed
to restore the Facility or pay for such costs and expenses. To the extent that
the cost of restoration is less than the amount of the Award (net of cost and
expenses incurred in obtaining the Award), the remainder of the Award shall be
retained by the Lessor and Rent shall be abated as set forth in Section 3.8.
14.5 Award Distribution. In the event the Lessee completes the purchase
of the Leased Property, as described in Section 14.3, the entire Award shall,
upon payment of the purchase price and all Rent and other sums due under this
Lease and the other Lease Documents, belong to the Lessee and the Lessor agrees
to assign to the Lessee all of the Lessor's rights thereto. In any other event,
the entire Award shall belong to and be paid to the Lessor.
14.6 Control of Proceedings. Subject to the rights of any Fee Mortgagee,
unless and until the Lessee completes the purchase of the Leased Property as
provided in Section 14.3, all proceedings involving any Taking and the
prosecution of claims arising out of any Taking against the Condemnor shall be
conducted, prosecuted and settled by the Lessor; provided, however, that the
Lessor shall keep the Lessee apprised of the progress of all such proceedings
and shall solicit the Lessee's advice with respect thereto and shall give due
consideration to any such advice. In addition, the Lessee shall reimburse the
Lessor (as an Additional Charge) for all costs and expenses, including
reasonable attorneys' fees, appraisal fees, fees of expert witnesses and costs
of litigation or dispute resolution, in relation to any Taking, whether or not
this Lease is terminated.
ARTICLE 15
PERMITTED CONTESTS
15.1 Lessee's Right to Contest. To the extent of the express references
made to this Article 15 in other Sections of this Lease, the Lessee, any
Sublessee or any Manager on their own or on the Lessor's behalf (or in the
Lessor's name), but at their sole cost and expense, may contest, by appropriate
legal proceedings conducted in good faith and with due diligence (until the
resolution thereof), the amount, validity or application, in whole or in part,
of any Imposition, Legal Requirement, the decision of any Governmental Authority
related to the operation of the Leased Property for its Primary Intended Use or
any Lien or claim relating to the Leased Property not otherwise permitted by
this Lease; provided, that (a) prior written notice of such contest is given to
the Lessor, (b) in the case of an unpaid Imposition, Lien or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from the Lessor and/or compliance by any applicable member of the
Leasing Group with the contested Legal Requirement or other matter may be
legally delayed pending the prosecution of any such proceeding without the
occurrence or creation of any Lien, charge or liability of any kind against the
Leased Property, (c) neither the Leased Property nor any rent therefrom would be
in any immediate danger of being sold, forfeited, attached or lost as a result
of such proceeding, (d) in the case of a Legal Requirement, neither the Lessor
nor any member of the Leasing Group would be in any immediate danger of civil or
criminal liability for failure to comply therewith pending the outcome of such
proceedings, (e) in the event that any such contest shall involve a sum of money
or potential loss in excess of FIFTY THOUSAND DOLLARS ($50,000), the Lessee
shall deliver to the Lessor an Officer's Certificate and opinion of counsel, if
the Lessor deems the delivery of an opinion to be appropriate, certifying or
opining, as the case may be, as to the validity of the statements set forth to
the effect set forth in clauses (b), (c) and (d), to the extent applicable, (f)
the Lessee shall give such cash security as may be demanded in good faith by the
Lessor to insure ultimate payment of any fine, penalty, interest or cost and to
prevent any sale or forfeiture of the affected portion of the Leased Property by
reason of such non-payment or non-compliance, (g) if such contest is finally
resolved against the Lessor or any member of the Leasing Group, the Lessee shall
promptly pay, as Additional Charges due hereunder, the amount required to be
paid, together with all interest and penalties accrued thereon and/or comply
(and cause any Sublessee and any Manager to comply) with the applicable Legal
Requirement, and (h) no state of facts or circumstance exists which constitutes,
or with the passage of time and/or the giving of notice, could constitute a
Lease Default; provided, however, the provisions of this Article 15 shall not be
construed to permit the Lessee to contest the payment of Rent or any other sums
payable by the Lessee to the Lessor under any of the Lease Documents.
15.2 Lessor's Cooperation. The Lessor, at the Lessee's sole cost and
expense, shall execute and deliver to the Lessee such authorizations and other
documents as may reasonably be required in any such contest, so long as the same
does not expose the Lessor to any civil or criminal liability, and, if
reasonably requested by the Lessee or if the Lessor so desires, the Lessor shall
join as a party therein.
15.3 Lessee's Indemnity. The Lessee, as more particularly provided for
in Section 12.2, shall indemnify, defend (with counsel acceptable to the Lessor)
and save the Lessor harmless against any liability, cost or expense of any kind,
including, without limitation, attorneys' fees and expenses that may be imposed
upon the Lessor in connection with any such contest and any loss resulting
therefrom and in the enforcement of this indemnification.
ARTICLE 16
DEFAULT
16.1 Events of Default. Each of the following shall constitute an "Event
of Default" hereunder and shall entitle the Lessor to exercise its remedies
hereunder and under any of the other Lease Documents:
(a) any failure of the Lessee to pay any amount due hereunder or under
any of the other Lease Documents within ten (10) days following the date when
such payment was due;
(b) any failure in the observance or performance of any other covenant,
term, condition or warranty provided in this Lease or any of the other Lease
Documents, other than the payment of any monetary obligation and other than as
specified in subsections (c) through (v) below (a "Failure to Perform"),
continuing for thirty (30) days after the giving of notice by the Lessor to the
Lessee specifying the nature of the Failure to Perform; except as to matters not
susceptible to cure within thirty (30) days, provided that with respect to such
matters, (i) the Lessee commences the cure thereof within thirty (30) days after
the giving of such notice by the Lessor to the Lessee, (ii) the Lessee
continuously prosecutes such cure to completion, (iii) such cure is completed
within ninety (90) days after the giving of such notice by the Lessor to the
Lessee and (iv) such Failure to Perform does not impair the value of, or the
Lessor's rights with respect to, the Leased Property;
(c) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, under
any of the other Lease Documents;
(d) if any representation, warranty or statement contained herein or in
any of the other Lease Documents proves to be untrue in any material respect as
of the date when made or at any time during the Term if such representation or
warranty is a continuing representation or warranty pursuant to Section 10.2;
(e) if any member of the Leasing Group shall (i) voluntarily be
adjudicated a bankrupt or insolvent, (ii) seek or consent to the appointment of
a receiver or trustee for itself or for the Leased Property, (iii) file a
petition seeking relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, (iv) make a general assignment for the
benefit of creditors, (v) make or offer a composition of its debts with its
creditors or (vi) be unable to pay its debts as such debts mature;
(f) if any court shall enter an order, judgment or decree appointing,
without the consent of any member of the Leasing Group, a receiver or trustee
for such member or for any of its property and such order, judgment or decree
shall remain in force, undischarged or unstayed, sixty (60) days after it is
entered;
(g) if a petition is filed against any member of the Leasing Group which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any other jurisdiction, and such petition is not dismissed within
sixty (60) days after it is filed;
(h) in the event that, without the prior written consent of the Lessor,
in each instance, which consent may be withheld by the Lessor in its sole and
absolute discretion, if any of the outstanding capital stock of any member of
the Leasing Group, other than the Guarantor, shall be, on any one or more
occasions, directly or indirectly, sold, assigned, hypothecated or otherwise
transferred (whether by operation of law or otherwise), if such member of the
Leasing Group shall be a corporation,
(i) the liquidation, dissolution or termination of existence of the any
member of the Lessee or the merger or consolidation of any member of the Lessee
with any other Person;
(j) if, without the prior written consent of the Lessor, in each
instance, which consent may be withheld by the Lessor in its sole and absolute
discretion, the Lessee's or any Sublessee's interest in the Leased Property
shall be, directly or indirectly, mortgaged, encumbered (by any voluntary or
involuntary Lien other than the Permitted Encumbrances), subleased, sold,
assigned, hypothecated or otherwise transferred (whether by operation of law or
otherwise);
(k) the occurrence of a default or breach of condition continuing beyond
the expiration of the applicable notice and grace periods, if any, in connection
with the payment or performance of any other material obligation of the Lessee
or any Sublessee (other than any Sublessee that is not an Affiliate of the
Lessee), whether or not the applicable creditor or obligee elects to declare the
obligations of the Lessee or the applicable Sublessee under the applicable
agreement due and payable or to exercise any other right or remedy available to
such creditor or obligee, if such creditor's or obligee's rights and remedies
may involve or result in (i) the taking of possession of the Leased Property or
(ii) the assertion of any other right or remedy that, in the Lessor's reasonable
opinion, may impair the Lessee's ability punctually to perform all of its
material obligations under this Lease and the other Lease Documents, may impair
such Sublessee's ability punctually to perform all of its obligations under its
Sublease or may materially impair the Lessor's security for the Lease
Obligations; provided, however, that in any event, the election by the
applicable creditor or obligee to declare the obligations of the Lessee under
the applicable agreement due and payable or to exercise any other right or
remedy available to such creditor or obligee shall be an Event of Default
hereunder only if such obligations, individually or in the aggregate, are in
excess of ONE HUNDRED THOUSAND DOLLARS ($100,000);
(l) the occurrence of a Related Party Default;
(m) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, under
any credit agreement, loan agreement or other agreement establishing a major
line of credit (or any documents executed in connection with such lines of
credit) on behalf of any member of the Leasing Group (other than any Sublessee
that is not an Affiliate of the Lessee) whether or not the applicable creditor
has elected to declare the indebtedness due and payable under such line of
credit or to exercise any other right or remedy available to it. For the
purposes of this provision, a major line of credit shall mean and include any
line of credit established in an amount equal to or greater than FIVE HUNDRED
THOUSAND DOLLARS ($500,000);
(n) except as a result of Casualty or a partial or complete
Condemnation, if the Lessee or any Sublessee ceases operation of the Facility
for a period in excess of thirty (30) days;
(o) if one or more judgments against the Lessee or any Sublessee (other
than any Sublessee that is not an Affiliate of the Lessee) or attachments
against the Lessee's interest or any such Sublessee's interest in the Leased
Property, which in the aggregate exceed ONE HUNDRED THOUSAND DOLLARS ($100,000)
or which may materially and adversely interfere with the operation of the
Facility, remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days;
(p) if any malpractice award or judgment exceeding any applicable
professional liability insurance coverage by more than FIVE HUNDRED THOUSAND
DOLLARS ($500,000) shall be rendered against any member of the Leasing Group and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such award or judgment or (ii) such award or judgment shall continue
unsatisfied and in effect for a period of ten (10) consecutive days without an
insurance company satisfactory to the Lessor (in its sole and absolute
discretion) having agreed to fund such award or judgment in a manner
satisfactory to the Lessor (in its sole and absolute discretion) and in either
case such award or judgment shall, in the reasonable opinion of the Lessor, have
a material adverse affect on the ability of any such member of the Leasing Group
to operate the Facility;
(q) if any Provider Agreement material to the operation or financial
condition of any member of the Leasing Group shall be terminated prior to the
expiration of the term thereof or, without the prior written consent of the
Lessor, in each instance, which consent may be withheld in the Lessor's
reasonable discretion, shall not be renewed or extended upon the expiration of
the stated term thereof;
(r) if, after the Lessee or any Sublessee has obtained approval for
participation in the Medicare and/or Medicaid programs with regard to the
operation of the Facility, a final unappealable determination is made by the
applicable Governmental Authority that the Lessee or any such Sublessee shall
have failed to comply with applicable Medicare and/or Medicaid regulations in
the operation of the Facility, as a result of which failure the Lessee or such
Sublessee is declared ineligible to continue its participation in the Medicare
and/or Medicaid programs;
(s) if any member of the Leasing Group receives notice of a final
unappealable determination by applicable Governmental Authorities of the
revocation of any Permit required for the lawful operation of the Facility in
accordance with the Primary Intended Use or the loss of any Permit under any
other circumstances under which any such member of the Leasing Group is required
to cease the operation of the Facility in accordance with the Primary Intended
Use;
(t) any failure to maintain the insurance required pursuant to Section
12 of this Lease in force and effect at all times until the Lease Obligations
are fully paid and performed;
(u) the appointment of a temporary manager (or operator) for the Leased
Property by any Governmental Authority; or
(v) the entry of an order by a court with jurisdiction over the Leased
Property to close the Facility, to transfer one or more patients or residents
from the Facility as a result of an allegation of abuse or neglect or to take
any action to eliminate an emergency situation then existing at the Facility.
16.2 Remedies.
(a) If any Lease Default shall have occurred, the Lessor may at its
option terminate this Lease by giving the Lessee not less than ten (10) days'
notice of such termination, or exercise any one or more of its rights and
remedies under this Lease or any of the other Lease Documents, or as available
at law or in equity and upon the expiration of the time fixed in such notice,
the Term shall terminate (but only if the Lessor shall have specifically elected
by a written notice to so terminate the Lease) and all rights of the Lessee
under this Lease shall cease. Notwithstanding the foregoing, in the event of the
Lessee's failure to pay Rent, if such Rent remains unpaid beyond ten (10) days
from the due date thereof, the Lessor shall not be obligated to give ten (10)
days notice of such termination or exercise of any of its other rights and
remedies under this Lease, or the other Lease Documents, or otherwise available
at law or in equity, and the Lessor shall be at liberty to pursue any one or
more of such rights or remedies without further notice. No taking of possession
of the Leased Property by or on behalf of the Lessor, and no other act done by
or on behalf of the Lessor, shall constitute an acceptance of surrender of the
Leased Property by the Lessee or reduce the Lessee's obligations under this
Lease or the other Lease Documents, unless otherwise expressly agreed to in a
written document signed by an authorized officer or agent of the Lessor.
(b) To the extent permitted under applicable law, the Lessee shall pay
as Additional Charges all costs and expenses (including, without limitation,
attorneys' fee and expenses) reasonably incurred by or on behalf of the Lessor
as a result of any Lease Default.
(c) If any Lease Default shall have occurred, whether or not this Lease
has been terminated pursuant to Paragraph (a) of this Section, the Lessee shall,
to the extent permitted under applicable law, if required by the Lessor so to
do, upon not less than ten (10) days' prior notice from the Lessor, immediately
surrender to the Lessor the Leased Property pursuant to the provisions of
Paragraph (a) of this Section and quit the same, and the Lessor may enter upon
and repossess the Leased Property by reasonable force, summary proceedings,
ejectment or otherwise, and may remove the Lessee and all other Persons and any
and all of the Tangible Personal Property from the Leased Property, subject to
the rights of any residents or patients of the Facility and any Sublessees who
are not Affiliates of any member of the Leasing Group and to any requirements of
applicable law, or the Lessor may claim ownership of the Tangible Personal
Property as set forth in Section 5.2.3 hereof or the Lessor may exercise its
rights as secured party under the Security Agreement. The Lessor shall use
reasonable, good faith efforts to relet the Leased Property or otherwise
mitigate damages suffered by the Lessor as a result of the Lessee's breach of
this Lease.
(d) In addition to all of the rights and remedies of the Lessor set
forth in this Lease and the other Lease Documents, if the Lessee shall fail to
pay any rental or other charge due hereunder (whether denominated as Base Rent,
Additional Charges or otherwise) within ten (10) days after same shall have
become due and payable, then and in such event the Lessee shall also pay to the
Lessor (i) a late payment service charge (in order to partially defray the
Lessor's administrative and other overhead expenses) equal to two hundred-fifty
($250) dollars and (ii) to the extent permitted by applicable law, interest on
such unpaid sum at the Overdue Rate; it being understood, however, that nothing
herein shall be deemed to extend the due date for payment of any sums required
to be paid by the Lessee hereunder or to relieve the Lessee of its obligation to
pay such sums at the time or times required by this Lease.
16.3 Damages. None of (a) the termination of this Lease pursuant to
Section 16.2, (b) the eviction of the Lessee or the repossession of the Leased
Property, (c) the failure or inability of the Lessor, notwithstanding reasonable
good faith efforts, to relet the Leased Property, (d) the reletting of the
Leased Property or (e) the failure of the Lessor to collect or receive any
rentals due upon any such reletting, shall relieve the Lessee of its liability
and obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In any such event, the Lessee shall forthwith pay to
the Lessor all Rent due and payable with respect to the Leased Property to and
including the date of such termination, repossession or eviction. Thereafter,
the Lessee shall forthwith pay to the Lessor, at the Lessor's option, either:
(i) the sum of: (x) all Rent that is due and unpaid at later to occur of
termination, repossession or eviction, together with interest thereon at the
Overdue Rate to the date of payment, plus (y) the worth (calculated in the
manner stated below) of the amount by which the unpaid Rent for the balance of
the Term after the later to occur of the termination, repossession or eviction
exceeds the fair market rental value of the Leased Property for the balance of
the Term, plus (z) any other amount necessary to compensate the Lessor for all
damage proximately caused by the Lessee's failure to perform the Lease
Obligations or which in the ordinary course would be likely to result therefrom;
or
(ii) each payment of Rent as the same would have become due and payable
if the Lessee's right of possession or other rights under this Lease had not
been terminated, or if the Lessee had not been evicted, or if the Leased
Property had not been repossessed which Rent, to the extent permitted by law,
shall bear interest at the Overdue Rate from the date when due until the date
paid, and the Lessor may enforce, by action or otherwise, any other term or
covenant of this Lease. There shall be credited against the Lessee's obligation
under this Clause (ii) amounts actually collected by the Lessor from another
tenant to whom the Leased Property may have actually been leased or, if the
Lessor is operating the Leased Property for its own account, the actual net cash
flow of the Leased Property.
In making the determinations described in subparagraph (i) above, the
"worth" of unpaid Rent shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present worth)
reasonably applicable at the time of such determination and allowed by
applicable law.
16.4 Lessee Waivers. If this Lease is terminated pursuant to Section
16.2, the Lessee waives, to the extent not prohibited by applicable law, (a) any
right of redemption, re-entry or repossession, (b) any right to a trial by jury
in the event of summary proceedings to enforce the remedies set forth in this
Article 16, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
16.5 Application of Funds. Any payments otherwise payable to the Lessee
which are received by the Lessor under any of the provisions of this Lease
during the existence or continuance of any Lease Default shall be applied to the
Lease Obligations in the order which the Lessor may reasonably determine or as
may be required by the laws of the State.
16.6 Intentionally Omitted.
16.7 Lessor's Right to Cure. If the Lessee shall fail to make any
payment, or to perform any act required to be made or performed under this Lease
and to cure the same within the relevant time periods provided in Section 16.1,
the Lessor, after five (5) Business Days' prior notice to the Lessee (except in
an emergency when such shorter notice shall be given as is reasonable under the
circumstances), and without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of the
Lessee, and may, to the extent permitted by law, enter upon the Leased Property
for such purpose and take all such action thereon as, in the Lessor's opinion,
may be necessary or appropriate therefor. No such entry shall be deemed an
eviction of the Lessee. All sums so paid by the Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred shall be
paid by the Lessee to the Lessor on demand as an Additional Charge. The
obligations of the Lessee and rights of the Lessor contained in this Article
shall survive the expiration or earlier termination of this Lease.
16.8 No Waiver By Lessor. The Lessor shall not by any act, delay,
omission or otherwise (including, without limitation, the exercise of any right
or remedy hereunder) be deemed to have waived any of its right or remedies
hereunder or under any of the other Lease Documents unless such waiver is in
writing and signed by the Lessor, and then, only to the extent specifically set
forth therein. No waiver at any time of any of the terms, conditions, covenants,
representations or warranties set forth in any of the Lease Documents
(including, without limitation, any of the time periods set forth therein for
the performance of the Lease Obligations) shall be construed as a waiver of any
other term, condition, covenant, representation or warranty of any of the Lease
Documents, nor shall such a waiver in any one instance or circumstances be
construed as a waiver of the same term, condition, covenant, representation or
warranty in any subsequent instance or circumstance. No such failure, delay or
waiver shall be construed as creating a requirement that the Lessor must
thereafter, as a result of such failure, delay or waiver, give notice to the
Lessee or any other Person that the Lessor does not intend to, or may not, give
a further waiver or to refrain from insisting upon the strict performance of the
terms, conditions, covenants, representations and warranties set forth in the
Lease Documents before the Lessor can exercise any of its rights or remedies
under any of the Lease Documents or before any Lease Default can occur, or as
establishing a course of dealing for interpreting the conduct of and agreements
between the Lessor and the Lessee or any other Person.
The acceptance by the Lessor of any payment that is less than payment in
full of all amounts then due under any of the Lease Documents at the time of the
making of such payment shall not: (a) constitute a waiver of the right to
exercise any of the Lessor's remedies at that time or at any subsequent time,
(b) constitute an accord and satisfaction or (c) nullify any prior exercise of
any remedy, without the express written consent of the Lessor. Any failure by
the Lessor to take any action under this Lease or any of the other Lease
Documents by reason of a default hereunder or thereunder, any acceptance of a
past due installment, or any indulgence granted from time to time shall not be
construed (i) as a novation of this Lease or any of the other Lease Documents,
(ii) as a waiver of any right of the Lessor thereafter to insist upon strict
compliance with the terms of this Lease or any of the other Lease Documents or
(iii) to prevent the exercise of any right of acceleration or any other right
granted hereunder or under applicable law; and to the maximum extent not
prohibited by applicable law, the Lessor hereby expressly waives the benefit of
any statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.
16.9 Right of Forbearance. Whether or not for consideration paid or
payable to the Lessor and, except as may be otherwise specifically agreed to by
the Lessor in writing, no forbearance on the part of the Lessor, no extension of
the time for the payment of the whole or any part of the Obligations, and no
other indulgence given by the Lessor to the Lessee or any other Person, shall
operate to release or in any manner affect the original liability of the Lessee
or such other Persons, or to limit, prejudice or impair any right of the Lessor,
including, without limitation, the right to realize upon any collateral, or any
part thereof, for any of the Obligations evidenced or secured by the Lease
Documents; notice of any such extension, forbearance or indulgence being hereby
waived by the Lessee and all those claiming by, through or under the Lessee.
16.10 Cumulative Remedies. The rights and remedies set forth under this
Lease are in addition to all other rights and remedies afforded to the Lessor
under any of the other Lease Documents or at law or in equity, all of which are
hereby reserved by the Lessor, and this Lease is made and accepted without
prejudice to any such rights and remedies. All of the rights and remedies of the
Lessor under each of the Lease Documents shall be separate and cumulative and
may be exercised concurrently or successively in the Lessor's sole and absolute
discretion.
ARTICLE 17
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
17.1 Surrender. The Lessee shall, upon the expiration or prior
termination of the Term (unless the Lessee has concurrently purchased the Leased
Property in accordance with the terms hereof), vacate and surrender the Leased
Property to the Lessor in good repair and condition, in compliance with all
Legal Requirements, all Insurance Requirements, and in compliance with the
provisions of Article 8, except for: (a) ordinary wear and tear (subject to the
obligation of the Lessee to maintain the Leased Property in good order and
repair during the entire Term of the Lease), (b) damage caused by the gross
negligence or willful acts of the Lessor, and (c) any damage or destruction
resulting from a Casualty or Taking that the Lessee is not required by the terms
of this Lease to repair or restore.
17.2 Transfer of Permits and Contracts. In connection with the
expiration or any earlier termination of this Lease (unless the Lessee has
concurrently purchased the Leased Property in accordance with the terms hereof),
upon any request made from time to time by the Lessor, the Lessee shall (a)
promptly and diligently use its best efforts to (i) transfer and assign all
Permits and Contracts necessary or desirable for the operation of the Leased
Property in accordance with its Primary Intended Lease to the Lessor or its
designee and/or (ii) arrange for the transfer or assignment of such Permits and
Contracts to the Lessor or its designee, all to the extent the same may be
transferred or assigned under applicable law and (b) cooperate in every respect
(and to the fullest extent possible) and assist the Lessor or its designee in
obtaining such Permits and Contracts (whether by transfer, assignment or
otherwise). Such efforts and cooperation on the part of the Lessee shall
include, without limitation, the execution, delivery and filing with appropriate
Governmental Authorities, Accreditation Bodies and Third Party Payors of any
applications, petitions, statements, notices, requests, assignments and other
documents or instruments requested by the Lessor. Furthermore, the Lessee shall
not take any action or refrain from taking any action which would defer, delay
or jeopardize the process of the Lessor or its designee obtaining said Permits
and Contracts (whether by transfer, assignment or otherwise). Without limiting
the foregoing, the Lessee shall not seek to transfer or relocate any of said
Permits or Contracts to any location other than the Leased Property. The
provisions of this Section 17.2 shall survive the expiration or earlier
termination of this Lease.
The Lessee hereby appoints the Lessor as its attorney-in-fact, with full
power of substitution to take such actions, in the event that the Lessee fails
to comply with any request made by the Lessor hereunder, as the Lessor (in its
sole absolute discretion) may deem necessary or desirable to effectuate the
intent of this Section 17.2. The power of attorney conferred on the Lessor by
the provisions of this Section 17.2, being coupled with an interest, shall be
irrevocable until the Lease Obligations are fully paid and performed and shall
not be affected by any disability or incapacity which the Lessee may suffer and
shall survive the same. Such power of attorney is provided solely to protect the
interests of the Lessor and shall not impose any duty on the Lessor to exercise
any such power and neither the Lessor nor such attorney-in-fact shall be liable
for any act, omission, error in judgment or mistake of law, except as the same
may result from its gross negligence or willful misconduct.
17.3 No Acceptance of Surrender. Except at the expiration of the Term in
the ordinary course, no surrender to the Lessor of this Lease or of the Leased
Property or any interest therein shall be valid or effective unless agreed to
and accepted in writing by the Lessor and no act by the Lessor or any
representative or agent of the Lessor, other than such a written acceptance by
the Lessor, shall constitute an acceptance of any such surrender.
17.4 Holding Over. If, for any reason, the Lessee shall remain in
possession of the Leased Property after the expiration or any earlier
termination of the Term, such possession shall be as a tenant at sufferance
during which time the Lessee shall pay as rental each month, one and one-half
times the aggregate of (i) one-twelfth of the aggregate Base Rent payable at the
time of such expiration or earlier termination of the Term; (ii) all Additional
Charges accruing during the month and (iii) all other sums, if any, payable by
the Lessee pursuant to the provisions of this Lease with respect to the Leased
Property. During such period of tenancy, the Lessee shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to tenants at sufferance, to continue its occupancy and use of the Leased
Property. Nothing contained herein shall constitute the consent, express or
implied, of the Lessor to the holding over of the Lessee after the expiration or
earlier termination of this Lease.
ARTICLE 18
PURCHASE OF THE LEASED PROPERTY
18.1 Purchase of the Leased Property. In the event the Lessee purchases
the Leased Property from the Lessor pursuant to Article 13 or Article 14 of this
Lease, the Lessor shall, upon receipt from the Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase, deliver to
the Lessee a deed with covenants only against acts of the Lessor conveying the
entire interest of the Lessor in and to the Leased Property to the Lessee
subject to all Legal Requirements, all of the matters described in clauses (a),
(b), (e) and (g) of Section 11.5.2, Impositions, any Liens created by the
Lessee, any Liens created in accordance with the terms of this Lease or
consented to by the Lessee, the claims of all Persons claiming by through or
under the Lessee, any other matters assented to by the Lessee and all matters
for which the Lessee has responsibility under any of the Lease Documents, but
otherwise not subject to any other Lien created by the Lessor from and after the
Commencement Date (other than an Encumbrance permitted under Article 20 which
the Lessee elects to assume). The applicable purchase price shall be paid in
cash to the Lessor, or as the Lessor may direct, in federal or other immediately
available funds except as otherwise mutually agreed by the Lessor and the
Lessee. All expenses of such conveyance, including, without limitation, title
examination costs, standard (and extended) coverage title insurance premiums,
attorneys' fees incurred by the Lessor in connection with such conveyance,
recording and transfer taxes and recording fees and other similar charges shall
be paid by the Lessee.
18.2 Appraisal.
18.2.1 Designation of Appraisers. In the event that it becomes necessary
to determine the Fair Market Value of the Leased Property for any purpose of
this Lease, the party required or permitted to give notice of such required
determination shall include in the notice the name of a Person selected to act
as appraiser on its behalf. Within ten (10) days after receipt of any such
notice, the Lessor (or the Lessee, as the case may be) shall by notice to the
Lessee (or the Lessor, as the case may be) appoint a second Person as appraiser
on its behalf.
18.2.2 Appraisal Process. The appraisers thus appointed, each of whom
must be a member of the American Institute of Real Estate Appraisers (or any
successor organization thereto), shall, within forty-five (45) days after the
date of the notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market Value of the Leased Property as of
the relevant date (giving effect to the impact, if any, of inflation from the
date of their decision to the relevant date); provided, however, that if only
one appraiser shall have been so appointed, or if two appraisers shall have been
so appointed but only one such appraiser shall have made such determination
within fifty (50) days after the making of the Lessee's or the Lessor's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers shall have been appointed and shall have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed ten per cent
(10%) of the lesser of such amounts, then the Fair Market Value of the Leased
Property shall be an amount equal to fifty percent (50%) of the sum of the
amounts so determined. If the difference between the amounts so determined shall
exceed ten percent (10%) of the lesser of such amounts, then such two appraisers
shall have twenty (20) days to appoint a third appraiser, but if such appraisers
fail to do so, then either party may request the American Arbitration
Association or any successor organization thereto to appoint an appraiser within
twenty (20) days of such request, and both parties shall be bound by any
appointment so made within such twenty (20) day period. If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of Fair Market Value of the
Leased Property, whichever is earlier, either the Lessor or the Lessee may apply
to any court having jurisdiction to have such appointment made by such court.
Any appraiser appointed by the original appraisers, by the American Arbitration
Association or by such court shall be instructed to determine the Fair Market
Value of the Leased Property within thirty (30) days after appointment of such
Appraiser. The determination of the appraiser which differs most in terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and fifty percent (50%) of the sum of the remaining two determinations
shall be final and binding upon the Lessor and the Lessee as the Fair Market
Value of the Leased Property.
18.2.3 Specific Enforcement and Costs. This provision for determination
by appraisal shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder shall be final
and binding upon the parties except as otherwise provided by applicable law. The
Lessor and the Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other cost and expenses incurred in
connection with each appraisal.
ARTICLE 19
SUBLETTING AND ASSIGNMENT
19.1 Subletting and Assignment. Except as specifically set forth in
Section 19.2 below, the Lessee may not, without the prior written consent of the
Lessor, which consent may be withheld in the Lessor's sole and absolute
discretion, assign or pledge all or any portion of its interest in this Lease or
any of the other Lease Documents (whether by operation of law or otherwise) or
sublet all or any part of the Leased Property. For purposes of this Section
19.1, the term "assign" shall be deemed to include, but not be limited to, any
one or more sales, pledges, hypothecations or other transfers (including,
without limitation, any transfer by operation of law) of any of the capital
stock of or partnership interests in the Lessee or sales, pledges,
hypothecations or other transfers (including, without limitation, any transfer
by operation of law) of the capital or the assets of the Lessee. Any such
assignment, pledge, sale, hypothecation or other transfer made without the
Lessor's consent shall be void and of no force and effect.
19.2 Permitted Subleases. Notwithstanding the foregoing, the Lessee
shall have the right to enter into Resident Agreements without the prior consent
of the Lessor.
19.3 Attornment. The Lessee shall insert in each Sublease (other than
Resident Agreements) provisions to the effect that (a) such Sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of the Lessor hereunder, (b) in the event this Lease shall terminate
before the expiration of such Sublease, the Sublessee thereunder will, at the
Lessor's option, attorn to the Lessor and waive any right the Sublessee may have
to terminate the Sublease or to surrender possession thereunder, as a result of
the termination of this Lease and (c) in the event the Sublessee receives a
written notice from the Lessor stating that the Lessee is in default under this
Lease, the Sublessee shall thereafter be obligated to pay all rentals accruing
under said Sublease directly to the Lessor or as the Lessor may direct. All
rentals received from the Sublessee by the Lessor shall be credited against the
amounts owing by the Lessee under this Lease.
ARTICLE 20
TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
20.1 No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby with the fee estate in the Leased Property
by reason of the fact that the same Person may acquire, own or hold, directly or
indirectly (a) this Lease or the leasehold estate created hereby or any interest
in this Lease or such leasehold estate and (b) the fee estate in the Leased
Property.
20.2 Transfers By Lessor. If the original the Lessor named herein or any
successor in interest shall convey the Leased Property in accordance with the
terms hereof, other than as security for a debt, and the grantee or transferee
of the Leased Property shall expressly assume all obligations of the Lessor
hereunder arising or accruing from and after the date of such conveyance or
transfer, the original the Lessor named herein or the applicable successor in
interest so conveying the Leased Property shall thereupon be released from all
future liabilities and obligations of the Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
20.3 Lessor May Grant Liens. Without the consent of the Lessee, but
subject to the terms and conditions set forth below in this Section 20.3, the
Lessor may, from time to time, directly or indirectly, create or otherwise cause
to exist any lien, encumbrance or title retention agreement upon the Leased
Property or any interest therein ("Encumbrance"), whether to secure any
borrowing or other means of financing or refinancing, provided that the Lessee
shall have no obligation to make payments under such Encumbrances. The Lessee
shall subordinate this Lease to the lien of any such Encumbrance, on the
condition that the beneficiary or holder of such Encumbrance executes a
non-disturbance agreement in conformity with the provisions of Section 20.4. To
the extent that any such Encumbrance consists of a mortgage or deed of trust on
the Lessor's interest in the Leased Property the same shall be referred to
herein as a "Fee Mortgage" and the holder thereof shall be referred to herein as
a "Fee Mortgagee".
20.4 Subordination and Non-Disturbance. Concurrently with the execution
and delivery of any Fee Mortgage entered into after the date hereof, provided
that the Lessee executes and delivers an agreement of the type described in the
following paragraph, the Lessor shall obtain and deliver to the Lessee an
agreement by the holder of such Fee Mortgage, pursuant to which, (a) the
applicable Fee Mortgagee consents to this Lease and (b) agrees that,
notwithstanding the terms of the applicable Fee Mortgage held by such Fee
Mortgagee, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under or pursuant to such Fee Mortgage or a transfer in
lieu of foreclosure, (i) the Lessee shall not be disturbed in peaceful enjoyment
of the Leased Property nor shall this Lease be terminated or canceled at any
time, except in the event that the Lessor shall have the right to terminate this
Lease under the terms and provisions expressly set forth herein, (ii) the
Lessee's options to purchase the Leased Property pursuant to Articles 13 and 14
of this Lease shall remain in force and effect pursuant to the terms hereof and
(iii) in the event that the Lessee elects its option to purchase the Leased
Property pursuant to Article 13 or Article 14 of this Lease and performs all of
its obligations hereunder in connection with any such election, the holder of
the Fee Mortgage shall release its Fee Mortgage upon payment by the Lessee of
the purchase price required hereunder, provided, that (1) such purchase price is
paid to the holder of the Fee Mortgage, in the event that the Indebtedness
secured by the applicable Fee Mortgage is equal to or greater than the purchase
price or (2) in the event that the purchase price is greater than the
Indebtedness secured by the Fee Mortgage, a portion of the purchase price equal
to the Indebtedness secured by the Fee Mortgage is paid to the Fee Mortgagee and
the remainder of the purchase price is paid to the Lessor.
At the request from time to time by any Fee Mortgagee, the Lessee shall
(a) subordinate this Lease and all of the Lessee's rights and estate hereunder
to the Fee Mortgage held by such Fee Mortgagee and (b) agree that the Lessee
will attorn to and recognize such Fee Mortgagee or the purchaser at any
foreclosure sale or any sale under a power of sale contained in any such Fee
Mortgage as the Lessor under this Lease for the balance of the Term then
remaining. To effect the intent and purpose of the immediately preceding
sentence, the Lessee agrees to execute and deliver such instruments in
recordable from as are reasonably requested by the Lessor or the applicable Fee
Mortgagee; provided, however, that such Fee Mortgagee simultaneously executes,
delivers and records a written agreement of the type described in the preceding
paragraph.
ARTICLE 21
LESSOR OBLIGATIONS
21.1 Quiet Enjoyment. As long as the Lessee shall pay all Rent and all
other sums due under any of the Lease Documents as the same become due and shall
fully comply with all of the terms of this Lease and the other Lease Documents
and fully perform its obligations thereunder, the Lessee shall peaceably and
quietly have, hold and enjoy the Leased Property throughout the Term, free of
any claim or other action by the Lessor or anyone claiming by, through or under
the Lessor, but subject to the Permitted Encumbrances and such Liens as may
hereafter be consented to by the Lessee. No failure by the Lessor to comply with
the foregoing covenant shall give the Lessee any right to cancel or terminate
this Lease, or to fail to perform any other sum payable under this Lease, or to
fail to perform any other obligation of the Lessee hereunder. Notwithstanding
the foregoing, the Lessee shall have the right by separate and independent
action to pursue any claim it may have against the Lessor as a result of a
breach by the Lessor of the covenant of quiet enjoyment contained in this
Article 21.
21.2 Memorandum of Lease. The Lessor and the Lessee shall, promptly upon
the request of either, enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State, in which reference to this
Lease and all options contained herein shall be made. The Lessee shall pay all
recording costs and taxes associated therewith.
21.3 Default by Lessor. The Lessor shall be in default of its
obligations under this Lease only if the Lessor shall fail to observe or perform
any term, covenant or condition of this Lease on its part to be performed and
such failure shall continue for a period of thirty (30) days after notice
thereof from the Lessee (or such shorter time as may be necessary in order to
protect the health or welfare of any patients and/or residents of the Facility
or to insure the continuing compliance of the Facility with the applicable Legal
Requirements), unless such failure cannot with due diligence be cured within a
period of thirty (30) days, in which case such failure shall not be deemed to
continue if the Lessor, within said thirty (30) day period, proceeds promptly
and with due diligence to cure the failure and diligently completes the curing
thereof. The time within which the Lessor shall be obligated to cure any such
failure shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
ARTICLE 22
NOTICES
Any notice, request, demand, statement or consent made hereunder or
under any of the other Lease Documents shall be in writing and shall be deemed
duly given if personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight delivery
service with provision for a receipt, postage or delivery charges prepaid, and
shall be deemed given when so personally delivered or postmarked or placed in
the possession of such mail or delivery service and addressed as follows:
If to the Lessee: CareMatrix of Dedham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: President
With a copies to: CareMatrix of Dedham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
If to the Lessor: Continuum Care of Dedham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: President
With copies to: Continuum Care of Dedham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
or such other address as the Lessor or the Lessee shall hereinafter from time to
time designate by a written notice to the others given in such manner. Any
notice given to the Lessee by the Lessor at any time shall not imply that such
notice or any further or similar notice was or is required.
ARTICLE 23
ENVIRONMENTAL MATTERS
23.1 Maintenance of Leased Property. The Lessee covenants that, as long
as this Lease shall remain in force and effect, the Lessee:
(a) shall not generate, store, transport, utilize, dispose of,
manage, release or locate, any Hazardous Substances on, under or from
the Leased Property in compliance with all applicable Environmental Laws
or permit the generation, storage, transportation, utilization,
disposal, management, release or threat of release, or location of any
Hazardous Substances on, under or from the Leased Property, but only in
compliance with all applicable Environmental Laws; and
(b) shall not permit any Lien arising under or related to any of
the Environmental Laws to attach to the Leased Property and remain
undischarged or not adequately bonded to the reasonable satisfaction of
the Lessor for more than sixty (60) days.
In addition to all other covenants contained herein, the Lessee agrees
that the Leased Property shall be maintained in compliance with the
Environmental Laws.
23.2 Notice of Environmental Conditions. The Lessee shall provide the
Lessor with immediate written notice: (a) upon the Lessee becoming aware of (i)
the presence of, any release or any threat of release of any Hazardous
Substances on, under or from the Leased Property (whether or not caused by the
Lessee) and (ii) any Environmental Enforcement Action instituted or threatened
and (b) upon receipt by the Lessee of any notice relating to the Leased Property
or any Hazardous Substance allegedly originating on, under or from the Leased
Property, from any Governmental Authority pursuant to any of the Environmental
Laws.
23.3 The Lessee's Agreement To Take Remedial Actions. Upon the Lessee
becoming aware of the presence of, any release, or any threat of release of any
Hazardous Substances on, under or from the Leased Property caused by the Lessee,
its officers, agents, employees, Sublessees, licensees, concessionaires and/or
invitees or any other occupant of the Leased Property during the term of this
Lease, the Lessee shall immediately take all such actions to arrange for the
assessment, monitoring, clean-up, containment, removal, remediation or
restoration of the Leased Property as are required pursuant to any of the
Environmental Laws or by any Governmental Authority.
Upon the Lessee becoming aware of the presence of, any release, or any
threat of release of any Hazardous Substances on any Surrounding Property, but
only to the extent that the presence of any Hazardous Substances on the
Surrounding Property originated on, under or from the Leased Property and such
release or threat of release was caused by the Lessee, its officers, agents,
employees, Sublessees, licensees, concessionaires and/or invitees or any other
occupant of the Leased Property during the term of this Lease, the Lessee shall
immediately take all such actions to arrange for the assessment, monitoring,
clean-up, containment, removal, remediation or restoration of the Surrounding
Property, as are required pursuant to any of the Environmental Laws or by any
Governmental Authority.
23.4 The Lessor's Rights To Inspect The Leased Property and Take
Remedial Actions. So long as this Lease shall remain in force and effect, the
Lessor shall have the right, but not the obligation, to enter upon the Leased
Property, to expend funds to:
(a) cause one or more environmental assessments of the Leased
Property to be undertaken. Such environmental assessments may include,
without limitation, (i) detailed visual inspections of the Leased
Property, including, without limitation, all storage areas, storage
tanks, drains, dry wells and leaching areas, (ii) the taking of soil and
surface water samples, (iii) the performance of soil and ground water
analyses and (iv) the performance of such other investigations or
analyses as are necessary or appropriate and consistent with sound
professional environmental engineering practice in order for the Lessor
to obtain a complete assessment of the compliance of the Leased Property
and the use thereof with all Environmental Laws and to make a
determination as to whether there is any risk of contamination (x) to
the Leased Property resulting from Hazardous Substances originating on,
under or from any Surrounding Property or (y) to any Surrounding
Property resulting from Hazardous Substances originating on, under or
from the Leased Property;
(b) cure any breach of the conditions and covenants contained in
this Article 6;
(c) take any actions as are necessary to (i) prevent the
migration of Hazardous Substances on, under or from the Leased Property
to any other property, (ii) clean-up, contain, remediate or remove any
Hazardous Substances on, under or from any other property, which
Hazardous Substances originated on, under or from the Leased Property or
(iii) prevent the migration of any Hazardous Substances on, under or
from any other property to the Leased Property;
(d) comply with, settle or otherwise satisfy any Environmental
Enforcement Action (including, without limitation, the payment of any
fines or penalties imposed by any Governmental Authority); and
(e) correct or abate any environmental condition on or under the
Leased Property which could cause degradation, damage or injury to the
Leased Property, any Surrounding Property or any Person.
Any amounts paid or advanced by the Lessor and all costs and expenses
incurred in connection with any action taken pursuant to the terms of this
Article 6 (including, without limitation, environmental consultants' and
experts' fees and expenses, reasonable attorneys' fees and expenses, court costs
and all costs of assessment, monitoring, clean-up, containment, remediation,
removal and restoration), shall be a demand obligation of the Lessee to the
Lessor, but only to the extent that such amounts paid or advanced and cost and
expenses incurred arose out of and/or relate to the presence of, any release, or
any threat of release of any Hazardous Substances on, under or from the Leased
Property caused by the Lessee, its officers, agents, employees, Sublessees,
licensees, concessionaires and/or invitees or any other occupant of the Leased
Property during the term of this Lease, and if such sums are not paid within ten
(10) days after demand, such sums shall thereafter (to the extent permitted by
applicable law) bear interest at the Overdue Rate until the date of payment.
The Lessor, by making any such payment or incurring any such costs,
shall be subrogated to all rights of the Lessee or any other occupant of the
Leased Property to seek reimbursement from any Person, including, without
limitation, any prior owner or operator of the Leased Property, who may be a
"responsible party" under any of the Environmental Laws, in connection with the
presence of Hazardous Substances on, under or from the Leased Property.
Any partial exercise by the Lessor of any of the rights and remedies set
forth in this Article 23, including, without limitation, any partial undertaking
on the part of the Lessor to cure any failure by the Lessee or the Leased
Property (or any other occupant) to comply with any of the Environmental Laws,
shall not obligate the Lessor to complete such actions taken or require the
Lessor to expend further sums to cure such non-compliance.
23.5 Environmental Indemnification. Without limiting any of the other
indemnity provisions set forth in this Lease, the Lessee shall and hereby agrees
to indemnify, exonerate, defend (with counsel acceptable to the Lessor) and hold
the Lessor harmless from and against any claim, liability, loss, cost, damage or
expense (including, without limitation, environmental consultants' and experts'
fees and expenses, reasonable attorneys' fees and expenses, court costs and all
costs of assessment, monitoring, clean-up, containment, removal, remediation and
restoration) arising out of or in connection with (a) any breach of any of the
conditions and covenants hereunder, (b) the Lessor's exercise of any of its
rights and remedies hereunder or (c) the enforcement of the aforesaid
indemnification agreement; excluding, however, any matters resulting from the
Lessor's gross negligence or willful misconduct. Notwithstanding the foregoing,
the Lessor shall have the option of conducting its defense with counsel of the
Lessor's choice, but at the expense of the Lessee as aforesaid.
The matters covered by the foregoing indemnity with respect to any
property other than the Leased Property shall not include any costs incurred as
a result of the clean-up, containment, remediation or removal of Hazardous
Substances on, under or from such other property or the restoration thereof if
such Hazardous Substances did not originate on, under or from the Leased
Property. The Lessee acknowledges and agrees that its obligations pursuant to
the provisions hereof are in addition to any and all other legal liabilities and
responsibilities (at law or in equity) that the Lessee may otherwise have as an
"owner" or "operator" of the Leased Property or a "responsible party" within the
meaning of any of the Environmental Laws, as the case may be.
23.6 Survival. The Lessee's liability for a breach of the provisions of
this Article shall survive any termination of this Lease.
ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 Broker's Fee Indemnification. The Lessee shall and hereby agrees to
indemnify, defend (with counsel reasonably acceptable to the Lessor) and hold
the Lessor harmless from and against any and all claims for premiums or other
charges, finder's fees, taxes, brokerage fees or commissions and other similar
compensation due in connection with any of the transactions contemplated by the
Lease Documents. Notwithstanding the foregoing, the Lessor shall have the option
of conducting its own defense against any such claims with counsel of the
Lessor's choice, but at the expense of the Lessee, as aforesaid. This
indemnification shall include all reasonable attorneys' fees and expenses and
court costs reasonably incurred by the Lessor in connection with the defense
against any such claims and the enforcement of this indemnification agreement
and shall survive the termination of this Lease.
24.2 No Joint Venture or Partnership. Neither anything contained in any
of the Lease Documents, nor the acts of the parties hereto, shall create, or be
construed to create, a partnership or joint venture between the Lessor and the
Lessee. The Lessee is not the agent or representative of the Lessor and nothing
contained herein or in any of the other Lease Documents shall make, or be
construed to make, the Lessor liable to any Person for goods delivered to the
Lessee, services performed with respect to the Leased Property at the direction
of the Lessee or for debts or claims accruing against the Lessee.
24.3 Amendments, Waivers and Modifications. Except as otherwise
expressly provided for herein or in any other Lease Document, none of the terms,
covenants, conditions, warranties or representations contained in this Lease or
in any of the other Lease Documents may be renewed, replaced, amended, modified,
extended, substituted, revised, waived, consolidated or terminated except by an
agreement in writing signed by (a) all parties to this Lease or the other
applicable Lease Document, as the case may be, with regard to any such renewal,
replacement, amendment, modification, extension, substitution, revision,
consolidation or termination and (b) the Person against whom enforcement is
sought with regard to any waiver. The provisions of this Lease and the other
Lease Documents shall extend and be applicable to all renewals, replacements,
amendments, extensions, substitutions, revisions, consolidations and
modifications of any of the Lease Documents, the Management Agreements, the
Related Party Agreements, the Permits and/or the Contracts. References herein
and in the other Lease Documents to any of the Lease Documents, the Management
Agreements, the Related Party Agreements, the Permits and/or the Contracts shall
be deemed to include any renewals, replacements, amendments, extensions,
substitutions, revisions, consolidations or modifications thereof.
Notwithstanding the foregoing, any reference contained in any of the
Lease Documents, whether express or implied, to any renewal, replacement,
amendment, extension, substitution, revisions, consolidation or modification of
any of the Lease Documents or any Management Agreement, Permit and/or the
Contract is not intended to constitute an agreement or consent by the Lessor to
any such renewal, replacement, amendment, substitution, revision, consolidation
or modification; but, rather as a reference only to those instances where the
Lessor may give, agree or consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification as the same may
be required pursuant to the terms, covenants and conditions of any of the Lease
Documents.
24.4 Captions and Headings. The captions and headings set forth in this
Lease and each of the other Lease Documents are included for convenience and
reference only, and the words contained therein shall in no way be held or
deemed to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent of, this
Lease, any of the other Lease Documents or any parts hereof or thereof.
24.5 Time is of the Essence. Time is of essence of each and every term,
condition, covenant and warranty set forth herein and in the other Lease
Documents.
24.6 Counterparts. This Lease may be executed in one or more
counterparts, each of which taken together shall constitute an original and all
of which shall constitute one and the same instrument.
24.7 Entire Agreement. This Lease and the other Lease Documents set
forth the entire agreement of the parties with respect to the subject matter.
24.8 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED
BY APPLICABLE LAW, THE LESSOR AND THE LESSEE HEREBY MUTUALLY,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
WHICH ANY PARTY HERETO MAY NOW OR HEREAFTER HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE LEASE OR ANY OF THE LEASE DOCUMENTS. The Lessee
hereby certifies that neither the Lessor nor any of the Lessor's
representatives, agents or counsel has represented expressly or otherwise that
the Lessor would not, in the event of any such suit, action or proceeding seek
to enforce this waiver to the right of trial by jury and acknowledges that the
Lessor has been induced by this waiver (among other things) to enter into the
transactions evidenced by this Lease and the other Lease Documents and further
acknowledges that the Lessee (a) has read the provisions of this Lease, and in
particular, the paragraph containing this waiver, (b) has consulted legal
counsel, (c) understands the rights that it is granting in this Lease and the
rights that it waiving in this paragraph in particular and (d) makes the waivers
set forth herein knowingly, voluntarily and intentionally.
24.9 Successors and Assigns. This Lease and the other Lease Documents
shall be binding and inure to the benefit of (a) upon the Lessee and the
Lessee's legal representatives and permitted successors and assigns and (b) the
Lessor and any other Person who may now or hereafter hold the interest of the
Lessor under this Lease and their respective successors and assigns.
Notwithstanding the foregoing, the Lessee shall not assign any of its rights or
obligations hereunder or under any of the other Lease Documents without the
prior written consent of the Lessor, in each instance, which consent may be
withheld in the Lessor's sole and absolute discretion.
24.10 No Third Party Beneficiaries. This Lease and the other Lease
Documents are solely for the benefit of the Lessor, its successors, assigns and
participants (if any), the Indemnified Parties, the Lessee, the other members of
the Leasing Group and their respective permitted successors and assigns, and,
except as otherwise expressly set forth in any of the Lease Documents, nothing
contained therein shall confer upon any Person other than such parties any right
to insist upon or to enforce the performance or observance of any of the
obligations contained therein. All conditions to the obligations of the Lessor
to advance or make available proceeds of insurance or Awards, or to release any
deposits held for Impositions or insurance premiums are imposed solely and
exclusively for the benefit of the Lessor, its successors and assigns. No other
Person shall have standing to require satisfaction of such conditions in
accordance with their terms, and no other Person shall, under any circumstances,
be a beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by the Lessor at any time, if, in the Lessor's sole and
absolute discretion, the Lessor deems it advisable or desirable to do so.
24.11 Governing Law. This Lease shall be construed and the rights and
obligations of the Lessor and the Lessee shall be determined in accordance with
the laws of the State.
The Lessee hereby consents to personal jurisdiction in the courts of the
State and the United States District Court for the District in which the Leased
Property is situated as well as to the jurisdiction of all courts from which an
appeal may be taken from the aforesaid courts, for the purpose of any suit,
action or other proceeding arising out of or with respect to any of the Lease
Documents, the negotiation and/or consummation of the transactions evidenced by
the Lease Documents, the Lessor's relationship of any member of the Leasing
Group in connection with the transactions evidenced by the Lease Documents
and/or the performance of any obligation or the exercise of any remedy under any
of the Lease Documents and expressly waives any and all objections the Lessee
may have as to venue in any of such courts.
24.12 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, the Lessee or the
Lessor arising prior to any date of termination of this Lease or any of the
other Lease Documents shall survive such termination.
If any provision of this Lease or any of the other Lease Documents or
any application thereof shall be invalid or unenforceable, the remainder of this
Lease or the other applicable Lease Document, as the case may be, and any other
application of such term or provision shall not be affected thereby.
Notwithstanding the foregoing, it is the intention of the parties hereto that if
any provision of any of this Lease is capable of two (2) constructions, one of
which would render the provision void and the other of which would render the
provision valid, then such provision shall be construed in accordance with the
construction which renders such provision valid.
If any late charges provided for in any provision of this Lease or any
of the other Lease Documents are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.
The Lessee waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance and waives all notices of the existence, creation, or incurring of
new or additional obligations, except as to all of the foregoing as expressly
provided for herein.
24.13 Consents. In the event that the Lessor's consent is required by
the terms hereof or of any other Lease Document for any purpose whatsoever, it
is understood and agreed that (a) the Lessor's consent shall be subject to the
consent of any Fee Mortgagee to the extent that such consent from any Fee
Mortgage is required under the terms of the applicable financing documents
(which consent the Lessor shall seek to obtain) and (b) notwithstanding anything
to the contrary set forth herein, it shall not be deemed unreasonable for the
Lessor to withhold its consent in any given circumstance based upon the Lessor's
inability to obtain any required consent from any Fee Mortgagee.
24.14 Meditrust Loan. Without limiting the provisions of Section 24.13,
in the event of any conflict between the provisions hereof and the provisions of
any of the documents evidencing and/or securing the MOB Loan and/or the SNF Loan
(collectively, the "Meditrust Loan Documents"), the Meditrust Loan Documents
shall control.
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and attested by their respective officers thereunto duly authorized.
WITNESS: LESSEE:
CAREMATRIX OF DEDHAM, INC., a
Delaware corporation
By:_________________________________
Name: Name:
Title:
WITNESS: LESSOR:
CONTINUUM CARE OF DEDHAM,
INC., a Delaware corporation
By:
Name: Name:
Title:
374661
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
The land together with the improvements now or hereafter located
thereon, situated in Dedham, Norfolk County, Commonwealth of Massachusetts known
as One Allied Drive, and being depicted as Lots 5 and 6 on Land court Plan No.
25941B, a copy of which is filed with Certificate of Title No. 133042.
Said premises have the benefit of the appurtenant right of way and
agreements set forth in a deed from Joseph Schwartz to United States Rubber
Company, dated December 30, 1955, recorded in Book 3438, Page 444 and in a deed
from Joseph Schwartz to Allied Container Corporation, dated December 30, 1955,
recorded in Book 3438, Page 446, as affected by an agreement set forth in an
instrument by and among Joseph Schwartz, Allied Container Corporation, and
United States Rubber Company, dated December 21, 1956, filed as Document No.
189581.
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
1. Rights of way and agreements as set forth in a deed from Joseph Schwartz
to United States Rubber Company, dated December 30, 1955, recorded in
Book 3438, Page 444, and in a deed from Joseph Schwartz to Allied
Container Corporation, dated December 30, 1955, recorded in Book 3438,
Page 446, as affected by an agreement set forth in an instrument by and
among Joseph Schwartz, Allied Container Corporation, and United States
Rubber Company, dated December 21, 1956, filed as Document No. 189581.
2. Taking by the Town of Dedham for the layout of Allied Drive, by
instrument dated April 10, 1958, filed as Document No. 198103.
3. Easement granted for gas pipe as set forth in instrument from Allied
Container Corporation to Worcester Gas Light Company, dated September
12, 1970, filed as Document No. 319959.
4. Ten foot drain as shown on Land Court Plan No. 25941A and referred to on
Certificate of Title No. 58527, in Book 293, Page 127.
5. Covenant with the Town of Dedham Planning Board dated September 12, 1989
filed as Document No. 586049.
6. Right of Way granted to the Massachusetts Bay Transportation Authority
as recited in taking dated April 30, 1992 and filed as Document No.
626051.
7. Right of Way granted to the Massachusetts Bay Transportation Authority
as recited in taking dated June 16, 1993 and filed as Document No.
659951.
8. Order of Department of Natural Resources dated November 14, 1974, filed
as Document No. 347976.
9. Order of Conditions, DEQE file No. 141-72, filed as Document No. 558736,
as affected by Certificate of Compliance by the Dedham Conservation
Commission filed as Document No. 581494.
10. Order of Conditions, DEP file No. 141-101, filed as Document No. 599671.
11. Taking by the Massachusetts Bay Transportation Authority dated March 29,
1995 and filed as Document No. 712036.
12. Inchoate or statutory liens for taxes not yet delinquent
13. Resident Agreements now or hereafter in effect.
14. Any other matter of record as of the date hereof.
<PAGE>
EXHIBIT C
RATE LIMITATIONS
None
<PAGE>
EXHIBIT D
FREE CARE REQUIREMENTS
None
<PAGE>
EXHIBIT E
CALCULATION OF RENT COVERAGE RATIO
<PAGE>
EXHIBIT 3
CALCULATION OF FAIR MARKET RENTAL VALUE
For purposes of Section 3.2, "Fair Market Rental Value" shall be as
reasonably determined by the Lessor to be the annual rental charge on a
so-called "triple net" basis (including without limitation Base Rent and
Additional Charges) as of the commencement date of each Extension Term, for new
leases then being negotiated or executed for comparable nursing homes and office
space in the area surrounding Dedham, Massachusetts for terms commencing on or
about the date of commencement of each Extension Term. In determining Fair
Market Rental Value, the Lessor shall take into consideration the size of the
premises, location of the premises, lease term, condition and location of the
applicable nursing home and office space, services and amenities provided by the
Lessor, rental concessions and other comparable factors. Bona fide written
offers to lease comparable space received by the Lessor from third parties (at
arm's length) may be used by the Lessor as an indication of the Fair Market
Rental Value.
The Lessor shall notify the Lessee of its determination of Fair Market
Rental Value within ten (10) days after the Lessor's receipt of the Lessee's
notice exercising its option to extend and the Lessor shall furnish data in
support of such determination. If the Lessor does not receive written notice
from the Lessee of the Lessee's disagreement with the Lessor's determination of
the Fair Market Rental Value within ten (10) days after the Lessee's receipt of
said determination, the Lessee shall be deemed to have accepted said
determination by the Lessor. If the Lessee disagrees with the Lessor's
determination of the Fair Market Rental Value, the Lessee shall have the right,
by written notice given to the Lessor within thirty (30) days after the Lessee
has received notice of the Lessor's determination, to request that such Fair
Market Value be determined by appraisal in accordance with the provisions of
this EXHIBIT 3. In such event, the Fair Market Rental Value shall be determined
by impartial MAI appraisers, one to be chosen by the Lessor, one to be chosen by
the Lessee (collectively, the "Initial Appraisers"), and, if necessary, a third
to be selected as provided below. The Lessor and the Lessee shall each notify
the other of its selected appraiser within ten (10) days following giving of the
Lessee's request for appraisal as provided above. Each appraiser shall be
independent, have at least five (5) years experience with commercial properties
in the area, and be familiar with nursing homes, office space and leases and
rents in Dedham, Massachusetts (and the surrounding area) and experienced in
making real estate appraisals. The cost of each Initial Appraiser shall be paid
by the party selecting such Initial Appraiser. The appraisers shall render their
written appraisal of the Fair Market Rental Value for the applicable Extension
Term within thirty (30) days following the appointment of both such appraisers.
If the appraisals determined by the Initial Appraisers are less than five
percent (5%) apart (i.e., the higher appraisal is less than 105% of the lower
appraisal), then the Fair Market Rental Value shall be determined by taking the
average of the two appraisals. In the event that the appraisals determined by
the Initial Appraisers are five percent (5%) or more apart, the Initial
Appraisers shall promptly select a third appraiser who meets the same criteria
as required of the Initial Appraisers ("Third Appraiser"). The Third Appraiser
shall submit to the Lessor and the Lessee, within twenty-one (21) days after its
appointment, its written appraisal of the Fair Market Rental Value with respect
to the Leased Property as of the commencement date of the applicable Extension
Term, which appraisal shall be binding upon the Lessor and the Lessee. The cost
of the Third Appraiser shall be borne equally by the Lessor and the Lessee.
<PAGE>
F A C I L I T Y L E A S E A G R E E M E N T
CONTINUUM CARE OF DEDHAM, INC.
as
Lessor
AND
CAREMATRIX OF DEDHAM, INC.
as
Lessee
Dated as of August , 1997
For Premises Located At
20 CareMatrix Drive
Dedham, Massachusetts
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS................................1
1.1 Leased Property...................................................................1
1.2 Term..............................................................................2
1.3 Extended Terms....................................................................2
ARTICLE 2 DEFINITIONS AND RULES OF CONSTRUCTION..........................................2
2.1 Definitions.......................................................................2
2.2 Rules of Construction............................................................17
ARTICLE 3 RENT .........................................................................18
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures..................18
3.2 Rent During Extension Terms......................................................18
3.3 Intentionally Omitted............................................................19
3.4 Additional Charges...............................................................19
3.5 Intentionally Omitted............................................................19
3.6 Net Lease........................................................................20
3.7 No Lessee Termination or Offset..................................................20
3.7.1 No Termination...........................................................20
3.7.2 Waiver...................................................................20
3.7.3 Independent Covenants....................................................20
3.8 Abatement of Rent Limited........................................................20
ARTICLE 4 IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS.............................21
4.1 Payment of Impositions...........................................................21
4.1.1 Lessee To Pay............................................................21
4.1.2 Installment Elections....................................................21
4.1.3 Returns and Reports......................................................21
4.1.4 Refunds..................................................................22
4.1.5 Protest..................................................................22
4.2 Notice of Impositions............................................................22
4.3 Adjustment of Impositions........................................................22
4.4 Utility Charges..................................................................22
4.5 Insurance Premiums...............................................................22
4.6 Deposits.........................................................................23
4.6.1 Lessor's Option..........................................................23
4.6.2 Use of Deposits..........................................................23
4.6.3 Deficits.................................................................24
4.6.4 Other Properties.........................................................24
4.6.5 Transfers................................................................24
4.6.6 Security.................................................................25
4.6.7 Return...................................................................25
4.6.8 Receipts.................................................................25
ARTICLE 5OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF PERSONAL PROPERTY..............................25
5.1 Ownership of the Leased Property.................................................25
5.2 Personal Property; Removal and Replacement of Personal Property..................25
5.2.1 Lessee To Equip Facility.................................................25
5.2.2 Sufficient Personal Property.............................................25
5.2.3 Removal and Replacement; Lessor's Option to Purchase.....................26
ARTICLE 6 SECURITY FOR LEASE OBLIGATIONS................................................26
6.1 Security for Lessee's Obligations................................................26
6.1.1 Security.................................................................26
6.1.2 Purchase-Money Security Interests and Equipment Leases...................27
ARTICLE 7 CONDITION AND USE OF LEASED PROPERTY; MANAGEMENT
AGREEMENTS .............................................................................28
7.1 Condition of the Leased Property.................................................28
7.2 Use of the Leased Property; Compliance; Management...............................29
7.2.1 Obligation to Operate....................................................29
7.2.2 Permitted Uses...........................................................29
7.2.3 Compliance With Insurance Requirements...................................29
7.2.4 No Waste.................................................................29
7.2.5 No Impairment............................................................29
7.2.6 No Liens.................................................................29
7.3 Compliance with Legal Requirements...............................................29
7.4 Management Agreements............................................................30
ARTICLE 8 REPAIRS; RESTRICTIONS.........................................................31
8.1 Maintenance and Repair...........................................................31
8.1.1 Lessee's Responsibility...................................................31
8.1.2 No Lessor Obligation......................................................32
8.1.3 Lessee May Not Obligate Lessor............................................32
8.2 Encroachments; Title Restrictions................................................32
ARTICLE 9 MATERIAL STRUCTURAL WORK AND CAPITAL ADDITIONS................................33
9.1 Lessor's Approval................................................................33
9.2 General Provisions as to Capital Additions and Certain Material Structural Work..33
9.2.1 No Liens.................................................................33
9.2.2 Lessee's Proposal Regarding Capital Additions and Material
Structural Work..........................................................33
9.2.3 Lessor's Options Regarding Capital Additions and Material
Structural Work..........................................................34
9.2.4 Lessor May Elect to Finance Capital Additions or Material
Structural Work..........................................................34
9.3 Capital Additions and Material Structural Work Financed by Lessor................34
9.3.1 Lessee's Financing Request...............................................34
9.3.2 Lessor's General Requirements............................................34
9.3.3 Payment of Costs.........................................................36
9.4 General Limitations..............................................................36
9.5 Non-Capital Additions............................................................37
ARTICLE 10 WARRANTIES AND REPRESENTATIONS...............................................37
10.1 Representations and Warranties...................................................37
10.1.1 Existence; Power; Qualification.........................................37
10.1.2 Valid and Binding.......................................................38
10.1.3 Single Purpose..........................................................38
10.1.4 No Violation............................................................38
10.1.5 Consents and Approvals..................................................38
10.1.6 No Liens or Insolvency Proceedings......................................38
10.1.7 No Burdensome Agreements................................................39
10.1.8 Commercial Acts.........................................................39
10.1.9 Adequate Capital, Not Insolvent.........................................39
10.1.10 Not Delinquent..........................................................39
10.1.11 No Affiliate Debt.......................................................39
10.1.12 Taxes Current...........................................................39
10.1.13 Intentionally Omitted...................................................40
10.1.14 Pending Actions, Notices and Reports....................................40
10.1.15 Compliance with Legal Requirements......................................41
10.1.16 Intentionally Omitted...................................................41
10.1.17 Intentionally Omitted...................................................41
10.1.18 Intentionally Omitted...................................................41
10.1.19 Rate Limitations........................................................41
10.1.20 Free Care...............................................................41
10.1.21 No Proposed Changes.....................................................41
10.1.22 ERISA...................................................................41
10.1.23 No Broker...............................................................41
10.1.24 No Improper Payments....................................................42
10.1.25 Nothing Omitted.........................................................42
10.1.26 No Margin Security......................................................42
10.1.27 No Default..............................................................42
10.1.28 Principal Place of Business.............................................43
10.1.29 Intentionally Omitted...................................................43
10.1.30 Intellectual Property...................................................43
10.1.31 Management Agreements...................................................43
10.2 Continuing Effect of Representations and Warranties..............................43
ARTICLE 11 FINANCIAL AND OTHER COVENANTS................................................43
11.1 Status Certificates..............................................................43
11.2 Financial Statements; Reports; Notice and Information............................44
11.2.1 Obligation To Furnish....................................................44
11.2.2 Responsible Officer......................................................47
11.2.3 No Material Omission.....................................................47
11.2.4 Confidentiality..........................................................47
11.3 Financial Covenants..............................................................48
11.3.1 Rent Coverage Ratio of Lessee............................................48
11.3.2 No Indebtedness..........................................................48
11.3.3 No Guaranties............................................................48
11.4 Affirmative Covenants............................................................49
11.4.1 Maintenance of Existence................................................49
11.4.2 Materials...............................................................49
11.4.3 Compliance With Legal Requirements And Applicable Agreements..........49
11.4.4 Books And Records.......................................................49
11.4.5 Participation in Third Party Payor Programs.............................49
11.4.6 Conduct of its Business.................................................50
11.4.7 Address.................................................................50
11.4.8 Subordination of Affiliate Transactions.................................50
11.4.9 Inspection..............................................................50
11.4.10 Additional Property.....................................................50
11.5 Additional Negative Covenants....................................................51
11.5.1 Restrictions Relating to Lessee.........................................51
11.5.2 No Liens................................................................51
11.5.3 Limits on Affiliate Transactions........................................52
11.5.4 Best Efforts To Maximize................................................52
11.5.5 No Default..............................................................52
11.5.6 Intentionally Omitted...................................................52
11.5.7 Intentionally Omitted...................................................52
11.5.8 ERISA...................................................................52
11.5.9 Forgiveness of Indebtedness.............................................53
11.5.10 Value of Assets.........................................................53
11.5.11 Changes in Fiscal Year and Accounting Procedures........................53
ARTICLE 12 INSURANCE AND INDEMNITY......................................................53
12.1 General Insurance Requirements...................................................53
12.1.1 Types and Amounts of Insurance..........................................53
12.1.2 Insurance Company Requirements..........................................55
12.1.3 Policy Requirements.....................................................55
12.1.4 Notices; Certificates and Policies......................................55
12.1.5 Lessor's Right to Place Insurance.......................................56
12.1.6 Payment of Proceeds.....................................................56
12.1.7 Irrevocable Power of Attorney...........................................56
12.1.8 Blanket Policies........................................................57
12.1.9 No Separate Insurance...................................................57
12.1.10 Assignment of Unearned Premiums..........................................57
12.2 Indemnity........................................................................57
12.2.1 Indemnification.........................................................57
12.2.2 Indemnified Parties.....................................................58
12.2.3 Limitation on Lessor Liability..........................................58
12.2.4 Risk of Loss............................................................59
ARTICLE 13 FIRE AND CASUALTY............................................................59
13.1 Restoration Following Fire or Other Casualty.....................................59
13.1.1 Following Fire or Casualty..............................................59
13.1.2 Procedures..............................................................60
13.1.3 Disbursement of Insurance Proceeds......................................61
13.2 Disposition of Insurance Proceeds................................................64
13.2.1 Proceeds To Be Released to Pay For Work.................................64
13.2.2 Proceeds Not To Be Released.............................................64
13.2.3 Lessee Responsible for Short-Fall.......................................65
13.3 Tangible Personal Property.......................................................65
13.4 Restoration of Certain Improvements and the Tangible Personal Property...........66
13.5 No Abatement of Rent.............................................................66
13.6 Termination of Certain Rights....................................................66
13.7 Waiver...........................................................................66
13.8 Application of Rent Loss and/or Business Interruption Insurance..................66
13.9 Obligation To Account............................................................67
ARTICLE 14 CONDEMNATION ................................................................67
14.1 Parties' Rights and Obligations..................................................67
14.2 Total Taking.....................................................................67
14.3 Partial or Temporary Taking......................................................67
14.4 Restoration......................................................................68
14.5 Award Distribution...............................................................68
14.6 Control of Proceedings...........................................................68
ARTICLE 15 PERMITTED CONTESTS...........................................................69
15.1 Lessee's Right to Contest........................................................69
15.2 Lessor's Cooperation.............................................................70
15.3 Lessee's Indemnity...............................................................70
ARTICLE 16 DEFAULT .....................................................................70
16.1 Events of Default................................................................70
16.2 Remedies.........................................................................73
16.3 Damages..........................................................................74
16.4 Lessee Waivers...................................................................75
16.5 Application of Funds.............................................................75
16.6 Intentionally Omitted............................................................75
16.7 Lessor's Right to Cure...........................................................75
16.8 No Waiver By Lessor..............................................................76
16.9 Right of Forbearance.............................................................77
16.10 Cumulative Remedies..............................................................77
ARTICLE 17 SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER..........................77
17.1 Surrender........................................................................77
17.2 Transfer of Permits and Contracts................................................77
17.3 No Acceptance of Surrender.......................................................78
17.4 Holding Over.....................................................................78
ARTICLE 18 PURCHASE OF THE LEASED PROPERTY..............................................79
18.1 Purchase of the Leased Property..................................................79
18.2 Appraisal........................................................................79
18.2.1 Designation of Appraisers...............................................79
18.2.2 Appraisal Process.......................................................79
18.2.3 Specific Enforcement and Costs..........................................80
ARTICLE 19 SUBLETTING AND ASSIGNMENT....................................................80
19.1 Subletting and Assignment........................................................80
19.2 Permitted Subleases..............................................................81
19.3 Attornment.......................................................................81
ARTICLE 20 TITLE TRANSFERS AND LIENS GRANTED BY LESSOR..................................81
20.1 No Merger of Title...............................................................81
20.2 Transfers By Lessor..............................................................81
20.3 Lessor May Grant Liens...........................................................82
20.4 Subordination and Non-Disturbance................................................82
ARTICLE 21LESSOR OBLIGATIONS 83
21.1 Quiet Enjoyment..................................................................83
21.2 Memorandum of Lease..............................................................83
21.3 Default by Lessor................................................................83
ARTICLE 22 NOTICES......................................................................84
ARTICLE 23 ENVIRONMENTAL MATTERS........................................................85
23.1 Maintenance of Leased Property...................................................85
23.2 Notice of Environmental Conditions...............................................85
23.3 The Lessee's Agreement To Take Remedial Actions..................................85
23.4 The Lessor's Rights To Inspect The Leased Property and Take Remedial Actions.....86
23.5 Environmental Indemnification....................................................87
23.6 Survival.........................................................................88
ARTICLE 24 MISCELLANEOUS PROVISIONS.....................................................88
24.1 Broker's Fee Indemnification.....................................................88
24.2 No Joint Venture or Partnership..................................................88
24.3 Amendments, Waivers and Modifications............................................88
24.4 Captions and Headings............................................................89
24.5 Time is of the Essence...........................................................89
24.6 Counterparts.....................................................................89
24.7 Entire Agreement.................................................................89
24.8 Waiver of Jury Trial.............................................................89
24.9 Successors and Assigns...........................................................90
24.10 No Third Party Beneficiaries.....................................................90
24.11 Governing Law....................................................................90
24.12 General..........................................................................91
24.13 Consents.........................................................................91
24.14 Meditrust Loan...................................................................91
EXHIBIT A LEGAL DESCRIPTION OF THE LAND........................................................93
EXHIBIT B PERMITTED ENCUMBRANCES...............................................................94
EXHIBIT C RATE LIMITATIONS.....................................................................95
EXHIBIT D FREE CARE REQUIREMENTS...............................................................96
EXHIBIT E CALCULATION OF RENT COVERAGE RATIO...................................................97
EXHIBIT 3 CALCULATION OF FAIR MARKET RENTAL VALUE..............................................98
</TABLE>
Exhibit 10.103
FACILITY LEASE AGREEMENT
This FACILITY LEASE AGREEMENT ("Lease") is dated as of the 2nd day of
June, 1997 and is between CONTINUUM CARE OF NEEDHAM, INC. ("Lessor"), a Delaware
corporation having its principal office at 197 First Avenue, Needham Heights,
Massachusetts 02194, and CAREMATRIX OF NEEDHAM, INC. ("Lessee"), a Delaware
corporation, having its principal office at 197 First Avenue, Needham,
Massachusetts 02194.
ARTICLE 1
LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, the Lessor leases to the Lessee and the Lessee rents and
leases from the Lessor all of the Lessor's rights and interests in and to the
following real and personal property (collectively, the "Leased Property"):
(a) the real property described in EXHIBIT A attached hereto (the
"Land");
(b) all buildings, structures, Fixtures (as hereinafter defined) and
other improvements of every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines, and parking
areas and roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances of every nature and
description now or hereafter relating to or benefiting any or all of the Land
and the Leased Improvements; and
(d) all equipment, machinery, building fixtures, and other items of
property (whether realty, personalty or mixed), including all components
thereof, now or hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire and theft protection
equipment, and built-in oxygen and vacuum systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto, but specifically excluding all items included within the
category of Tangible Personal Property (as hereinafter defined) which are not
permanently affixed to or incorporated in the Leased Property (collectively, the
"Fixtures");
The Leased Property is leased in its present condition, AS IS, without
representation or warranty of any kind, express or implied, by the Lessor and
subject to: (i) the rights of parties in possession; (ii) the existing state of
title including all covenants, conditions, Liens (as hereinafter defined) and
other matters of record (including, without limitation, the matters set forth in
EXHIBIT B); (iii) all applicable laws and (iv) all matters, whether or not of a
similar nature, which would be disclosed by an inspection of the Leased Property
or by an accurate survey thereof.
1.2 Term. The term of this Lease shall consist of: the "Initial Term",
which shall commence on June 2, 1997 (the "Commencement Date") and end on May
31, 2007 (the "Expiration Date"); provided, however, that this Lease may be
sooner terminated as hereinafter provided. In addition, the Lessee shall have
the option(s) to extend the Term (as hereinafter defined) as provided for in
Section 1.3.
1.3 Extended Terms. Provided that this Lease has not been previously
terminated, and as long as there exists no Lease Default (as hereinafter
defined) at the time of exercise and on the last day of the Initial Term or the
then current Extended Term (as hereinafter defined), as the case may be, the
Lessee is hereby granted the option to extend the Initial Term of this Lease for
three (3) additional periods (collectively, the "Extended Terms") as follows:
three (3) successive five (5) year periods for a maximum Term, if all such
options are exercised, which ends on May 31, 2022. The Lessee's extension
options shall be exercised by the Lessee by giving written notice to the Lessor
of each such extension at least one hundred eighty (180) days, but not more than
three hundred sixty (360) days, prior to the termination of the Initial Term or
the then current Extended Term, as the case may be. The Lessee shall have no
right to rescind any such notice once given. The Lessee may not exercise its
option for more than one Extended Term at a time. During each effective Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect, except that the Base Rent (as hereinafter defined) for each such
Extended Term shall be adjusted as set forth in Section 3.2.
ARTICLE 2
DEFINITIONS AND RULES OF CONSTRUCTION
2.1 Definitions. For all purposes of this Lease and the other Lease
Documents (as hereinafter defined), except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular and (ii) all references in this Lease or any of the other
Lease Documents to designated "Articles", "Sections" and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease or the
other applicable Lease Document.
Accounts: As defined in the UCC.
Accreditation Body: All Persons now or hereafter having or claiming
jurisdiction over the accreditation, certification, evaluation or operation of
the Facility.
Additional Charges: As defined in Article 3.
Additional Land: As defined in Section 9.3.
Additional Rent: As defined in Article 3.
Affiliate: With respect to any Person (i) any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person, (ii) any other Person that owns, beneficially, directly or
indirectly, five percent (5%) or more of the outstanding capital stock, shares
or equity interests of such Person or (iii) any officer, director, employee,
general partner or trustee of such Person, or any other Person controlling,
controlled by, or under common control with, such Person (excluding trustees and
Persons serving in a fiduciary or similar capacity who are not otherwise an
Affiliate of such Person); provided, however, that notwithstanding the
foregoing, in no event shall any of the following entities be deemed to be an
Affiliate of the Lessee: (i) PhyMatrix Corp., a Delaware corporation and its
wholly-owned Subsidiaries and (ii) Sun Healthcare Group, Inc., a Delaware
corporation. For the purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities,
partnership interests or other equity interests.
Appurtenant Agreements: Collectively, all instruments, documents and
other agreements that now or hereafter create any utility, access or other
rights or appurtenances benefiting or relating to the Leased Property.
Award: All compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
Bankruptcy Code: Subsection 365(h) of the United States Bankruptcy Code,
11 U.S.C. '365(h), as the same may hereafter be amended and including any
successor provision thereto.
Base Rent: As defined in Article 3.
Business Day: Any day which is not a Saturday or Sunday or a public
holiday under the laws of the United States of America, the Commonwealth of
Massachusetts, the State or the state in which the Lessor's depository bank is
located.
Capital Additions: Collectively, all new buildings and additional
structures annexed to any portion of any of the Leased Improvements and material
expansions of any of the Leased Improvements which are constructed on any
portion of the Land during the Term, including, without limitation, the
construction of a new wing or new story, the renovation of any of the Leased
Improvements on the Leased Property in order to provide a functionally new
facility that is needed or used to provide services not previously offered and
any expansion, construction, renovation or conversion or in order to (i)
increase the bed or unit capacity of the Facility, (ii) change the purpose for
which such beds or units are utilized and/or (iii) change the utilization of any
material portion of any of the Leased Improvements.
Capital Addition Cost: The cost of any Capital Addition made by the
Lessee whether paid for by the Lessee or the Lessor. Such cost shall include all
costs and expenses of every nature whatsoever incurred directly or indirectly in
connection with the development, permitting, construction and financing of a
Capital Addition as reasonably determined by, or to the reasonable satisfaction
of, the Lessor.
CARF: The Commission on Accreditation of Rehabilitation Facilities.
Cash Flow: The Consolidated Net Income (or Consolidated Net Loss),
arising solely from the operation of the Leased Property, before federal and
state income taxes for any period plus (i) the amount of the provision for
depreciation and amortization actually deducted on the books of the applicable
Person for the purposes of computing such Consolidated Net Income (or
Consolidated Net Loss) for the period involved, plus (ii) Rent.
Casualty: As defined in Section 13.1.
Champus: The Civilian Health and Medical Program of the Uniform Service,
a program of medical benefits covering retirees and dependents of members or
former members of a uniformed service provided, financed and supervised by the
United States Department of Defense and established by 10 USC "1071 et seq.
Chattel Paper: As defined in the UCC.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: As defined in Section 1.2.
Condemnation: With respect to the Leased Property or any interest
therein or right accruing thereto or use thereof (i) the exercise of any
Governmental Authority, whether by legal proceedings or otherwise, by a
Condemnor or (ii) a voluntary sale or transfer by the Lessor to any Condemnor,
either under threat of Condemnation or Taking or while legal proceedings for
Condemnation or Taking are pending.
Condemnor: Any public or quasi-public authority, or private corporation
or individual, having the power of condemnation.
Consolidated and Consolidating: The consolidated and consolidating
accounts of the relevant Person and its Subsidiaries consolidated in accordance
with GAAP.
Consolidated Financials: For any fiscal year or other accounting period
for any Person and its consolidated Subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP, and disclosing all
liabilities of such Person and its consolidated Subsidiaries, including, without
limitation, contingent liabilities.
Consultants: Collectively, the architects, engineers, inspectors,
surveyors and other consultants that are engaged from time to time by the Lessor
to perform services for the Lessor in connection with this Lease.
Contracts: All agreements (including, without limitation, Provider
Agreements and Patient Admission Agreements), contracts, (including without
limitation, construction contracts, subcontracts, and architects' contracts,)
contract rights, warranties and representations, franchises, and records and
books of account benefiting, relating to or affecting the Leased Property or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession, or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacement
and substitutions therefor, now or hereafter issued by or entered into with any
Governmental Authority, Accreditation Body or Third Party Payor or maintained or
used by any member of the Leasing Group or entered into by any member of the
Leasing Group with any third Person.
Current Management Agreement: That certain Services Agreement, dated as
of July 15, 1996, by and between the Lessor and Prism Care Centers, Inc.
(formerly known as Vanguard Health Services, Inc.), as amended by Assignment
Agreement and First Amendment to Services Agreement of even date by and among
the Lessor, the Lessee and Prism Care Centers, Inc.
Date of Taking: The date the Condemnor has the right to possession of
the property being condemned.
Deaconess: Deaconess Glover Hospital, a Massachusetts corporation.
Debt Service: All payments due and payable under any promissory note
secured by a Fee Mortgage, including, without limitation, principal, interest
and any other costs, expenses and late charges incurred by the Lessor as a
result of any failure by Lessee to satisfy, on a timely basis, the obligations
set forth under Section 3.2, but specifically excluding any so-called "balloon
payments" due at the maturity thereof and all costs and expenses incurred in
connection with any refinancing thereof.
Debt Service Rental Payments: As defined in Section 3.2.
Documents: As defined in the UCC.
Encumbrance: As defined in Section 20.3.
Environmental Enforcement Actions: Collectively, all actions or orders
instituted, threatened or required by any Governmental Authority and all claims
made or threatened by any Person against Lessee or the Leased Property (or any
other occupant, prior occupant or prior owner thereof or any other Person),
arising out of or in connection with any of the Environmental Laws or the
assessment, monitoring, clean-up, containment, remediation or removal of, or
damages caused or alleged to be caused by, any Hazardous Substances (i) located
on or under the Leased Property, (ii) emanating from the Leased Property or
(iii) generated, stored, transported, utilized, disposed of, managed or released
by Lessee or any other occupant of the Leased Property.
Environmental Laws: Collectively, all Legal Requirements applicable to
(i) environmental conditions on, under or emanating from the Leased Property and
(ii) the generation, storage, transportation, utilization, disposal, management
or release (whether or not on, under or from the Leased Property) of Hazardous
Substances by the Lessee.
ERISA: The Employment Retirement Income Security Act of 1974, as
amended.
Event of Default: As defined in Article 16.
Expiration Date: As defined in Section 1.2.
Extended Terms: As defined in Section 1.3.
Facility: The 142-bed skilled nursing facility known as Avery Manor, the
60-unit assisted living facility known as Avery Crossing, 11,800 square feet of
medical office space and the parking garage on the Land (together with related
parking and other amenities).
Failure to Perform: As defined Article 16.
Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Additions) minus the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by the Lessee had been
constructed.
Fair Market Rental Value: As defined in EXHIBIT 3.
Fair Market Value of the Capital Addition: The amount by which the Fair
Market Value of the Leased Property upon the completion of a particular Capital
Addition exceeds the Fair Market Value of the Leased Property just prior to the
construction of the particular Capital Addition.
Fair Market Value of the Leased Property: The fair market value of the
Leased Property, including all Capital Additions, and including the Land and all
other portions of the Leased Property, and (a) assuming the same is unencumbered
by this Lease, (b) determined in accordance with the appraisal procedures set
forth in Section 18.2 or in such other manner as shall be mutually acceptable to
the Lessor and the Lessee (including, without limitation, as a negotiated
percentage of total project costs) and (c) not taking into account any reduction
in value resulting from any Lien to which the Leased Property is subject and
which Lien the Lessee or the Lessor is otherwise required to remove at or prior
to closing of the transaction. However, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment provisions and other terms and conditions of
any Lien on the Leased Property which is not so required or agreed to be removed
shall be taken into account in determining the Fair Market Value of the Leased
Property. The Fair Market Value of the Leased Property shall be determined as
the overall value based on due consideration of the "income" approach, the
"comparable sales" approach, and the "replacement cost" approach.
Fair Market Value of the Material Structural Work: The amount by which
the Fair Market Value of the Leased Property upon the completion of any
particular Material Structural Work exceeds the Fair Market Value of the Leased
Property just prior to the construction of the applicable Material Structural
Work.
Fee Mortgage: As defined in Section 20.3.
Fee Mortgagee: As defined in Section 20.3.
Financing Party: Any Person who is or may be participating with the
Lessor in any way in connection with the financing of any Capital Addition.
Fiscal Quarter: Each of the three (3) month periods commencing on
January 1st, April 1st, July 1st and October 1st.
Fiscal Year: The twelve (12) month period from January 1st to December
31st.
Fixtures: As defined in Article 1.
GAAP: Generally accepted accounting principles, consistently applied
throughout the relevant period.
General Intangibles: As defined in the UCC.
Governmental Authorities: Collectively, all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures, and
offices of any nature whatsoever of any government, quasi-government unit or
political subdivision, whether with a federal, state, county, district,
municipal, city or otherwise and whether now or hereinafter in existence.
Gross Revenues: Collectively, all revenues generated by reason of the
operation of the Leased Property (including any Capital Additions), whether or
not directly or indirectly received or to be received by the Lessee, including,
without limitation, all revenues received or receivable for the use of, or
otherwise by reason of, all rooms, beds, units and other facilities provided,
meals served, services performed, space or facilities subleased or goods sold on
or from the Leased Property and further including, without limitation, except as
otherwise specifically provided below, any consideration received under any
subletting, licensing, or other arrangements with any Person relating to the
possession or use of the Leased Property and all revenues from all ancillary
services provided at or relating to the Leased Property; provided, however, that
Gross Revenues shall not include non-operating revenues such as interest income
or gain from the sale of assets not sold in the ordinary course of business; and
provided, further, that there shall be excluded or deducted (as the case may be)
from such revenues:
(i) contractual allowances (relating to any period during the Term of
this Lease and thereafter until the Rent hereunder is paid in full) for billings
not paid by or received from the appropriate Governmental Agencies or Third
Party Payors,
(ii) allowances according to GAAP for uncollectible accounts,
(iii) all proper patient and/or resident billing credits and adjustments
according to GAAP relating to health care accounting,
(iv) federal, state or local sales, use, gross receipts and excise taxes
and any tax based upon or measured by said Gross Revenues which is added to or
made a part of the amount billed to the patient, resident or other recipient of
such services or goods, whether included in the billing or stated separately,
(v) provider discounts for hospital or other medical facility
utilization contracts,
(vi) the cost of any federal, state or local governmental program
imposed specially to provide or finance indigent patient and/or resident care
(other than Medicare, Medicaid and the like), and
(vii) deposits refundable to residents of the Facility.
To the extent that the Leased Property is subleased or occupied by an
Affiliate of the Lessee, Gross Revenues calculated for all purposes of this
Lease shall include the Gross Revenues of such Sublessee with respect to the
premises demised under the applicable Sublease (i.e., the Gross Revenues
generated from the operations conducted on such subleased portion of the Leased
Property) and the rent received or receivable from such Sublessee pursuant to
such Subleases shall be excluded from Gross Revenues for all such purposes. As
to any Sublease between the Lessee and a non-Affiliate of the Lessee, only the
rental actually received by the Lessee from such non-Affiliate shall be included
in Gross Revenues.
Guarantor: CareMatrix Corporation, a Delaware corporation.
Guaranty: The Guaranty of even date executed by the Guarantor in favor
of the Lessor.
Hazardous Substances: Collectively, (a) any Ahazardous material,@
Ahazardous substance,@ Ahazardous waste,@ Aoil,@ Aregulated substance,@ Atoxic
substance,@ Arestricted hazardous waste@, Aspecial waste@ or words of similar
import as defined under any of the Environmental Laws; (b) asbestos in any form;
(c) urea formaldehyde foam insulation; (d) polychlorinated biphenyls; (e) radon
gas; (f) flammable explosives; (g) radioactive materials; (h) any chemical,
containment, solvent, material, pollutant or substance that may be dangerous or
detrimental to the Leased Property, the environment, or the health and safety of
the patients and other occupants of the Leased Property or of the owners or
occupants of any other real property nearby the Leased Property and (i) any
substance, the generation, storage, transportation, utilization, disposal,
management, release or location of which, on, under or from the Leased Property
is prohibited or otherwise regulated pursuant to any of the Environmental Laws.
Notwithstanding the foregoing, the term Hazardous Substances as defined
herein shall not include (i) pharmaceuticals and cleaning agents of the types
and in the quantities and concentrations normally stocked by health care and/or
assisted living providers similar to the Facility, (ii) oil in de minimis
amounts typically associated with the use of certain portions of the Leased
Property for driving and parking motor vehicles or (iii) medical wastes
generated at the Facility; provided that the foregoing are used, stored,
transported and/or disposed of in accordance with all Legal Requirements.
Impositions: Collectively, all taxes (including, without limitation, all
capital stock and franchise taxes of the Lessor, all ad valorem, property,
sales, use, single business, gross receipts, transaction privilege, rent or
similar taxes), assessments (including, without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term), ground
rents, water and sewer rents, water charges or other rents and charges, excises,
tax levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), transfer taxes and recordation taxes imposed as
a result of this Lease or any extensions hereof, and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of either or both of the
Leased Property and the Rent (including all interest and penalties thereon due
to any failure in payment by the Lessee), which at any time prior to, during or
in respect of the Term hereof and thereafter until the Leased Property is
surrendered to the Lessor as required by the terms of this Lease, may be
assessed or imposed on or in respect of or be a Lien upon (a) the Lessor or the
Lessor's interest in the Leased Property, (b) the Leased Property or any rent
therefrom or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, sales from, or activity conducted on, or in
connection with, the Leased Property or the leasing or use of the Leased
Property. Notwithstanding the foregoing, nothing contained in this Lease shall
be construed to require the Lessee to pay (1) any tax based on net income
(whether denominated as a franchise or capital stock or other tax) imposed on
the Lessor or any other Person, except the Lessee or its successors, (2) any net
revenue tax of the Lessor or any other Person, except the Lessee and its
successors, (3) any tax imposed with respect to the sale, exchange or other
disposition by the Lessor of the Leased Property or the proceeds thereof, or (4)
except as expressly provided elsewhere in this Lease, any principal or interest
on any Encumbrance on the Leased Property; provided, however, the provisos set
forth in clauses (1) and (2) of this sentence shall not be applicable to the
extent that any tax, assessment, tax levy or charge which the Lessee is
obligated to pay pursuant to the first sentence of this definition and which is
in effect at any time during the Term hereof is totally or partially repealed,
and a tax, assessment, tax levy or charge set forth in clause (1) or (2) is
levied, assessed or imposed expressly in lieu thereof. In computing the amount
of any franchise tax or capital stock tax which may be or become an Imposition,
the amount payable by the Lessee shall be equitably apportioned based upon all
properties owned by the Lessor that are located within the particular
jurisdiction subject to any such tax.
Indebtedness: The total of all obligations of a Person, whether current
or long-term, which in accordance with GAAP would be included as liabilities
upon such Person's balance sheet at the date as of which Indebtedness is to be
determined, and shall also include (i) all capital lease obligations and (ii)
all guarantees, endorsements (other than for collection of instruments in the
ordinary course of business), or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement contingent
or otherwise to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
Indemnified Parties: As defined in Section 12.2.
Initial Appraisers: As defined in EXHIBIT 3.
Initial Term: As defined in Section 1.2.
Instruments: As defined in the UCC.
Insurance Requirements: All terms of any insurance policy required by
this Lease, all requirements of the issuer of any such policy with respect to
the Leased Property and the activities conducted thereon and the requirements of
any insurance board, association or organization or underwriters' regulations
pertaining to the Leased Property.
Land: As defined in Article 1.
Lease: As defined in the preamble of this Lease.
Lease Default: The occurrence of any default or breach of condition
continuing beyond any applicable notice and/or grace periods under this Lease
and/or any of the other Lease Documents.
Lease Documents: Collectively, this Lease, the Guaranty, the Pledge
Agreement, the Security Agreement, the Permits Assignment and any and all other
instruments, documents, certificates or agreements now or hereafter (i) executed
or furnished by any member of the Leasing Group in connection with the
transactions evidenced by this Lease and/or any of the foregoing documents
and/or (ii) evidencing or securing any of the Lessee's obligations relating to
the Leased Property, including, without limitation, the Lessee's obligations
hereunder.
Lease Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings (other than the Lessor's
obligations) under this Lease and the other Lease Documents.
Leased Improvements: As defined in Article 1.
Leased Property: As defined in Article 1.
Leasing Group: Collectively, the Lessee, the Guarantor, any Sublessee
and any Manager.
Legal Requirements: Collectively, all statutes, ordinances, by-laws,
codes, rules, regulations, restrictions, orders, judgments, decrees and
injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision, and other land use and health-care and assisted
living licensing statutes, ordinances, by-laws, codes, rules and regulations),
whether now or hereafter enacted, promulgated or issued by any Governmental
Authority, Accreditation Body or Third Party Payor affecting the Lessor, any
member of the Leasing Group or the Leased Property or the ownership,
construction, development, maintenance, management, repair, use, occupancy,
possession or operation thereof or the operation of any programs or services in
connection with the Leased Property, including, without limitation, any of the
foregoing which may (i) require repairs, modifications or alterations in or to
the Leased Property, (ii) in any way affect (adversely or otherwise) the use and
enjoyment of the Leased Property or (iii) require the assessment, monitoring,
clean-up, containment, removal, remediation or other treatment of any Hazardous
Substances on, under or from the Leased Property. Without limiting the
foregoing, the term Legal Requirements includes all Environmental Laws and shall
also include all Permits and Contracts issued or entered into by any
Governmental Authority, any Accreditation Body and/or any Third Party Payor and
all Permitted Encumbrances.
Lessee: As defined in the preamble of this Lease and its successors and
assigns.
Lessee's Election Notice: As defined in Section 14.3.
Lessor: As defined in the preamble of this Lease and its successors and
assigns.
Lien: With respect to any real or personal property, any mortgage,
easement, restriction, lien, pledge, collateral assignment, hypothecation,
charge, security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether or not choate, vested or perfected.
Limited Parties: As defined in Section 11.5; provided, however, in no
event shall the term Limited Parties include any Person in its capacity as a
shareholder of a public entity, unless such shareholder is a member of the
Leasing Group or an Affiliate of any member of the Leasing Group.
Managed Care Plans: All health maintenance organizations, preferred
provider organizations, individual practice associations, competitive medical
plans, and similar arrangements.
Management Agreement: Any agreement, whether written or oral, between
the Lessee or any Sublessee and any other Person pursuant to which the Lessee or
such Sublessee provides any payment, fee or other consideration to any other
Person to operate or manage the Facility, including, without limitation, the
Current Management Agreement.
Manager: Any Person who has entered into a Management Agreement with the
Lessee or any Sublessee (other than Deaconess).
Material Structural Work: Any (i) structural alteration, (ii) structural
repair or (iii) structural renovation to the Leased Property that would require
(a) the design and/or involvement of a structural engineer and/or architect
and/or (b) the issuance of a Permit.
Medicaid: The medical assistance program established by Title XIX of the
Social Security Act (42 USC "1396 et seq.) and any statute succeeding thereto.
Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 USC "1395 et seq.) and
any statute succeeding thereto.
Meditrust Loan Documents: As defined in Section 24.15.
MMI Loan: As defined in Section 24.15.
Monthly Deposit Date: As defined in Section 4.6.
Net Income (or Net Loss): The net income (or net loss, expressed as a
negative number) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with GAAP.
Officer's Certificate: A certificate of the Lessee signed on behalf of
the Lessee by the Chairman of the Board of Directors, the President, any Vice
President or the Treasurer of the Lessee, or another officer authorized to so
sign by the Board of Directors or By-Laws of the Lessee, or any other Person
whose power and authority to act has been authorized by delegation in writing by
any of the Persons holding the foregoing offices.
Overdue Rate: On any date, a rate of interest per annum equal to the
greater of: (i) a variable rate of interest per annum equal to one hundred
twenty percent (120%) of the Prime Rate, or (ii) eighteen percent (18%) per
annum; provided, however, in no event shall the Overdue Rate be greater than the
maximum rate then permitted under applicable law to be charged by the Lessor.
Patient Admission Agreements: All contracts, agreements and consents
executed by or on behalf of any patient or other Person seeking services at the
Facility, including, without limitation, assignments of benefits and guarantees.
PBGC: Pension Benefit Guaranty Corporation.
Permits: Collectively, all permits, licenses, approvals, qualifications,
rights, variances, permissive uses, accreditations, certificates,
certifications, consents, agreements, contracts, contract rights, franchises,
interim licenses, permits and other authorizations of every nature whatsoever
required by, or issued under, applicable Legal Requirements benefiting, relating
or affecting the Leased Property or the construction, development, maintenance,
management, use or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacements
and substitutions therefor, now or hereafter required or issued by any
Governmental Authority, Accreditation Body or Third Party Payor to any member of
the Leasing Group, or maintained or used by any member of the Leasing Group, or
entered into by any member of the Leasing Group with any third Person.
Permits Assignment: The Collateral Assignment of Permits and Contracts
of even date granted by the Lessee to the Lessor.
Permitted Encumbrances: Collectively, those agreements, covenants and
Liens to which this Lease is expressly subject, whether presently existing, as
are listed on EXHIBIT B or which may hereafter be created in accordance with the
terms hereof.
Permitted Prior Security Interests: As defined in Section 6.1.
Person: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land trust, business trust, unincorporated organization,
unincorporated association, Governmental Authority or other entity of any kind
or nature.
Plans and Specifications: As defined in Section 13.1.
Pledge Agreement: The Stock Pledge Agreement of even date by and among
the Guarantor, the Lessee and the Lessor.
Primary Intended Use: The use of the Facility as a (a) skilled nursing
facility with 142 beds or such additional number of beds as may hereafter be
permitted under this Lease, (b) an assisted living facility with 60 units or
such additional units as may be hereafter permitted under this Lease, and (c)
medical office building with 11,800 square feet of space, and such ancillary
uses as are permitted by law and may be necessary in connection therewith or
incidental thereto.
Prime Rate: The variable rate of interest per annum from time to time
announced by the Reference Bank as its prime rate of interest and in the event
that the Reference Bank no longer announces a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any other major bank or other financial institution reasonably
selected by the Lessor.
Principal Place of Business: As defined in Section 10.1.
Proceeds: As defined in the UCC.
Provider Agreements: All participation, provider and reimbursement
agreements or arrangements now or hereafter in effect for the benefit of the
Lessee or any Sublessee, other than Deaconess, in connection with the operation
of the Facility relating to any right of payment or other claim arising out of
or in connection with the Lessee's or such Sublessee's participation in any
Third Party Payor Program.
Purchaser: As defined in Section 11.5.
Receivables: Collectively, all (i) Instruments, Documents, Accounts,
Proceeds, General Intangibles and Chattel Paper and (ii) rights to payment for
goods sold or leased or services rendered by the Lessee or any other party,
whether now in existence or arising from time to time hereafter and whether or
not yet earned by performance, including, without limitation, obligations
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness.
Reference Bank: Fleet Bank of Connecticut, N.A.
Rent: Collectively, the Base Rent, the Additional Rent, the Additional
Charges and all other sums payable under this Lease and the other Lease
Documents.
Rent Coverage Ratio: The ratio of (i) Cash Flow for each applicable
period to (ii) the total of all Rent paid or payable during such period or
accrued for such period.
Rent Insurance Proceeds: As defined in Section 13.8.
Resident Agreements: Collectively, all Subleases now or hereafter
executed or entered into by or on behalf of any Person allowing such Person to
reside at the Facility.
Retainage: As defined in Section 13.1.
Security Agreement: The Security Agreement of even date herewith by and
between the Lessee and the Lessor.
State: The state or commonwealth in which the Leased Property is
located.
Sublease: Collectively, all subleases, licenses, use agreements,
concession agreements, tenancy at will agreements, room rentals, rentals of
other facilities of the Leased Property and all other occupancy agreements of
every kind and nature (but excluding Patient Admission Agreements), whether oral
or in writing, now in existence or subsequently entered into by the Lessee,
encumbering or affecting the Leased Property.
Sublessee: Any sublessee, licensee, concessionaire, tenant or other
occupant under any of the Subleases, but excluding any resident of the Facility
under any Resident Agreement.
Subsidiary or Subsidiaries: With respect to any Person, any corporation
or other entity of which such Person, directly, or indirectly, through another
entity or otherwise, owns, or has the right to control or direct the voting of,
fifty percent (50%) or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances).
Surrounding Property: Any real property that abuts the Leased Property
or any portion thereof.
Taking: A taking or voluntary conveyance during the Term of the Leased
Property, or any interest therein or right accruing thereto, or use thereof, as
the result of, or in settlement of, any Condemnation or other eminent domain
proceeding affecting the Leased Property whether or not the same shall have
actually been commenced.
Tangible Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, and other personal property owned or leased (pursuant to
equipment leases) by the Lessee and used in connection with the operation of the
Leased Property.
Term: Collectively, the Initial Term and each Extended Term which has
become effective pursuant to Section 1.3, as the context may require, unless
earlier terminated pursuant to the provisions hereof.
Third Appraiser: As defined in EXHIBIT 3.
Third Party Payor Programs: Collectively, all third party payor programs
in which the Lessee or any Sublessee presently or in the future may participate,
including without limitation, Medicare, Medicaid, Champus, Blue Cross and/or
Blue Shield, Managed Care Plans, other private insurance plans and employee
assistance programs.
Third Party Payors: Collectively, Medicare, Medicaid, Blue Cross and/or
Blue Shield, private insurers and any other Person which presently or in the
future maintains Third Party Payor Programs.
UCC: The Uniform Commercial Code as in effect from time to time in the
Commonwealth of Massachusetts.
Unavoidable Delays: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto.
United States Treasury Securities: The uninsured treasury securities
issued by the United States Federal Reserve Bank.
Unsuitable For Its Primary Intended Use: As used anywhere in this Lease,
the term "Unsuitable For Its Primary Intended Use" shall mean that, by reason of
Casualty, or a partial or temporary Taking by Condemnation, in the good faith
judgment of the Lessor, the Facility cannot be operated on a commercially
practicable basis for the Primary Intended Use, taking into account, among other
relevant factors, the number of usable beds and/or units affected by such
Casualty or partial or temporary Taking.
Work: As defined in Section 13.1.
Work Certificates: As defined in Section 13.1.
2.2 Rules of Construction. The following rules of construction shall
apply to the Lease and each of the other Lease Documents: (a) references to
"herein", "hereof" and "hereunder" shall be deemed to refer to this Lease or the
other applicable Lease Document, and shall not be limited to the particular text
or section or subsection in which such words appear; (b) the use of any gender
shall include all genders and the singular number shall include the plural and
vice versa as the context may require; (c) references to the Lessor's attorneys
shall be deemed to include, without limitation, special counsel and local
counsel for the Lessor; (d) reference to attorneys' fees and expenses shall be
deemed to include all costs for administrative, paralegal and other support
staff; (e) references to Leased Property shall be deemed to include references
to all of the Leased Property and references to any portion thereof; (f)
references to the Lease Obligations shall be deemed to include references to all
of the Lease Obligations and references to any portion thereof; (g) the term
"including", when following any general statement, will not be construed to
limit such statement to the specific items or matters as provided immediately
following the term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar import are also
used), but rather will be deemed to refer to all of the items or matters that
could reasonably fall within the broadest scope of the general statement; (h)
any requirement that financial statements be Consolidated in form shall apply
only to such financial statements as relate to a period during any portion of
which the relevant Person has one or more Subsidiaries; (i) all accounting terms
not specifically defined in the Lease Documents shall be construed in accordance
with GAAP and (j) all exhibits annexed to any of the Lease Documents as
referenced therein shall be deemed incorporated in such Lease Document by such
annexation and/or reference.
ARTICLE 3
RENT
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures.
During the Initial Term, the Lessee will pay to the Lessor, in lawful money of
the United States of America, at the Lessor's address set forth herein or at
such other place or to such other Person as the Lessor from time to time may
designate in writing, rent for the Leased Property, as follows:
(a) The Lessee shall pay to the Lessor a base rent (the "Base Rent") per
annum that is equal to ONE HUNDRED SIXTY-NINE THOUSAND TWO HUNDRED FOURTEEN AND
28/100 DOLLARS ($169,214.28) and that is payable in advance in equal,
consecutive monthly installments due on the first day of each calendar month,
except with respect to the Base Rent due for the month of June, 1997, which
shall be due and payable concurrently with the execution hereof; and
(b) The Lessee shall pay to Lessor, as additional rent (the "Additional
Rent") an amount equal to the excess, if any, of the aggregate amount of Debt
Service payments due and payable with respect to any calendar year minus the
Base Rent due and payable for such calendar year. The Additional Rent shall be
payable in arrears on the first day of each calendar month.
The Base Rent and Additional Rent due and payable hereunder for any
fractional month during the Term shall be prorated accordingly.
3.2 Rent During Extension Terms. During each Extension Term, the Lessee
shall pay to the Lessor Base Rent per annum, determined as of the first day of
the applicable Extension Term, that is equal to the greater of: (a) an amount
equal to the Debt Service due from the Lessor to the holder of any Fee Mortgage
encumbering the Leased Property during the applicable period (the "Debt Service
Rental Payments"), (b) the Fair Market Rental Value, as determined in accordance
with EXHIBIT 3 attached hereto and (c) the Base Rent in effect (i) during the
Initial Term, for the first Extension Term or (ii) during the immediately
preceding Extension Term, for all remaining Extension Terms. During each
Extension Term, the Base Rent shall continue to be payable in arrears on the
first day of each calendar month; provided, however, that in the event that the
terms of any promissory note secured by any Fee Mortgage requires Debt Service
from the Lessor to be paid on any basis other than monthly in arrears, the
Lessee's obligation to make monthly payments of the Debt Service Rental Payments
shall be adjusted accordingly to coincide with the schedule of payments. The
Lessor reserves the right to refinance any Fee Mortgage now or hereafter
encumbering the Leased Property and no such refinancing will limit or otherwise
affect the Lessee's obligation to make the Debt Service Rental Payments or
payments of Additional Rent; provided, that the terms and conditions of any such
refinancing reflect the terms and conditions that are then customary and
prevailing for commercial loan transactions secured by real property of similar
value and nature to the Leased Property.
The Lessee will pay to the Lessor, in lawful money of the United States
of America, at the Lessor's address set forth herein or at such other place or
to such other Person as the Lessor from time to time may designate in writing,
Base Rent determined in accordance with clause (b) or (c) above. The Lessee will
pay the Debt Service Rental Payments, in lawful money of the United States of
America, directly to the applicable Fee Mortgagee (at the address that the
Lessor shall from time to time designate in writing to the Lessee).
3.3 Intentionally Omitted.
3.4 Additional Charges. Subject to the rights to contest as set forth in
Article 15, in addition to the Base Rent, (a) the Lessee will also pay and
discharge as and when due and payable all Impositions, all amounts, liabilities
and obligations under the Appurtenant Agreements due from or payable by the
owner of the Leased Property, all amounts, liabilities and obligations under the
Permitted Encumbrances due from or payable by the owner of the Leased Property
and all other amounts, liabilities and obligations which the Lessee assumes or
agrees to pay under this Lease, and (b) in the event of any failure on the part
of the Lessee to pay any of those items referred to in clause (a) above, the
Lessee will also promptly pay and discharge every fine, penalty, interest and
cost which may be added for non-payment or late payment of such items (the items
referred to in clauses (a) and (b) above being referred to herein collectively
as the "Additional Charges"), and the Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease, by statute or
otherwise, in the case of non-payment of the Additional Charges, as well as the
Base Rent. To the extent that the Lessee pays any Additional Charges to the
Lessor pursuant to any requirement of this Lease, the Lessee shall be relieved
of its obligation to pay such Additional Charges to any other Person to which
such Additional Charges would otherwise be due.
3.5 Intentionally Omitted.
3.6 Net Lease. The Rent shall be paid absolutely net to the Lessor, so
that this Lease shall yield to the Lessor the full amount of the installments of
Base Rent and Additional Charges throughout the Term.
3.7 No Lessee Termination or Offset.
3.7.1 No Termination. Except as may be otherwise specifically and
expressly provided in this Lease, the Lessee, to the extent not prohibited by
applicable law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the consent of the Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent, nor
shall the respective obligations of the Lessor and the Lessee be otherwise
affected by reason of (a) any Casualty or any Taking of the Leased Property, (b)
the lawful or unlawful prohibition of, or restriction upon, the Lessee's use of
the Leased Property or the interference with such use by any Person (other than
the Lessor, except to the extent permitted hereunder) or by reason of eviction
by paramount title; (c) any claim that the Lessee has or might have against the
Lessor, (d) any default or breach of any warranty by the Lessor under this Lease
or any other Lease Document, (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting the Lessor or any assignee or transferee of the Lessor or
(f) any other cause whether similar or dissimilar to any of the foregoing, other
than a discharge of the Lessee from any of the Lease Obligations as a matter of
law.
3.7.2 Waiver. The Lessee to the fullest extent not prohibited by
applicable law, hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or (b) entitle the Lessee to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by the Lessee hereunder, except as
otherwise specifically and expressly provided in this Lease.
3.7.3 Independent Covenants. The obligations of the Lessor and the
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by the Lessee hereunder shall continue to be
payable in all events unless the obigations to pay the same shall be terminated
pursuant to the express provisions of this Lease or (except in those instances
where the obligation to pay expressly survives the termination of this Lease) by
termination of this Lease other than by reason of an Event of Default.
3.8 Abatement of Rent Limited. There shall be no abatement of Rent on
account of any Casualty, Taking or other event, except that in the event of a
partial Taking or a temporary Taking as described in Section 14.3, the Base Rent
shall be abated as follows: (a) in the case of such a partial Taking, Base Rent
then due during the Lease Year in which such Taking occurs shall be reduced to
equal the product of (i) the then current Base Rent multiplied by (ii) the
difference between one minus a fraction the numerator of which is the Award, the
denominator of which is the Fair Market Value of the Leased Property, and (b) in
the case of such a temporary Taking, by reducing the Base Rent for the period of
such a temporary Taking, by the net amount of the Award received by the Lessor.
For the purposes of this Section 3.8, the "net amount of the Award
received by the Lessor" shall mean the Award paid to the Lessor on account of
such Taking, minus all costs and expenses incurred by the Lessor in connection
therewith, and minus any amounts paid to or for the account of the Lessee to
reimburse for the costs and expenses of reconstructing the Facility following
such Taking in order to create a viable and functional Facility under all of the
circumstances.
ARTICLE 4
IMPOSITIONS; TAXES; UTILITIES;
INSURANCE PAYMENTS
4.1 Payment of Impositions.
4.1.1 Lessee To Pay. Subject to the provisions of Section 4.1.2 and
Article 15, the Lessee will pay or cause to be paid all Impositions before any
fine, penalty, interest or cost may be added for non-payment, such payments to
be made directly to the taxing authority where feasible, and the Lessee will
promptly furnish the Lessor copies of official receipts or other satisfactory
proof evidencing payment not later than the last day on which the same may be
paid without penalty or interest. Subject to the provisions of Article 15 and
Section 4.1.2, the Lessee's obligation to pay such Impositions shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof.
4.1.2 Installment Elections. If any such Imposition may, at the option
of the taxpayer, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), the Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term hereof (subject to the Lessee's right to contest pursuant to the
provisions of Section 4.1.5 below) as the same respectively become due and
before any fine, penalty, premium, further interest or cost may be added
thereto.
4.1.3 Returns and Reports. The Lessor, at its expense, shall, to the
extent permitted by applicable law, prepare and file all tax returns and reports
as may be required by Governmental Authorities in respect of the Lessor's net
income, gross receipts, franchise taxes and taxes on its capital stock, and the
Lessee, at its expense, shall, to the extent permitted by applicable laws and
regulations, prepare and file all other tax returns and reports in respect of
any Imposition as may be required by Governmental Authorities. The Lessor and
the Lessee shall, upon request of the other, provide such data as is maintained
by the party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports. In the event that
any Governmental Authority classifies any property covered by this Lease as
personal property, the Lessee shall file all personal property tax returns in
such jurisdictions where it may legally so file. The Lessor, to the extent it
possesses the same, and the Lessee, to the extent it possesses the same, will
provide the other party, upon request, with cost and depreciation records
necessary for filing returns for any portion of Leased Property so classified as
personal property. Where the Lessor is legally required to file personal
property tax returns, if the Lessee notifies the Lessor of the obligation to do
so in each year at least thirty (30) days prior to the date any protest must be
filed, the Lessee will be provided with copies of assessment notices so as to
enable the Lessee to file a protest.
4.1.4 Refunds. If no Lease Default shall have occurred and be
continuing, any refund due from any taxing authority in respect of any
Imposition paid by the Lessee shall be paid over to or retained by the Lessee.
If a Lease Default shall have occurred and be continuing, at the Lessor's
option, such funds shall be paid over to the Lessor and/or retained by the
Lessor and applied toward the Lease Obligations in accordance with the Lease
Documents.
4.1.5 Protest. Upon giving notice to the Lessor, at the Lessee's option
and sole cost and expense, and subject to compliance with the provisions of
Article 15, the Lessee may contest, protest, appeal, or institute such other
proceedings as the Lessee may deem appropriate to effect a reduction of any
Imposition and the Lessor, at the Lessee's cost and expense as aforesaid, shall
fully cooperate in a reasonable manner with the Lessee in connection with such
protest, appeal or other action.
4.2 Notice of Impositions. The Lessor shall give prompt notice to the
Lessee of all Impositions payable by the Lessee hereunder of which the Lessor at
any time has knowledge, but the Lessor's failure to give any such notice shall
in no way diminish the Lessee's obligations hereunder to pay such Impositions.
4.3 Adjustment of Impositions. Impositions imposed in respect of the
period during which the expiration or earlier termination of the Term occurs
shall be adjusted and prorated between the Lessor and the Lessee, whether or not
such Impositions are imposed before or after such expiration or termination, and
the Lessee's obligation to pay its prorated share thereof shall survive such
expiration or termination.
4.4 Utility Charges. The Lessee will pay or cause to be paid all charges
for electricity, power, gas, oil, water, telephone and other utilities used in
the Leased Property during the Term and thereafter until the Lessee surrenders
the Leased Property in the manner required by this Lease.
4.5 Insurance Premiums. The Lessee will pay or cause to be paid all
premiums for the insurance coverage required to be maintained pursuant to
Article 12 during the Term, and thereafter until the Lessee yields up the Leased
Property in the manner required by this Lease. All such premiums shall be paid
annually in advance and the Lessee shall furnish the Lessor with evidence
satisfactory to the Lessor that all such premiums have been so paid prior to the
commencement of the Term and thereafter at least thirty (30) days prior to the
due date of each premium which thereafter becomes due. Notwithstanding the
foregoing, the Lessee may pay such insurance premiums to the insurer in monthly
installments so long as the applicable insurer is contractually obligated to
give the Lessor not less than a thirty (30) days notice of non-payment and so
long as no Lease Default has occurred and is continuing. In the event of the
failure of the Lessee either to comply with the insurance requirements in
Article 12, or to pay the premiums for such insurance, or to deliver such
policies or certificates thereof to the Lessor at the times required hereunder,
the Lessor shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums therefor, which premiums shall be a demand
obligation of the Lessee to the Lessor.
4.6 Deposits.
4.6.1 Lessor's Option. At the option of the Lessor, which may be
exercised at any time, the Lessee shall, upon written request of the Lessor, on
the first day on the calendar month immediately following such request, and on
the first day of each calendar month thereafter during the Term (each of which
dates is referred to as a "Monthly Deposit Date"), pay to and deposit with the
Lessor a sum equal to one-twelfth (1/12th) of the Impositions to be levied,
charged, filed, assessed or imposed upon or against the Leased Property within
one (1) year after said Monthly Deposit Date and a sum equal to one-twelfth
(1/12th) of the premiums for the insurance policies required pursuant to Article
12 which are payable within one (1) year after said Monthly Deposit Date. If the
amount of the Impositions to be levied, charged, assessed or imposed or
insurance premiums to be paid within the ensuing one (1) year period shall not
be fixed upon any Monthly Deposit Date, such amount for the purpose of computing
the deposit to be made by the Lessee hereunder shall be estimated by the Lessor
with an appropriate adjustment to be promptly made between the Lessor and the
Lessee as soon as such amount becomes determinable. In addition, the Lessor may,
at its option, from time to time require that any particular deposit be greater
than one-twelfth (1/12th) of the estimated amount payable within one (1) year
after said Monthly Deposit Date, if such additional deposit is required in order
to provide to the Lessor a sufficient fund from which to make payment of all
Impositions on or before the next due date of any installment thereof, or to
make payment of any required insurance premiums not later than the due date
thereof.
4.6.2 Use of Deposits. The sums deposited by the Lessee under this
Section 4.6 shall be held by the Lessor and shall be applied in payment of the
Impositions or insurance premiums, as the case may be, when due. Any such
deposits may be commingled with other assets of the Lessor, and shall be
deposited by the Lessor at such bank as the Lessor may, from time to time
select, and the Lessor shall not be liable to the Lessee or any other Person (a)
based on the Lessor's (or such bank's) choice of investment vehicles, (b) for
any consequent loss of principal or interest or (c) for any unavailability of
funds based on such choice of investment. Furthermore, the Lessor shall bear no
responsibility for the financial condition of, nor any act or omission by, the
Lessor's depository bank. The income from such investment or interest on such
deposit shall be paid to the Lessee on a semi-annual basis as long as no Lease
Default has occurred and is then continuing, and as long as no fact or
circumstance exists which, with the giving of notice and/or the passage of time,
would constitute a Lease Default. The Lessee shall give not less than ten (10)
days prior written notice to the Lessor in each instance when an Imposition or
insurance premium is due, specifying the Imposition or premium to be paid and
the amount thereof, the place of payment, and the last day on which the same may
be paid in order to comply with the requirements of this Lease. If the Lessor,
in violation of its obligations under this Lease, does not pay any Imposition or
insurance premium when due, for which a sufficient deposit exists, the Lessee
shall not be in default hereunder by virtue of the failure of the Lessor to pay
such Imposition or such insurance premium and the Lessor shall pay any interest
or fine assessed by virtue of the Lessor's failure to pay such Imposition or
insurance premium.
4.6.3 Deficits. If for any reason any deposit held by the Lessor under
this Section 4.6 shall not be sufficient to pay an Imposition or insurance
premium within the time specified therefor in this Lease, then, within ten (10)
days after demand by the Lessor, the Lessee shall deposit an additional amount
with the Lessor, increasing the deposit held by the Lessor so that the Lessor
holds sufficient funds to pay such Imposition or premium in full (or in
installments as otherwise provided for herein), together with any penalty or
interest due thereon. The Lessor may change its estimate of any Imposition or
insurance premium for any period on the basis of a change in an assessment or
tax rate or on the basis of a prior miscalculation or for any other good faith
reason; in which event, within ten (10) days after demand by the Lessor, the
Lessee shall deposit with the Lessor the amount in excess of the sums previously
deposited with the Lessor for the applicable period which would theretofore have
been payable under the revised estimate.
4.6.4 Other Properties. If any Imposition shall be levied, charged,
filed, assessed, or imposed upon or against the Leased Property, and if such
Imposition shall also be a levy, charge, assessment, or imposition upon or for
any other real or personal property that does not constitute a part of the
Leased Property, then the computation of the amounts to be deposited under this
Section 4.6 shall be based upon the entire amount of such Imposition and the
Lessee shall not have the right to apportion any deposit with respect to such
Imposition.
4.6.5 Transfers. In connection with any assignment of the Lessor's
interest under this Lease, the original the Lessor named herein and each
successor in interest shall have the right to transfer all amounts deposited
pursuant to the provisions of this Section 4.6 then in its possession to such
assignee (as the subsequent holder of the Lessor's interest in this Lease) and
upon such transfer, the original the Lessor named herein or the applicable
successor in interest transferring the deposits shall thereupon be completely
released from all liability with respect to such deposits so transferred and the
Lessee shall look solely to said assignee, as the subsequent holder of the
Lessor's interest under this Lease, in reference thereto. The original the
Lessor named herein or the applicable successor in interest transferring the
deposits shall provide written notice to the Lessee of such transfer.
4.6.6 Security. All amounts deposited with the Lessor pursuant to the
provisions of this Section 4.6 shall be held by the Lessor as additional
security for the payment and performance of the Lease Obligations and, upon the
occurrence of any Lease Default, the Lessor may, in its sole and absolute
discretion, apply said amounts towards payment or performance of such Lease
Obligations.
4.6.7 Return. Upon the expiration or earlier termination of this Lease,
provided, that, all of the Lease Obligations have been fully paid and performed,
any sums then held by the Lessor under this Section 4.6 shall be refunded to the
Lessee
4.6.8 Receipts. The Lessee shall deliver to the Lessor copies of all
notices, demands, claims, bills and receipts in relation to the Impositions and
insurance premiums immediately upon receipt thereof by the Lessee.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY
5.1 Ownership of the Leased Property. The Lessee acknowledges that the
Leased Property is the property of the Lessor and that, subject to the Permitted
Encumbrances, the Lessee has only the right to the exclusive possession and use
of the Leased Property upon the terms and conditions of this Lease.
5.2 Personal Property; Removal and Replacement of Personal Property.
5.2.1 Lessee To Equip Facility. The Lessee, at its sole cost and
expense, shall install, affix or assemble or place on the Leased Property,
sufficient items of Tangible Personal Property, to enable the Leased Property to
be operated, in accordance with the requirements of this Lease for the Primary
Intended Use, and such Tangible Personal Property and replacements thereof,
shall be at all times the property of the Lessee.
5.2.2 Sufficient Personal Property. The Lessee shall maintain, during
the entire Term, the Tangible Personal Property in good order and repair and
shall provide at its expense all necessary replacements thereof, as may be
necessary in order to operate the Leased Property in compliance with all
applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended Use.
In addition, the Lessee shall (a) furnish all necessary replacements of obsolete
items of the Tangible Personal Property during the Term, unless the Lessee
provides the Lessor with an explanation (reasonably acceptable to the Lessor) as
to why such Tangible Personal Property is no longer required in connection with
the operation of the Leased Property and (b) at least once a year, and more
frequently if requested by the Lessor, deliver to the Lessor, a detailed
inventory of all such Tangible Personal Property.
5.2.3 Removal and Replacement; Lessor's Option to Purchase. The Lessee
shall not remove from the Leased Property any one or more items of Tangible
Personal Property (whether now owned or hereafter acquired), the fair market
value of which exceeds TWENTY-FIVE THOUSAND DOLLARS ($25,000), individually or
ONE HUNDRED THOUSAND DOLLARS ($100,000.00) collectively, except if such Tangible
Personal Property is simultaneously suitably replaced or the Lessee provides the
Lessor with an explanation (reasonably satisfactory to the Lessor) as to why
such Tangible Personal Property is no longer required in connection with the
operation of the Leased Property. At its sole cost and expense, the Lessee shall
restore the Leased Property to the condition required by Article 8, including
repair of all damage to the Leased Property caused by the removal of the
Tangible Personal Property, whether effected by the Lessee or the Lessor. Upon
the expiration or earlier termination of this Lease, the Lessor shall have the
option, which may be exercised prior to or within sixty (60) days following such
expiration or termination, of (a) acquiring the Tangible Personal Property
(pursuant to a bill of sale and assignments of any equipment leases, all in such
forms as are reasonably satisfactory to the Lessor) upon payment of its book
value (the Lessee's cost, minus depreciation), but not in excess of its fair
market value or (b) requiring the Lessee to remove the Tangible Personal
Property. If the Lessor exercises its option to purchase the Tangible Personal
Property, the price to be paid by the Lessor shall be (i) reduced by the amount
of all payments due on any equipment leases or any other Permitted Prior
Security Interests assumed by the Lessor and (ii) applied to the Lease
Obligations before any payment to the Lessee. If the Lessor requires the removal
of the Tangible Personal Property, then all of the Tangible Personal Property
that is not removed by the Lessee within ten (10) days following such request
shall be considered abandoned by the Lessee and may be appropriated, sold,
destroyed or otherwise disposed of by the Lessor upon first giving notice
thereof to the Lessee, without any payment to the Lessee and without any
obligation to account therefor.
ARTICLE 6
SECURITY FOR LEASE OBLIGATIONS
6.1 Security for Lessee's Obligations.
6.1.1 Security. In order to secure the payment and performance of all of
the Lease Obligations, the Lessee agrees to provide or cause there to be
provided, among other things, the following security:
(a) a first lien and exclusive security interest in the Tangible
Personal Property and certain other Collateral as more particularly provided for
in the Security Agreement;
(b) a first lien and exclusive pledge of all of the capital stock of the
Lessee all as more particularly set forth in the Pledge Agreements. If any
Person other than the Lessee shall ever operate the Facility, a pledge of all
capital stock of, or partnership or other ownership interests, in such Person
shall also be provided pursuant to a pledge and security agreement substantially
similar to the Pledge Agreements; and
(c) a first lien and exclusive pledge and assignment of, and security
interest in, all Permits and Contracts, as more particularly provided for in the
Permits Assignment.
Notwithstanding anything to the contrary set forth herein, in no event
shall the Lessee be required to grant to the Lessor any security interest in
Receivables; provided, however, upon any Lease Default or the expiration or
earlier termination of this Lease, the Lessee shall provide the Lessor with
copies of its books and records relating to Receivables, even if excluded from
the security granted to the Lessor, so as to facilitate continuity of patient
and/or resident care and billing.
6.1.2 Purchase-Money Security Interests and Equipment Leases.
Notwithstanding any other provision hereof regarding the creation of Liens, but
subject to Section 11.3.2, the Lessee may grant priority purchase money security
interests in items of Tangible Personal Property or lease Tangible Personal
Property from equipment lessors without the consent of the Lessor as long as the
total amount of the obligations of the Lessee outstanding in connection
therewith do not exceed ONE HUNDRED THOUSAND DOLLARS ($100,000) in the aggregate
and the Lessee may grant purchase money security interests in Tangible Personal
Property and lease Tangible Personal Property from equipment lessors in excess
of such limit, as long as, in each instance, (i) the secured party or equipment
lessor enters into an intercreditor agreement with, and satisfactory to, the
Lessor, pursuant to which, without limiting the foregoing, (x) the Lessor shall
be afforded the option of curing defaults and the option of succeeding to the
rights of the Lessee and (y) the Lessor's security interest in Tangible Personal
Property shall be subordinated to the security interest granted to such secured
party, (ii) all of the terms, conditions and provisions of the purchase money
security agreements or equipment leases evidencing the financing arrangement are
reasonably acceptable to the Lessor, (iii) promptly after the execution thereof,
the Lessee provides to the Lessor true and complete copies, as executed, of all
such purchase money security agreements and equipment leases (and all amendments
thereto) and (iv) no such purchase money security interest or equipment lease
shall be cross-defaulted or cross-collateralized with any other obligation.
Security interests granted by the Lessee in full compliance with the provisions
of this Section 6.1.2 are referred to as APermitted Prior Security Interests.@
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS
7.1 Condition of the Leased Property. The Lessee acknowledges receipt
and delivery of possession of the Leased Property and that the Lessee has
examined and otherwise has acquired knowledge of the condition of the Leased
Property prior to the execution and delivery of this Lease and has found the
same to be in good order and repair and satisfactory for its purposes hereunder.
The Lessee is leasing the Leased Property "AS-IS" in its present condition. The
Lessee waives any claim or action against the Lessor in respect of the condition
of the Leased Property. THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, EITHER AS TO ITS FITNESS FOR
ANY PARTICULAR PURPOSE OR USE, ITS DESIGN OR CONDITION OR OTHERWISE, OR AS TO
DEFECTS IN THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT;
IT BEING AGREED THAT ALL RISKS RELATING TO THE DESIGN, CONDITION AND/OR USE OF
THE LEASED PROPERTY ARE TO BE BORNE BY THE LESSEE. THE LESSEE HEREBY ASSUMES ALL
RISK OF THE PHYSICAL CONDITION OF THE LEASED PROPERTY, THE SUITABILITY OF THE
LEASED PROPERTY FOR THE LESSEE'S PURPOSES, AND THE COMPLIANCE OR NON-COMPLIANCE
OF THE LEASED PROPERTY WITH ALL APPLICABLE REQUIREMENTS OF LAW, INCLUDING BUT
NOT LIMITED TO ENVIRONMENTAL LAWS AND ZONING OR LAND USE LAWS.
Upon the request of the Lessor, at any time and from time to time during
the Term, the Lessee shall engage one (1) or more independent professional
consultants, engineers and inspectors, qualified to do business in the State and
acceptable to the Lessor to perform any environmental and/or structural
investigations and/or other inspections of the Leased Property and the Facility
as the Lessor may reasonably request in order to detect (a) any structural
deficiencies in the Leased Improvements or the utilities servicing the Leased
Property or (b) the presence of any condition that (i) may be harmful or present
a health hazard to the patients and/or residents and other occupants of the
Leased Property or (ii) constitutes a breach or violation of any of the Lease
Documents. In the event that the Lessor reasonably determines that the results
of such testing or inspections are unsatisfactory, within thirty (30) days of
notice from the Lessor, the Lessee shall commence such appropriate remedial
actions as may be reasonably requested by the Lessor to correct such
unsatisfactory conditions and, thereafter, shall diligently and continuously
prosecute such remedial actions to completion within the time limits prescribed
in this Lease or the other Lease Documents.
7.2 Use of the Leased Property; Compliance; Management.
7.2.1 Obligation to Operate. The Lessee shall continuously operate the
Leased Property in accordance with the Primary Intended Use and maintain its
qualifications for licensure and accreditation as required by all applicable
Legal Requirements and Insurance Requirements.
7.2.2 Permitted Uses. During the entire Term, the Lessee shall use the
Leased Property, or permit the Leased Property to be used, only for the Primary
Intended Use. The Lessee shall not use the Leased Property or permit the Leased
Property to be used for any other use without the prior written consent of the
Lessor, which consent may be withheld in the Lessor's sole and absolute
discretion.
7.2.3 Compliance With Insurance Requirements. No use shall be made or
permitted to be made of the Leased Property and no acts shall be done which will
cause the cancellation of any insurance policy covering the Leased Property, nor
shall the Lessee, any Manager or any other Person sell or otherwise provide to
any patients and/or residents, other occupants or invitees therein, or permit to
be kept, used or sold in or about the Leased Property, any article which may be
prohibited by any Legal Requirement or by any of the Insurance Requirements.
Furthermore, the Lessee shall, at its sole cost and expense, take whatever other
actions that may be necessary to comply with and to insure that the Leased
Property complies with all Insurance Requirements.
7.2.4 No Waste. The Lessee shall not commit or suffer to be committed
any waste on, in or under the Leased Property, nor shall the Lessee cause or
permit any nuisance thereon.
7.2.5 No Impairment. The Lessee shall neither suffer nor permit the
Leased Property to be used in such a manner as (a) might reasonably tend to
impair the Lessor's title thereto or (b) may reasonably make possible a claim or
claims of adverse usage or adverse possession by the public or of implied
dedication of the Leased Property.
7.2.6 No Liens. Except as permitted pursuant to Section 6.1.2, the
Lessee shall not permit or suffer any Lien to exist on the Tangible Personal
Property and shall in no event cause, permit or suffer any Lien to exist with
respect to the Leased Property other than as set forth in Section 11.5.2.
7.3 Compliance with Legal Requirements. The Lessee covenants and agrees
that the Leased Property shall not be used for any unlawful purpose and that the
Lessee, at its sole cost and expense, will promptly (a) comply with, and shall
cause every other member of the Leasing Group to comply with, all Legal
Requirements relating to the use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural change in any of the Leased Property or interfere with the use and
enjoyment of the Leased Property and (b) procure, maintain and comply with (in
all material respects), and shall cause every other member of the Leasing Group
to procure, maintain and comply with (in all material respects), all Contracts
and Permits necessary or desirable in order to operate the Leased Property for
the Primary Intended Use, and for compliance with all of the terms and
conditions of this Lease. Unless a Lease Default has occurred or any event has
occurred which, with the passage of time and/or the giving of notice would
constitute a Lease Default, the Lessee may, upon prior written notice to the
Lessor, contest any Legal Requirement to the extent permitted by, and in
accordance with, Article 15.
7.4 Management Agreements. From and after the Commencement Date, neither
the Lessee, nor any Sublessee (other than Deaconess and any other Sublessee that
is not an Affiliate of the Lessee) shall enter into any Management Agreement,
without the prior written approval of the Lessor, in each instance, which
approval shall not be unreasonably withheld. The Lessee shall not, without the
prior written approval of the Lessor, in each instance, which approval shall not
be unreasonably withheld, agree to or allow: (a) any change in the Manager or
change in the ownership or control of the Manager, (b) any change in the
Management Agreement, (c) the termination of any Management Agreement (other
than in connection with the exercise by the Lessee of any of its remedies under
the Management Agreement as a result of any default by the Manager thereunder),
(d) any assignment by the Manager of its interest under the Management Agreement
or (e) any material amendment of the Management Agreement. In addition, the
Lessee and every Sublessee (other than Deaconess and any other Sublessee that is
not an Affiliate of the Lessee) shall, at their sole cost and expense, promptly
and fully perform or cause to be performed every covenant, condition, promise
and obligation of the licensed operator of the Leased Property under any
Management Agreement.
Each Management Agreement shall provide that the Lessor shall be
provided notice of any defaults thereunder and, at the Lessor's option, an
opportunity to cure such default. The Lessee and any Sublessee (other than
Deaconess and any other Sublessee that is not an Affiliate of the Lessee) shall
furnish to the Lessor, within three (3) days after receipt thereof, or after the
mailing or service thereof by the Lessee or such Sublessee, as the case may be,
a copy of each notice of default which the Lessee or such Sublessee shall give
to, or receive from any Person, based upon the occurrence, or alleged
occurrence, of any default in the performance of any covenant, condition,
promise or obligation under any Management Agreement.
Whenever and as often as the Lessee or any Sublessee (other than
Deaconess and any other Sublessee that is not an Affiliate of the Lessee) shall
fail to perform, promptly and fully, at its sole cost and expense, any covenant,
condition, promise or obligation on the part of the licensed operator of the
Leased Property under and pursuant to any Management Agreement, the Lessor, or a
lawfully appointed receiver of the Leased Property, may, at their respective
options (and without any obligation to do so), after five (5) days' prior notice
to the Lessee (except in the case of an emergency) enter upon the Leased
Property and perform, or cause to be performed, such work, labor, services, acts
or things, and take such other steps and do such other acts as they may deem
advisable, to cure such defaulted covenant, condition, promise or obligation,
and any amount so paid or advanced by the Lessor or such receiver and all costs
and expenses reasonably incurred in connection therewith (including, without
limitation, attorneys' fees and expenses and court costs), shall be a demand
obligation of the Lessee to the Lessor or such receiver, and, the Lessor shall
have the same rights and remedies for failure to pay such costs on demand as for
the Lessee's failure to pay any other sums due hereunder.
ARTICLE 8
REPAIRS; RESTRICTIONS
8.1 Maintenance and Repair.
8.1.1 Lessee's Responsibility. The Lessee, at its sole cost and expense,
shall keep the Leased Property and all private roadways, sidewalks and curbs
appurtenant thereto which are under the Lessee's control in good order and
repair (whether or not the need for such repairs occurs as a result of the
Lessee's use, any prior use, the elements or the age of the Leased Property or
such private roadways, sidewalks and curbs or any other cause whatsoever) and,
subject to Articles 9, 13 and 14, the Lessee shall promptly, with the exercise
of all reasonable efforts, undertake and diligently complete all necessary and
appropriate repairs, replacements, renovations, restorations, alterations and
modifications thereof of every kind and nature, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition (concealed or otherwise) existing prior to
the commencement of, or during, the Term and thereafter until the Lessee
surrenders the Leased Property in the manner required by this Lease. In
addition, the Lessee, at its sole cost and expense, shall make all repairs,
modifications, replacements, renovations and alterations of the Leased Property
(and such private roadways, sidewalks and curbs) that are necessary to comply
with all applicable Legal Requirements and Insurance Requirements so that the
Leased Property can be legally operated for the Primary Intended Use. All
repairs, replacements, renovations, alterations, and modifications required by
the terms of this Section 8.1 shall be (a) performed in a good and workmanlike
manner in compliance with all Legal Requirements, Insurance Requirements and the
requirements of Article 9 hereof, using new materials well suited for their
intended purpose and (b) consistent with the operation of the Leased Property in
a first class manner. The Lessee will not take or omit to take any action the
taking or omission of which might materially impair the value or the usefulness
of the Leased Property for the Primary Intended Use. To the extent that any of
the repairs, replacements, renovations, alterations or modifications required by
the terms of this Section 8.1 constitute Material Structural Work, the Lessee
shall obtain the Lessor's prior written approval (which approval shall not be
unreasonably withheld) of the specific repairs, replacements, renovations,
alterations and modifications to be performed by or on behalf of the Lessee in
connection with such Material Structural Work. Notwithstanding the foregoing, in
the event of a bona fide emergency during which the Lessee is unable to contact
the appropriate representatives of the Lessor, the Lessee may commence such
Material Structural Work as may be necessary in order to address such emergency
without the Lessor's prior approval, provided, however, that the Lessee shall
immediately thereafter advise the Lessor of such emergency and the nature and
scope of the Material Structural Work commenced and shall obtain the Lessor's
approval of the remaining Material Structural Work to be completed.
8.1.2 No Lessor Obligation. The Lessor shall not, under any
circumstances, be required to build or rebuild any improvements on the Leased
Property (or any private roadways, sidewalks or curbs appurtenant thereto), or
to make any repairs, replacements, renovations, alterations, restorations,
modifications, or renewals of any nature or description to the Leased Property
(or any private roadways, sidewalks or curbs appurtenant thereto), whether
ordinary or extraordinary, structural or non-structural, foreseen or unforeseen,
or to make any expenditure whatsoever with respect thereto in connection with
this Lease, or to maintain the Leased Property (or any private roadways,
sidewalks or curbs appurtenant thereto) in any way.
8.1.3 Lessee May Not Obligate Lessor. Nothing contained herein nor any
action or inaction by the Lessor shall be construed as (a) constituting the
consent or request of the Lessor, express or implied, to any contractor,
subcontractor, laborer, materialman or vendor to or for the performance of any
labor or services for any construction, alteration, addition, repair or
demolition of or to the Leased Property or (b) giving the Lessee any right,
power or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Lessor for the payment thereof
or to make any agreement that may create, or in any way be the basis for, any
right, title or interest in, or Lien or claim against, the estate of the Lessor
in the Leased Property. Without limiting the generality of the foregoing, the
right title and interest of the Lessor in and to the Leased Property shall not
be subject to liens or encumbrances for the performance of any labor or services
or the furnishing of any materials or other property furnished to the Leased
Property at or by the request of the Lessee or any other Person other than the
Lessor. The Lessee shall notify any contractor, subcontractor, laborer,
materialman or vendor providing any labor, services or materials to the Leased
Property of this provision.
8.2 Encroachments; Title Restrictions. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other Lien now or hereafter affecting the
Leased Property, or shall impair the rights of others under any easement,
right-of-way or other Lien to which the Leased Property is now or hereafter
subject, then promptly upon the request of the Lessor, the Lessee shall, at its
sole cost and expense, subject to the Lessee's right to contest the existence of
any encroachment, violation or impairment as set forth in Article 15, (a) obtain
valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment or (b)
make such alterations to the Leased Improvements, and take such other actions,
as the Lessee in the good faith exercise of its judgment deems reasonably
practicable, to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements. Notwithstanding the foregoing, the Lessee shall, in any event,
take all such actions as may be reasonably necessary in order to be able to
continue the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and to the extent that the Leased Improvements were
operated prior to the assertion of such encroachment, violation or impairment
and nothing contained herein shall limit the Lessee's obligations to operate the
Leased Property in accordance with its Primary Intended Use. Any such alteration
made pursuant to the terms of this Section 8.2 shall be completed in conformity
with the applicable requirements of Section 8.1 and Article 9. The Lessee's
obligations under this Section 8.2 shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any policy of title or
other insurance.
ARTICLE 9
MATERIAL STRUCTURAL WORK AND
CAPITAL ADDITIONS
9.1 Lessor's Approval. Without the prior written consent of the Lessor,
which consent may be withheld by the Lessor, in its sole and absolute
discretion, the Lessee shall make no Capital Addition or Material Structural
Work to the Leased Property (including, without limitation, any change in the
size, bed and/or unit capacity of the Facility), except as may be otherwise
expressly required pursuant to Article 8.
9.2 General Provisions as to Capital Additions and Certain Material
Structural Work. As to any Capital Addition or Material Structural Work (other
than such Material Structural Work that is required to be performed pursuant to
the terms of Section 8.1) for which the Lessor has granted its prior written
approval, the following terms and conditions shall apply unless otherwise
expressly set forth in the Lessor's written approval.
9.2.1 No Liens. The Lessee shall not be permitted to create any Lien on
the Leased Property in connection with any Capital Addition or Material
Structural Work.
9.2.2 Lessee's Proposal Regarding Capital Additions and Material
Structural Work. If the Lessee desires to undertake any Capital Addition or
Material Structural Work, the Lessee shall submit to the Lessor in writing a
proposal setting forth in reasonable detail any proposed Capital Addition or
Material Structural Work and shall provide to the Lessor copies of, or
information regarding, the applicable plans and specifications, Permits,
Contracts and any other materials concerning the proposed Capital Addition or
Material Structural Work, as the case may be, as the Lessor may reasonably
request. Without limiting the generality of the foregoing, each such proposal
pertaining to any Capital Addition shall indicate the approximate projected cost
of constructing such Capital Addition, the use or uses to which it will be put
and a good faith estimate of the change, if any, in the Gross Revenues that the
Lessee anticipates will result from the construction of such Capital Addition.
9.2.3 Lessor's Options Regarding Capital Additions and Material
Structural Work. The Lessor shall have the options of: (a) denying permission
for the construction of the applicable Capital Addition or Material Structural
Work, (b) offering to finance the construction of the Capital Addition or
Material Structural Work pursuant to Section 9.3, (c) allowing the Lessee to pay
for or separately finance the construction of the Capital Addition or Material
Structural Work, subject to compliance with the terms and conditions of Section
9.2.1, Section 9.4, Section 13.1, all Legal Requirements and all other
requirements of this Lease and to such other terms and conditions as the Lessor
may in its discretion impose or (d) any combination of the foregoing. Unless the
Lessor notifies the Lessee in writing of a contrary election within forty-five
(45) days of the Lessee's request, the Lessor shall be deemed to have denied the
request for the Capital Addition or Material Structural Work.
9.2.4 Lessor May Elect to Finance Capital Additions or Material
Structural Work. If the Lessor elects to offer financing for the proposed
Capital Addition or Material Structural Work, the provisions of Section 9.3
shall apply.
9.2.5 Legal Requirements; Quality of Work. All Capital Additions and/or
Material Structural Work shall be performed in full compliance with all
applicable Legal Requirements and shall be performed in a good and workmanlike
manner.
9.3 Capital Additions and Material Structural Work Financed by Lessor.
9.3.1 Lessee's Financing Request. The Lessee may request that the Lessor
provide or arrange financing for a Capital Addition or Material Structural Work
by providing to the Lessor such information about the Capital Addition or
Material Structural Work as he Lessor may reasonably request, including, without
limitation, all information referred to in Section 9.2 above. The Lessee
understands, however, that the Lessor shall be under no obligation to agree to
such request. Nevertheless, the Lessor shall use reasonable efforts to notify
the Lessee, within forty-five (45) days of receipt of such information, as to
whether the Lessor will finance the proposed Capital Addition or Material
Structural Work and, if so, the terms and conditions upon which it would do so,
including the terms of any amendment to this Lease (including, without
limitation, an increase in Base Rent based on the Lessor's then existing terms
and prevailing conditions to compensate the Lessor for the additional funds
advanced by it). The Lessee may withdraw its request by notice to the Lessor at
any time before such time as the Lessee accepts the Lessor's terms and
conditions. All advances of funds for any such financing shall be made in
accordance with the Lessor's then standard construction loan requirements and
procedures, which may include, without limitation, the requirements and
procedures applicable to Work under Section 13.1.
9.3.2 Lessor's General Requirements. If the Lessor agrees to finance the
proposed Capital Addition or Material Structural Work and the Lessee accepts the
Lessor's proposal therefor, in addition to all other items which the Lessor or
any applicable Financing Party may reasonably require, the Lessee shall provide
to the Lessor the following:
(a) prior to any advance of funds, (i) any information, opinions,
certificates, Permits or documents reasonably requested by the Lessor or any
applicable Financing Party which are necessary to confirm that the Lessee will
be able to use the Capital Addition upon the completion thereof or the
applicable portion of the Facility upon the completion of the Material
Structural Work in accordance with the Primary Intended Use and (ii) evidence
satisfactory to the Lessor and any applicable Financing Party that all Permits
required for the construction and use of the Capital Addition or the applicable
portion of the Facility have been obtained, are in full force and effect and are
not subject to appeal, except only for those Permits which cannot in the normal
course be obtained prior to commencement or completion of the construction;
provided, that the Lessor and any applicable Financing Party are furnished with
reasonable evidence that the same will be available in the normal course of
business without unusual condition;
(b) prior to any advance of funds, an Officer's Certificate and, if
requested, a certificate from the Lessee's architect, setting forth in
reasonable detail the projected (or actual, if available) Capital Addition Cost
or the cost of the Material Structural Work;
(c) bills of sale, instruments of transfer and other documents required
by the Lessor so as to vest title to the Capital Addition or the applicable
Material Structural Work in the Lessor free and clear of all Liens, and
amendments to this Lease and any recorded notice or memorandum thereof, duly
executed and acknowledged, in form and substance reasonably satisfactory to the
Lessor, providing for any changes required by the Lessor including, without
limitation, changes in the Base Rent and the legal description of the Land;
(d) upon payment therefor, a deed conveying to the Lessor title to any
land acquired for the purpose of constructing the Capital Addition or the
applicable Material Structural Work ("Additional Land") free and clear of any
Liens except those approved by the Lessor;
(e) upon completion of the Capital Addition or the Material Structural
Work, a final as-built survey thereof reasonably satisfactory to the Lessor, if
required by the Lessor;
(f) during and following the advance of funds and the completion of the
Capital Addition or the Material Structural Work, endorsements to any
outstanding policy of title insurance covering the Leased Property satisfactory
in form and substance to the Lessor and any Financing Party (i) updating the
same without any additional exception except as may be reasonably permitted by
the Lessor, (ii) if applicable, including the Additional Land in the premises
covered by such title insurance policy and (iii) increasing the coverage thereof
by an amount equal to any amount paid by the Lessor for the Additional Land plus
the Fair Market Value of the Capital Addition or the Fair Market Value of the
Material Structural Work (except to the extent covered by the owner's policy of
title insurance referred to in subparagraph (g) below);
(g) simultaneous with the initial advance of funds, if appropriate, (i)
an owner's policy of title insurance insuring fee simple title to any Additional
Land conveyed to the Lessor pursuant to subparagraph (d) free and clear of all
Liens except those approved by the Lessor and (ii) a lender's policy of title
insurance reasonably satisfactory in form and substance to any applicable
Financing Party;
(h) following the completion of the Capital Addition or the Material
Structural Work, if reasonably deemed necessary by the Lessor, an appraisal of
the Leased Property by an M.A.I. appraiser acceptable to the Lessor, which
states that the Fair Market Value of the Leased Property upon completion of the
Capital Addition or the Material Structural Work exceeds the Fair Market Value
of the Leased Property prior to the commencement of the construction of such
Capital Addition or Material Structural Work by an amount not less than one
hundred twenty-five percent (125%) of the Capital Addition Cost or the cost of
the Material Structural Work; and
(i) during or following the advancement of funds, prints of
architectural and engineering drawings relating to the Capital Addition or the
Material Structural Work and such other materials, including, without
limitation, endorsements to the title insurance policies (insuring the Lessor
and any applicable Financing Party with respect to the Leased Property)
contemplated by subsection (f) above, opinions of counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the board of directors of the
Lessee authorizing the execution and delivery of the lease amendment and any
other documents and instruments as may be reasonably required by the Lessor and
any applicable Financing Party.
9.3.3 Payment of Costs. By virtue of making a request to finance a
Capital Addition or any Material Structural Work, whether or not such financing
is actually consummated, the Lessee shall be deemed to have agreed to pay, upon
demand, all costs and expenses reasonably incurred by the Lessor and any Person
participating with the Lessor in any way in the financing of the Capital
Addition or Material Structural Work, including, but not limited to (a) fees and
expenses of their respective attorneys, (b) all photocopying expenses, if any,
(c) the amount of any filing, registration and recording taxes and fees, (d)
documentary stamp taxes and intangible taxes and (e) title insurance charges and
appraisal fees.
9.4 General Limitations. Without in any way limiting the Lessor's
options with respect to proposed Capital Additions or Material Structural Work:
(a) no Capital Addition or Material Structural Work shall be completed that
could, upon completion, significantly alter the character or purpose or detract
from the value or operating efficiency of the Leased Property, or significantly
impair the revenue-producing capability of the Leased Property, or adversely
affect the ability of the Lessee to comply with the terms of this Lease, (b) no
Capital Addition or Material Structural Work shall be completed which would tie
in or connect any Leased Improvements on the Leased Property with any other
improvements on property adjacent to the Leased Property (and not part of the
Land covered by this Lease) including, without limitation, tie-ins of buildings
or other structures or utilities, unless the Lessee shall have obtained the
prior written approval of the Lessor, which approval may be withheld in the
Lessor's sole and absolute discretion and (c) all proposed Capital Additions and
Material Structural Work shall be architecturally integrated and consistent with
the Leased Property.
9.5 Non-Capital Additions. The Lessee shall have the obligation and
right to make repairs, replacements and alterations which are not Capital
Additions as required by the other Sections of this Lease, but in so doing, the
Lessee shall always comply with and satisfy the conditions of Sections 9.2.1,
9.2.5 and 9.4, mutatis, mutandis. The Lessee shall have the right, from time to
time, to make additions, modifications or improvements to the Leased Property
which do not constitute Capital Additions or Material Structural Work as it may
deem to be desirable or necessary for its uses and purposes, subject to the same
limits and conditions imposed under Sections 9.2.1, 9.2.5 and 9.4. The cost of
any such repair, replacement, alteration, addition, modification or improvement
shall be paid by the Lessee and the results thereof shall be included under the
terms of this Lease and become a part of the Leased Property, without payment
therefor by the Lessor at any time. Notwithstanding the foregoing, all such
additions, modifications and improvements which affect the structure of any of
the Leased Improvements, or which involve the expenditure of more than FIFTY
THOUSAND DOLLARS ($50,000.00), shall be undertaken only upon compliance with the
provisions of Section 13.1, all Legal Requirements and all other applicable
requirements of this Lease; provided, however, that in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such additions,
modifications and improvements as may be necessary in order to address such
emergency without the Lessor's prior approval, as long as the Lessee immediately
thereafter advises the Lessor of such emergency and the nature and scope of the
additions, modifications and improvements performed and obtains the Lessor's
approval of the remaining work to be completed.
ARTICLE 10
WARRANTIES AND REPRESENTATIONS
10.1 Representations and Warranties. The Lessee hereby represents and
warrants to, and covenants and agrees with, the Lessor that:
10.1.1 Existence; Power; Qualification.
The Lessee is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. The Lessee has all requisite corporate
power to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted and is duly qualified to transact
business and is in good standing in each jurisdiction where such qualification
is necessary or desirable in order to carry out its business as presently
conducted and as proposed to be conducted;
10.1.2 Valid and Binding. The Lessee is duly authorized to make and
enter into all of the Lease Documents to which the Lessee is a party and to
carry out the transactions contemplated therein. All of the Lease Documents to
which the Lessee is a party have been duly executed and delivered by the Lessee,
and each is a legal, valid and binding obligation of the Lessee, enforceable in
accordance with its terms.
10.1.3 Single Purpose. The Lessee is, and during the entire time that
this Lease remains in force and effect shall be, engaged in no business, trade
or activity other than the operation of the Leased Property for the Primary
Intended Use.
10.1.4 No Violation. The execution, delivery and performance of the
Lease Documents and the consummation of the transactions thereby contemplated
shall not result in any breach of, or constitute a default under, or result in
the acceleration of, or constitute an event which, with the giving of notice or
the passage of time, or both, could result in default or acceleration of any
obligation of any member of the Leasing Group under any of the Permits or
Contracts or any other contract, mortgage, lien, lease, agreement, instrument,
franchise, arbitration award, judgment, decree, bank loan or credit agreement,
trust indenture or other instrument to which any member of the Leasing Group is
a party or by which any member of the Leasing Group or the Leased Property may
be bound or affected and do not violate or contravene any Legal Requirement.
10.1.5 Consents and Approvals. Except as already obtained or filed, as
the case may be, no consent or approval or other authorization of, or exemption
by, or declaration or filing with, any Person and no waiver of any right by any
Person is required to authorize or permit, or is otherwise required as a
condition of the execution and delivery of any of the Lease Documents by any
member of the Leasing Group and the performance of such member's obligations
thereunder or as a condition to the validity (assuming the due authorization,
execution and delivery by the Lessor of the Lease Documents to which it is a
party).
10.1.6 No Liens or Insolvency Proceedings. Each member of the Leasing
Group (excluding Deaconess) is financially solvent and there are no actions,
suits, investigations or proceedings including, without limitation, outstanding
federal or state tax liens, garnishments or insolvency or bankruptcy
proceedings, pending or, to the best of the Lessee's knowledge and belief,
threatened:
(a) against or affecting any member of the Leasing Group (excluding
Deaconess), which if adversely resolved to such member of the Leasing Group,
would materially adversely affect the ability of any of the foregoing to perform
their respective obligations under the Lease Documents; or
(b) which may involve or affect the validity, priority or enforceability
of any of the Lease Documents, at law or in equity, or before or by any
arbitrator or Governmental Authority.
10.1.7 No Burdensome Agreements. The Lessee is a party to any agreement
the terms of which now have, or, as far as can be reasonably foreseen, may have,
a material adverse affect on its respective financial condition or business or
on the operation of the Leased Property.
10.1.8 Commercial Acts. The Lessee's performance of and compliance with
the obligations and conditions set forth herein and in the other Lease Documents
will constitute commercial acts done and performed for commercial purposes.
10.1.9 Adequate Capital, Not Insolvent. After giving effect to the
consummation of the transactions contemplated by the Lease Documents, each
member of the Leasing Group (excluding Deaconess):
(a) will be able to pay its debts as they become due;
(b) will have sufficient funds and capital to carry on its business as
now conducted or as contemplated to be conducted (in accordance with the terms
of the Lease Documents);
(c) will own property having a value both at fair valuation and at
present fair salable value greater than the amount required to pay its debts as
they become due; and
(d) will not be rendered insolvent as determined by applicable law.
10.1.10 Not Delinquent. No member of the Leasing Group (excluding
Deaconess) is delinquent or claimed to be delinquent under any obligation for
the payment of borrowed money.
10.1.11 No Affiliate Debt. The Lessee has not created, incurred,
guaranteed, endorsed, assumed or suffered to exist any liability (whether direct
or contingent) for borrowed money from the Guarantor (or any of its Affiliates)
or any Affiliate of the Lessee that is not fully subordinated to the Lease
Obligations pursuant to the Affiliated Party Subordination Agreement.
10.1.12 Taxes Current. Each member of the Leasing Group (excluding
Deaconess) has filed all federal, state and local tax returns which are required
to be filed as to which extensions are not currently in effect and have paid all
taxes, assessments, impositions, fees and other governmental charges (including
interest and penalties) which have become due pursuant to such returns or
pursuant to any assessment or notice of tax claim or deficiency received by each
such member of the Leasing Group. No tax liability has been asserted by the
Internal Revenue Service against any member of the Leasing Group (excluding
Deaconess) or any other federal, state or local taxing authority for taxes,
assessments, impositions, fees or other governmental charges (including interest
or penalties thereon) in excess of those already paid.
10.1.13 Intentionally Omitted.
10.1.14 Pending Actions, Notices and Reports.
(a) There is no action or investigation pending or, to the best
knowledge and belief of the Lessee, threatened, anticipated or contemplated
(nor, to the knowledge of the Lessee, is there any reasonable basis therefor)
against or affecting any member of the Leasing Group (or any Affiliate thereof),
excluding Deaconess, before any Governmental Authority, Accreditation Body or
Third Party Payor which could prevent or hinder the consummation of the
transactions contemplated hereby or call into question the validity of any of
the Lease Documents or any action taken or to be taken in connection with the
transactions contemplated thereunder or which in any single case or in the
aggregate might result in any material adverse change in the business,
prospects, condition, affairs or operations of any such member of the Leasing
Group or the Leased Property (including, without limitation, any action to
revoke, withdraw or suspend any Permit necessary or desirable for the operation
of the Leased Property in accordance with its Primary Intended Use and any
action to transfer or relocate any such Permit to a location other than the
Leased Property) or any material impairment of the right or ability of any such
member of the Leasing Group to carry on its operations as proposed to be
conducted or which may materially adversely impact reimbursement to any such
member of the Leasing Group for services rendered to beneficiaries of Third
Party Payor Programs.
(b) Neither the Facility nor any member of the Leasing Group, excluding
Deaconess, has received any notice of any claim, requirement or demand of any
Governmental Authority, Accreditation Body, Third Party Payor or any insurance
body having or claiming any licensing, certifying, supervising, evaluating or
accrediting authority over the Leased Property to rework or redesign the Leased
Property, its professional staff or its professional services, procedures or
practices in any material respect or to provide additional furniture, fixtures,
equipment or inventory or to otherwise take action so as to make the Leased
Property conform to or comply with any Legal Requirement; and
(c) The most recent utilization reviews relating to the Leased Property
by all applicable Third Party Payors, Accreditation Bodies and Governmental
Authorities and reviews or scrutiny by any managed care or utilization review
companies have not had a material adverse impact on the utilization of beds,
units or programs at any of the Leased Property. No claims or assertions have
been made in any utilization review that any of the practices or procedures used
at the Leased Property are improper or inappropriate other than such claims or
assertions which singly and in the aggregate will not have a material adverse
impact on the Leased Property.
10.1.15 Compliance with Legal Requirements. The Lessee has obtained all
Permits that are necessary or desirable to operate the Leased Property in
accordance with its Primary Intended Use and all such Permits are in full force
and effect.
10.1.16 Intentionally Omitted.
10.1.17 Intentionally Omitted.
10.1.18 Intentionally Omitted.
10.1.19 Rate Limitations. Except as disclosed on EXHIBIT C, the State
currently imposes no restrictions or limitations on rates which may be charged
to private pay patients and/or residents receiving services at the Facility.
10.1.20 Free Care. Except as disclosed on EXHIBIT D, there are no
Contracts, Permits or Legal Requirements which require that a percentage of
beds, slots or units in any program at the Facility be reserved for Medicaid or
Medicare eligible patients and/or residents or that the Facility provide a
certain amount of welfare, free or charity care or discounted or government
assisted patient and/or resident care.
10.1.21 No Proposed Changes. The Lessee has no actual knowledge of any
Legal Requirements which have been enacted, promulgated or issued within the
eighteen (18) months preceding the date of this Lease or any proposed Legal
Requirements currently pending in the State which may materially adversely
affect rates at the Facility (or any program operated in conjunction with the
Facility) or may result in the likelihood of increased competition at the
Facility or the imposition of Medicaid, Medicare, charity, free care, welfare or
other discounted or government assisted patients at the Facility or require that
the Lessee or the Facility obtain a certificate of need, Section 1122 approval
or the equivalent, which the Lessee or the Facility does not currently possess.
10.1.22 ERISA. No employee pension benefit plan maintained by any member
of the Leasing Group has any accumulated funding deficiency within the meaning
of the ERISA, nor does any member of the Leasing Group have any material
liability to the PBGC established under ERISA (or any successor thereto) in
connection with any employee pension benefit plan (or other class of benefit
which the PBGC has elected to insure), and there have been no "reportable
events" (not waived) or "prohibited transactions" with respect to any such plan,
as those terms are defined in Section 4043 of ERISA and Section 4975 of the
Internal Revenue Code of 1986, as now or hereafter amended, respectively.
10.1.23 No Broker. No member of the Leasing Group nor any of their
respective Affiliates has dealt with any broker or agent in connection with the
transactions contemplated by the Lease Documents.
10.1.24 No Improper Payments. No member of the Leasing Group (excluding
Deaconess) nor any of their respective Affiliates has:
(a) made any contributions, payments or gifts of its funds or property
to or for the private use of any government official, employee, agent or other
Person where either the payment or the purpose of such contribution, payment or
gifts is illegal under the laws of the United States, any state thereof or any
other jurisdiction (foreign or domestic);
(b) established or maintained any unrecorded fund or asset for any
purpose or has made any false or artificial entries on any of its books or
records for any reason;
(c) made any payments to any Person with the intention or understanding
that any part of such payment was to be used for any other purpose other than
that described in the documents supporting the payment; or
(d) made any contribution, or has reimbursed any political gift or
contribution made by any other Person, to candidates for public office, whether
federal, state or local, where such contribution would be in violation of
applicable law.
10.1.25 Nothing Omitted. Neither this Lease, nor any of the other Lease
Documents, nor any certificate, agreement, statement or other document,
including, without limitation, any financial statements concerning the financial
condition of any member of the Leasing Group, furnished to or to be furnished to
the Lessor or its attorneys in connection with the transactions contemplated by
the Lease Documents, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to
prevent all statements contained herein and therein from being misleading. There
is no fact within the special knowledge of the Lessee which has not been
disclosed herein or in writing to the Lessor that materially adversely affects,
or in the future, insofar as the Lessee can reasonably foresee, may materially
adversely affect the business, properties, assets or condition, financial or
otherwise, of any member of the Leasing Group or the Leased Property.
10.1.26 No Margin Security. The Lessee is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System). The Lessee is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
10.1.27 No Default. No event or state of facts which constitutes, or
which, with notice or lapse of time, or both, could constitute, a Lease Default
has occurred and is continuing.
10.1.28 Principal Place of Business. The principal place of business and
chief executive office of the Lessee is located at 197 First Avenue, Needham,
Massachusetts 02194 (the "Principal Place of Business").
10.1.29 Intentionally Omitted.
10.1.30 Intellectual Property. The Lessee is duly licensed or authorized
to use all (if any) copyrights, rights of reproduction, trademarks, trade-names,
trademark applications, service marks, patent applications, patents and patent
license rights, (all whether registered or unregistered, U.S. or foreign),
inventions, franchises, discoveries, ideas, research, engineering, methods,
practices, processes, systems, formulae, designs, drawings, products, projects,
improvements, developments, know-how and trade secrets which are used in or
necessary for the operation of the Facility in accordance with its Primary
Intended Use, without conflict with or infringement of any, and subject to no
restriction, lien, encumbrance, right, title or interest in others.
10.1.31 Management Agreements. There is no Management Agreement in force
and effect as of the date hereof, other than the Current Management Agreement.
10.2 Continuing Effect of Representations and Warranties. All
representations and warranties contained in this Lease and the other Lease
Documents shall constitute continuing representations and warranties which shall
remain true, correct and complete throughout the Term. Notwithstanding the
provisions of the foregoing sentence but without derogation from any other terms
and provisions of this Lease, including, without limitation, those terms and
provisions containing covenants to be performed or conditions to be satisfied on
the part of the Lessee, the representations and warranties contained in Sections
10.1.6, 10.1.7, 10.1.10, 10.1.14, 10.1.19, 10.1.20, 10.1.21, 10.1.22, 10.1.28,
and in the second sentence of Section 10.1.12, shall not constitute continuing
representations and warranties throughout the Term.
ARTICLE 11
FINANCIAL AND OTHER COVENANTS
11.1 Status Certificates. At any time, and from time to time, upon
request from the Lessor, the Lessee shall furnish to the Lessor, within ten (10)
Business Days' after receipt of such request, an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications) and the dates to which the Rent has been paid. Any Officer's
Certificate furnished pursuant to this Section shall be addressed to any
prospective purchaser or mortgagee of the Leased Property as the Lessor may
request and may be relied upon by the Lessor and any such prospective purchaser
or mortgagee of the Leased Property.
11.2 Financial Statements; Reports; Notice and Information.
11.2.1 Obligation To Furnish. The Lessee will furnish and shall cause to
be furnished to the Lessor the following statements, information and other
materials:
(a) Annual Statements. Within ninety (90) days after the end of each of
their respective fiscal years, (i) a copy of the Consolidated Financials for
each of (x) the Lessee and (y) any Sublessee (other than Deaconess) for the
preceding fiscal year, certified and audited by, and with the unqualified
opinion of, independent certified public accountants acceptable to the Lessor
and certified as true and correct by the Lessee or the applicable Sublessee, as
the case may be (and, without limiting anything else contained herein, the
Consolidated Financials for the Lessee and for each such Sublessee shall include
a detailed balance sheet for Leased Property (other than Deaconess) as of the
last day of such fiscal year and a statement of earnings from the Leased
Property for such fiscal year showing, among other things, all rents and other
income therefrom and all expenses paid or incurred in connection with the
operation of the Leased Property); (ii) separate statements, certified as true
and correct by the Lessee and each Sublessee, stating whether, to the best of
the signer's knowledge and belief after making due inquiry, the Lessee or such
Sublessee, as the case may be, is in default in the performance or observance of
any of the terms of this Lease or any of the other Lease Documents and, if so,
specifying all such defaults, the nature thereof and the steps being taken to
immediately remedy the same; (iii) a copy of all letters from the independent
certified accountants engaged to perform the annual audits referred to above,
directed to the management of the Lessee or any Sublessee (other than
Deaconess), as the case may be, regarding the existence of any reportable
conditions or material weaknesses and (iv) a statement certified as true and
correct by the Lessee setting forth all Subleases as of the last day of such
fiscal year, the respective areas demised thereunder, the names of the
Sublessees thereunder, the respective expiration dates of such Subleases, the
respective rentals provided for therein, and such other information pertaining
to such Subleases as may be reasonably requested by the Lessor.
(b) Monthly Statements of Lessee. Within twenty (20) days after the end
of each calendar month during the pendency of this Lease, (i) an unaudited,
detailed month and year to date income and expense statement for the Leased
Property which shall include a comparison to corresponding budget figures,
occupancy statistics (including the actual number of patients, the number of
beds available and total patient days for such month) for the skilled nursing
facility included within the definition of the Facility and patient mix
breakdowns (for each patient day during such month classifying patients by the
type of care required and source of payment) for such skilled nursing facility
and occupancy statistics for the assisted living facility included within the
definition of the Facility and (ii) an express written calculation showing the
compliance or non-compliance, as the case may be, with the specific financial
covenants set forth in Section 11.3 for the applicable period, including, with
respect to the calculation of the Lessee's Rent Coverage Ratio, a schedule
substantially in the form attached hereto as EXHIBIT E.
(c) Quarterly Statements. Within twenty (20) days after the end of each
of their respective Fiscal Quarters, unaudited Consolidated Financials for the
Lessee certified as true and correct by the Lessee.
(d) Permits and Contracts. Promptly after the issuance or the execution
thereof, as the case may be, true and complete copies of (i) all Permits which
constitute operating licenses for the Facility issued by any Governmental
Authority having jurisdiction over health care matters and (ii) Contracts
(involving payments in the aggregate in excess of $100,000 per annum),
including, without limitation, all Provider Agreements.
(e) Contract Notices. Promptly after the receipt thereof, true and
complete copies of any notices, consents, terminations or statements of any kind
or nature relating to any of the Contracts (involving payments in the aggregate
in excess of $100,000 per annum) other than those issued in the ordinary course
of business.
(f) Permit or Contract Defaults. Promptly after the receipt thereof,
true and complete copies of all surveys, follow-up surveys, licensing surveys,
complaint surveys, examinations, compliance certificates, inspection reports,
statements (other than those statements that are issued in the ordinary course
of business), terminations and notices of any kind (other than those notices
that are furnished in the ordinary course of business) issued or provided to the
Lessee or any Sublessee that is an Affiliate of the Lessee by any Governmental
Authority, Accreditation Body or any Third Party Payor, including, without
limitation, any notices pertaining to any delinquency in, or proposed revision
of, the Lessee's or any such Sublessee's obligations under the terms and
conditions of any Permits or Contracts now or hereafter issued by or entered
into with any Governmental Authority, Accreditation Body or Third Party Payor
and the response(s) thereto made by or on behalf of the Lessee or any such
Sublessee.
(g) Official Reports. Upon completion or filing thereof, complete copies
of all applications (other than those that are furnished in the ordinary course
of business), notices (other than those that are furnished in the ordinary
course of business), statements, annual reports, cost reports and other reports
or filings of any kind (other than those that are furnished in the ordinary
course of business) provided by the Lessee or any Sublessee that is an Affiliate
of the Lessee to any Governmental Authority, Accreditation Body or any Third
Party Payor with respect to the Leased Property.
(h) Other Information. With reasonable promptness, such other
information as the Lessor may from time to time reasonably request respecting
(i) the financial condition and affairs of each member of the Leasing Group and
the Leased Property and (ii) the licensing and operation of the Leased Property;
including, without limitation, audited financial statements, certificates and
consents from accountants and all other financial and licensing/operational
information as may be required or requested by any Governmental Authority.
(i) Default Conditions. As soon as possible, and in any event within
five (5) days after the occurrence of any Lease Default, or any event or
circumstance which, with the giving of notice or the passage of time, or both,
could constitute a Lease Default, a written statement of the Lessee setting
forth the details of such Lease Default, event or circumstance and the action
which the Lessee proposes to take with respect thereto.
(j) Official Actions. Promptly after the commencement thereof, notice of
all actions, suits and proceedings before any Governmental Authority or
Accreditation Body which could have a material adverse effect on (i) any member
of the Leasing Group to perform any of its obligations under any of the Lease
Documents or (ii) the Leased Property.
(k) Audit Reports. Promptly after receipt, a copy of all audits or
reports submitted to any member of the Leasing Group by any independent public
accountant in connection with any annual, special or interim audits of the books
of any such member of the Leasing Group and, if requested by the Lessor, any
letter of comments directed by such accountant to the management of any such
member of the Leasing Group.
(l) Adverse Developments. Promptly after the Lessee acquires knowledge
thereof, written notice of:
(i) the potential termination of any Permit or Provider Agreement
necessary for the operation of the Leased Property;
(ii) any loss, damage or destruction to or of the Leased Property
in excess of FIFTY THOUSAND DOLLARS ($50,000) (regardless of whether the same is
covered by insurance);
(iii) any material controversy involving the Lessee or any
Sublessee and (x) Facility administrator or Facility employee of similar stature
or (y) any labor organization;
(iv) any controversy that calls into question the eligibility of
the Lessee or the Facility for the participation in any Medicaid, Medicare or
other Third Party Payor Program;
(v) any refusal of reimbursement by any Third Party Payor which,
singularly or together with all other such refusals by any Third Party Payors,
could have a material adverse effect on the financial condition of the Lessee or
any Sublessee; and
(vi) any fact within the special knowledge of any member of the
Leasing Group, or any other development in the business or affairs of any member
of the Leasing Group, which may be materially adverse to the business,
properties, assets or condition, financial or otherwise, of any member of the
Leasing Group or the Leased Property.
(m) Responses To Inspection Reports. Within thirty (30) days after
receipt of an inspection report relating to the Leased Property from the Lessor,
a written response describing in detail prepared plans to address concerns
raised by the inspection report.
(n) Public Information. Upon the completion or filing, mailing or other
delivery thereof, complete copies of all financial statements, reports, notices
and proxy statements, if any, sent by any member of the Leasing Group (which is
a publicly held corporation) to its shareholders and of all reports, if any,
filed by any member of the Leasing Group (which is a publicly held corporation)
with any securities exchange or with the Securities Exchange Commission.
(o) Annual Budgets. At least thirty (30) days prior to the end of each
Fiscal Year, the Lessee, any Sublessee (other than Deaconess) and/or any Manager
shall submit to the Lessor a preliminary annual financial budget for the
Facility for the next Fiscal Year, a preliminary capital expenditures budget for
the Facility for the next Fiscal Year and a report detailing the capital
expenditures made in the then current Fiscal Year and on or before the end of
the first month of each Fiscal Year, the Lessee, any applicable Sublessee and/or
any Manager shall submit to the Lessor revised finalized versions of such
budgets and report.
11.2.2 Responsible Officer. Any certificate, instrument, notice, or
other document to be provided to the Lessor hereunder by any member of the
Leasing Group shall be signed by an executive officer of such member (in the
event that any of the foregoing is not an individual), having a position of Vice
President or higher and with respect to financial matters, any such certificate,
instrument, notice or other document shall be signed by the chief financial
officer of such member.
11.2.3 No Material Omission. No certificate, instrument, notice or other
document, including without limitation, any financial statements furnished or to
be furnished to the Lessor pursuant to the terms hereof or of any of the other
Lease Documents shall contain any untrue statement of a material fact or shall
omit to state any material fact necessary in order to prevent all statements
contained therein from being misleading.
11.2.4 Confidentiality. The Lessor shall afford any information received
pursuant to the provisions of the Lease Documents the same degree of
confidentiality that the Lessor affords similar information proprietary to the
Lessor; provided, however, that the Lessor does not in any way warrant or
represent that such information received from any member of the Leasing Group
shall remain confidential (and shall not be liable in any way for any subsequent
disclosure of such information by any Person that the Lessor has provided such
information in accordance with the terms hereof) and provided, further, that the
Lessor shall have the unconditional right to (a) disclose any such information
as the Lessor deems necessary or appropriate in connection with any sale,
transfer, conveyance, participation or assignment of the Leased Property or any
of the Lease Documents or any interest therein and (b) use such information in
any litigation or arbitration proceeding between the Lessor and any member of
the Leasing Group. Without limiting the foregoing, the Lessor may also utilize
any information furnished to it hereunder as and to the extent (i) counsel to
the Lessor determines that such utilization is necessary pursuant to 15 U.S.C.
77a-77aa or 15 U.S.C. 78a-78jj and the rules and regulations promulgated
thereunder, (ii) the Lessor is required or requested by any Governmental
Authority to disclose any such information and/or (iii) the Lessor is requested
to disclose any such information by any of its lenders or potential lenders. The
Lessor shall not be liable in any way for any subsequent disclosure of such
information by any Person to whom the Lessor provided such information in
accordance with the terms hereof. Nevertheless, in connection with any such
disclosure, the Lessor shall inform the recipient of any such information of the
confidential nature thereof. The Lessor shall observe any prohibitions or
limitations on the disclosure of any such information under applicable
confidentiality law or regulations, to the extent that the same are applicable
to such information, including, without limitation, any duly enacted "Patients'
Bill of Rights" or similar legislation, including such limitations as may be
necessary to preserve the confidentiality of the facility-patient/resident
relationship and the physician-patient privilege.
11.3 Financial Covenants. The Lessee covenants and agrees that,
throughout the Term and as long as the Lessee is in possession of the Leased
Property:
11.3.1 Rent Coverage Ratio of Lessee. The Lessee shall maintain with
respect to the Leased Property, a Rent Coverage Ratio equal to or greater than
1.3 to 1.
11.3.2 No Indebtedness. The Lessee shall not create, incur, assume or
suffer to exist any liability for borrowed money except (i) Indebtedness to the
Lessor under the Lease Documents and, (ii) Impositions allowed pursuant to the
provisions of the Lease, (iii) unsecured normal trade debt incurred upon
customary terms in the ordinary course of business, (iv) Indebtedness created in
connection with any financing of any Capital Addition, provided, that each such
financing has been approved by the Lessor in accordance with the terms of
Article 9 hereof, (v) Indebtedness to any Affiliate, provided, that, such
Indebtedness is fully subordinated to the Lease Obligations pursuant to the
Affiliated Party Subordination Agreement and (vi) other Indebtedness of the
Lessee in the aggregate amount not to exceed TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000) incurred, for the exclusive use of the Leased Property, on account of
purchase money indebtedness or finance lease arrangements, each of which shall
not exceed the fair market value of the assets or property acquired or leased
and shall not extend to any assets or property other than those purchased or
leased and purchase money security interests in equipment and equipment leases
which comply with the provisions of Section 6.1.2.
11.3.3 No Guaranties. The Lessee shall not assume, guarantee, endorse,
contingently agree to purchase or otherwise become directly or contingently
liable (including, without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise to invest in any debtor or otherwise to assure any creditor against
loss) in connection with any Indebtedness of any other Person, except by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
11.4 Affirmative Covenants. The Lessee covenants and agrees that
throughout the Term and any periods thereafter that the Lessee remains in
possession of the Leased Property:
11.4.1 Maintenance of Existence. If the Lessee is a corporation, trust
or partnership, during the entire time that this Lease remains in full force and
effect, the Lessee shall keep in effect its existence and rights as a
corporation, trust or partnership under the laws of the state of its
incorporation or formation and its right to own property and transact business
in the State.
11.4.2 Materials. Except as provided in Section 6.1.2, the Lessee shall
not suffer the use in connection with any renovations or other construction
relating to the Leased Property of any materials, fixtures or equipment intended
to become part of the Leased Property which are purchased upon lease or
conditional bill of sale or to which the Lessee does not have absolute and
unencumbered title, and the Lessee covenants to cause to be paid punctually all
sums becoming due for labor, materials, fixtures or equipment used or purchased
in connection with any such renovations or construction, subject to the Lessee's
right to contest to the extent provided for in Article 15.
11.4.3 Compliance With Legal Requirements And Applicable Agreements. The
Lessee and the Leased Property and all uses thereof shall comply with (i) all
Legal Requirements, (ii) all Permits and Contracts, (iii) all Insurance
Requirements, (iv) the Lease Documents, (v) the Permitted Encumbrances and (vi)
the Appurtenant Agreements.
11.4.4 Books And Records. The Lessee shall cause to be kept and
maintained, and shall permit the Lessor and its representatives to inspect at
all reasonable times, accurate books of accounts in which complete entries will
be made in accordance with GAAP reflecting all financial transactions of the
Lessee (showing, without limitation, all materials ordered and received and all
disbursements, accounts payable and accounts receivable in connection with the
operation of the Leased Property).
11.4.5 Participation in Third Party Payor Programs. The Lessee and each
Sublessee, other than Deaconess, shall participate in all Third Party Payor
Programs (which would be participated in by a prudent operator in the good faith
exercise of commercially reasonable business judgment), in accordance with all
requirements thereof (including, without limitation, all applicable Provider
Agreements), and shall remain eligible to participate in such Third Party Payor
Programs, all as shall be necessary for the prudent operation of the Facility in
the good faith exercise of commercially reasonable business judgment.
11.4.6 Conduct of its Business. The Lessee will maintain, and cause any
Sublessee (other than Deaconess) and any Manager, as applicable, to maintain,
experienced and competent professional management with respect to its business
and with respect to the Leased Property. The Lessee, any Sublessee (other than
Deaconess) and any Manager shall conduct, in the ordinary course, the operation
of the Facility, and the Lessee and any such Sublessee shall not enter into any
other business or venture during the Term or such time as the Lessee or any such
Sublessee is in possession of the Leased Property.
11.4.7 Address. The Lessee shall provide the Lessor thirty (30) days'
prior written notice of any change of its Principal Place of Business from its
current Principal Place of Business. The Lessee shall maintain all books and
records relating to its business, solely at its Principal Place of Business and
at the Leased Property. The Lessee shall not (a) remove any books or records
relating to the Lessee's business from either the Leased Property or the
Lessee's Principal Place of Business or (b) relocate its Principal Place of
Business until after receipt of a certificate from the Lessor, signed by an
officer thereof, stating that the Lessor has, to its satisfaction, obtained all
documentation that it deems necessary or desirable to obtain, maintain, perfect
and confirm the first priority security interests granted in the Lease
Documents.
11.4.8 Subordination of Affiliate Transactions. Without limiting the
provisions of any other Section of this Lease or the Affiliated Party
Subordination Agreement, any payments to be made by the Lessee to (a) any member
of the Leasing Group, other than Deaconess (or any Affiliate of any such member
of the Leasing Group) or (b) any Affiliate of the Lessee, in connection with any
transaction between the Lessee and such Person, including, without limitation,
the purchase, sale or exchange of any property, the rendering of any service to
or with any such Person (including, without limitation, all allocations of any
so-called corporate or central office costs, expenses and charges of any kind or
nature) or the making of any loan or other extension of credit or the making of
any equity investment, shall be subordinate to the complete payment and
performance of the Lease Obligations; provided, however, that all such
subordinated payments may be paid at any time unless: (x) after giving effect to
such payment, the Lessee shall be unable to comply with any of its obligations
under any of the Lease Documents or (y) a Lease Default has occurred and is
continuing and has not been expressly waived in writing by the Lessor or an
event or state of facts exists, which, with the giving of notice or the passage
of time, or both, would constitute a Lease Default.
11.4.9 Inspection. At reasonable times and upon reasonable notice, the
Lessee shall permit the Lessor, any Fee Mortgagee and their respective
authorized representatives (including, without limitation, the Consultants) to
inspect the Leased Property as provided in Section 7.1 above.
11.4.10 Additional Property. In the event that at any time during the
Term, the Lessee holds the fee title to or a leasehold interest in any real
property and/or personal property which is used as an integral part of the
operation of the Leased Property (but is not subject to this Lease), the Lessee
shall (i) provide the Lessor with prior notice of such acquisition and (ii)
shall take such actions and enter into such agreements as the Lessor shall
reasonably request in order to grant the Lessor a first priority mortgage or
other security interest in such real property and personal property, subject
only to the Permitted Encumbrances and other Liens reasonably acceptable to the
Lessor.
11.5 Additional Negative Covenants. The Lessee covenants and agrees
that, throughout the Term and such time as the Lessee remains in possession of
the Leased Property:
11.5.1 Restrictions Relating to Lessee. Except as may otherwise be
expressly provided in any of the Lease Documents, the Lessee shall not, without
the prior written consent of the Lessor, in each instance, which consent may be
withheld in the sole and absolute discretion of the Lessor:
(a) convey, assign, hypothecate, transfer, dispose of or encumber, or
permit the conveyance, assignment, transfer, hypothecation, disposal or
encumbrance of all or any part of any legal or beneficial interest in this
Lease, its other assets or the Leased Property; provided, however, that this
restriction shall not apply to (i) the Permitted Encumbrances that may be
created after the date hereof pursuant to the Lease Documents; (ii) Liens
created in accordance with Section 6.1.2 against Tangible Personal Property
securing Indebtedness permitted under Section 11.3.2(v) relating to equipment
leasing or financing for the exclusive use of the Leased Property; (iii) the
sale, conveyance, assignment, hypothecation, lease or other transfer of any
material asset or assets (whether now owned or hereafter acquired), the fair
market value of which equals or is less than FIFTY THOUSAND DOLLARS ($50,000),
individually, or TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) collectively;
(iv) without limitation as to amount, the disposition in the ordinary course of
business of any obsolete, worn out or defective fixtures, furnishings or
equipment used in the operation of the Leased Property provided that the same
are replaced with fixtures, furnishings or equipment of equal or greater utility
or value or the Lessee provides the Lessor with an explanation (reasonably
satisfactory to the Lessor) as to why such fixtures, furnishings or equipment is
no longer required in connection with the operation of the Leased Property; (v)
without limitation as to amount, any sale of inventory by the Lessee in the
ordinary course of business and (vi) subject to the terms of the Pledge
Agreement and the Affiliated Party Subordination Agreement, distributions to the
shareholders of the Lessee;
(b) permit the use of the Facility for any purpose other than the
Primary Intended Use; or
(c) liquidate, dissolve or merge or consolidate with any other Person.
11.5.2 No Liens. The Lessee will not directly or indirectly create or
allow to remain and will promptly discharge at its expense any Lien, title
retention agreement or claim upon or against the Leased Property (including the
Lessee's interest therein) or the Lessee's interest in this Lease or any of the
other Lease Documents, or in respect of the Rent, excluding (a) this Lease and
any permitted Subleases, (b) the Permitted Encumbrances, (c) Liens which are
consented to in writing by the Lessor, (d) Liens for those taxes of the Lessor
which the Lessee is not required to pay hereunder, (e) Liens of mechanics,
laborers, materialmen, suppliers or vendors for sums either not yet due or being
contested in strict compliance with the terms and conditions of Article 15, (f)
any Liens which are the responsibility of the Lessor pursuant to the provisions
of Article 20, (g) Liens for Impositions which are either not yet due and
payable or which are in the process of being contested in strict compliance with
the terms and conditions of Article 15 and (h) involuntary Liens caused by the
actions or omissions of the Lessor.
11.5.3 Limits on Affiliate Transactions. The Lessee shall not enter into
any transaction with any Affiliate, including, without limitation, the purchase,
sale or exchange of any property, the rendering of any service to or with any
Affiliate and the making of any loan or other extension of credit, except in the
ordinary course of, and pursuant to the reasonable requirements of, the Lessee's
business and upon fair and reasonable terms no less favorable to the Lessee than
would be obtained in a comparable arms'-length transaction with any Person that
is not an Affiliate.
11.5.4 Best Efforts To Maximize. The Lessee covenants that the operation
of the Facility shall be conducted in a manner consistent with the prevailing
standards and practices recognized in the health care and assisted living
industries as those customarily utilized by first class business operations.
Subject to any applicable Legal Requirements, the members of the Leasing Group
shall use their best efforts to maximize the Facility's Gross Revenues, and to
that end, but without limiting the foregoing, (a) a full staff of employees
shall be maintained at the Facility and (b) a maximum amount of space in the
Facility (excluding the 11,800 square feet of medical office space) shall be
devoted to revenue producing activities and only such part thereof shall be
devoted for office, storage and non-revenue producing purposes as shall be
reasonably necessary.
11.5.5 No Default. The Lessee shall not commit any default or breach
under any of the Lease Documents.
11.5.6 Intentionally Omitted.
11.5.7 Intentionally Omitted.
11.5.8 ERISA. The Lessee shall not establish or permit any Sublessee to
establish any new pension or defined benefit plan or modify any such existing
plan for employees subject to ERISA, which plan provides any benefits based on
past service without the advance consent of the Lessor to the amount of the
aggregate past service liability thereby created.
11.5.9 Forgiveness of Indebtedness. The Lessee will not waive, or permit
any sublessee or Manager which is an Affiliate to waive any debt or claim,
except in the ordinary course of its business.
11.5.10 Value of Assets. Except as disclosed in the financial statements
provided to the Lessor as of the date hereof, the Lessee will not write up (by
creating an appraisal surplus or otherwise) the value of any assets of the
Lessee above their cost to the Lessee, less the depreciation regularly allowable
thereon.
11.5.11 Changes in Fiscal Year and Accounting Procedures. The Lessee
shall not, without the prior written consent of the Lessor, in each instance,
which consent may be withheld in the Lessor's reasonable discretion (a) change
its fiscal year or capital structure or (b) change, alter, amend or in any
manner modify, except in accordance with GAAP, any of its current accounting
procedures related to the method of revenue recognition, billing procedures or
determinations of doubtful accounts or bad debt expenses nor will the Lessee
permit any of its Subsidiaries to change its fiscal year or suffer or permit any
circumstance to exist in which any Subsidiary is not wholly-owned, directly or
indirectly, by the Lessee.
ARTICLE 12
INSURANCE AND INDEMNITY
12.1 General Insurance Requirements. During the Term of this Lease and
thereafter until the Lessee surrenders the Leased Property in the manner
required by this Lease, the Lessee shall at its sole cost and expense keep the
Leased Property and the Tangible Personal Property located thereon and the
business operations conducted on the Leased Property insured as set forth below.
12.1.1 Types and Amounts of Insurance. The Lessee's insurance shall
include the following:
(a) property loss and physical damage insurance on an all-risk basis
(with only such exceptions as the Lessor may in its reasonable discretion
approve) covering the Leased Property (exclusive of Land) for its full
replacement cost, which cost shall be reset once a year at the Lessor's option,
with an agreed-amount endorsement and a deductible not in excess of TEN THOUSAND
DOLLARS ($10,000.00). Such insurance shall include, without limitation, the
following coverages: (i) increased cost of construction, (ii) cost of
demolition, (iii) the value of the undamaged portion of the Facility and (iv)
contingent liability from the operation of building laws, less exclusions
provided in the normal "All Risk" insurance policy. During any period of
construction, such insurance shall be on a builder's-risk, completed value,
non-reporting form with permission to occupy;
(b) flood insurance (if the Leased Property or any portion thereof is
situated in an area which is considered a flood risk area by the U.S. Department
of Housing and Urban Development or any other Governmental Authority that may in
the future have jurisdiction over flood risk analysis) in limits reasonably
acceptable to the Lessor;
(c) boiler and machinery insurance (including related electrical
apparatus and components) under a standard comprehensive form, providing
coverage against loss or damage caused by explosion of steam boilers, pressure
vessels or similar vessels, now or hereafter installed on the Leased Property,
in limits reasonably acceptable to the Lessor;
(d) earthquake insurance (if deemed necessary by the Lessor) in limits
and with deductibles reasonably acceptable to the Lessor;
(e) intentionally omitted;
(f) business interruption and/or rent loss insurance in an amount equal
to the annual Base Rent due hereunder plus the aggregate sum of the Impositions
relating to the Leased Property due and payable during one year;
(g) comprehensive general public liability insurance including coverages
commonly found in the Broad Form Commercial Liability Endorsements with amounts
not less than FIVE MILLION DOLLARS ($5,000,000) per occurrence with respect to
bodily injury and death and THREE MILLION DOLLARS ($3,000,000) for property
damage and with all limits based solely upon occurrences at the Leased Property
without any other impairment;
(h) professional liability insurance in an amount not less than TEN
MILLION DOLLARS ($10,000,000) for each medical incident;
(i) physical damage insurance on an all-risk basis (with only such
exceptions as the Lessor in its reasonable discretion shall approve) covering
the Tangible Personal Property for the full replacement cost thereof and with a
deductible not in excess of one percent (1%) of the full replacement cost
thereof;
(j) Workers' Compensation and Employers' Liability Insurance providing
protection against all claims arising out of injuries to all employees of the
Lessee or of any Sublessee (employed on the Leased Property or any portion
thereof) in amounts equal for Workers' Compensation, to the statutory benefits
payable to employees in the State and for Employers' Liability, to limits of not
less than ONE HUNDRED THOUSAND DOLLARS ($100,000) for injury by accident, ONE
HUNDRED THOUSAND DOLLARS ($100,000) per employee for disease and FIVE HUNDRED
THOUSAND DOLLARS ($500,000) disease policy limit; and
(k) such other insurance as the Lessor from time to time may reasonably
require and also, as may from time to time be required by applicable Legal
Requirements and/or by any Fee Mortgagee.
12.1.2 Insurance Company Requirements. All such insurance required by
this Lease or the other Lease Documents shall be issued and underwritten by
insurance companies licensed to do insurance business by, and in good standing
under the laws of, the State and which companies have and maintain a rating of
A-X or better by A.M. Best Co.
12.1.3 Policy Requirements. Every policy of insurance from time to time
required under this Lease or any of the other Lease Documents (other than
worker's compensation) shall name the Lessor as owner, loss payee, secured party
(to the extent applicable) and additional named insured as its interests may
appear. If an insurance policy covers properties other than the Leased Property,
then the Lessor shall be so named with respect only to the Leased Property.
Each such policy, where applicable or appropriate, shall:
(a) include an agreed amount endorsement and loss payee, additional
named insured and secured party endorsements, in forms acceptable to the Lessor
in its sole and absolute discretion;
(b) include mortgagee, secured party, loss payable and additional named
insured endorsements reasonably acceptable to each Fee Mortgagee;
(c) provide that the coverages may not be canceled or materially
modified except upon thirty (30) days' prior written notice to the Lessor and
any Fee Mortgagee;
(d) be payable to the Lessor and any Fee Mortgagee notwithstanding any
defense or claim that the insurer may have to the payment of the same against
any other Person holding any other interest in the Leased Property;
(e) be endorsed with standard noncontributory clauses in favor of and in
form reasonably acceptable to the Lessor and any Fee Mortgagee;
(f) expressly waive any right of subrogation on the part of the insurer
against the Lessor, any Fee Mortgagee or the Leasing Group; and
(g) otherwise be in such forms as shall be reasonably acceptable to the
Lessor and any Fee Mortgagee.
12.1.4 Notices; Certificates and Policies. The Lessee shall promptly
provide to the Lessor copies of any and all notices (including notice of
non-renewal), claims and demands which the Lessee receives from insurers of the
Leased Property. At least ten (10) days prior to the expiration of any insurance
policy required hereunder, the Lessee shall deliver to the Lessor certificates
and evidence of insurance relating to all renewals and replacements thereof,
together with evidence, satisfactory to the Lessor, of payment of the premiums
thereon. The Lessee shall deliver to the Lessor original counterparts or copies
certified by the insurance company to be true and complete copies, of all
insurance policies required hereunder not later than the earlier to occur of (a)
thirty (30) days after the effective date of each such policy and (b) ten (10)
days after receipt thereof by the Lessee.
12.1.5 Lessor's Right to Place Insurance. If the Lessee shall fail to
obtain any insurance policy required hereunder by the Lessor, or shall fail to
deliver the certificate and evidence of insurance relating to any such policy to
the Lessor, or if any insurance policy required hereunder (or any part thereof)
shall expire or be canceled or become void or voidable by reason of any breach
of any condition thereof, or if the Lessor determines that such insurance
coverage is unsatisfactory by reason of the failure or impairment of the capital
of any insurance company which wrote any such policy, upon demand by the Lessor,
the Lessee shall promptly obtain new or additional insurance coverage on the
Leased Property, or for those risks required to be insured by the provisions
hereof, satisfactory to the Lessor, and, at its option, the Lessor may obtain
such insurance and pay the premium or premiums therefor; in which event, any
amount so paid or advanced by the Lessor and all costs and expenses incurred in
connection therewith (including, without limitation, attorneys' fees and
expenses and court costs), shall be a demand obligation of the Lessee to the
Lessor, payable as an Additional Charge.
12.1.6 Payment of Proceeds. All insurance policies required hereunder
(except for general public liability, professional liability and workers'
compensation and employers liability insurance) shall provide that in the event
of loss, injury or damage, subject to the rights of any Fee Mortgagee, all
proceeds shall be paid to the Lessor alone (rather than jointly to the Lessee
and the Lessor). The Lessor is hereby authorized to adjust and compromise any
such loss with the consent of the Lessee or, following any Lease Default,
whether or not cured, without the consent of the Lessee, and to collect and
receive such proceeds in the name of the Lessor and the Lessee, and the Lessee
appoints the Lessor (or any agent designated by the Lessor) as the Lessee's
attorney-in-fact with full power of substitution, to endorse the Lessee's name
upon any check in payment thereof. Subject to the provisions of Article 13, such
insurance proceeds shall be applied first toward reimbursement of all costs and
expenses reasonably incurred by the Lessor in collecting said insurance
proceeds, then toward payment of the Lease Obligations or any portion thereof,
then due and payable, in such order as the Lessor determines, and then in whole
or in part toward restoration, repair or reconstruction of the Leased Property
for which such insurance proceeds shall have been paid.
12.1.7 Irrevocable Power of Attorney. The power of attorney conferred on
the Lessor pursuant to the provisions of this Section 12.1, being coupled with
an interest, shall be irrevocable for as long as this Lease is in effect or any
Lease Obligations are outstanding, shall not be affected by any disability or
incapacity which the Lessee may suffer and shall survive the same. Such power of
attorney, is provided solely to protect the interests of the Lessor and shall
not impose any duty on the Lessor to exercise any such power, and neither the
Lessor nor such attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its gross
negligence or willful misconduct.
12.1.8 Blanket Policies. Notwithstanding anything to the contrary
contained herein, the Lessee's obligations to carry the insurance provided for
herein may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by the Lessee and its Affiliates;
provided, however, that the coverage afforded to the Lessor shall not be reduced
or diminished or otherwise be different from that which would exist under a
separate policy meeting all other requirements of this Lease by reason of the
use of such blanket policy of insurance, and provided, further that the
requirements of this Section 12.1 are otherwise satisfied.
12.1.9 No Separate Insurance. The Lessee shall not, on the Lessee's own
initiative or pursuant to the request or requirement of any other Person, take
out separate insurance concurrent in form or contributing in the event of loss
with the insurance required hereunder to be furnished by the Lessee, or increase
the amounts of any then existing insurance by securing an additional policy or
additional policies, unless (a) all parties having an insurable interest in the
subject matter of the insurance, including the Lessor, are included therein as
additional insureds and (b) losses are payable under said insurance in the same
manner as losses are required to be payable under this Lease. The Lessee shall
immediately notify the Lessor of the taking out of any such separate insurance
or of the increasing of any of the amounts of the then existing insurance by
securing an additional insurance policy or policies.
12.1.10 Assignment of Unearned Premiums. The Lessee hereby assigns to
the Lessor all rights of the Lessee in and to any unearned premiums allocable to
the Leased Property on any insurance policy required hereunder to be furnished
by the Lessee which may become payable or are refundable after the occurrence of
an Event of Default hereunder. In the event that this Lease is terminated for
any reason (other than the purchase of the Leased Property by the Lessee), the
insurance policies required to be maintained hereunder, including all right,
title and interest of the Lessee thereunder, shall become the absolute property
of the Lessor.
12.2 Indemnity.
12.2.1 Indemnification. Except with respect to the gross negligence or
willful misconduct of the Lessor or any of the other Indemnified Parties, as to
which no indemnity is provided, the Lessee hereby agrees to defend with counsel
acceptable to the Lessor, indemnify and hold harmless the Lessor and each of the
other Indemnified Parties from and against all damages, losses, claims,
liabilities, obligations, penalties, causes of action, costs and expenses
(including, without limitation, attorneys' fees, court costs and other expenses
of litigation) suffered by, or claimed or asserted against, the Lessor or any of
the other Indemnified Parties, directly or indirectly, based on, arising out of
or resulting from (a) the use and occupancy of the Leased Property or any
business conducted therein, (b) any act, fault, omission to act or misconduct by
(i) any member of the Leasing Group, (ii) any Affiliate of the Lessee or (iii)
any employee, agent, licensee, business invitee, guest, customer, contractor or
sublessee of any of the foregoing parties, relating to, directly or indirectly,
the Leased Property, (c) any accident, injury or damage whatsoever caused to any
Person, including, without limitation, any claim of malpractice, or to the
property of any Person in or about the Leased Property or outside of the Leased
Property where such accident, injury or damage results or is claimed to have
resulted from any act, fault, omission to act or misconduct by any member of the
Leasing Group or any Affiliate of the Lessee or any employee, agent, licensee,
contractor or sublessee of any of the foregoing parties, (d) any Lease Default,
(e) any claim brought or threatened against any of the Indemnified Parties by
any member of the Leasing Group or by any other Person on account of (i) the
Lessor's relationship with any member of the Leasing Group pertaining in any way
to the Leased Property and/or the transaction evidenced by the Lease Documents
and/or (ii) the Lessor's negotiation of, entering into and/or performing any of
its obligations and/or exercising any of its right and remedies under any of the
Lease Documents, (f) any attempt by any member of the Leasing Group (other than
Deaconess) or any Affiliate of the Lessee to transfer or relocate any of the
Permits to any location other than the Leased Property and/or (g) the
enforcement of this indemnity. All amounts which become payable by the Lessee
under this Section 12.2.1 shall be a demand obligation of the Lessee to the
Lessor, payable as an Additional Charge. The indemnity provided for in this
Section 12.2.1 shall survive any termination of this Lease. Notwithstanding
anything to the contrary contained in this Section 12.2.1, no payment for any
indemnified claim brought or threatened against any of the Indemnified Parties
shall be due unless and until the earlier to occur of (x) an agreement by the
relevant parties to settle the claim at issue or (y) a final decision is issued
by a court of competent jurisdiction in favor of the applicable Indemnified
Parties and all appeal periods have lapsed or been exhausted.
12.2.2 Indemnified Parties. As used in this Lease the term "Indemnified
Parties" shall mean Lessor, any Fee Mortgagee and their respective successors,
assigns, employees, servants, agents, attorneys, officers, directors,
shareholders, partners and owners.
12.2.3 Limitation on Lessor Liability. Neither the Lessor nor any
Affiliate of the Lessor shall be liable to any member of the Leasing Group or
any Affiliate of any member of the Leasing Group, or to any other Person
whatsoever for any damage, injury, loss, compensation, or claim (including, but
not limited to, any claim for the interruption of or loss to any business
conducted on the Leased Property) based on, arising out of or resulting from any
cause whatsoever, including, but not limited to, the following: (a) repairs to
the Leased Property, (b) interruption in use of the Leased Property; (c) any
accident or damage resulting from the use or operation of the Leased Property or
any business conducted thereon; (d) the termination of this Lease by reason of
Casualty or Condemnation, (e) any fire, theft or other casualty or crime, (f)
the actions, omissions or misconduct of any other Person, (g) damage to any
property, or (h) any damage from the flow or leaking of water, rain or snow. All
Tangible Personal Property and the personal property of any other Person on the
Leased Property shall be at the sole risk of the Lessee and the Lessor shall not
in any manner be held responsible therefor. Notwithstanding the foregoing, the
Lessor shall not be released from liability for any injury, loss, damage or
liability suffered directly by the Lessee to the extent caused directly by the
gross negligence or willful misconduct of the Lessor, its servants, employees or
agents acting within the scope of their authority on or about the Leased
Property or in regards to the Lease; provided, however, that in no event shall
the Lessor, its servants, employees or agents have any liability based on any
loss with respect to or interruption in the operation of any business at the
Leased Property or for any indirect or consequential damages.
12.2.4 Risk of Loss. During the Term of this Lease, the risk of loss or
of decrease in the enjoyment and beneficial use of the Leased Property in
consequence of any damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
levies or executions of Liens (other than those created by the Lessor in
accordance with the provisions of Article 20) is assumed by the Lessee and, in
the absence of the gross negligence or willful misconduct as set forth in
Section 12.2.3, the Lessor shall in no event be answerable or accountable
therefor (except for the obligation to account for insurance proceeds and Awards
to the extent provided for in Articles 13 and 14) nor shall any of the events
mentioned in this Section entitle the Lessee to any abatement of Rent (except
for an abatement, if any, as specifically provided for in Section 3.8).
ARTICLE 13
FIRE AND CASUALTY
13.1 Restoration Following Fire or Other Casualty.
13.1.1 Following Fire or Casualty. In the event of any damage or
destruction to the Leased Property by reason of fire or other hazard or casualty
(a "Casualty"), the Lessee shall give immediate written notice thereof to the
Lessor and, subject to the terms of this Article 13, the Lessee shall proceed
with reasonable diligence, in full compliance with all applicable Legal
Requirements, to perform such repairs, replacement and reconstruction work
(referred to herein as the "Work") to restore the Leased Property to the
condition it was in immediately prior to such damage or destruction and to a
condition adequate to operate the Facility for the Primary Intended Use and in
compliance with Legal Requirements. All Work shall be performed and completed in
accordance with all Legal Requirements and the other requirements of this Lease
within one hundred and twenty (120) days following the occurrence of the damage
or destruction plus a reasonable time to compensate for Unavoidable Delays
(including for the purposes of this Section, delays in obtaining Permits and in
adjusting insurance losses), but in no event beyond two-hundred and seventy
(270) days following the occurrence of the Casualty.
13.1.2 Procedures. In the event that any Casualty results in
non-structural damage to the Leased Property in excess of FIFTY THOUSAND DOLLARS
($50,000) or in any structural damage to the Leased Property, regardless of the
extent of such structural damage, prior to commencing the Work, the Lessee shall
comply with the following requirements:
(a) The Lessee shall furnish to the Lessor complete plans and
specifications for the Work (collectively, the "Plans and Specifications"), for
the Lessor's approval, in each instance, which approval shall not be
unreasonably withheld. The Plans and Specifications shall bear the signed
approval thereof by an architect, licensed to do business in the State,
reasonably satisfactory to the Lessor and shall be accompanied by a written
estimate from the architect, bearing the architect's seal, of the entire cost of
completing the Work, and to the extent feasible, the Plans and Specifications
shall provide for Work of such nature, quality and extent, that, upon the
completion thereof, the Leased Property shall be at least equal in value and
general utility to its value and general utility prior to the Casualty and shall
be adequate to operate the Leased Property for the Primary Intended Use;
(b) The Lessee shall furnish to the Lessor certified or photostatic
copies of all Permits and Contracts required by all applicable Legal
Requirements in connection with the commencement and conduct of the Work;
(c) The Lessee shall furnish to the Lessor a cash deposit or a payment
and performance bond sufficient to pay for completion of and payment for the
Work in an amount not less than the architect's estimate of the entire cost of
completing the Work, less the amount of property insurance proceeds, if any,
then held by the Lessor and which the Lessor shall be required to apply toward
restoration of the Leased Property as provided in Section 13.2;
(d) The Lessee shall furnish to the Lessor such insurance with respect
to the Work (in addition to the insurance required under Section 12.1 hereof) in
such amounts and in such forms as is reasonably required by the Lessee; and
(e) The Lessee shall not commence any of the Work until the Lessee shall
have complied with the requirements set forth in clauses (a) through (d)
immediately above, as applicable, and, thereafter, the Lessee shall perform the
Work diligently, in a good and workmanlike fashion and in good faith in
accordance with (i) the Plans and Specifications referred to in clause (a)
immediately above, (ii) the Permits and Contracts referred to in clause (b)
immediately above and (iii) all applicable Legal Requirements and other
requirements of this Lease; provided, however, that in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such Work as may be
necessary in order to address such emergency without the Lessor's prior
approval, as long as the Lessee immediately thereafter advises the Lessor of
such emergency and the nature and scope of the Work performed and obtains the
Lessor's approval of the remaining Work to be completed.
13.1.3 Disbursement of Insurance Proceeds. If, as provided in Section
13.2, the Lessor is required to apply any property insurance proceeds toward
repair or restoration of the Leased Property, then as long as the Work is being
diligently performed by the Lessee in accordance with the terms and conditions
of this Lease, the Lessor shall disburse such insurance proceeds from time to
time during the course of the Work in accordance with and subject to
satisfaction of the following provisions and conditions. The Lessor shall not be
required to make disbursements more often than at thirty (30) day intervals. The
Lessee shall submit a written request for each disbursement at least ten (10)
Business Days in advance and shall comply with the following requirements in
connection with each disbursement:
(a) Prior to the commencement of any Work, the Lessee shall have
received the Lessor's written approval of the Plans and Specifications (which
approval shall not be unreasonably withheld) and the Work shall be supervised by
an experienced construction manager with the consultation of an architect or
engineer qualified and licensed to do business in the State.
(b) Each request for payment shall be accompanied by (x) a certificate
of the architect or engineer, bearing the architect's or engineer's seal, and
(y) a certificate of the general contractor, qualified and licensed to do
business in the State, that is performing the Work (collectively, the "Work
Certificates"), each dated not more than ten (10) days prior to the application
for withdrawal of funds, and each stating:
(i) that all of the Work performed as of the date of the
certificates has been completed in compliance with the approved Plans and
Specifications, applicable Contracts and all applicable Legal Requirements;
(ii) that the sum then requested to be withdrawn has been paid by
the Lessee or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other Persons, whose names and addresses shall be
stated therein, who have rendered or furnished certain services or materials for
the Work, and the certificate shall also include a brief description of such
services and materials and the principal subdivisions or categories thereof and
the respective amounts so paid or due to each of said Persons in respect thereof
and stating the progress of the Work up to the date of said certificate;
(iii) that the sum then requested to be withdrawn, plus all sums
previously withdrawn, does not exceed the cost of the Work insofar as actually
accomplished up to the date of such certificate;
(iv) that the remainder of the funds held by the Lessor will be
sufficient to pay for the full completion of the Work in accordance with the
Plans and Specifications;
(v) that no part of the cost of the services and materials
described in the applicable Work Certificate has been or is being made the basis
of the withdrawal of any funds in any previous or then pending application; and
(vi) that, except for the amounts, if any, specified in the
applicable Work Certificate to be due for services and materials, there is no
outstanding indebtedness known, after due inquiry, which is then due and payable
for work, labor, services or materials in connection with the Work which, if
unpaid, might become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar Lien upon the Leased Property.
(c) The Lessee shall deliver to the Lessor satisfactory evidence that
the Leased Property and all materials and all property described in the Work
Certificates are free and clear of Liens, except (i) Liens, if any, securing
indebtedness due to Persons (whose names and addresses and the several amounts
due them shall be stated therein) specified in an applicable Work Certificate,
which Liens shall be discharged upon disbursement of the funds then being
requested, (ii) any Fee Mortgage and (iii) the Permitted Encumbrances. The
Lessor shall accept as satisfactory evidence of the foregoing lien waivers in
customary form from the general contractor and all subcontractors performing the
Work, together with an endorsement of its title insurance policy (relating to
the Leased Property) in form acceptable to the Lessor, dated as of the date of
the making of the then current disbursement, confirming the foregoing.
(d) If the Work involves alteration or restoration of the exterior of
any Leased Improvement that changes the footprint of any Leased Improvement, the
Lessee shall deliver to the Lessor, upon the request of the Lessor, an
"as-built" survey of the Leased Property dated as of a date within ten (10) days
prior to the making of the first and final advances (or revised to a date within
ten (10) days prior to each such advance) showing no encroachments other than
such encroachments, if any, by the Leased Improvements upon or over the
Permitted Encumbrances as are in existence as of the date hereof.
(e) The Lessee shall deliver to the Lessor (i) an opinion of counsel
(satisfactory to the Lessor both as to counsel and as to the form of opinion)
prior to the first advance opining that all necessary Permits for the repair,
replacement and/or restoration of the Leased Property have been obtained and
that the Leased Property, if repaired, replaced or rebuilt in accordance, in all
material respects, with the approved Plans and Specifications and such Permits,
shall comply with all applicable Legal Requirements and (ii) an architect's
certificate (satisfactory to the Lessor both as to the architect and as to the
form of the certificate) prior to the final advance, certifying that the Leased
Property was repaired, replaced or rebuilt in accordance, in all material
respects, with the approved Plans and Specifications and complies with all
applicable Legal Requirements, including, without limitation, all Permits
referenced in the foregoing clause (i).
(f) There shall be no Lease Default or any state of facts or
circumstance existing which, with the giving of notice and/or the passage of
time, would constitute any Lease Default.
The Lessor, at its option, may waive any of the foregoing requirements in whole
or in part in any instance. Upon compliance by the Lessee with the foregoing
requirements (except for such requirements, if any, as the Lessor may have
expressly elected to waive), and to the extent of (x) the insurance proceeds, if
any, which the Lessor may be required to apply to restoration of the Leased
Property pursuant to the provisions of this Lease and (y) all other cash
deposits made by the Lessee, the Lessor shall make available for payment to the
Persons named in the Work Certificate the respective amounts stated in said
certificate(s) to be due, subject to a retention of ten percent (10%) as to all
hard costs of the Work (the "Retainage"). It is understood that the Retainage is
intended to provide a contingency fund to assure the Lessor that the Work shall
be fully completed in accordance with the Plans and Specifications and the
requirements of the Lessor. Upon the full and final completion of all of the
Work in accordance with the provisions hereof, the Retainage shall be made
available for payment to those Persons entitled thereto.
Upon completion of the Work, and as a condition precedent to making any further
advance, in addition to the requirements set forth above, the Lessee shall
promptly deliver to the Lessor:
(i) written certificates of the architect or engineer, bearing the
architect's or engineer's seal, and the general contractor, certifying that the
Work has been fully completed in a good and workmanlike manner in material
compliance with the Plans and Specifications and all Legal Requirements;
(ii) an endorsement of its title insurance policy (relating to the
Leased Property) in form reasonably acceptable to the Lessor insuring the Leased
Property against all mechanic's and materialman's liens accompanied by the final
lien waivers from the general contractor and all subcontractors;
(iii) a certificate by the Lessee in form and substance reasonably
satisfactory to the Lessor, listing all costs and expenses in connection with
the completion of the Work and the amount paid by the Lessee with respect to the
Work; and
(iv) a temporary certificate of occupancy (if obtainable) and all other
applicable Permits and Contracts (that have not previously been delivered to the
Lessor) issued by or entered into with any Governmental Authority with respect
to the Leased Property and the Primary Intended Use and by the appropriate Board
of Fire Underwriters or other similar bodies acting in and for the locality in
which the Leased Property is situated; provided, that within thirty (30) days
after completion of the Work, the Lessee shall obtain and deliver to the Lessor
a permanent certificate of occupancy for the Leased Property.
Upon completion of the Work and delivery of the documents required
pursuant to the provisions of this Section 13.1, the Lessor shall pay the
Retainage to the Lessee or to those Persons entitled thereto and if there shall
be insurance proceeds or cash deposits, other than the Retainage, held by the
Lessor in excess of the amounts disbursed pursuant to the foregoing provisions,
then provided that no Lease Default has occurred and is continuing, nor any
state of facts or circumstances which, with the giving of notice and/or the
passage of time would constitute a Lease Default, the Lessor shall pay over such
proceeds or cash deposits to the Lessee.
No inspections or any approvals of the Work during or after construction
shall constitute a warranty or representation by the Lessor, or any of its
agents or Consultants, as to the technical sufficiency, adequacy or safety of
any structure or any of its component parts, including, without limitation, any
fixtures, equipment or furnishings, or as to the subsoil conditions or any other
physical condition or feature pertaining to the Leased Property. All acts,
including any failure to act, relating to the Lessor are performed solely for
the benefit of the Lessor to assure the payment and performance of the Lease
Obligations and are not for the benefit of the Lessee or the benefit of any
other Person.
13.2 Disposition of Insurance Proceeds.
13.2.1 Proceeds To Be Released to Pay For Work. In the event of any
Casualty, except as provided for in Section 13.2.2, the Lessor shall release
proceeds of property insurance held by it to pay for the Work in accordance with
the provisions and procedures set forth in this Article 13, only if:
(a) all of the terms, conditions and provisions of Sections 13.1 and
13.2.1 are satisfied;
(b) there does not then exist any Lease Default or any state of facts or
circumstance which, with the giving of notice and/or the passage of time, would
constitute such a Lease Default;
(c) The Lessee demonstrates to the Lessor's satisfaction that the Lessee
has the financial ability to satisfy the Lease Obligations during such repair or
restoration; and
(d) no Sublease material to the operation of the Facility immediately
prior to such damage or taking shall have been canceled or terminated, nor
contain any still exercisable right to cancel or terminate, due to such Casualty
if and to the extent that the income from such Sublease is necessary in order to
avoid the violation of any of the financial covenants set forth in this Lease or
otherwise to avoid the creation of an Event of Default.
13.2.2 Proceeds Not To Be Released. If, as the result of any Casualty,
the Leased Property is damaged to the extent it is rendered Unsuitable For Its
Primary Intended Use and if either: (a) the Lessee, after exercise of diligent
efforts, cannot within a reasonable time (not in excess of ninety (90) days)
obtain all necessary Permits in order to be able to perform all required Work
and to again operate the Facility for its Primary Intended Use within two
hundred and seventy (270) days from the occurrence of the damage or destruction
in substantially the manner as immediately prior to such damage or destruction
or (b) such Casualty occurs during the last twenty-four (24) months of the Term
and would reasonably require more than nine (9) months to obtain all Permits and
complete the Work, then the Lessee may either (i) acquire the Leased Property
from the Lessor for a purchase price equal to the Fair Market Value of the
Leased Property minus the Fair Market Added Value, with the Fair Market Value
and the Fair Market Added Value to be determined as of the day immediately prior
to such Casualty and prior to any other Casualty which has not been fully
repaired, restored or replaced, in which event, the Lessee shall be entitled
upon payment of the full purchase price to receive all property insurance
proceeds (less any costs and expenses incurred by the Lessor in collecting the
same), or (ii) terminate this Lease, in which event (subject to the provisions
of the last sentence of this Section 13.2.2) the Lessor shall be entitled to
receive and retain the insurance proceeds; provided, however, that the Lessee
shall only have such right of termination effective upon payment to the Lessor
of all Rent and other sums due under this Lease and the other Lease Documents
through the date of termination plus an amount, which when added to the sum of
(1) the Fair Market Value of the Leased Property as affected by all unrepaired
or unrestored damage due to any Casualty (and giving due regard for delays,
costs and expenses incident to completing all repair or restoration required to
fully repair or restore the same) plus (2) the amount of insurance proceeds
actually received by the Lessor (net of costs and expenses incurred by the
Lessor in collecting the same) equals (3) the Fair Market Value of the Leased
Property minus the Fair Market Added Value, with the Fair Market Value and the
Fair Market Added Value to be determined as of the day immediately prior to such
Casualty and prior to any other Casualty which has not been fully repaired. Any
acquisition of the Leased Property pursuant to the terms of this Section 13.2.2
shall be consummated in accordance with the provisions of Article 18, mutatis,
mutandis. If such termination becomes effective, the Lessor shall assign to the
Lessee any outstanding insurance claims.
13.2.3 Lessee Responsible for Short-Fall. If the cost of the Work
exceeds the amount of proceeds received by the Lessor from the property
insurance required under Article 12 (net of costs and expenses incurred by the
Lessor in collecting the same), the Lessee shall be obligated to contribute any
excess amount needed to repair or restore the Leased Property and pay for the
Work. Such amount shall be paid by the Lessee to the Lessor together with any
other property insurance proceeds for application to the cost of the Work.
13.3 Tangible Personal Property. All insurance proceeds payable by
reason of any loss of or damage to any of the Tangible Personal Property shall
be paid to the Lessor as secured party, subject to the rights of the holders of
any Permitted Prior Security Interests, and, thereafter, provided that no Lease
Default, nor any fact or circumstance which with the giving of notice and/or the
passage of time could constitute a Lease Default, has occurred and is
continuing, the Lessor shall pay such insurance proceeds to the Lessee to
reimburse the Lessee for the cost of repairing or replacing the damaged Tangible
Personal Property, subject to the terms and conditions set forth in the other
provisions of this Article 13, mutatis mutandis.
13.4 Restoration of Certain Improvements and the Tangible Personal
Property. If the Lessee is required or elects to restore the Facility, the
Lessee shall either (a) restore (i) all alterations and improvements to the
Leased Property made by the Lessee and (ii) the Tangible Personal Property or
(b) replace such alterations and improvements and the Tangible Personal Property
with improvements or items of the same or better quality and utility in the
operation of the Leased Property.
13.5 No Abatement of Rent. In no event shall any Rent abate as a result
of any Casualty.
13.6 Termination of Certain Rights. Any termination of this Lease
pursuant to this Article 13 shall cause any right of the Lessee to extend the
Term of this Lease, granted to the Lessee herein and any right of the Lessee to
purchase the Leased Property contained in this Lease to be terminated and to be
without further force or effect.
13.7 Waiver. The Lessee hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction to the Leased
Property due to any Casualty which the Lessee is obligated to restore or may
restore under any of the provisions of this Lease.
13.8 Application of Rent Loss and/or Business Interruption Insurance.
All proceeds of rent loss and/or business interruption insurance (collectively,
"Rent Insurance Proceeds") shall be paid to the Lessor and dealt with as
follows:
(a) if the Work has been promptly and diligently commenced by the Lessee
and is in the process of being completed in accordance with this Lease and no
fact or condition exists which constitutes, or which with the giving of notice
and/or the passage of time would constitute, a Lease Default, the Lessor shall
each month pay to the Lessee out of the Rent Insurance Proceeds a sum equal to
that amount, if any, of the Rent Insurance Proceeds paid by the insurer which is
allocable to the rental loss and/or business interruption for the preceding
month minus an amount equal to the sum of the Rent due hereunder for such month
plus any Impositions relating to the Leased Property then due and payable;
(b) if the Work has not been promptly and diligently commenced by the
Lessee or is not in the process of being completed in accordance with this
Lease, the Rent Insurance Proceeds shall be applied to any Rent then due, and,
to the extent sufficient therefor, an amount equal to Base Rent, Impositions and
insurance premiums payable for the next twelve (12) months, as reasonably
projected by the Lessor, shall be held by the Lessor as security for the Lease
Obligations and applied to the payment of Rent as it becomes due; and
(c) if such Rent Insurance Proceeds received by the Lessor (net of costs
and expenses incurred by the Lessor in collecting the same) exceed the amounts
required under clauses (a) and (b) above, the excess shall be paid to the
Lessee, provided no fact or circumstance exists which constitutes, or with
notice, or passage of time, or both, would constitute, a Lease Default.
Notwithstanding the foregoing, the Lessor may at its option use or release the
Rent Insurance Proceeds to pay for the Work and, if a Lease Default exists, the
Lessor may apply all such insurance proceeds towards the Lease Obligations or
hold such proceeds as security therefor.
13.9 Obligation To Account. Upon the Lessee's written request, which may
not be made not more than once in any three (3) month period, the Lessor shall
provide the Lessee with a written accounting of the application of all insurance
proceeds received by the Lessor.
ARTICLE 14
CONDEMNATION
14.1 Parties' Rights and Obligations. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease,
the rights and obligations of the parties shall be determined by this Article
14.
14.2 Total Taking. If there is a permanent Taking of all or
substantially all of the Leased Property, this Lease shall terminate on the Date
of Taking.
14.3 Partial or Temporary Taking. If there is a Permanent Taking of a
portion of the Leased Property, or if there is a temporary Taking of all or a
portion of the Leased Property, this Lease shall remain in effect so long as the
Leased Property is not thereby rendered permanently Unsuitable For Its Primary
Intended Use or temporarily Unsuitable For Its Primary Intended Use for a period
not likely to, or which does not, exceed two hundred and seventy (270) days. If,
however, the Leased Property is thereby so rendered permanently or temporarily
Unsuitable For Its Primary Intended Use: (a) the Lessee shall have the right to
restore the Leased Property, at its own expense, (subject to the right under
certain circumstances as provided for in Section 14.5 to receive the net
proceeds of an Award for reimbursement) to the extent possible, to substantially
the same condition as existed immediately before the partial or temporary Taking
or (b) the Lessee shall have the right to acquire the Leased Property from the
Lessor (i) upon payment of all Rent due through the date that the purchase price
is paid, for a purchase price equal to the Fair Market Value of the Leased
Property minus the Fair Market Added Value, with the Fair Market Value of the
Leased Property and the Fair Market Added Value to be determined as of the day
immediately prior to such partial or temporary Taking and (ii) in accordance
with the terms and conditions set forth in Article 18; in which event, this
Lease shall terminate upon payment of such purchase price and the consummation
of such acquisition. Notwithstanding the foregoing, the Lessor may overrule the
Lessee's election under clause (a) or (b) and instead either (1) terminate this
Lease as of the date when the Lessee is required to surrender possession of the
portion of the Leased Property so taken or (2) compel the Lessee to keep the
Lease in full force and effect and to restore the Leased Property as provided in
clause (a) above, but only if the Leased Property may be operated for at least
eighty percent (80%) of the licensed bed capacity of the Facility if operated in
accordance with its Primary Intended Use. The Lessee shall exercise its election
under this Section 14.3 by giving the Lessor notice thereof ("Lessee's Election
Notice") within sixty (60) days after the Lessee receives notice of the Taking.
The Lessor shall exercise its option to overrule the Lessee's election under
this Section 14.3 by giving the Lessee notice of the Lessor's exercise of its
rights under Section 14.3 within thirty (30) days after the Lessor receives the
Lessee's Election Notice. If, as the result of any such partial or temporary
Taking, this Lease is not terminated as provided above, the Lessee shall be
entitled to an abatement of Rent, but only to the extent, if any, provided for
in Section 3.8, effective as of the date upon which the Leased Property is
rendered Unsuitable For Its Primary Intended Use.
14.4 Restoration. If there is a partial or temporary Taking of the
Leased Property and this Lease remains in full force and effect pursuant to
Section 14.3, the Lessee shall accomplish all necessary restoration and the
Lessor shall release the net proceeds of such Award to reimburse the Lessee for
the actual reasonable costs and expenses thereof, subject to all of the
conditions and provisions set forth in Article 13 as though the Taking was a
Casualty and the Award was insurance proceeds. If the cost of the restoration
exceeds the amount of the Award (net of costs and expenses incurred in obtaining
the Award), the Lessee shall be obligated to contribute any excess amount needed
to restore the Facility or pay for such costs and expenses. To the extent that
the cost of restoration is less than the amount of the Award (net of cost and
expenses incurred in obtaining the Award), the remainder of the Award shall be
retained by the Lessor and Rent shall be abated as set forth in Section 3.8.
14.5 Award Distribution. In the event the Lessee completes the purchase
of the Leased Property, as described in Section 14.3, the entire Award shall,
upon payment of the purchase price and all Rent and other sums due under this
Lease and the other Lease Documents, belong to the Lessee and the Lessor agrees
to assign to the Lessee all of the Lessor's rights thereto. In any other event,
the entire Award shall belong to and be paid to the Lessor.
14.6 Control of Proceedings. Subject to the rights of any Fee Mortgagee,
unless and until the Lessee completes the purchase of the Leased Property as
provided in Section 14.3, all proceedings involving any Taking and the
prosecution of claims arising out of any Taking against the Condemnor shall be
conducted, prosecuted and settled by the Lessor; provided, however, that the
Lessor shall keep the Lessee apprised of the progress of all such proceedings
and shall solicit the Lessee's advice with respect thereto and shall give due
consideration to any such advice. In addition, the Lessee shall reimburse the
Lessor (as an Additional Charge) for all costs and expenses, including
reasonable attorneys' fees, appraisal fees, fees of expert witnesses and costs
of litigation or dispute resolution, in relation to any Taking, whether or not
this Lease is terminated.
ARTICLE 15
PERMITTED CONTESTS
15.1 Lessee's Right to Contest. To the extent of the express references
made to this Article 15 in other Sections of this Lease, the Lessee, any
Sublessee or any Manager on their own or on the Lessor's behalf (or in the
Lessor's name), but at their sole cost and expense, may contest, by appropriate
legal proceedings conducted in good faith and with due diligence (until the
resolution thereof), the amount, validity or application, in whole or in part,
of any Imposition, Legal Requirement, the decision of any Governmental Authority
related to the operation of the Leased Property for its Primary Intended Use or
any Lien or claim relating to the Leased Property not otherwise permitted by
this Lease; provided, that (a) prior written notice of such contest is given to
the Lessor, (b) in the case of an unpaid Imposition, Lien or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from the Lessor and/or compliance by any applicable member of the
Leasing Group with the contested Legal Requirement or other matter may be
legally delayed pending the prosecution of any such proceeding without the
occurrence or creation of any Lien, charge or liability of any kind against the
Leased Property, (c) neither the Leased Property nor any rent therefrom would be
in any immediate danger of being sold, forfeited, attached or lost as a result
of such proceeding, (d) in the case of a Legal Requirement, neither the Lessor
nor any member of the Leasing Group would be in any immediate danger of civil or
criminal liability for failure to comply therewith pending the outcome of such
proceedings, (e) in the event that any such contest shall involve a sum of money
or potential loss in excess of FIFTY THOUSAND DOLLARS ($50,000), the Lessee
shall deliver to the Lessor an Officer's Certificate and opinion of counsel, if
the Lessor deems the delivery of an opinion to be appropriate, certifying or
opining, as the case may be, as to the validity of the statements set forth to
the effect set forth in clauses (b), (c) and (d), to the extent applicable, (f)
the Lessee shall give such cash security as may be demanded in good faith by the
Lessor to insure ultimate payment of any fine, penalty, interest or cost and to
prevent any sale or forfeiture of the affected portion of the Leased Property by
reason of such non-payment or non-compliance, (g) if such contest is finally
resolved against the Lessor or any member of the Leasing Group, the Lessee shall
promptly pay, as Additional Charges due hereunder, the amount required to be
paid, together with all interest and penalties accrued thereon and/or comply
(and cause any Sublessee and any Manager to comply) with the applicable Legal
Requirement, and (h) no state of facts or circumstance exists which constitutes,
or with the passage of time and/or the giving of notice, could constitute a
Lease Default; provided, however, the provisions of this Article 15 shall not be
construed to permit the Lessee to contest the payment of Rent or any other sums
payable by the Lessee to the Lessor under any of the Lease Documents.
15.2 Lessor's Cooperation. The Lessor, at the Lessee's sole cost and
expense, shall execute and deliver to the Lessee such authorizations and other
documents as may reasonably be required in any such contest, so long as the same
does not expose the Lessor to any civil or criminal liability, and, if
reasonably requested by the Lessee or if the Lessor so desires, the Lessor shall
join as a party therein.
15.3 Lessee's Indemnity. The Lessee, as more particularly provided for
in Section 12.2, shall indemnify, defend (with counsel acceptable to the Lessor)
and save the Lessor harmless against any liability, cost or expense of any kind,
including, without limitation, attorneys' fees and expenses that may be imposed
upon the Lessor in connection with any such contest and any loss resulting
therefrom and in the enforcement of this indemnification.
ARTICLE 16
DEFAULT
16.1 Events of Default. Each of the following shall constitute an "Event
of Default" hereunder and shall entitle the Lessor to exercise its remedies
hereunder and under any of the other Lease Documents:
(a) any failure of the Lessee to pay any amount due hereunder or under
any of the other Lease Documents within ten (10) days following the date when
such payment was due;
(b) any failure in the observance or performance of any other covenant,
term, condition or warranty provided in this Lease or any of the other Lease
Documents, other than the payment of any monetary obligation and other than as
specified in subsections (c) through (v) below (a "Failure to Perform"),
continuing for thirty (30) days after the giving of notice by the Lessor to the
Lessee specifying the nature of the Failure to Perform; except as to matters not
susceptible to cure within thirty (30) days, provided that with respect to such
matters, (i) the Lessee commences the cure thereof within thirty (30) days after
the giving of such notice by the Lessor to the Lessee, (ii) the Lessee
continuously prosecutes such cure to completion, (iii) such cure is completed
within ninety (90) days after the giving of such notice by the Lessor to the
Lessee and (iv) such Failure to Perform does not impair the value of, or the
Lessor's rights with respect to, the Leased Property;
(c) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, under
any of the other Lease Documents;
(d) if any representation, warranty or statement contained herein or in
any of the other Lease Documents proves to be untrue in any material respect as
of the date when made or at any time during the Term if such representation or
warranty is a continuing representation or warranty pursuant to Section 10.2;
(e) if any member of the Leasing Group other than Deaconess shall (i)
voluntarily be adjudicated a bankrupt or insolvent, (ii) seek or consent to the
appointment of a receiver or trustee for itself or for the Leased Property,
(iii) file a petition seeking relief under the bankruptcy or other similar laws
of the United States, any state or any jurisdiction, (iv) make a general
assignment for the benefit of creditors, (v) make or offer a composition of its
debts with its creditors or (vi) be unable to pay its debts as such debts
mature;
(f) if any court shall enter an order, judgment or decree appointing,
without the consent of any member of the Leasing Group (other than Deaconess), a
receiver or trustee for such member or for any of its property and such order,
judgment or decree shall remain in force, undischarged or unstayed, sixty (60)
days after it is entered;
(g) if a petition is filed against any member of the Leasing Group
(other than Deaconess) which seeks relief under the bankruptcy or other similar
laws of the United States, any state or any other jurisdiction, and such
petition is not dismissed within sixty (60) days after it is filed;
(h) in the event that, without the prior written consent of the Lessor,
in each instance, which consent may be withheld by the Lessor in its sole and
absolute discretion, if any of the outstanding capital stock of any member of
the Leasing Group, other than the Guarantor or Deaconess, shall be, on any one
or more occasions, directly or indirectly, sold, assigned, hypothecated or
otherwise transferred (whether by operation of law or otherwise), if such member
of the Leasing Group shall be a corporation,
(i) the liquidation, dissolution or termination of existence of the any
member of the Lessee or the merger or consolidation of any member of the Lessee
with any other Person;
(j) if, without the prior written consent of the Lessor, in each
instance, which consent may be withheld by the Lessor in its sole and absolute
discretion, the Lessee's or any Sublessee's interest in the Leased Property
shall be, directly or indirectly, mortgaged, encumbered (by any voluntary or
involuntary Lien other than the Permitted Encumbrances), subleased, sold,
assigned, hypothecated or otherwise transferred (whether by operation of law or
otherwise);
(k) the occurrence of a default or breach of condition continuing beyond
the expiration of the applicable notice and grace periods, if any, in connection
with the payment or performance of any other material obligation of the Lessee
or any Sublessee (other than Deaconess or any other Sublessee that is not an
Affiliate of the Lessee), whether or not the applicable creditor or obligee
elects to declare the obligations of the Lessee or the applicable Sublessee
under the applicable agreement due and payable or to exercise any other right or
remedy available to such creditor or obligee, if such creditor's or obligee's
rights and remedies may involve or result in (i) the taking of possession of the
Leased Property or (ii) the assertion of any other right or remedy that, in the
Lessor's reasonable opinion, may impair the Lessee's ability punctually to
perform all of its material obligations under this Lease and the other Lease
Documents, may impair such Sublessee's ability punctually to perform all of its
obligations under its Sublease or may materially impair the Lessor's security
for the Lease Obligations; provided, however, that in any event, the election by
the applicable creditor or obligee to declare the obligations of the Lessee
under the applicable agreement due and payable or to exercise any other right or
remedy available to such creditor or obligee shall be an Event of Default
hereunder only if such obligations, individually or in the aggregate, are in
excess of ONE HUNDRED THOUSAND DOLLARS ($100,000);
(l) intentionally omitted;
(m) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, under
any credit agreement, loan agreement or other agreement establishing a major
line of credit (or any documents executed in connection with such lines of
credit) on behalf of any member of the Leasing Group (other than Deaconess or
any other Sublessee that is not an Affiliate of the Lessee) whether or not the
applicable creditor has elected to declare the indebtedness due and payable
under such line of credit or to exercise any other right or remedy available to
it. For the purposes of this provision, a major line of credit shall mean and
include any line of credit established in an amount equal to or greater than
FIVE HUNDRED THOUSAND DOLLARS ($500,000);
(n) except as a result of Casualty or a partial or complete
Condemnation, if the Lessee or any Sublessee (other than Deaconess) ceases
operation of the Facility for a period in excess of thirty (30) days;
(o) if one or more judgments against the Lessee or any Sublessee (other
than Deaconess or any other Sublessee that is not an Affiliate of the Lessee) or
attachments against the Lessee's interest or any such Sublessee's interest in
the Leased Property, which in the aggregate exceed ONE HUNDRED THOUSAND DOLLARS
($100,000) or which may materially and adversely interfere with the operation of
the Facility, remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days;
(p) if any malpractice award or judgment exceeding any applicable
professional liability insurance coverage by more than FIVE HUNDRED THOUSAND
DOLLARS ($500,000) shall be rendered against any member of the Leasing Group
(other than Deaconess) and either (i) enforcement proceedings shall have been
commenced by any creditor upon such award or judgment or (ii) such award or
judgment shall continue unsatisfied and in effect for a period of ten (10)
consecutive days without an insurance company satisfactory to the Lessor (in its
sole and absolute discretion) having agreed to fund such award or judgment in a
manner satisfactory to the Lessor (in its sole and absolute discretion) and in
either case such award or judgment shall, in the reasonable opinion of the
Lessor, have a material adverse affect on the ability of any such member of the
Leasing Group to operate the Facility;
(q) if any Provider Agreement material to the operation or financial
condition of any member of the Leasing Group (other than Deaconess) shall be
terminated prior to the expiration of the term thereof or, without the prior
written consent of the Lessor, in each instance, which consent may be withheld
in the Lessor's reasonable discretion, shall not be renewed or extended upon the
expiration of the stated term thereof;
(r) if, after the Lessee or any Sublessee (other than Deaconess) has
obtained approval for participation in the Medicare and/or Medicaid programs
with regard to the operation of the Facility, a final unappealable determination
is made by the applicable Governmental Authority that the Lessee or any such
Sublessee shall have failed to comply with applicable Medicare and/or Medicaid
regulations in the operation of the Facility, as a result of which failure the
Lessee or such Sublessee is declared ineligible to continue its participation in
the Medicare and/or Medicaid programs;
(s) if any member of the Leasing Group (other than Deaconess) receives
notice of a final unappealable determination by applicable Governmental
Authorities of the revocation of any Permit required for the lawful operation of
the Facility in accordance with the Primary Intended Use or the loss of any
Permit under any other circumstances under which any such member of the Leasing
Group is required to cease the operation of the Facility in accordance with the
Primary Intended Use;
(t) any failure to maintain the insurance required pursuant to Section
12 of this Lease in force and effect at all times until the Lease Obligations
are fully paid and performed;
(u) the appointment of a temporary manager (or operator) for the Leased
Property by any Governmental Authority; or
(v) the entry of an order by a court with jurisdiction over the Leased
Property to close the Facility, to transfer one or more patients or residents
from the Facility as a result of an allegation of abuse or neglect or to take
any action to eliminate an emergency situation then existing at the Facility.
16.2 Remedies.
(a) If any Lease Default shall have occurred, the Lessor may at its
option terminate this Lease by giving the Lessee not less than ten (10) days'
notice of such termination, or exercise any one or more of its rights and
remedies under this Lease or any of the other Lease Documents, or as available
at law or in equity and upon the expiration of the time fixed in such notice,
the Term shall terminate (but only if the Lessor shall have specifically elected
by a written notice to so terminate the Lease) and all rights of the Lessee
under this Lease shall cease. Notwithstanding the foregoing, in the event of the
Lessee's failure to pay Rent, if such Rent remains unpaid beyond ten (10) days
from the due date thereof, the Lessor shall not be obligated to give ten (10)
days notice of such termination or exercise of any of its other rights and
remedies under this Lease, or the other Lease Documents, or otherwise available
at law or in equity, and the Lessor shall be at liberty to pursue any one or
more of such rights or remedies without further notice. No taking of possession
of the Leased Property by or on behalf of the Lessor, and no other act done by
or on behalf of the Lessor, shall constitute an acceptance of surrender of the
Leased Property by the Lessee or reduce the Lessee's obligations under this
Lease or the other Lease Documents, unless otherwise expressly agreed to in a
written document signed by an authorized officer or agent of the Lessor.
(b) To the extent permitted under applicable law, the Lessee shall pay
as Additional Charges all costs and expenses (including, without limitation,
attorneys' fee and expenses) reasonably incurred by or on behalf of the Lessor
as a result of any Lease Default.
(c) If any Lease Default shall have occurred, whether or not this Lease
has been terminated pursuant to Paragraph (a) of this Section, the Lessee shall,
to the extent permitted under applicable law, if required by the Lessor so to
do, upon not less than ten (10) days' prior notice from the Lessor, immediately
surrender to the Lessor the Leased Property pursuant to the provisions of
Paragraph (a) of this Section and quit the same, and the Lessor may enter upon
and repossess the Leased Property by reasonable force, summary proceedings,
ejectment or otherwise, and may remove the Lessee and all other Persons and any
and all of the Tangible Personal Property from the Leased Property, subject to
the rights of any residents or patients of the Facility and any Sublessees who
are not Affiliates of any member of the Leasing Group and to any requirements of
applicable law, or the Lessor may claim ownership of the Tangible Personal
Property as set forth in Section 5.2.3 hereof or the Lessor may exercise its
rights as secured party under the Security Agreement. The Lessor shall use
reasonable, good faith efforts to relet the Leased Property or otherwise
mitigate damages suffered by the Lessor as a result of the Lessee's breach of
this Lease.
(d) In addition to all of the rights and remedies of the Lessor set
forth in this Lease and the other Lease Documents, if the Lessee shall fail to
pay any rental or other charge due hereunder (whether denominated as Base Rent,
Additional Charges or otherwise) within ten (10) days after same shall have
become due and payable, then and in such event the Lessee shall also pay to the
Lessor (i) a late payment service charge (in order to partially defray the
Lessor's administrative and other overhead expenses) equal to two hundred-fifty
($250) dollars and (ii) to the extent permitted by applicable law, interest on
such unpaid sum at the Overdue Rate; it being understood, however, that nothing
herein shall be deemed to extend the due date for payment of any sums required
to be paid by the Lessee hereunder or to relieve the Lessee of its obligation to
pay such sums at the time or times required by this Lease.
16.3 Damages. None of (a) the termination of this Lease pursuant to
Section 16.2, (b) the eviction of the Lessee or the repossession of the Leased
Property, (c) the failure or inability of the Lessor, notwithstanding reasonable
good faith efforts, to relet the Leased Property, (d) the reletting of the
Leased Property or (e) the failure of the Lessor to collect or receive any
rentals due upon any such reletting, shall relieve the Lessee of its liability
and obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In any such event, the Lessee shall forthwith pay to
the Lessor all Rent due and payable with respect to the Leased Property to and
including the date of such termination, repossession or eviction. Thereafter,
the Lessee shall forthwith pay to the Lessor, at the Lessor's option, either:
(i) the sum of: (x) all Rent that is due and unpaid at later to occur of
termination, repossession or eviction, together with interest thereon at the
Overdue Rate to the date of payment, plus (y) the worth (calculated in the
manner stated below) of the amount by which the unpaid Rent for the balance of
the Term after the later to occur of the termination, repossession or eviction
exceeds the fair market rental value of the Leased Property for the balance of
the Term, plus (z) any other amount necessary to compensate the Lessor for all
damage proximately caused by the Lessee's failure to perform the Lease
Obligations or which in the ordinary course would be likely to result therefrom;
or
(ii) each payment of Rent as the same would have become due and payable
if the Lessee's right of possession or other rights under this Lease had not
been terminated, or if the Lessee had not been evicted, or if the Leased
Property had not been repossessed which Rent, to the extent permitted by law,
shall bear interest at the Overdue Rate from the date when due until the date
paid, and the Lessor may enforce, by action or otherwise, any other term or
covenant of this Lease. There shall be credited against the Lessee's obligation
under this Clause (ii) amounts actually collected by the Lessor from another
tenant to whom the Leased Property may have actually been leased or, if the
Lessor is operating the Leased Property for its own account, the actual net cash
flow of the Leased Property.
In making the determinations described in subparagraph (i) above, the
"worth" of unpaid Rent shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present worth)
reasonably applicable at the time of such determination and allowed by
applicable law.
16.4 Lessee Waivers. If this Lease is terminated pursuant to Section
16.2, the Lessee waives, to the extent not prohibited by applicable law, (a) any
right of redemption, re-entry or repossession, (b) any right to a trial by jury
in the event of summary proceedings to enforce the remedies set forth in this
Article 16, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
16.5 Application of Funds. Any payments otherwise payable to the Lessee
which are received by the Lessor under any of the provisions of this Lease
during the existence or continuance of any Lease Default shall be applied to the
Lease Obligations in the order which the Lessor may reasonably determine or as
may be required by the laws of the State.
16.6 Intentionally Omitted.
16.7 Lessor's Right to Cure. If the Lessee shall fail to make any
payment, or to perform any act required to be made or performed under this Lease
and to cure the same within the relevant time periods provided in Section 16.1,
the Lessor, after five (5) Business Days' prior notice to the Lessee (except in
an emergency when such shorter notice shall be given as is reasonable under the
circumstances), and without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of the
Lessee, and may, to the extent permitted by law, enter upon the Leased Property
for such purpose and take all such action thereon as, in the Lessor's opinion,
may be necessary or appropriate therefor. No such entry shall be deemed an
eviction of the Lessee. All sums so paid by the Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred shall be
paid by the Lessee to the Lessor on demand as an Additional Charge. The
obligations of the Lessee and rights of the Lessor contained in this Article
shall survive the expiration or earlier termination of this Lease.
16.8 No Waiver By Lessor. The Lessor shall not by any act, delay,
omission or otherwise (including, without limitation, the exercise of any right
or remedy hereunder) be deemed to have waived any of its right or remedies
hereunder or under any of the other Lease Documents unless such waiver is in
writing and signed by the Lessor, and then, only to the extent specifically set
forth therein. No waiver at any time of any of the terms, conditions, covenants,
representations or warranties set forth in any of the Lease Documents
(including, without limitation, any of the time periods set forth therein for
the performance of the Lease Obligations) shall be construed as a waiver of any
other term, condition, covenant, representation or warranty of any of the Lease
Documents, nor shall such a waiver in any one instance or circumstances be
construed as a waiver of the same term, condition, covenant, representation or
warranty in any subsequent instance or circumstance. No such failure, delay or
waiver shall be construed as creating a requirement that the Lessor must
thereafter, as a result of such failure, delay or waiver, give notice to the
Lessee or any other Person that the Lessor does not intend to, or may not, give
a further waiver or to refrain from insisting upon the strict performance of the
terms, conditions, covenants, representations and warranties set forth in the
Lease Documents before the Lessor can exercise any of its rights or remedies
under any of the Lease Documents or before any Lease Default can occur, or as
establishing a course of dealing for interpreting the conduct of and agreements
between the Lessor and the Lessee or any other Person.
The acceptance by the Lessor of any payment that is less than payment in
full of all amounts then due under any of the Lease Documents at the time of the
making of such payment shall not: (a) constitute a waiver of the right to
exercise any of the Lessor's remedies at that time or at any subsequent time,
(b) constitute an accord and satisfaction or (c) nullify any prior exercise of
any remedy, without the express written consent of the Lessor. Any failure by
the Lessor to take any action under this Lease or any of the other Lease
Documents by reason of a default hereunder or thereunder, any acceptance of a
past due installment, or any indulgence granted from time to time shall not be
construed (i) as a novation of this Lease or any of the other Lease Documents,
(ii) as a waiver of any right of the Lessor thereafter to insist upon strict
compliance with the terms of this Lease or any of the other Lease Documents or
(iii) to prevent the exercise of any right of acceleration or any other right
granted hereunder or under applicable law; and to the maximum extent not
prohibited by applicable law, the Lessor hereby expressly waives the benefit of
any statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.
16.9 Right of Forbearance. Whether or not for consideration paid or
payable to the Lessor and, except as may be otherwise specifically agreed to by
the Lessor in writing, no forbearance on the part of the Lessor, no extension of
the time for the payment of the whole or any part of the Lease Obligations, and
no other indulgence given by the Lessor to the Lessee or any other Person, shall
operate to release or in any manner affect the original liability of the Lessee
or such other Persons, or to limit, prejudice or impair any right of the Lessor,
including, without limitation, the right to realize upon any collateral, or any
part thereof, for any of the Lease Obligations evidenced or secured by the Lease
Documents; notice of any such extension, forbearance or indulgence being hereby
waived by the Lessee and all those claiming by, through or under the Lessee.
16.10 Cumulative Remedies. The rights and remedies set forth under this
Lease are in addition to all other rights and remedies afforded to the Lessor
under any of the other Lease Documents or at law or in equity, all of which are
hereby reserved by the Lessor, and this Lease is made and accepted without
prejudice to any such rights and remedies. All of the rights and remedies of the
Lessor under each of the Lease Documents shall be separate and cumulative and
may be exercised concurrently or successively in the Lessor's sole and absolute
discretion.
ARTICLE 17
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
17.1 Surrender. The Lessee shall, upon the expiration or prior
termination of the Term (unless the Lessee has concurrently purchased the Leased
Property in accordance with the terms hereof), vacate and surrender the Leased
Property to the Lessor in good repair and condition, in compliance with all
Legal Requirements, all Insurance Requirements, and in compliance with the
provisions of Article 8, except for: (a) ordinary wear and tear (subject to the
obligation of the Lessee to maintain the Leased Property in good order and
repair during the entire Term of the Lease), (b) damage caused by the gross
negligence or willful acts of the Lessor, and (c) any damage or destruction
resulting from a Casualty or Taking that the Lessee is not required by the terms
of this Lease to repair or restore.
17.2 Transfer of Permits and Contracts. In connection with the
expiration or any earlier termination of this Lease (unless the Lessee has
concurrently purchased the Leased Property in accordance with the terms hereof),
upon any request made from time to time by the Lessor, the Lessee shall (a)
promptly and diligently use its best efforts to (i) transfer and assign all
Permits and Contracts necessary or desirable for the operation of the Leased
Property in accordance with its Primary Intended Lease to the Lessor or its
designee and/or (ii) arrange for the transfer or assignment of such Permits and
Contracts to the Lessor or its designee, all to the extent the same may be
transferred or assigned under applicable law and (b) cooperate in every respect
(and to the fullest extent possible) and assist the Lessor or its designee in
obtaining such Permits and Contracts (whether by transfer, assignment or
otherwise). Such efforts and cooperation on the part of the Lessee shall
include, without limitation, the execution, delivery and filing with appropriate
Governmental Authorities, Accreditation Bodies and Third Party Payors of any
applications, petitions, statements, notices, requests, assignments and other
documents or instruments requested by the Lessor. Furthermore, the Lessee shall
not take any action or refrain from taking any action which would defer, delay
or jeopardize the process of the Lessor or its designee obtaining said Permits
and Contracts (whether by transfer, assignment or otherwise). Without limiting
the foregoing, the Lessee shall not seek to transfer or relocate any of said
Permits or Contracts to any location other than the Leased Property. The
provisions of this Section 17.2 shall survive the expiration or earlier
termination of this Lease.
The Lessee hereby appoints the Lessor as its attorney-in-fact, with full
power of substitution to take such actions, in the event that the Lessee fails
to comply with any request made by the Lessor hereunder, as the Lessor (in its
sole absolute discretion) may deem necessary or desirable to effectuate the
intent of this Section 17.2. The power of attorney conferred on the Lessor by
the provisions of this Section 17.2, being coupled with an interest, shall be
irrevocable until the Lease Obligations are fully paid and performed and shall
not be affected by any disability or incapacity which the Lessee may suffer and
shall survive the same. Such power of attorney is provided solely to protect the
interests of the Lessor and shall not impose any duty on the Lessor to exercise
any such power and neither the Lessor nor such attorney-in-fact shall be liable
for any act, omission, error in judgment or mistake of law, except as the same
may result from its gross negligence or willful misconduct.
17.3 No Acceptance of Surrender. Except at the expiration of the Term in
the ordinary course, no surrender to the Lessor of this Lease or of the Leased
Property or any interest therein shall be valid or effective unless agreed to
and accepted in writing by the Lessor and no act by the Lessor or any
representative or agent of the Lessor, other than such a written acceptance by
the Lessor, shall constitute an acceptance of any such surrender.
17.4 Holding Over. If, for any reason, the Lessee shall remain in
possession of the Leased Property after the expiration or any earlier
termination of the Term, such possession shall be as a tenant at sufferance
during which time the Lessee shall pay as rental each month, one and one-half
times the aggregate of (i) one-twelfth of the aggregate Base Rent payable at the
time of such expiration or earlier termination of the Term; (ii) all Additional
Charges accruing during the month and (iii) all other sums, if any, payable by
the Lessee pursuant to the provisions of this Lease with respect to the Leased
Property. During such period of tenancy, the Lessee shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to tenants at sufferance, to continue its occupancy and use of the Leased
Property. Nothing contained herein shall constitute the consent, express or
implied, of the Lessor to the holding over of the Lessee after the expiration or
earlier termination of this Lease.
ARTICLE 18
PURCHASE OF THE LEASED PROPERTY
18.1 Purchase of the Leased Property. In the event the Lessee purchases
the Leased Property from the Lessor pursuant to Article 13 or Article 14 of this
Lease, the Lessor shall, upon receipt from the Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase, deliver to
the Lessee a deed with covenants only against acts of the Lessor conveying the
entire interest of the Lessor in and to the Leased Property to the Lessee
subject to all Legal Requirements, all of the matters described in clauses (a),
(b), (e) and (g) of Section 11.5.2, Impositions, any Liens created by the
Lessee, any Liens created in accordance with the terms of this Lease or
consented to by the Lessee, the claims of all Persons claiming by through or
under the Lessee, any other matters assented to by the Lessee and all matters
for which the Lessee has responsibility under any of the Lease Documents, but
otherwise not subject to any other Lien created by the Lessor from and after the
Commencement Date (other than an Encumbrance permitted under Article 20 which
the Lessee elects to assume). The applicable purchase price shall be paid in
cash to the Lessor, or as the Lessor may direct, in federal or other immediately
available funds except as otherwise mutually agreed by the Lessor and the
Lessee. All expenses of such conveyance, including, without limitation, title
examination costs, standard (and extended) coverage title insurance premiums,
attorneys' fees incurred by the Lessor in connection with such conveyance,
recording and transfer taxes and recording fees and other similar charges shall
be paid by the Lessee.
18.2 Appraisal.
18.2.1 Designation of Appraisers. In the event that it becomes necessary
to determine the Fair Market Value of the Leased Property for any purpose of
this Lease, the party required or permitted to give notice of such required
determination shall include in the notice the name of a Person selected to act
as appraiser on its behalf. Within ten (10) days after receipt of any such
notice, the Lessor (or the Lessee, as the case may be) shall by notice to the
Lessee (or the Lessor, as the case may be) appoint a second Person as appraiser
on its behalf.
18.2.2 Appraisal Process. The appraisers thus appointed, each of whom
must be a member of the American Institute of Real Estate Appraisers (or any
successor organization thereto), shall, within forty-five (45) days after the
date of the notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market Value of the Leased Property as of
the relevant date (giving effect to the impact, if any, of inflation from the
date of their decision to the relevant date); provided, however, that if only
one appraiser shall have been so appointed, or if two appraisers shall have been
so appointed but only one such appraiser shall have made such determination
within fifty (50) days after the making of the Lessee's or the Lessor's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers shall have been appointed and shall have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed ten per cent
(10%) of the lesser of such amounts, then the Fair Market Value of the Leased
Property shall be an amount equal to fifty percent (50%) of the sum of the
amounts so determined. If the difference between the amounts so determined shall
exceed ten percent (10%) of the lesser of such amounts, then such two appraisers
shall have twenty (20) days to appoint a third appraiser, but if such appraisers
fail to do so, then either party may request the American Arbitration
Association or any successor organization thereto to appoint an appraiser within
twenty (20) days of such request, and both parties shall be bound by any
appointment so made within such twenty (20) day period. If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of Fair Market Value of the
Leased Property, whichever is earlier, either the Lessor or the Lessee may apply
to any court having jurisdiction to have such appointment made by such court.
Any appraiser appointed by the original appraisers, by the American Arbitration
Association or by such court shall be instructed to determine the Fair Market
Value of the Leased Property within thirty (30) days after appointment of such
Appraiser. The determination of the appraiser which differs most in terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and fifty percent (50%) of the sum of the remaining two determinations
shall be final and binding upon the Lessor and the Lessee as the Fair Market
Value of the Leased Property.
18.2.3 Specific Enforcement and Costs. This provision for determination
by appraisal shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder shall be final
and binding upon the parties except as otherwise provided by applicable law. The
Lessor and the Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other cost and expenses incurred in
connection with each appraisal.
ARTICLE 19
SUBLETTING AND ASSIGNMENT
19.1 Subletting and Assignment. Except as specifically set forth in
Section 19.2 below, the Lessee may not, without the prior written consent of the
Lessor, which consent may be withheld in the Lessor's sole and absolute
discretion, assign or pledge all or any portion of its interest in this Lease or
any of the other Lease Documents (whether by operation of law or otherwise) or
sublet all or any part of the Leased Property. For purposes of this Section
19.1, the term "assign" shall be deemed to include, but not be limited to, any
one or more sales, pledges, hypothecations or other transfers (including,
without limitation, any transfer by operation of law) of any of the capital
stock of or partnership interests in the Lessee or sales, pledges,
hypothecations or other transfers (including, without limitation, any transfer
by operation of law) of the capital or the assets of the Lessee. Any such
assignment, pledge, sale, hypothecation or other transfer made without the
Lessor's consent shall be void and of no force and effect.
19.2 Permitted Subleases. Notwithstanding the foregoing, the Lessee
shall have the right to enter into Resident Agreements without the prior consent
of the Lessor.
19.3 Attornment. The Lessee shall insert in each Sublease (other than
Resident Agreements) provisions to the effect that (a) such Sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of the Lessor hereunder, (b) in the event this Lease shall terminate
before the expiration of such Sublease, the Sublessee thereunder will, at the
Lessor's option, attorn to the Lessor and waive any right the Sublessee may have
to terminate the Sublease or to surrender possession thereunder, as a result of
the termination of this Lease and (c) in the event the Sublessee receives a
written notice from the Lessor stating that the Lessee is in default under this
Lease, the Sublessee shall thereafter be obligated to pay all rentals accruing
under said Sublease directly to the Lessor or as the Lessor may direct. All
rentals received from the Sublessee by the Lessor shall be credited against the
amounts owing by the Lessee under this Lease.
ARTICLE 20
TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
20.1 No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby with the fee estate in the Leased Property
by reason of the fact that the same Person may acquire, own or hold, directly or
indirectly (a) this Lease or the leasehold estate created hereby or any interest
in this Lease or such leasehold estate and (b) the fee estate in the Leased
Property.
20.2 Transfers By Lessor. If the original the Lessor named herein or any
successor in interest shall convey the Leased Property in accordance with the
terms hereof, other than as security for a debt, and the grantee or transferee
of the Leased Property shall expressly assume all obligations of the Lessor
hereunder arising or accruing from and after the date of such conveyance or
transfer, the original the Lessor named herein or the applicable successor in
interest so conveying the Leased Property shall thereupon be released from all
future liabilities and obligations of the Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
20.3 Lessor May Grant Liens. Without the consent of the Lessee, but
subject to the terms and conditions set forth below in this Section 20.3, the
Lessor may, from time to time, directly or indirectly, create or otherwise cause
to exist any lien, encumbrance or title retention agreement upon the Leased
Property or any interest therein ("Encumbrance"), whether to secure any
borrowing or other means of financing or refinancing, provided that the Lessee
shall have no obligation to make payments under such Encumbrances. The Lessee
shall subordinate this Lease to the lien of any such Encumbrance, on the
condition that the beneficiary or holder of such Encumbrance executes a
non-disturbance agreement in conformity with the provisions of Section 20.4. To
the extent that any such Encumbrance consists of a mortgage or deed of trust on
the Lessor's interest in the Leased Property the same shall be referred to
herein as a "Fee Mortgage" and the holder thereof shall be referred to herein as
a "Fee Mortgagee".
20.4 Subordination and Non-Disturbance. Concurrently with the execution
and delivery of any Fee Mortgage entered into after the date hereof, provided
that the Lessee executes and delivers an agreement of the type described in the
following paragraph, the Lessor shall obtain and deliver to the Lessee an
agreement by the holder of such Fee Mortgage, pursuant to which, (a) the
applicable Fee Mortgagee consents to this Lease and (b) agrees that,
notwithstanding the terms of the applicable Fee Mortgage held by such Fee
Mortgagee, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under or pursuant to such Fee Mortgage or a transfer in
lieu of foreclosure, (i) the Lessee shall not be disturbed in peaceful enjoyment
of the Leased Property nor shall this Lease be terminated or canceled at any
time, except in the event that the Lessor shall have the right to terminate this
Lease under the terms and provisions expressly set forth herein, (ii) the
Lessee's options to purchase the Leased Property pursuant to Articles 13 and 14
of this Lease shall remain in force and effect pursuant to the terms hereof and
(iii) in the event that the Lessee elects its option to purchase the Leased
Property pursuant to Article 13 or Article 14 of this Lease and performs all of
its obligations hereunder in connection with any such election, the holder of
the Fee Mortgage shall release its Fee Mortgage upon payment by the Lessee of
the purchase price required hereunder, provided, that (1) such purchase price is
paid to the holder of the Fee Mortgage, in the event that the Indebtedness
secured by the applicable Fee Mortgage is equal to or greater than the purchase
price or (2) in the event that the purchase price is greater than the
Indebtedness secured by the Fee Mortgage, a portion of the purchase price equal
to the Indebtedness secured by the Fee Mortgage is paid to the Fee Mortgagee and
the remainder of the purchase price is paid to the Lessor.
At the request from time to time by any Fee Mortgagee, the Lessee shall
(a) subordinate this Lease and all of the Lessee's rights and estate hereunder
to the Fee Mortgage held by such Fee Mortgagee and (b) agree that the Lessee
will attorn to and recognize such Fee Mortgagee or the purchaser at any
foreclosure sale or any sale under a power of sale contained in any such Fee
Mortgage as the Lessor under this Lease for the balance of the Term then
remaining. To effect the intent and purpose of the immediately preceding
sentence, the Lessee agrees to execute and deliver such instruments in
recordable from as are reasonably requested by the Lessor or the applicable Fee
Mortgagee; provided, however, that such Fee Mortgagee simultaneously executes,
delivers and records a written agreement of the type described in the preceding
paragraph.
ARTICLE 21
LESSOR OBLIGATIONS
21.1 Quiet Enjoyment. As long as the Lessee shall pay all Rent and all
other sums due under any of the Lease Documents as the same become due and shall
fully comply with all of the terms of this Lease and the other Lease Documents
and fully perform its obligations thereunder, the Lessee shall peaceably and
quietly have, hold and enjoy the Leased Property throughout the Term, free of
any claim or other action by the Lessor or anyone claiming by, through or under
the Lessor, but subject to the Permitted Encumbrances and such Liens as may
hereafter be consented to by the Lessee. No failure by the Lessor to comply with
the foregoing covenant shall give the Lessee any right to cancel or terminate
this Lease, or to fail to perform any other sum payable under this Lease, or to
fail to perform any other obligation of the Lessee hereunder. Notwithstanding
the foregoing, the Lessee shall have the right by separate and independent
action to pursue any claim it may have against the Lessor as a result of a
breach by the Lessor of the covenant of quiet enjoyment contained in this
Article 21.
21.2 Memorandum of Lease. The Lessor and the Lessee shall, promptly upon
the request of either, enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State, in which reference to this
Lease and all options contained herein shall be made. The Lessee shall pay all
recording costs and taxes associated therewith.
21.3 Default by Lessor. The Lessor shall be in default of its
obligations under this Lease only if the Lessor shall fail to observe or perform
any term, covenant or condition of this Lease on its part to be performed and
such failure shall continue for a period of thirty (30) days after notice
thereof from the Lessee (or such shorter time as may be necessary in order to
protect the health or welfare of any patients and/or residents of the Facility
or to insure the continuing compliance of the Facility with the applicable Legal
Requirements), unless such failure cannot with due diligence be cured within a
period of thirty (30) days, in which case such failure shall not be deemed to
continue if the Lessor, within said thirty (30) day period, proceeds promptly
and with due diligence to cure the failure and diligently completes the curing
thereof. The time within which the Lessor shall be obligated to cure any such
failure shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
ARTICLE 22
NOTICES
Any notice, request, demand, statement or consent made hereunder or
under any of the other Lease Documents shall be in writing and shall be deemed
duly given if personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight delivery
service with provision for a receipt, postage or delivery charges prepaid, and
shall be deemed given when so personally delivered or postmarked or placed in
the possession of such mail or delivery service and addressed as follows:
If to the Lessee: CareMatrix of Needham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: President
With a copies to: CareMatrix of Needham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
If to the Lessor: Continuum Care of Needham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: President
With copies to: Continuum Care of Needham, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
Meditrust Mortgage Investments, Inc.
197 First Avenue
Needham Heights, Massachusetts 02194
Attention: General Counsel
or such other address as the Lessor or the Lessee shall hereinafter from time to
time designate by a written notice to the others given in such manner. Any
notice given to the Lessee by the Lessor at any time shall not imply that such
notice or any further or similar notice was or is required.
ARTICLE 23
ENVIRONMENTAL MATTERS
23.1 Maintenance of Leased Property. The Lessee covenants that, as long
as this Lease shall remain in force and effect, the Lessee:
(a) shall not generate, store, transport, utilize, dispose of,
manage, release or locate, any Hazardous Substances on, under or from
the Leased Property in compliance with all applicable Environmental Laws
or permit the generation, storage, transportation, utilization,
disposal, management, release or threat of release, or location of any
Hazardous Substances on, under or from the Leased Property, but only in
compliance with all applicable Environmental Laws; and
(b) shall not permit any Lien arising under or related to any of
the Environmental Laws to attach to the Leased Property and remain
undischarged or not adequately bonded to the reasonable satisfaction of
the Lessor for more than sixty (60) days.
In addition to all other covenants contained herein, the Lessee agrees
that the Leased Property shall be maintained in compliance with the
Environmental Laws.
23.2 Notice of Environmental Conditions. The Lessee shall provide the
Lessor with immediate written notice: (a) upon the Lessee becoming aware of (i)
the presence of, any release or any threat of release of any Hazardous
Substances on, under or from the Leased Property (whether or not caused by the
Lessee) and (ii) any Environmental Enforcement Action instituted or threatened
and (b) upon receipt by the Lessee of any notice relating to the Leased Property
or any Hazardous Substance allegedly originating on, under or from the Leased
Property, from any Governmental Authority pursuant to any of the Environmental
Laws.
23.3 The Lessee's Agreement To Take Remedial Actions. Upon the Lessee
becoming aware of the presence of, any release, or any threat of release of any
Hazardous Substances on, under or from the Leased Property caused by the Lessee,
its officers, agents, employees, Sublessees, licensees, concessionaires and/or
invitees or any other occupant of the Leased Property during the term of this
Lease, the Lessee shall immediately take all such actions to arrange for the
assessment, monitoring, clean-up, containment, removal, remediation or
restoration of the Leased Property as are required pursuant to any of the
Environmental Laws or by any Governmental Authority.
Upon the Lessee becoming aware of the presence of, any release, or any
threat of release of any Hazardous Substances on any Surrounding Property, but
only to the extent that the presence of any Hazardous Substances on the
Surrounding Property originated on, under or from the Leased Property and such
release or threat of release was caused by the Lessee, its officers, agents,
employees, Sublessees, licensees, concessionaires and/or invitees or any other
occupant of the Leased Property during the term of this Lease, the Lessee shall
immediately take all such actions to arrange for the assessment, monitoring,
clean-up, containment, removal, remediation or restoration of the Surrounding
Property, as are required pursuant to any of the Environmental Laws or by any
Governmental Authority.
23.4 The Lessor's Rights To Inspect The Leased Property and Take
Remedial Actions. So long as this Lease shall remain in force and effect, the
Lessor shall have the right, but not the obligation, to enter upon the Leased
Property, to expend funds to:
(a) cause one or more environmental assessments of the Leased
Property to be undertaken. Such environmental assessments may include,
without limitation, (i) detailed visual inspections of the Leased
Property, including, without limitation, all storage areas, storage
tanks, drains, dry wells and leaching areas, (ii) the taking of soil and
surface water samples, (iii) the performance of soil and ground water
analyses and (iv) the performance of such other investigations or
analyses as are necessary or appropriate and consistent with sound
professional environmental engineering practice in order for the Lessor
to obtain a complete assessment of the compliance of the Leased Property
and the use thereof with all Environmental Laws and to make a
determination as to whether there is any risk of contamination (x) to
the Leased Property resulting from Hazardous Substances originating on,
under or from any Surrounding Property or (y) to any Surrounding
Property resulting from Hazardous Substances originating on, under or
from the Leased Property;
(b) cure any breach of the conditions and covenants contained in
this Article 6;
(c) take any actions as are necessary to (i) prevent the
migration of Hazardous Substances on, under or from the Leased Property
to any other property, (ii) clean-up, contain, remediate or remove any
Hazardous Substances on, under or from any other property, which
Hazardous Substances originated on, under or from the Leased Property or
(iii) prevent the migration of any Hazardous Substances on, under or
from any other property to the Leased Property;
(d) comply with, settle or otherwise satisfy any Environmental
Enforcement Action (including, without limitation, the payment of any
fines or penalties imposed by any Governmental Authority); and
(e) correct or abate any environmental condition on or under the
Leased Property which could cause degradation, damage or injury to the
Leased Property, any Surrounding Property or any Person.
Any amounts paid or advanced by the Lessor and all costs and expenses
incurred in connection with any action taken pursuant to the terms of this
Article 6 (including, without limitation, environmental consultants' and
experts' fees and expenses, reasonable attorneys' fees and expenses, court costs
and all costs of assessment, monitoring, clean-up, containment, remediation,
removal and restoration), shall be a demand obligation of the Lessee to the
Lessor, but only to the extent that such amounts paid or advanced and cost and
expenses incurred arose out of and/or relate to the presence of, any release, or
any threat of release of any Hazardous Substances on, under or from the Leased
Property caused by the Lessee, its officers, agents, employees, Sublessees,
licensees, concessionaires and/or invitees or any other occupant of the Leased
Property during the term of this Lease, and if such sums are not paid within ten
(10) days after demand, such sums shall thereafter (to the extent permitted by
applicable law) bear interest at the Overdue Rate until the date of payment.
The Lessor, by making any such payment or incurring any such costs,
shall be subrogated to all rights of the Lessee or any other occupant of the
Leased Property to seek reimbursement from any Person, including, without
limitation, any prior owner or operator of the Leased Property, who may be a
"responsible party" under any of the Environmental Laws, in connection with the
presence of Hazardous Substances on, under or from the Leased Property.
Any partial exercise by the Lessor of any of the rights and remedies set
forth in this Article 23, including, without limitation, any partial undertaking
on the part of the Lessor to cure any failure by the Lessee or the Leased
Property (or any other occupant) to comply with any of the Environmental Laws,
shall not obligate the Lessor to complete such actions taken or require the
Lessor to expend further sums to cure such non-compliance.
23.5 Environmental Indemnification. Without limiting any of the other
indemnity provisions set forth in this Lease, the Lessee shall and hereby agrees
to indemnify, exonerate, defend (with counsel acceptable to the Lessor) and hold
the Lessor harmless from and against any claim, liability, loss, cost, damage or
expense (including, without limitation, environmental consultants' and experts'
fees and expenses, reasonable attorneys' fees and expenses, court costs and all
costs of assessment, monitoring, clean-up, containment, removal, remediation and
restoration) arising out of or in connection with (a) any breach of any of the
conditions and covenants hereunder, (b) the Lessor's exercise of any of its
rights and remedies hereunder or (c) the enforcement of the aforesaid
indemnification agreement; excluding, however, any matters resulting from the
Lessor's gross negligence or willful misconduct. Notwithstanding the foregoing,
the Lessor shall have the option of conducting its defense with counsel of the
Lessor's choice, but at the expense of the Lessee as aforesaid.
The matters covered by the foregoing indemnity with respect to any
property other than the Leased Property shall not include any costs incurred as
a result of the clean-up, containment, remediation or removal of Hazardous
Substances on, under or from such other property or the restoration thereof if
such Hazardous Substances did not originate on, under or from the Leased
Property. The Lessee acknowledges and agrees that its obligations pursuant to
the provisions hereof are in addition to any and all other legal liabilities and
responsibilities (at law or in equity) that the Lessee may otherwise have as an
"owner" or "operator" of the Leased Property or a "responsible party" within the
meaning of any of the Environmental Laws, as the case may be.
23.6 Survival. The Lessee's liability for a breach of the provisions of
this Article shall survive any termination of this Lease.
ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 Broker's Fee Indemnification. The Lessee shall and hereby agrees to
indemnify, defend (with counsel reasonably acceptable to the Lessor) and hold
the Lessor harmless from and against any and all claims for premiums or other
charges, finder's fees, taxes, brokerage fees or commissions and other similar
compensation due in connection with any of the transactions contemplated by the
Lease Documents. Notwithstanding the foregoing, the Lessor shall have the option
of conducting its own defense against any such claims with counsel of the
Lessor's choice, but at the expense of the Lessee, as aforesaid. This
indemnification shall include all reasonable attorneys' fees and expenses and
court costs reasonably incurred by the Lessor in connection with the defense
against any such claims and the enforcement of this indemnification agreement
and shall survive the termination of this Lease.
24.2 No Joint Venture or Partnership. Neither anything contained in any
of the Lease Documents, nor the acts of the parties hereto, shall create, or be
construed to create, a partnership or joint venture between the Lessor and the
Lessee. The Lessee is not the agent or representative of the Lessor and nothing
contained herein or in any of the other Lease Documents shall make, or be
construed to make, the Lessor liable to any Person for goods delivered to the
Lessee, services performed with respect to the Leased Property at the direction
of the Lessee or for debts or claims accruing against the Lessee.
24.3 Amendments, Waivers and Modifications. Except as otherwise
expressly provided for herein or in any other Lease Document, none of the terms,
covenants, conditions, warranties or representations contained in this Lease or
in any of the other Lease Documents may be renewed, replaced, amended, modified,
extended, substituted, revised, waived, consolidated or terminated except by an
agreement in writing signed by (a) all parties to this Lease or the other
applicable Lease Document, as the case may be, with regard to any such renewal,
replacement, amendment, modification, extension, substitution, revision,
consolidation or termination and (b) the Person against whom enforcement is
sought with regard to any waiver. The provisions of this Lease and the other
Lease Documents shall extend and be applicable to all renewals, replacements,
amendments, extensions, substitutions, revisions, consolidations and
modifications of any of the Lease Documents, the Management Agreements, the
Permits and/or the Contracts. References herein and in the other Lease Documents
to any of the Lease Documents, the Management Agreements, the Permits and/or the
Contracts shall be deemed to include any renewals, replacements, amendments,
extensions, substitutions, revisions, consolidations or modifications thereof.
Notwithstanding the foregoing, any reference contained in any of the
Lease Documents, whether express or implied, to any renewal, replacement,
amendment, extension, substitution, revisions, consolidation or modification of
any of the Lease Documents or any Management Agreement, Permit and/or the
Contract is not intended to constitute an agreement or consent by the Lessor to
any such renewal, replacement, amendment, substitution, revision, consolidation
or modification; but, rather as a reference only to those instances where the
Lessor may give, agree or consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification as the same may
be required pursuant to the terms, covenants and conditions of any of the Lease
Documents.
24.4 Captions and Headings. The captions and headings set forth in this
Lease and each of the other Lease Documents are included for convenience and
reference only, and the words contained therein shall in no way be held or
deemed to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent of, this
Lease, any of the other Lease Documents or any parts hereof or thereof.
24.5 Time is of the Essence. Time is of essence of each and every term,
condition, covenant and warranty set forth herein and in the other Lease
Documents.
24.6 Counterparts. This Lease may be executed in one or more
counterparts, each of which taken together shall constitute an original and all
of which shall constitute one and the same instrument.
24.7 Entire Agreement. This Lease and the other Lease Documents set
forth the entire agreement of the parties with respect to the subject matter.
24.8 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED
BY APPLICABLE LAW, THE LESSOR AND THE LESSEE HEREBY MUTUALLY,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
WHICH ANY PARTY HERETO MAY NOW OR HEREAFTER HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE LEASE OR ANY OF THE LEASE DOCUMENTS. The Lessee
hereby certifies that neither the Lessor nor any of the Lessor's
representatives, agents or counsel has represented expressly or otherwise that
the Lessor would not, in the event of any such suit, action or proceeding seek
to enforce this waiver to the right of trial by jury and acknowledges that the
Lessor has been induced by this waiver (among other things) to enter into the
transactions evidenced by this Lease and the other Lease Documents and further
acknowledges that the Lessee (a) has read the provisions of this Lease, and in
particular, the paragraph containing this waiver, (b) has consulted legal
counsel, (c) understands the rights that it is granting in this Lease and the
rights that it waiving in this paragraph in particular and (d) makes the waivers
set forth herein knowingly, voluntarily and intentionally.
24.9 Successors and Assigns. This Lease and the other Lease Documents
shall be binding and inure to the benefit of (a) upon the Lessee and the
Lessee's legal representatives and permitted successors and assigns and (b) the
Lessor and any other Person who may now or hereafter hold the interest of the
Lessor under this Lease and their respective successors and assigns.
Notwithstanding the foregoing, the Lessee shall not assign any of its rights or
obligations hereunder or under any of the other Lease Documents without the
prior written consent of the Lessor, in each instance, which consent may be
withheld in the Lessor's sole and absolute discretion.
24.10 No Third Party Beneficiaries. This Lease and the other Lease
Documents are solely for the benefit of the Lessor, its successors, assigns and
participants (if any), the Indemnified Parties, the Lessee, the other members of
the Leasing Group and their respective permitted successors and assigns, and,
except as otherwise expressly set forth in any of the Lease Documents, nothing
contained therein shall confer upon any Person other than such parties any right
to insist upon or to enforce the performance or observance of any of the
obligations contained therein. All conditions to the obligations of the Lessor
to advance or make available proceeds of insurance or Awards, or to release any
deposits held for Impositions or insurance premiums are imposed solely and
exclusively for the benefit of the Lessor, its successors and assigns. No other
Person shall have standing to require satisfaction of such conditions in
accordance with their terms, and no other Person shall, under any circumstances,
be a beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by the Lessor at any time, if, in the Lessor's sole and
absolute discretion, the Lessor deems it advisable or desirable to do so.
24.11 Governing Law. This Lease shall be construed and the rights and
obligations of the Lessor and the Lessee shall be determined in accordance with
the laws of the State.
The Lessee hereby consents to personal jurisdiction in the courts of the
State and the United States District Court for the District in which the Leased
Property is situated as well as to the jurisdiction of all courts from which an
appeal may be taken from the aforesaid courts, for the purpose of any suit,
action or other proceeding arising out of or with respect to any of the Lease
Documents, the negotiation and/or consummation of the transactions evidenced by
the Lease Documents, the Lessor's relationship of any member of the Leasing
Group in connection with the transactions evidenced by the Lease Documents
and/or the performance of any obligation or the exercise of any remedy under any
of the Lease Documents and expressly waives any and all objections the Lessee
may have as to venue in any of such courts.
24.12 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, the Lessee or the
Lessor arising prior to any date of termination of this Lease or any of the
other Lease Documents shall survive such termination.
If any provision of this Lease or any of the other Lease Documents or
any application thereof shall be invalid or unenforceable, the remainder of this
Lease or the other applicable Lease Document, as the case may be, and any other
application of such term or provision shall not be affected thereby.
Notwithstanding the foregoing, it is the intention of the parties hereto that if
any provision of any of this Lease is capable of two (2) constructions, one of
which would render the provision void and the other of which would render the
provision valid, then such provision shall be construed in accordance with the
construction which renders such provision valid.
If any late charges provided for in any provision of this Lease or any
of the other Lease Documents are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.
The Lessee waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance and waives all notices of the existence, creation, or incurring of
new or additional obligations, except as to all of the foregoing as expressly
provided for herein.
24.13 Consents. In the event that the Lessor's consent is required by
the terms hereof or of any other Lease Document for any purpose whatsoever, it
is understood and agreed that (a) the Lessor's consent shall be subject to the
consent of any Fee Mortgagee to the extent that such consent from any Fee
Mortgage is required under the terms of the applicable financing documents
(which consent the Lessor shall seek to obtain) and (b) notwithstanding anything
to the contrary set forth herein, it shall not be deemed unreasonable for the
Lessor to withhold its consent in any given circumstance based upon the Lessor's
inability to obtain any required consent from any Fee Mortgagee.
24.14 Meditrust Loan. Reference is made to that certain loan in the
original principal amount of TWENTY MILLION THREE HUNDRED THOUSAND DOLLAR
($20,300,000) made by Meditrust Mortgage Investments, Inc. to the Lessor (the
"MMI Loan"). Without limiting the provisions of Section 24.13, in the event of
any conflict between the provisions hereof and the provisions of any of the
documents evidencing and/or securing the MMI Loan (collectively, the "Meditrust
Loan Documents"), the Meditrust Loan Documents shall control.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and attested by their respective officers thereunto duly authorized.
WITNESS: LESSEE:
CAREMATRIX OF NEEDHAM, INC., a
Delaware corporation
By:_________________________________
Name: Name:
Title:
WITNESS: LESSOR:
CONTINUUM CARE OF NEEDHAM,
INC., a Delaware corporation
By:
Name: Name:
Title:
310487_3.WP6
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
The land, together with the buildings and improvements thereon, in
Needham, Norfolk County, Massachusetts shown as Parcel 1 (the "Property") on the
plan entitled, "Consolidated Plan of Land in Needham, Massachusetts", Prepared
for the Owner: Continuum Care Corporation, Prepared By: Vanasse Hangen Brustlin,
Inc., Scale: 1 inch = 40 feet, dated December 7, 1993 (the "Plan") recorded as
Plan #26 of 1994 in Plan Book 419, formerly known as Lots 3C and 3D on the plan
entitled "Plan of Land in Needham, Mass.," dated October 22, 1992, Scale 1" =
30', drawn by Needham Survey Associates, Inc., recorded with the Norfolk County
Registry of Deeds as Plan #721 of 1992 in Plan Book 409.
According to the Plan, said Parcel 1 contains 4.298 acres of land.
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
(1) Restrictions and agreements set forth in deed from The New York, New
Haven and Hartford Railroad Company to The William Care Company dated April 7,
1958 and recorded with said Deeds in Book 3631, Page 53.
(2) Notices of Variance recorded with said Deeds in Book 4355, Page 664;
Book 4427, Page 520; Book 4924, Page 175 and Book 4941, Page 164.
(3) Terms and provisions of Site Plan Special Permit (Application 93-4)
issued by the Town of Needham Planning Board dated as of October 12, 1993,
recorded December 1, 1993 as Instrument No. 16830 as affected by Amendment to
Site Plan Special Permit dated as of February 8, 1994, recorded in Book 10389,
Page 647.
(4) Terms and provisions of Access and Maintenance Easement by and
between Continuum Care of Massachusetts, Inc. and the Town of Needham (public
purposes, including fire hydrant) dated December 23, 1994, recorded in Book
10773, Page 553 - see plan number 898 of 1994 recorded in Plan Book 427.
(5) Inchoate or statutory liens for taxes not yet delinquent
(6) Resident Agreements now or hereafter in effect.
(7) That certain Office Lease, dated as of November 17, 1995, by and
between Deaconess Glover Hospital and Continuum Care of Needham, Inc., as
affected by First Amendment to Office Lease, dated as of April 7, 1997
<PAGE>
EXHIBIT C
RATE LIMITATIONS
<PAGE>
EXHIBIT D
FREE CARE REQUIREMENTS
<PAGE>
EXHIBIT E
CALCULATION OF RENT COVERAGE RATIO
<PAGE>
EXHIBIT 3
CALCULATION OF FAIR MARKET RENTAL VALUE
For purposes of Section 3.2, "Fair Market Rental Value" shall be as
reasonably determined by the Lessor to be the annual rental charge on a
so-called "triple net" basis (including without limitation Base Rent and
Additional Charges) as of the commencement date of each Extension Term, for new
leases then being negotiated or executed for comparable nursing homes, assisted
living facilities and office space in the area surrounding Needham,
Massachusetts for terms commencing on or about the date of commencement of each
Extension Term. In determining Fair Market Rental Value, the Lessor shall take
into consideration the size of the premises, location of the premises, lease
term, condition and location of the applicable nursing home, assisted living
facility and office space, services and amenities provided by the Lessor, rental
concessions and other comparable factors. Bona fide written offers to lease
comparable space received by the Lessor from third parties (at arm's length) may
be used by the Lessor as an indication of the Fair Market Rental Value.
The Lessor shall notify the Lessee of its determination of Fair Market
Rental Value within ten (10) days after the Lessor's receipt of the Lessee's
notice exercising its option to extend and the Lessor shall furnish data in
support of such determination. If the Lessor does not receive written notice
from the Lessee of the Lessee's disagreement with the Lessor's determination of
the Fair Market Rental Value within ten (10) days after the Lessee's receipt of
said determination, the Lessee shall be deemed to have accepted said
determination by the Lessor. If the Lessee disagrees with the Lessor's
determination of the Fair Market Rental Value, the Lessee shall have the right,
by written notice given to the Lessor within thirty (30) days after the Lessee
has received notice of the Lessor's determination, to request that such Fair
Market Value be determined by appraisal in accordance with the provisions of
this EXHIBIT 3. In such event, the Fair Market Rental Value shall be determined
by impartial MAI appraisers, one to be chosen by the Lessor, one to be chosen by
the Lessee (collectively, the "Initial Appraisers"), and, if necessary, a third
to be selected as provided below. The Lessor and the Lessee shall each notify
the other of its selected appraiser within ten (10) days following giving of the
Lessee's request for appraisal as provided above. Each appraiser shall be
independent, have at least five (5) years experience with commercial properties
in the area, and be familiar with nursing homes, assisted living facilities,
office space and leases and rents in Needham, Massachusetts (and the surrounding
area) and experienced in making real estate appraisals. The cost of each Initial
Appraiser shall be paid by the party selecting such Initial Appraiser. The
appraisers shall render their written appraisal of the Fair Market Rental Value
for the applicable Extension Term within thirty (30) days following the
appointment of both such appraisers. If the appraisals determined by the Initial
Appraisers are less than five percent (5%) apart (i.e., the higher appraisal is
less than 105% of the lower appraisal), then the Fair Market Rental Value shall
be determined by taking the average of the two appraisals. In the event that the
appraisals determined by the Initial Appraisers are five percent (5%) or more
apart, the Initial Appraisers shall promptly select a third appraiser who meets
the same criteria as required of the Initial Appraisers ("Third Appraiser"). The
Third Appraiser shall submit to the Lessor and the Lessee, within twenty-one
(21) days after its appointment, its written appraisal of the Fair Market Rental
Value with respect to the Leased Property as of the commencement date of the
applicable Extension Term, which appraisal shall be binding upon the Lessor and
the Lessee. The cost of the Third Appraiser shall be borne equally by the Lessor
and the Lessee.
<PAGE>
F A C I L I T Y L E A S E A G R E E M E N T
CONTINUUM CARE OF NEEDHAM, INC.
as
Lessor
AND
CAREMATRIX OF NEEDHAM, INC.
as
Lessee
Dated as of June 2, 1997
For Premises Located At
98-110 West Street
Needham, Massachusetts
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS...................................1
1.1 Leased Property...................................................................1
1.2 Term..............................................................................2
1.3 Extended Terms....................................................................2
ARTICLE 2 DEFINITIONS AND RULES OF CONSTRUCTION.............................................2
2.1 Definitions.......................................................................2
2.2 Rules of Construction............................................................16
ARTICLE 3 RENT.............................................................................17
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures..................17
3.2 Rent During Extension Terms......................................................18
3.3 Intentionally Omitted............................................................18
3.4 Additional Charges...............................................................18
3.5 Intentionally Omitted............................................................19
3.6 Net Lease........................................................................19
3.7 No Lessee Termination or Offset..................................................19
3.7.1 No Termination...........................................................19
3.7.2 Waiver...................................................................19
3.7.3 Independent Covenants....................................................19
3.8 Abatement of Rent Limited........................................................20
ARTICLE 4 IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS................................20
4.1 Payment of Impositions...........................................................20
4.1.1 Lessee To Pay............................................................20
4.1.2 Installment Elections....................................................20
4.1.3 Returns and Reports......................................................21
4.1.4 Refunds..................................................................21
4.1.5 Protest..................................................................21
4.2 Notice of Impositions............................................................21
4.3 Adjustment of Impositions........................................................21
4.4 Utility Charges..................................................................22
4.5 Insurance Premiums...............................................................22
4.6 Deposits.........................................................................22
4.6.1 Lessor's Option..........................................................22
4.6.2 Use of Deposits..........................................................23
4.6.3 Deficits.................................................................23
4.6.4 Other Properties.........................................................23
4.6.5 Transfers................................................................24
4.6.6 Security.................................................................24
4.6.7 Return...................................................................24
4.6.8 Receipts.................................................................24
ARTICLE 5 OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY................................................................24
5.1 Ownership of the Leased Property.................................................24
5.2 Personal Property; Removal and Replacement of Personal Property..................24
5.2.1 Lessee To Equip Facility.................................................24
5.2.2 Sufficient Personal Property.............................................25
5.2.3 Removal and Replacement; Lessor's Option to Purchase.....................25
ARTICLE 6 SECURITY FOR LEASE OBLIGATIONS...................................................26
6.1 Security for Lessee's Obligations................................................26
6.1.1 Security.................................................................26
6.1.2 Purchase-Money Security Interests and Equipment Leases...................26
ARTICLE 7 CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS............................................................27
7.1 Condition of the Leased Property.................................................27
7.2 Use of the Leased Property; Compliance; Management...............................28
7.2.1 Obligation to Operate....................................................28
7.2.2 Permitted Uses...........................................................28
7.2.3 Compliance With Insurance Requirements...................................28
7.2.4 No Waste.................................................................28
7.2.5 No Impairment............................................................28
7.2.6 No Liens.................................................................28
7.3 Compliance with Legal Requirements...............................................29
7.4 Management Agreements............................................................29
ARTICLE 8 REPAIRS; RESTRICTIONS............................................................30
8.1 Maintenance and Repair...........................................................30
8.1.1 Lessee's Responsibility...................................................30
8.1.2 No Lessor Obligation......................................................31
8.1.3 Lessee May Not Obligate Lessor............................................31
8.2 Encroachments; Title Restrictions................................................31
ARTICLE 9 MATERIAL STRUCTURAL WORK AND CAPITAL ADDITIONS...................................32
9.1 Lessor's Approval................................................................32
9.2 General Provisions as to Capital Additions and Certain Material
Structural Work..................................................................32
9.2.1 No Liens.................................................................32
9.2.2 Lessee's Proposal Regarding Capital Additions and
Material Structural Work.................................................33
9.2.3 Lessor's Options Regarding Capital Additions and
Material Structural Work.................................................33
9.2.4 Lessor May Elect to Finance Capital Additions or
Material Structural Work.................................................33
9.3 Capital Additions and Material Structural Work Financed by Lessor................33
9.3.1 Lessee's Financing Request...............................................33
9.3.2 Lessor's General Requirements............................................34
9.3.3 Payment of Costs.........................................................35
9.4 General Limitations..............................................................36
9.5 Non-Capital Additions............................................................36
ARTICLE 10 WARRANTIES AND REPRESENTATIONS..................................................37
10.1 Representations and Warranties..................................................37
10.1.1 Existence; Power; Qualification..........................................37
10.1.2 Valid and Binding........................................................37
10.1.3 Single Purpose...........................................................37
10.1.4 No Violation.............................................................37
10.1.5 Consents and Approvals...................................................37
10.1.6 No Liens or Insolvency Proceedings.......................................38
10.1.7 No Burdensome Agreements.................................................38
10.1.8 Commercial Acts..........................................................38
10.1.9 Adequate Capital, Not Insolvent..........................................38
10.1.10 Not Delinquent.....................................................38
10.1.11 No Affiliate Debt..................................................39
10.1.12 Taxes Current......................................................39
10.1.13 Intentionally Omitted..............................................39
10.1.14 Pending Actions, Notices and Reports...............................39
10.1.15 Compliance with Legal Requirements.................................40
10.1.16 Intentionally Omitted..............................................40
10.1.17 Intentionally Omitted..............................................40
10.1.18 Intentionally Omitted..............................................40
10.1.19 Rate Limitations...................................................40
10.1.20 Free Care..........................................................40
10.1.21 No Proposed Changes................................................40
10.1.22 ERISA..............................................................41
10.1.23 No Broker..........................................................41
10.1.24 No Improper Payments...............................................41
10.1.25 Nothing Omitted....................................................41
10.1.26 No Margin Security.................................................42
10.1.27 No Default.........................................................42
10.1.28 Principal Place of Business........................................42
10.1.29 Intentionally Omitted..............................................42
10.1.30 Intellectual Property..............................................42
10.1.31 Management Agreements..............................................42
10.2 Continuing Effect of Representations and Warranties.............................42
ARTICLE 11 FINANCIAL AND OTHER COVENANTS...................................................43
11.1 Status Certificates.............................................................43
11.2 Financial Statements; Reports; Notice and Information...........................43
11.2.1 Obligation To Furnish....................................................43
11.2.2 Responsible Officer......................................................46
11.2.3 No Material Omission.....................................................46
11.2.4 Confidentiality..........................................................47
11.3 Financial Covenants.............................................................47
11.3.1 Rent Coverage Ratio of Lessee............................................47
11.3.2 No Indebtedness..........................................................47
11.3.3 No Guaranties............................................................48
11.4 Affirmative Covenants...........................................................48
11.4.1 Maintenance of Existence.................................................48
11.4.2 Materials................................................................48
11.4.3 Compliance With Legal Requirements And Applicable
Agreements.........................................................48
11.4.4 Books And Records........................................................48
11.4.5 Participation in Third Party Payor Programs..............................49
11.4.6 Conduct of its Business..................................................49
11.4.7 Address..................................................................49
11.4.8 Subordination of Affiliate Transactions..................................49
11.4.9 Inspection...............................................................50
11.4.10 Additional Property................................................50
11.5 Additional Negative Covenants...................................................50
11.5.1 Restrictions Relating to Lessee..........................................50
11.5.2 No Liens.................................................................51
11.5.3 Limits on Affiliate Transactions.........................................51
11.5.4 Best Efforts To Maximize.................................................51
11.5.5 No Default...............................................................51
11.5.6 Intentionally Omitted....................................................51
11.5.7 Intentionally Omitted....................................................51
11.5.8 ERISA....................................................................52
11.5.9 Forgiveness of Indebtedness..............................................52
11.5.10 Value of Assets....................................................52
11.5.11 Changes in Fiscal Year and Accounting Procedures...................52
ARTICLE 12 INSURANCE AND INDEMNITY.........................................................52
12.1 General Insurance Requirements..................................................52
12.1.1 Types and Amounts of Insurance...........................................52
12.1.2 Insurance Company Requirements...........................................54
12.1.3 Policy Requirements......................................................54
12.1.4 Notices; Certificates and Policies.......................................55
12.1.5 Lessor's Right to Place Insurance........................................55
12.1.6 Payment of Proceeds......................................................55
12.1.7 Irrevocable Power of Attorney............................................56
12.1.8 Blanket Policies.........................................................56
12.1.9 No Separate Insurance....................................................56
12.1.10 Assignment of Unearned Premiums....................................56
12.2 Indemnity.......................................................................56
12.2.1 Indemnification..........................................................56
12.2.2 Indemnified Parties......................................................57
12.2.3 Limitation on Lessor Liability...........................................57
12.2.4 Risk of Loss.............................................................58
ARTICLE 13 FIRE AND CASUALTY...............................................................58
13.1 Restoration Following Fire or Other Casualty....................................58
13.1.1 Following Fire or Casualty...............................................58
13.1.2 Procedures...............................................................59
13.1.3 Disbursement of Insurance Proceeds.......................................60
13.2 Disposition of Insurance Proceeds...............................................63
13.2.1 Proceeds To Be Released to Pay For Work..................................63
13.2.2 Proceeds Not To Be Released..............................................64
13.2.3 Lessee Responsible for Short-Fall........................................64
13.3 Tangible Personal Property......................................................65
13.4 Restoration of Certain Improvements and the Tangible Personal Property..........65
13.5 No Abatement of Rent............................................................65
13.6 Termination of Certain Rights...................................................65
13.7 Waiver..........................................................................65
13.8 Application of Rent Loss and/or Business Interruption Insurance.................65
13.9 Obligation To Account...........................................................66
ARTICLE 14 CONDEMNATION....................................................................66
14.1 Parties' Rights and Obligations.................................................66
14.2 Total Taking....................................................................66
14.3 Partial or Temporary Taking.....................................................66
14.4 Restoration.....................................................................67
14.5 Award Distribution..............................................................67
14.6 Control of Proceedings..........................................................68
ARTICLE 15 PERMITTED CONTESTS..............................................................68
15.1 Lessee's Right to Contest.......................................................68
15.2 Lessor's Cooperation............................................................69
15.3 Lessee's Indemnity..............................................................69
ARTICLE 16 DEFAULT.........................................................................69
16.1 Events of Default...............................................................69
16.2 Remedies........................................................................73
16.3 Damages.........................................................................74
16.4 Lessee Waivers..................................................................74
16.5 Application of Funds............................................................75
16.6 Intentionally Omitted...........................................................75
16.7 Lessor's Right to Cure..........................................................75
16.8 No Waiver By Lessor.............................................................75
16.9 Right of Forbearance............................................................76
16.10 Cumulative Remedies.............................................................76
ARTICLE 17 SURRENDER OF LEASED PROPERTY OR LEASE;
HOLDING OVER....................................................................77
17.1 Surrender.......................................................................77
17.2 Transfer of Permits and Contracts...............................................77
17.3 No Acceptance of Surrender......................................................78
17.4 Holding Over....................................................................78
ARTICLE 18 PURCHASE OF THE LEASED PROPERTY.................................................78
18.1 Purchase of the Leased Property.................................................78
18.2 Appraisal.......................................................................79
18.2.1 Designation of Appraisers................................................79
18.2.2 Appraisal Process........................................................79
18.2.3 Specific Enforcement and Costs...........................................80
ARTICLE 19 SUBLETTING AND ASSIGNMENT.......................................................80
19.1 Subletting and Assignment.......................................................80
19.2 Permitted Subleases.............................................................80
19.3 Attornment......................................................................80
ARTICLE 20 TITLE TRANSFERS AND LIENS GRANTED BY LESSOR.....................................81
20.1 No Merger of Title..............................................................81
20.2 Transfers By Lessor.............................................................81
20.3 Lessor May Grant Liens..........................................................81
20.4 Subordination and Non-Disturbance...............................................81
ARTICLE 21 LESSOR OBLIGATIONS..............................................................82
21.1 Quiet Enjoyment.................................................................82
21.2 Memorandum of Lease.............................................................82
21.3 Default by Lessor...............................................................83
ARTICLE 22 NOTICES.........................................................................83
ARTICLE 23 ENVIRONMENTAL MATTERS...........................................................84
23.1 Maintenance of Leased Property..................................................84
23.2 Notice of Environmental Conditions..............................................85
23.3 The Lessee's Agreement To Take Remedial Actions.................................85
23.4 The Lessor's Rights To Inspect The Leased Property and Take
Remedial Actions................................................................85
23.5 Environmental Indemnification...................................................87
23.6 Survival........................................................................87
ARTICLE 24 MISCELLANEOUS PROVISIONS........................................................87
24.1 Broker's Fee Indemnification....................................................87
24.2 No Joint Venture or Partnership.................................................88
24.3 Amendments, Waivers and Modifications...........................................88
24.4 Captions and Headings...........................................................88
24.5 Time is of the Essence..........................................................89
24.6 Counterparts....................................................................89
24.7 Entire Agreement................................................................89
24.8 WAIVER OF JURY TRIAL............................................................89
24.9 Successors and Assigns..........................................................89
24.10 No Third Party Beneficiaries....................................................89
24.11 Governing Law...................................................................90
24.12 General.........................................................................90
24.13 Consents........................................................................91
24.14 Meditrust Loan..................................................................91
EXHIBIT A LEGAL DESCRIPTION OF THE LAND
EXHIBIT B PERMITTED ENCUMBRANCES
EXHIBIT C RATE LIMITATIONS
EXHIBIT D FREE CARE REQUIREMENTS
EXHIBIT E CALCULATION OF RENT COVERAGE RATIO
EXHIBIT 3 CALCULATION OF FAIR MARKET RENTAL VALUE
</TABLE>
Exhibit 10.104
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT ("Sublease") is entered into this 1st day of July,
1997, by and between CHANCELLOR OF LAUDERHILL I, INC., a Delaware corporation,
whose address is 197 First Avenue, Needham, Massachusetts 02194 ("Sublessor"),
and CAREMATRIX OF LAUDERHILL I, INC., a Delaware corporation, whose address is
197 First Avenue, Needham, Massachusetts 02194 ("Sublessee").
RECITALS
WHEREAS, Sublessor entered into that certain Lease dated July 1, 1997
("Master Lease") by and between Unicom Partnership Ltd., a Florida limited
partnership, as "Landlord" (the "Landlord") and Sublessor as "Tenant", pursuant
to which Landlord rents to Sublessor that certain land situated in Broward
County, Florida and more particularly described on Exhibit "A" attached hereto
and made a part hereof (the "Land"), which Land is improved with an assisted
living/independent living facility (the "Facility") known as "Forest Trace at
Inverrary" located at 5500 NW 69th Avenue, Lauderhill, Broward County, Florida
(collectively, the "Premises"); and
WHEREAS, Sublessee desires to sublease from the Sublessor and the Sublessor
desires to sublease to the Sublessee the Premises on the terms and conditions
set forth hereinbelow.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
obligations, promises and covenants herein contained, and in further
consideration of ten ($10.00) dollars cash in hand paid by each party hereto to
the other, the receipt and adequacy of which is hereby acknowledged by each of
the parties hereto, it is hereby agreed as follows:
1. Recitals: The foregoing recitals are true and correct and made a part
hereof. Capitalized terms used but not defined in this Sublease shall have the
meanings given to them in the Master Lease.
2. Premises and Term: Sublessor hereby leases to Sublessee and Sublessee
hereby leases from Sublessor the Premises for a term (the "Term") commencing on
the Commencement Date and expiring on the Expiration Date.
3. Rent: Sublessee shall pay to Sublessor during the term of this Sublease
as monthly rent (collectively, "Rent"), without deduction, setoff, prior notice,
or demand, a total sum equal to
<PAGE>
(i) the Base Rent, (ii) the additional rent as calculated in Section 4.02 of the
Master Lease, and (iii) all other payments due from Sublessor to Landlord under
the Master Lease, plus applicable sales or use tax thereon, if any. All Rent
shall be paid to Sublessor at the address to which notices to Sublessor are
given.
4. Insurance: Sublessee shall, at its sole cost and expense, provide and
maintain in force from the Commencement Date and during the entire Term of this
Sublease, insurance in the types of coverages, the amounts and otherwise as
required to be maintained by Sublessor pursuant to the Master Lease. The policy
or policies of insurance shall name as the insured thereunder both the Sublessor
and Sublessee. Sublessee shall independently insure for its own interest all
trade fixtures, furniture, furnishings, equipment and other installations of
Sublessee not otherwise covered under the Sublessee's insurance coverage as
described herein.
5. Water, Sewer, Gas, Electricity and Other Utilities: Sublessee shall be
responsible directly to the applicable utility supplier for payment of monthly
water, sewer, gas, electricity, and other utilities bills for the Premises.
6. Condition of Premises: Sublessor is delivering the Premises to Sublessee
and Sublessee hereby accepts the Premises in an "AS IS" condition. No warranties
or representations are made by Sublessor with respect to the condition of the
Premises, any such warranties or representations being expressly disclaimed.
Sublessor shall not be obliged to make any alterations or improvements to the
Premises or to remove any fixtures or improvements.
7. Incorporation of Terms of Master Lease: This Sublease is subject to and
subordinate to the terms, covenants, conditions and limitations of the Master
Lease which are incorporated by reference into and made a part of this Sublease;
provided, that in the event that there are any inconsistencies between the terms
and provisions of this Sublease and the Master Lease, the terms and provisions
of this Sublease shall control. All the terms, covenants, and limitations
contained in the Master Lease shall be applicable to this Sublease with the same
force and effect as if Sublessor was the Lessor and Sublessee was the Tenant
thereunder; provided, that in case of any breach hereof by Sublessee, Sublessor
shall have all the rights against Sublessee as would be available to the
Landlord against the Sublessor as Tenant under the Master Lease if such breach
was by the lessee thereunder. Sublessee shall have the right to request
Sublessor to make demand upon the Landlord to enforce the terms or obligations
of the Landlord which may effect the Sublessee's use and enjoyment of the
Premises. Upon such request Sublessor shall immediately transmit such demand to
Landlord. Sublessor shall not, however, be liable or responsible to Sublessee
-2-
<PAGE>
for any failure or neglect by Landlord in complying with Landlord's duties and
obligations under the Master Lease. In no event shall Sublessor be deemed to be
assuming, and Sublessor is not hereby assuming, any of the Landlord's duties,
responsibilities or obligations in connection with maintenance of the Facility
or the Premises, or with the providing of services to the Premises or with
respect to repair or reconstruction of the Facility or the Premises. In no event
shall Sublessor be deemed in any manner to be released from any of its
obligations under the Master Lease by virtue of this Sublease or the Landlord's
consent hereto, Sublessor acknowledging that it shall be and remain fully liable
under the Master Lease.
8. Indemnity: In consideration of the Premises being leased to Sublessee
for the Rent, Sublessee agrees that: (i) Sublessee, at all times, will indemnify
and keep harmless Sublessor from all losses, damages, liabilities and expenses
which may arise or be claimed against Sublessor and be in favor of any person,
firms or corporations, for any injuries or damages to the person or property of
any persons, firms or corporations, consequent upon or arising from the use or
occupancy of the Premises by Sublessee, or consequent upon or arising from any
acts, omissions, neglect or fault of Sublessee, its agents, servants, employees,
licensees, visitors, customers, clients, patrons or invitees, or consequent upon
or arising from Sublessee's failure to comply with any laws, statutes,
ordinances, codes or regulations as herein provided; (ii) Sublessor shall not be
liable to Sublessee for any damages, losses or injuries to the persons or
property of Sublessee which may be caused by the acts, neglect, omissions or
faults of any persons, firms or corporations, except when such injury, loss or
damage results directly from the gross negligence of Sublessor, its agents or
employees; and (iii) Sublessee will indemnify and keep harmless Sublessor from
all damages, liabilities, losses, injuries, or expenses which may arise or be
claimed against Sublessor and be in favor of any persons, firms or corporations,
where said injuries or damages arose upon the Premises, as a result of the
negligence, neglect or fault of Sublessee, its agents, employees, servants,
licensees, visitors, customers, patrons and invitees. All personal property
placed or moved into the Facility or the Premises shall be at the risk of
Sublessee or the owner thereof, and Sublessor shall not be liable to Sublessee
for any damage to said personal property, except for any damage resulting from
the acts of gross negligence of Sublessor or its authorized representatives.
Sublessee shall maintain at all times during the term of this Sublease an
insurance policy or policies in an amount or amounts sufficient to indemnify the
Sublessor or pay the Sublessor's damages, if any, resulting from any matters set
forth in this paragraph. Any such policy shall name Sublessor as additional
insured.
-3-
<PAGE>
In case Sublessor shall be made a party to any litigation arising from any
matters set forth in this paragraph, then the Sublessee shall protect and hold
the Sublessor harmless and shall pay all costs, expenses and reasonable
attorney's fees (at trial and all appellate levels) incurred or paid by the
Sublessor in connection with such litigation.
9. Cleaning Upon Vacating: Upon vacating the Premises, Sublessee shall
surrender same and shall clean and restore the Premises, at its own expense, so
that the Premises will be in the same condition (except for ordinary wear and
tear) as when the Premises were first occupied by Sublessee. Notwithstanding
anything contained herein to the contrary, Sublessor can elect to retain or
dispose of in any manner any alterations, improvements or Sublessee's personal
property that Sublessee does not remove from the Premises on expiration or
termination of the term allowed or otherwise required by this Sublease. Title to
any such alterations, improvements or personal property that Sublessor elects to
retain or dispose of shall vest in Sublessor. Sublessee waives all claims
against Sublessor for any damage to Sublessee resulting from Sublessor's
retention or disposition of any such alterations or improvements.
10. Brokerage: The parties hereto each represent to the other that neither
has dealt with any real estate broker in connection with the negotiation and/or
consummation of the transactions contemplated by this Sublease. Each party
agrees that it will defend, save and hold harmless against claim or loss
(including reasonable attorney's fees) which may be asserted against the other
by reason of any claims or determinations in contravention of the
representations contained in this paragraph.
11. Prior Understandings: All prior understandings and agreements between
the parties are merged within this Sublease which fully and completely sets
forth the understanding of the parties. This Sublease may not be changed or
terminated orally or in any matter other than by an agreement in writing.
12. Assignment: Sublessee shall not assign, pledge or mortgage its interest
in this Sublease nor shall it further sublet the Premises, or any portion
thereof, without the prior written consent of the Sublessor.
13. Notices: Any notice or demand which either party may or must give to
the other hereunder shall be in writing and delivered personally or sent by
registered mail to the address set forth on the first page of this Sublease.
14. Default: If any of the Rent or other payment due from Sublessee to
Sublessor is not promptly and fully made when due, or
-4-
<PAGE>
if any other of the terms and conditions of this Sublease or in the Master Lease
on the part of Sublessee to be performed are not fully and promptly complied
with by Sublessee, Sublessor may declare Sublessee in default hereunder and may
exercise any and all rights and remedies available under applicable law upon the
occurrence of a default. The default provisions and the time of payment
provisions stated herein shall control over the provisions of the Master Lease.
15. Attorneys Fees: In connection with any litigation arising out of this
Sublease, the prevailing party shall be entitled to recover all costs incurred
including reasonable attorneys' fees, which reasonable attorneys' fees shall
include, but not be limited to, attorneys' fees incurred by such prevailing
party for the services of its attorneys at trial and all appellate levels.
16. Tender and Delivery of Sublease Instrument: Submission of this Sublease
for examination does not constitute an offer, right of refusal, reservation of
or option for the Facility or the Premises. This Sublease becomes effective as a
sublease upon execution by both Sublessor and Sublessee and receipt by Sublessor
of written approval of this Sublease by the Landlord.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
--5--
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Sublease Agreement
as of the date first above written.
WITNESSES: SUBLESSOR:
CHANCELLOR OF LAUDERHILL I,
INC., a Delaware corporation
/s/ JOHN L. SHIEKMAN By:/s/ [ILLEGIBLE]
- ---------------------------------- ---------------------------------
Print Name: John L. Shiekman Print Name: [ILLEGIBLE]
Title: VP
/s/ [ILLEGIBLE]
- ----------------------------------
Print Name: [ILLEGIBLE]
SUBLESSEE:
CAREMATRIX OF LAUDERHILL I,
INC., a Delaware corporation
/s/ JOHN L. SHIEKMAN By:/s/ [ILLEGIBLE]
- ---------------------------------- ---------------------------------
Print Name: John L. Shiekman Print Name: [ILLEGIBLE]
Title: EVP
/s/ [ILLEGIBLE]
- ----------------------------------
Print Name: [ILLEGIBLE]
-6-
<PAGE>
CONSENT TO SUBLEASE
The undersigned, as Landlord of the Premises under the Master Lease
described hereinabove, does hereby consent to the above Sublease.
WITNESSES: UNICOM PARTNERSHIP LTD., a
Florida limited partnership
By: F. Trace, Inc., a Florida
corporation, its General
Partner
/s/ JOHN L. SHIEKMAN By: /s/ [ILLEGIBLE]
- ---------------------------------- ---------------------------------
Print Name: John L. Shiekman Print Name: [ILLEGIBLE]
Title: [ILLEGIBLE]
/s/ [ILLEGIBLE]
- ----------------------------------
Print Name: [ILLEGIBLE]
Dated: July 1, 1997
-7-
Exhibit 10.105
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Aberdeen,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of One Hundred Forty-Eight (148) units (the "Project") to be located
in Boynton Beach, Florida described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 2.4
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property
will be subject to the easements, assessments, conditions,
contracts, rights, claims, encroachments, restrictions and other
encumbrances as set forth on Exhibit "B" (the "Existing
Encumbrances"), to physical conditions disclosed by a boundary
survey to be prepared by Owen Haskell, Inc. entitled "Boundary
Survey", dated September 13, 1996, for the Property, and will be
subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances
resulting from the Developer securing regulatory, development and
construction approvals for the Project and attendant site
improvements. The Owner and the Developer each represents to the
other that it has reviewed or shall review the boundary survey
and the topographical survey of the Property and has made a
physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material
respects.
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(b) Concurrently with the execution of this Agreement, the Owner
shall provide the Developer with copies of all engineering,
architectural and any other plans, studies and surveys, title
reports, environmental assessments, appraisals and other
information regarding the Property or the Project which are in
the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if
any, as set forth on Exhibit "D" which require the implementation
of the measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences
construction in accordance with the terms of this Agreement, the
Owner shall provide the Developer with full possession and
complete control of the Property for purposes of performing the
Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts
to obtain, prior to the date of Physical Completion (as
hereinafter defined), all state, federal, county and municipal
land use approvals and permits, licenses, easements, and utility
agreements which are necessary for the development, construction
and opening of the Project on the Property as set forth on
Exhibit "E" (the "Developer's Approvals"). The Developer
covenants to diligently use its best efforts to obtain all of the
Developer's Approvals in an expeditious manner. In the event that
the Developer is unable to obtain the Developer's Approvals, the
Developer shall have no liability whatsoever to the Owner, or any
other party and at the Owner's or the Developer's option, this
Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion, all state,
federal, county and municipal land use approvals and permits,
licenses, easements, and utility agreements which are necessary
for the development, construction and operation of the Project on
the Property as set forth on Exhibit "F" (the "Owner's
Approvals"). The Owner covenants to diligently use its best
efforts to obtain all of the Owner's Approvals in an expeditious
manner. In the event that the Owner is unable to obtain the
Owner's Approvals, the Owner shall have no liability whatsoever
to the Developer, or any other party and at the Owner's or the
Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct
the Project, the Owner grants to the Developer, to the extent
required by the Developer in order that the purpose of this
Agreement be effectuated, the rights under the Developer's
Approvals and the Owner's Approvals (collectively, the
"Approvals") and any other grants of rights, permits, approvals,
or licenses, which may be necessary to complete the performance
of the Developer's obligations hereunder; provided, however that
no transfer or assignment of any of the foregoing shall occur
which is prohibited by applicable law or the respective terms
hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined
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herein) and related development costs (collectively, the "Project Loan") which
shall be sufficient, together with the Owner's equity contributions, if
necessary (which shall in no event exceed ten percent (10%) of the total costs
to construct the Project in accordance with the development budget), to pay the
full amount of the total costs to construct the Project in accordance with the
development budget. The Owner covenants that it will provide fully and in a
timely fashion all reasonable documentation required by the lender in connection
with the Project Loan. Such documentation shall include, but is not limited to,
all zoning and plan approvals, all utility letters indicating positive
availability of service, inventory of concessions made to and agreements with
any or all municipal bodies, site plans, title policies, and all other
regulatory body approvals. The Owner also covenants that it will, in a timely
manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
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<PAGE>
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Architecture Team and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall,
under the direction of the Developer and after consultation with
the Owner, prepare basic design plans (the "Basic Plans"). As a
part of this process, the Developer may engage engineers,
including the site engineers, to perform test borings and other
soil testing at the Property for purposes of properly locating
the Property on the Project. The Developer, the Architects and
Engineers shall consult with the Owner during the process of
preparing the Basic Plans. The Developer, Architect and the
Engineers shall have access to the Project for all such tests and
surveys.
(b) Within two (2) weeks after the date of the Architect's and
the Engineer's completion and delivery of the Basic Plans, the
Owner, the Developer, the Architect and Engineers shall meet to
review and approve the Basic Plans. The parties shall initial the
Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the
Developer shall direct the Architect and Engineers to prepare
final plans, specifications and a site plan (collectively the
"Final Plans") based upon the Basic Plans. Within two (2) weeks
after the completion of the Final Plans and their delivery to the
Owner, the parties will meet to review and approve the same, and
make any necessary revisions. The Owner agrees that it will not
unreasonably withhold its approval of the Final Plans if they
conform in all material respects to the Basic Plans. The parties
agree to use their best efforts to reach a prompt and reasonable
conclusion concerning the acceptability of the Final Plans (and
the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the
same.
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Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal
property contained in Exhibit "I" (the "Furniture, Furnishings &
Equipment" or the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be
delivered prior to the Closing contemplated herein, the Owner
covenants that it shall approve the F F & E as soon as
practicable but not later than approximately six (6) months prior
to the estimated date of Physical Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical
Completion" or "Physically Completed" shall mean the date on
which the building and improvements described and set forth in
the Final Plans have been completed and the Project shall have
been approved for and received a certificate for temporary or
permanent occupancy by the local building inspector, and by the
State Fire Marshall in the event his or her approval is required
(the "Certificate of Occupancy"). Physical Completion shall be
deemed to have been achieved notwithstanding that
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any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter
defined) listing items requiring completion or correction, so
long as such conditions or Punch-List items do not prevent or
prohibit occupancy as determined by the Owner, in its sole
discretion.
(b) The Developer will use its reasonable best efforts to notify
the Owner at least ninety (90) days prior to the time that the
Developer estimates that the Project will be Physically
Completed, whereupon the Owner will diligently proceed to fulfill
all other conditions necessary for licensure and the Owner will
apply in a timely manner for all licenses and permits necessary
to commence operation of the Project as set forth on Exhibit
"C-2". After such notice from the Developer, the Owner, to the
extent necessary to perform administrative activities may, so
long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial
licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be
sufficient, together with the Owner's equity contributions, to
pay the full amount of the costs to construct the Project in
accordance with the development budget.
The Owner and the Developer also contemplate that the Property
and the Project, together with all fixtures, furnishing,
equipment, and articles of personal property now owned or
hereafter acquired by the Owner which are or may be attached to
or used in connection with the Property
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or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all
present and future rents, issues, leases, and profits of the
Property and the Project will serve as security for the payment
obligations to any lenders relating to the Project Loan or
otherwise, and that the Owner will be the principal obligor for
the repayment of all financial obligations thereunder after the
transfer of title to the Owner. The Owner therefore, agrees to
execute and deliver all commitments, promissory notes, mortgages,
collateral assignments, documents, certificates, affidavits, and
other writings required to be executed by any lender in
connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate
of Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project
in accordance with the Final Plans (except as otherwise expressly
set forth herein);
(c) To at all times, commencing with the date upon which
construction begins, carry the following types of insurance with
an insurance carrier or carriers acceptable to the Owner and the
Owner's lender:
(i) Workman's compensation insurance fully covering all
persons engaged in the performance of this Agreement, in
accordance with applicable law.
(ii) Public liability insurance covering death or bodily
injury with limits of not less than $300,000 for one person and
$1,000,000 for any one accident or disaster; and property damage
coverage limits of not less than $100,000; all of which insurance
shall name the Owner's lender as an additional insured.
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The Developer shall furnish to the Owner and the Owner's
lender if required by such lender, duplicate policies of
insurance as set forth in subparagraphs (i) and (ii) hereof. Each
of such policies shall, if the insurance carriers so permit,
contain a provision to the effect that they may not be canceled
except upon ten (10) days prior written notice to the Owner and
the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the
Owner, at the Owner's option, duly executed waivers of mechanic's
liens signed by each contractor and subcontractor which provided
labor or materials on the Project.
(e) To expeditiously pursue obtaining commitments for financing
the contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel
required for the pre-opening and operation of the Project in
sufficient time to permit licensure by the applicable
governmental agency(ies) at the date of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then
obtainable) and current utility availability letters shall have
been obtained by December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA
survey, satisfactory to the Developer, in its sole discretion,
shall have been obtained by the Owner which confirms that there
are no exceptions or conditions which would render title to the
Property unmarketable or which will prohibit or restrict the
construction or operation of the Project or which would prevent
an institutional lender from closing a construction or permanent
mortgage loan for the Project in the usual course of its
business.
(c) Additional Due Diligence Regarding the Property. The
Developer shall have received due diligence information
concerning the Property, satisfactory to the Developer in its
sole discretion, including, without limitation, soil tests and
utility service confirmations to the extent not currently
available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth
in Section 1.1.
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Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations
between the parties on the terms of this Agreement; and any of
the Developer's proprietary information, including, without
limitation, financial information, projects, copies of leases,
real estate appraisals, and other information regarding the
Project and the business affairs and operations of the Developer
which any of said parties obtain from the Developer in the course
of negotiations for the transactions contemplated hereby (the
"Confidential Information");
(b) not to disclose, without the Developer's prior written
consent (except to the extent disclosure is required by
applicable law or regulation), any Confidential Information
except to such parties' own agents, servants and employees,
bankers, consultants and other advisors to whom disclosure is
necessary in order to effectuate the transactions contemplated
hereby; and
(c) to comply therewith for a period of one (1) year commencing
on the date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
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Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall
be sent to it at the address set forth above and a copy therefore
sent to Chancellor Senior Housing Group, Inc., 197 First Avenue,
Needham, MA 02194, Attention: Frederick R. Leathers, or at such
other address or addresses the Owner shall from time to time
designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it
shall be sent to CareMatrix of Massachusetts, Inc., 197 First
Avenue, Needham, MA 02194, Attention: President, with a copy to
James M. Clary, III, Esq. at the same address; or at such other
address or addresses as the Developer shall from time-to-time
designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
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Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 11th day of April, 1997 and executed under seal.
Witness: CHANCELLOR OF ABERDEEN, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.106
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of One
Hundred Thirteen (113) units (the "Project") to be located in Bayport, New York
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 8
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property
will be subject to the easements, assessments, conditions,
contracts, rights, claims, encroachments, restrictions and other
encumbrances as set forth on Exhibit "B" (the "Existing
Encumbrances"), to physical conditions disclosed by a boundary
survey to be prepared by Schnepf & Murrell, P.C., dated May 9,
1997, for the Property, and will be subject to those easements,
conditions, contracts, rights, licenses, encroachments,
restrictions and other encumbrances resulting from the Developer
securing regulatory, development and construction approvals for
the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or
shall review the boundary survey and the topographical survey of
the Property and has made a physical inspection of the Property
and is satisfied as to the site characteristics and other
attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner
shall provide the Developer with copies of all engineering,
architectural and any other plans, studies and surveys, title
reports, environmental assessments, appraisals and other
information regarding the Property or the Project which are in
the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if
any, as set forth on Exhibit "D" which require the implementation
of the measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences
construction in accordance with the terms of this Agreement, the
Owner shall provide the Developer with full possession and
complete control of the Property for purposes of performing the
Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts
to obtain, prior to the date of Physical Completion (as
hereinafter defined), all state, federal, county and municipal
land use approvals and permits, licenses, easements, and utility
agreements which are necessary for the development, construction
and opening of the Project on the Property as set forth on
Exhibit "E" (the "Developer's Approvals"). The Developer
covenants to diligently use its best efforts to obtain all of the
Developer's Approvals in an expeditious manner. In the event that
the Developer is unable to obtain the Developer's Approvals, the
Developer shall have no liability whatsoever to the Owner, or any
other party and at the Owner's or the Developer's option, this
Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion, all state,
federal, county and municipal land use approvals and permits,
licenses, easements, and utility agreements which are necessary
for the development, construction and operation of the Project on
the Property as set forth on Exhibit "F" (the "Owner's
Approvals"). The Owner covenants to diligently use its best
efforts to obtain all of the Owner's Approvals in an expeditious
manner. In the event that the Owner is unable to obtain the
Owner's Approvals, the Owner shall have no liability whatsoever
to the Developer, or any other party and at the Owner's or the
Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct
the Project, the Owner grants to the Developer, to the extent
required by the Developer in order that the purpose of this
Agreement be effectuated, the rights under the Developer's
Approvals and the Owner's Approvals (collectively, the
"Approvals") and any other grants of rights, permits, approvals,
or licenses, which may be necessary to complete the performance
of the Developer's
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obligations hereunder; provided, however that no transfer or
assignment of any of the foregoing shall occur which is
prohibited by applicable law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
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in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio & Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall,
under the direction of the Developer and after consultation with
the Owner, prepare basic design plans (the "Basic Plans"). As a
part of this process, the Developer may engage engineers,
including the site engineers, to perform test borings and other
soil testing at the Property for purposes of properly locating
the Property on the Project. The Developer, the Architects and
Engineers shall consult with the Owner during the process of
preparing the Basic Plans. The Developer, Architect and the
Engineers shall have access to the Project for all such tests and
surveys.
(b) Within two (2) weeks after the date of the Architect's and
the Engineer's completion and delivery of the Basic Plans, the
Owner, the Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties
shall initial the Basic Plans to indicate their approval of such
Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the
Developer shall direct the Architect and Engineers to prepare
final plans, specifications and a site plan (collectively the
"Final Plans") based upon the Basic Plans. Within two (2) weeks
after the completion of the Final Plans and their delivery to the
Owner, the parties will meet to review and approve the same, and
make any necessary revisions. The Owner agrees that it will not
unreasonably withhold its approval of the Final Plans if they
conform in all material respects to the Basic Plans. The parties
agree to use their best efforts to reach a prompt and reasonable
conclusion concerning the acceptability of the Final Plans (and
the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the
same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal
property contained in Exhibit "I" (the "Furniture, Furnishings &
Equipment" or the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be
delivered prior to the Closing contemplated herein, the Owner
covenants that it shall approve the F F & E as soon as
practicable but not later than approximately six (6) months prior
to the estimated date of Physical Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical
Completion" or "Physically Completed" shall mean the date on
which the building and improvements described and set forth in
the Final Plans have been completed and the Project shall have
been approved for and received a certificate for temporary or
permanent occupancy by the local building inspector, and by the
State Fire Marshall in the event his or her approval is required
(the "Certificate of Occupancy"). Physical Completion shall be
deemed to have been achieved notwithstanding that any of such
officials or agencies have issued a Certificate of Occupancy with
conditions or a Punch-List (as hereinafter defined) listing items
requiring completion or correction, so long as such conditions or
Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify
the Owner at least ninety (90) days prior to the time that the
Developer estimates that the Project will be Physically
Completed, whereupon the Owner will diligently proceed to fulfill
all other conditions necessary for licensure and the Owner will
apply in a timely manner for all licenses and permits necessary
to commence operation of the Project as set forth on Exhibit
"C-2". After such notice from the Developer, the Owner, to the
extent necessary to perform administrative activities may, so
long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial
licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be
sufficient, together with the Owner's equity contributions, to
pay the full amount of the costs to construct the Project in
accordance with the development budget.
The Owner and the Developer also contemplate that the Property
and the Project, together with all fixtures, furnishing,
equipment, and articles of personal property now owned or
hereafter acquired by the Owner which are or may be attached to
or used in connection with the Property or the Project, together
with any and all replacements thereto and substitutions therefor,
and all proceeds thereof; and all present and future rents,
issues, leases, and profits of the Property and the Project will
serve as security for the payment obligations to any lenders
relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner.
The Owner therefore, agrees to execute and deliver all
commitments, promissory notes, mortgages, collateral assignments,
documents, certificates, affidavits, and other writings required
to be executed by any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate
of Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project
in accordance with the Final Plans (except as otherwise expressly
set forth herein);
(c) To at all times, commencing with the date upon which
construction begins, carry the following types of insurance with
an insurance carrier or carriers acceptable to the Owner and the
Owner's lender:
(i) Workman's compensation insurance fully covering all
persons engaged in the performance of this Agreement, in
accordance with applicable law.
(ii) Public liability insurance covering death or bodily
injury with limits of not less than $300,000 for one person and
$1,000,000 for any one accident or disaster; and property damage
coverage limits of not less than $100,000; all of which insurance
shall name the Owner's lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's
lender if required by such lender, duplicate policies of
insurance as set forth in subparagraphs (i) and (ii) hereof. Each
of such policies shall, if the insurance carriers so permit,
contain a provision to the effect that they may not be canceled
except upon ten (10) days prior written notice to the Owner and
the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the
Owner, at the Owner's option, duly executed waivers of mechanic's
liens signed by each contractor and subcontractor which provided
labor or materials on the Project.
(e) To expeditiously pursue obtaining commitments for financing
the contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel
required for the pre-opening and operation of the Project in
sufficient time to permit licensure by the applicable
governmental agency(ies) at the date of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then
obtainable) and current utility availability letters shall have
been obtained by April 30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA
survey, satisfactory to the Developer, in its sole discretion,
shall have been obtained by the Owner which confirms that there
are no exceptions or conditions which would render title to the
Property unmarketable or which will prohibit or restrict the
construction or operation of the Project or which would prevent
an institutional lender from closing a construction or permanent
mortgage loan for the Project in the usual course of its
business.
(c) Additional Due Diligence Regarding the Property. The
Developer shall have received due diligence information
concerning the Property, satisfactory to the Developer in its
sole discretion, including, without limitation, soil tests and
utility service confirmations to the extent not currently
available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth
in Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations
between the parties on the terms of this Agreement; and any of
the Developer's proprietary information, including, without
limitation, financial
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information, projects, copies of leases, real estate appraisals,
and other information regarding the Project and the business
affairs and operations of the Developer which any of said parties
obtain from the Developer in the course of negotiations for the
transactions contemplated hereby (the "Confidential
Information");
(b) not to disclose, without the Developer's prior written
consent (except to the extent disclosure is required by
applicable law or regulation), any Confidential Information
except to such parties' own agents, servants and employees,
bankers, consultants and other advisors to whom disclosure is
necessary in order to effectuate the transactions contemplated
hereby; and
(c) to comply therewith for a period of one (1) year commencing
on the date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and
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save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall
be sent to it at the address set forth above and a copy therefore
sent to Chancellor Senior Housing Group, Inc., 197 First Avenue,
Needham, MA 02194, Attention: Frederick R. Leathers, or at such
other address or addresses the Owner shall from time to time
designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it
shall be sent to CareMatrix of Massachusetts, Inc., 197 First
Avenue, Needham, MA 02194, Attention: President, with a copy to
James M. Clary, III, Esq. at the same address; or at such other
address or addresses as the Developer shall from time-to-time
designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
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Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.107
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Clearwater,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of ninety-nine (99) units (the "Project") to be located in Safety
Harbor, Florida described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 12.89
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property
will be subject to the easements, assessments, conditions,
contracts, rights, claims, encroachments, restrictions and other
encumbrances as set forth on Exhibit "B" (the "Existing
Encumbrances"), to physical conditions disclosed by a boundary
survey to be prepared by Milone & MacBroom, Inc., for the
Property, and will be subject to those easements, conditions,
contracts, rights, licenses, encroachments, restrictions and
other encumbrances resulting from the Developer securing
regulatory, development and construction approvals for the
Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or
shall review the boundary survey and the topographical survey of
the Property and has made a physical inspection of the Property
and is satisfied as to the site characteristics and other
attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner
shall provide the Developer with copies of all engineering,
architectural and any other plans, studies and surveys, title
reports, environmental assessments, appraisals and other
information regarding the Property or the Project which are in
the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if
any, as set forth on Exhibit "D" which require the implementation
of the measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences
construction in accordance with the terms of this Agreement, the
Owner shall provide the Developer with full possession and
complete control of the Property for purposes of performing the
Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts
to obtain, prior to the date of Physical Completion (as
hereinafter defined), all state, federal, county and municipal
land use approvals and permits, licenses, easements, and utility
agreements which are necessary for the development, construction
and opening of the Project on the Property as set forth on
Exhibit "E" (the "Developer's Approvals"). The Developer
covenants to diligently use its best efforts to obtain all of the
Developer's Approvals in an expeditious manner. In the event that
the Developer is unable to obtain the Developer's Approvals, the
Developer shall have no liability whatsoever to the Owner, or any
other party and at the Owner's or the Developer's option, this
Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion, all state,
federal, county and municipal land use approvals and permits,
licenses, easements, and utility agreements which are necessary
for the development, construction and operation of the Project on
the Property as set forth on Exhibit "F" (the "Owner's
Approvals"). The Owner covenants to diligently use its best
efforts to obtain all of the Owner's Approvals in an expeditious
manner. In the event that the Owner is unable to obtain the
Owner's Approvals, the Owner shall have no liability whatsoever
to the Developer, or any other party and at the Owner's or the
Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct
the Project, the Owner grants to the Developer, to the extent
required by the Developer in order that the purpose of this
Agreement be effectuated, the rights under the Developer's
Approvals and the Owner's Approvals (collectively, the
"Approvals") and any other grants of rights, permits, approvals,
or licenses, which may be necessary to complete the performance
of the Developer's obligations hereunder; provided, however that
no transfer or assignment of any
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of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Stein/Troost and their consulting engineers (the "Architect and Engineers")
have or will be retained by the Owner. The Owner represents and warrants to the
Developer that a true, accurate and complete copy of the Architectural Contract
is attached hereto as Exhibit "H" (the "Architect Contract"). The Developer
shall not be responsible to the Owner, or any other party for any errors,
omissions, breaches or failures thereof, or any damages resulting from the acts
or omissions of the Architect. At the Developer's option, the Owner shall assign
to the Developer all of its right, title and interest in the Architectural
Contract and any and all architectural, engineering and other contracts with
respect to the Project free of any claims other than outstanding amounts owed
under the Architectural Contract. In no event shall the Developer be obligated
to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall,
under the direction of the Developer and after consultation with
the Owner, prepare basic design plans (the "Basic Plans"). As a
part of this process, the Developer may engage engineers,
including the site engineers, to perform test borings and other
soil testing at the Property for purposes of properly locating
the Property on the Project. The Developer, the Architects and
Engineers shall consult with the Owner during the process of
preparing the Basic Plans. The Developer, Architect and the
Engineers shall have access to the Project for all such tests and
surveys.
(b) Within two (2) weeks after the date of the Architect's and
the Engineer's completion and delivery of the Basic Plans, the
Owner, the Developer, the Architect and Engineers shall meet
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to review and approve the Basic Plans. The parties shall initial
the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the
Developer shall direct the Architect and Engineers to prepare
final plans, specifications and a site plan (collectively the
"Final Plans") based upon the Basic Plans. Within two (2) weeks
after the completion of the Final Plans and their delivery to the
Owner, the parties will meet to review and approve the same, and
make any necessary revisions. The Owner agrees that it will not
unreasonably withhold its approval of the Final Plans if they
conform in all material respects to the Basic Plans. The parties
agree to use their best efforts to reach a prompt and reasonable
conclusion concerning the acceptability of the Final Plans (and
the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the
same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal
property contained in Exhibit "I" (the "Furniture, Furnishings &
Equipment" or the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be
delivered prior to the Closing contemplated herein, the Owner
covenants that it shall approve the F F & E as soon as
practicable but not later than approximately six (6) months prior
to the estimated date of Physical Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical
Completion" or "Physically Completed" shall mean the date on
which the building and improvements described and set forth in
the Final Plans have been completed and the Project shall have
been approved for and received a certificate for temporary or
permanent occupancy by the local building inspector, and by the
State Fire Marshall in the event his or her approval is required
(the "Certificate of Occupancy"). Physical Completion shall be
deemed to have been achieved notwithstanding that any of such
officials or agencies have issued a Certificate of Occupancy with
conditions or a Punch-List (as hereinafter defined) listing items
requiring completion or correction, so long as such conditions or
Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify
the Owner at least ninety (90) days prior to the time that the
Developer estimates that the Project will be Physically
Completed, whereupon the Owner will diligently proceed to fulfill
all other conditions necessary for licensure and the Owner will
apply in a timely manner for all licenses and permits necessary
to commence operation of the Project as set forth on Exhibit
"C-2". After such notice from the Developer, the Owner, to the
extent necessary to perform administrative activities may, so
long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial
licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be
sufficient, together with the Owner's equity contributions, to
pay the full amount of the costs to construct the Project in
accordance with the development budget.
The Owner and the Developer also contemplate that the Property
and the Project, together with all fixtures, furnishing,
equipment, and articles of personal property now owned or
hereafter acquired by the Owner which are or may be attached to
or used in connection with the Property or the Project, together
with any and all replacements thereto and substitutions therefor,
and all proceeds thereof; and all present and future rents,
issues, leases, and profits of the Property and the Project will
serve as security for the payment obligations to any lenders
relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner.
The Owner therefore, agrees to execute and deliver all
commitments, promissory notes, mortgages, collateral assignments,
documents, certificates, affidavits, and other writings required
to be executed by any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
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Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate
of Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project
in accordance with the Final Plans (except as otherwise expressly
set forth herein);
(c) To at all times, commencing with the date upon which
construction begins, carry the following types of insurance with
an insurance carrier or carriers acceptable to the Owner and the
Owner's lender:
(i) Workman's compensation insurance fully covering all
persons engaged in the performance of this Agreement, in
accordance with applicable law.
(ii) Public liability insurance covering death or bodily
injury with limits of not less than $300,000 for one person and
$1,000,000 for any one accident or disaster; and property damage
coverage limits of not less than $100,000; all of which insurance
shall name the Owner's lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's
lender if required by such lender, duplicate policies of
insurance as set forth in subparagraphs (i) and (ii) hereof. Each
of such policies shall, if the insurance carriers so permit,
contain a provision to the effect that they may not be canceled
except upon ten (10) days prior written notice to the Owner and
the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the
Owner, at the Owner's option, duly executed waivers of mechanic's
liens signed by each contractor and subcontractor which provided
labor or materials on the Project.
(e) To expeditiously pursue obtaining commitments for financing
the contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel
required for the pre-opening and operation of the Project in
sufficient time to permit licensure by the applicable
governmental agency(ies) at the date of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
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ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then
obtainable) and current utility availability letters shall have
been obtained by June 1, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA
survey, satisfactory to the Developer, in its sole discretion,
shall have been obtained by the Owner which confirms that there
are no exceptions or conditions which would render title to the
Property unmarketable or which will prohibit or restrict the
construction or operation of the Project or which would prevent
an institutional lender from closing a construction or permanent
mortgage loan for the Project in the usual course of its
business.
(c) Additional Due Diligence Regarding the Property. The
Developer shall have received due diligence information
concerning the Property, satisfactory to the Developer in its
sole discretion, including, without limitation, soil tests and
utility service confirmations to the extent not currently
available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth
in Section 1.1. Section 5.2 - Failure of Contingencies. In the
event that any one or more of the contingencies set forth in this
Article is not satisfied, waived or deferred by the parties in
writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In
such event, neither party shall have any further responsibility
or liability to the other. The Developer reserves the right, at
its option, to waive or defer any one or more of the conditions
precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations
between the parties on the terms of this Agreement; and any of
the Developer's proprietary information, including, without
limitation, financial information, projects, copies of leases,
real estate appraisals, and other information regarding the
Project and the business affairs and operations of the Developer
which any of said parties obtain from the Developer in the course
of negotiations for the transactions contemplated hereby (the
"Confidential Information");
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(b) not to disclose, without the Developer's prior written
consent (except to the extent disclosure is required by
applicable law or regulation), any Confidential Information
except to such parties' own agents, servants and employees,
bankers, consultants and other advisors to whom disclosure is
necessary in order to effectuate the transactions contemplated
hereby; and
(c) to comply therewith for a period of one (1) year commencing
on the date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of
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the Owner except that the Developer shall have the right to assign this
Agreement to, merge with or consolidate with an "Affiliate" (defined herein as
defined in the Securities and Exchange Act of 1934 and the regulations
thereunder) in connection with a public offering, merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall
be sent to it at the address set forth above and a copy therefore
sent to Chancellor of Clearwater, Inc., 197 First Avenue,
Needham, MA 02194, Attention: Frederick R. Leathers, or at such
other address or addresses the Owner shall from time to time
designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it
shall be sent to CareMatrix of Massachusetts, Inc., 197 First
Avenue, Needham, MA 02194, Attention: President, with a copy to
James M. Clary, III, Esq. at the same address; or at such other
address or addresses as the Developer shall from time-to-time
designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
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Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF CLEARWATER, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
12
Exhibit 10.108
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Dix Hills,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of 150 units (the "Project") to be located in Dix Hills, New York
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 11.5
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared for the Property, and
will be subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances resulting
from the Developer securing regulatory,
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development and construction approvals for the Project and attendant
site improvements. The Owner and the Developer each represents to the
other that it has reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical
inspection of the Property and is satisfied as to the site
characteristics and other attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
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(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
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Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
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Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to
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make all decisions with respect to such changes; provided, that, such changes
result in construction, space, design, personal property, equipment and interior
and exterior design comparable in overall design and quality to that shown on
the Final Plans. Any change that results in the loss or adjustment of square
footage in the Project will require approval by the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
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complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual cots for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
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information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold
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and save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Dix Hills, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the
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validity or enforceability of this remaining portions so long as the material
purposes of this Agreement can be determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 30th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF DIX HILLS, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
Exhibit 10.109
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of East
Longmeadow, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Owner"), and is entered into for the purpose
of reducing to a formal writing all of the parties understandings with respect
to the development and construction of an assisted/independent living project to
be comprised of seventy (70) units (the "Project") to be located in East
Longmeadow, Massachusetts described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 3.84
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Smith Associates
Surveyors, Inc., for the Property, and will be subject to those
easements, conditions, contracts, rights, licenses, encroachments,
restrictions and other encumbrances resulting from the Developer
securing regulatory, development and construction approvals for the
Project and attendant site improvements. The Owner and the Developer
each represents to the other that
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it has reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical
inspection of the Property and is satisfied as to the site
characteristics and other attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
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(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its
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terms and in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Sheskey Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
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(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved. Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all
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warranties and guarantees received from designers, the Architect, the general
contractor and suppliers of equipment and furnishings. The Developer will cause
the applicable contractor to remedy any defect in construction caused by poor
workmanship or materials which are brought to its attention by written notice
within a period of one (1) year from the date of the issuance of the Certificate
of Occupancy. Aside from the foregoing, the Owner hereby waives and the
Developer hereby disclaims all other express and implied warranties of every
kind or nature with respect to the Project and the Personal Property, including,
without limitation, waiving all IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors,
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agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
November 30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
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(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
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Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the
Owner, it shall be sent to it at the address set forth above and a copy
therefore sent to Chancellor of East Longmeadow, Inc., 197 First
Avenue, Needham, MA 02194, Attention: Frederick R. Leathers, or at such
other address or addresses the Owner shall from time to time designate
by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
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Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF EAST LONGMEADOW, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.110
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Easton, Inc.,
a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living and senior
housing project to be comprised of two hundred (200) units (the "Project") to be
located in Easton, Connecticut described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 26.8
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Milone & MacBroom,
Inc., for the Property, and will be subject to those easements,
conditions, contracts, rights, licenses, encroachments, restrictions
and other encumbrances resulting from the Developer securing
regulatory, development and construction approvals for the Project and
attendant site improvements. The Owner and the Developer each
represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
<PAGE>
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
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Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Stein/Troost and their consulting engineers (the "Architect and Engineers")
have or will be retained by the Owner. The Owner represents and warrants to the
Developer that a true, accurate and complete copy of the Architectural Contract
is attached hereto as Exhibit "H" (the "Architect Contract"). The Developer
shall not be responsible to the Owner, or any other party for any errors,
omissions, breaches or failures thereof, or any damages resulting from the acts
or omissions of the Architect. At the Developer's option, the Owner shall assign
to the Developer all of its right, title and interest in the Architectural
Contract and any and all architectural, engineering and other contracts with
respect to the Project free of any claims other than outstanding amounts owed
under the Architectural Contract. In no event shall the Developer be obligated
to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the
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same, and make any necessary revisions. The Owner agrees that it will
not unreasonably withhold its approval of the Final Plans if they
conform in all material respects to the Basic Plans. The parties agree
to use their best efforts to reach a prompt and reasonable conclusion
concerning the acceptability of the Final Plans (and the Personal
Property, see Section 2.6 ). The parties shall initial the Final Plans
as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
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Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
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Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
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(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000
for any one accident or disaster; and property damage coverage limits
of not less than $100,000; all of which insurance shall name the
Owner's lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender
if required by such lender, duplicate policies of insurance as set
forth in subparagraphs (i) and (ii) hereof. Each of such policies
shall, if the insurance carriers so permit, contain a provision to the
effect that they may not be canceled except upon ten (10) days prior
written notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the
Owner, at the Owner's option, duly executed waivers of mechanic's
liens signed by each contractor and subcontractor which provided labor
or materials on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the
date of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
February 28, 1999.
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(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
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Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Easton, Inc., 197 First Avenue, Needham,
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MA 02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the
Developer, it shall be sent to CareMatrix of Massachusetts, Inc., 197
First Avenue, Needham, MA 02194, Attention: President, with a copy to
James M. Clary, III, Esq. at the same address; or at such other address
or addresses as the Developer shall from time-to-time designate by
notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF EASTON, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.111
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Greenbelt,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of ninety-two (92) units (the "Project") to be located in Greenbelt,
Maryland described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 8.12
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Loiederman Associates,
Inc., for the Property, and will be subject to those easements,
conditions, contracts, rights, licenses, encroachments, restrictions
and other encumbrances resulting from the Developer securing
regulatory, development and construction approvals for the Project and
attendant site improvements. The Owner and the Developer each
represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of
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the Property and has made a physical inspection of the Property and is
satisfied as to the site characteristics and other attributes in all
material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
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(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its
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terms and in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates, Inc. and their consulting engineers (the "Architect
and Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers,
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including the site engineers, to perform test borings and other soil
testing at the Property for purposes of properly locating the Property
on the Project. The Developer, the Architects and Engineers shall
consult with the Owner during the process of preparing the Basic
Plans. The Developer, Architect and the Engineers shall have access to
the Project for all such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
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Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
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Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
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Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
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(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by July
31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in
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writing, within the period of time set forth above, then, upon written notice,
either party may terminate this Agreement. In such event, neither party shall
have any further responsibility or liability to the other. The Developer
reserves the right, at its option, to waive or defer any one or more of the
conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
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Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Greenbelt, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
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The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF GREENBELT, INC.
__________________________ By: __________________________
Name: Name:
Title:
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CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.112
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Islandia,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of ninety-nine (99) units (the "Project") to be located in Islandia,
New York described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 4.09
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Sidney B. Browne &
Son, for the Property, and will be subject to those easements,
conditions, contracts, rights, licenses, encroachments, restrictions
and other encumbrances resulting from the Developer securing
regulatory, development and construction approvals for the Project and
attendant site improvements. The Owner and the Developer each
represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and
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surveys, title reports, environmental assessments, appraisals and
other information regarding the Property or the Project which are in
the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
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Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
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(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
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Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate
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of Occupancy. Aside from the foregoing, the Owner hereby waives and the
Developer hereby disclaims all other express and implied warranties of every
kind or nature with respect to the Project and the Personal Property, including,
without limitation, waiving all IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
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(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
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Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
5, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other
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advisors to whom disclosure is necessary in order to effectuate the
transactions contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
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Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Islandia, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
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Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF ISLANDIA, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.113
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Livingston,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of one hundred eighteen (118) units (the "Project") to be located in
Livingston, New Jersey described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 6.46
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments,
<PAGE>
restrictions and other encumbrances as set forth on Exhibit "B" (the
"Existing Encumbrances"), to physical conditions disclosed by a
boundary survey to be prepared by Lovenguth Surveying, Inc., for the
Property, and will be subject to those easements, conditions,
contracts, rights, licenses, encroachments, restrictions and other
encumbrances resulting from the Developer securing regulatory,
development and construction approvals for the Project and attendant
site improvements. The Owner and the Developer each represents to the
other that it has reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical
inspection of the Property and is satisfied as to the site
characteristics and other attributes in all material respects. (b)
Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural
and any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property
or the Project which are in the Owner's possession, custody or
control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no
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liability whatsoever to the Developer, or any other party and at the
Owner's or the Developer's option, this Agreement shall be terminated
without recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject
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to the conditions subsequent set forth in Section 5.1, this Agreement shall be
valid, binding and legal obligation of the Developer, enforceable in accordance
with its terms and in compliance with its certificate of incorporation and
bylaws and all applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the
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"Basic Plans"). As a part of this process, the Developer may engage
engineers, including the site engineers, to perform test borings and
other soil testing at the Property for purposes of properly locating
the Property on the Project. The Developer, the Architects and
Engineers shall consult with the Owner during the process of preparing
the Basic Plans. The Developer, Architect and the Engineers shall have
access to the Project for all such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
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Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
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Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
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Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
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(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
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ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between
the parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
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Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other. Section 7.5 - Brokers. Each
of the Owner and the Developer represents and warrants to the other that no
broker or finder has acted on its behalf in connection with this Agreement or
the transactions contemplated hereby or referred to herein; and each agrees to
indemnify and hold and save the other harmless from any claim or demand for
commission or other compensation by any broker, finder or similar agent claiming
to have been employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Livingston, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
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Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns. Section 7.11 - Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF LIVINGSTON, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.114
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Middletown,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of one hundred ten (110) units (the "Project") to be located in
Middletown, New Jersey described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 15.7
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Kendarian/Zilinski,
for the Property, and will be subject to those easements, conditions,
contracts, rights, licenses, encroachments, restrictions and other
encumbrances resulting from the Developer securing regulatory,
development and construction approvals for the Project and attendant
site improvements. The Owner and the Developer each represents to the
other that it has
<PAGE>
reviewed or shall review the boundary survey and the topographical
survey of the Property and has made a physical inspection of the
Property and is satisfied as to the site characteristics and other
attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the
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purpose of this Agreement be effectuated, the rights under the
Developer's Approvals and the Owner's Approvals (collectively, the
"Approvals") and any other grants of rights, permits, approvals, or
licenses, which may be necessary to complete the performance of the
Developer's obligations hereunder; provided, however that no transfer
or assignment of any of the foregoing shall occur which is prohibited
by applicable law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is
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duly organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates and their consulting engineers King, Kitrick, Jackson
& Troncone (the "Architect and Engineers") have or will be retained by the
Owner. The Owner represents and warrants to the Developer that a true, accurate
and complete copy of the Architectural Contract is attached hereto as Exhibit
"H" (the "Architect Contract"). The Developer shall not be responsible to the
Owner, or any other party for any errors, omissions, breaches or failures
thereof, or any damages resulting from the acts or omissions of the Architect.
At the Developer's option, the Owner shall assign to the Developer all of its
right, title and interest in the Architectural Contract and any and all
architectural, engineering and other contracts with respect to the Project free
of any claims other than outstanding amounts owed under the Architectural
Contract. In no event shall the Developer be obligated to assume any of said
contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
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(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
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Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
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Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
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Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
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(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
September 15, 1998.
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(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between
the parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other
advisors to whom disclosure is necessary in order to effectuate the
transactions contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
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Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
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(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Middletown, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF MIDDLETOWN, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.115
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of One
Hundred Forty-Eight (148) units (the "Project") to be located in Naples, Florida
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 7.45
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Wilson, Miller, Barton
& Peek, dated September 15, 1997, for the Property, and will be subject
to those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
<PAGE>
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio & Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
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information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and
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save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
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Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.116
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Watchung,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of ninety-nine (99) units (the "Project") to be located in Watchung,
New Jersey described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately seven
(7) acres of land as more fully described in Exhibit "A". Exhibit "A" and each
of the other Exhibits referred to in this Agreement shall be incorporated into
this Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Control Point
Associates, Inc., for the Property, and will be subject to those
easements, conditions, contracts, rights, licenses, encroachments,
restrictions and other encumbrances resulting from the Developer
securing regulatory, development and construction approvals for the
Project and attendant site improvements. The Owner and the Developer
each represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and
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surveys, title reports, environmental assessments, appraisals and other
information regarding the Property or the Project which are in the
Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
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Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates and their consulting engineers Bohler Engineering (the
"Architect and Engineers") have or will be retained by the Owner. The Owner
represents and warrants to the Developer that a true, accurate and complete copy
of the Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
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(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
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Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
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Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
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Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
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(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by March
1, 1999.
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(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
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Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
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(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Watchung, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 4th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF WATCHUNG, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.117
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Westport,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of 115 units (the "Project") to be located in Westport, Connecticut
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 6.5
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Milone & MacBroom,
Inc. dated August 15, 1997 for the Property, and will be subject to
those
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easements, conditions, contracts, rights, licenses, encroachments,
restrictions and other encumbrances resulting from the Developer
securing regulatory, development and construction approvals for the
Project and attendant site improvements. The Owner and the Developer
each represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's
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option, this Agreement shall be terminated without recourse to either
party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal
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obligation of the Developer, enforceable in accordance with its terms and in
compliance with its certificate of incorporation and bylaws and all applicable
laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Stein/Troost and their consulting engineers (the "Architect and Engineers")
have or will be retained by the Owner. The Owner represents and warrants to the
Developer that a true, accurate and complete copy of the Architectural Contract
is attached hereto as Exhibit "H" (the "Architect Contract"). The Developer
shall not be responsible to the Owner, or any other party for any errors,
omissions, breaches or failures thereof, or any damages resulting from the acts
or omissions of the Architect. At the Developer's option, the Owner shall assign
to the Developer all of its right, title and interest in the Architectural
Contract and any and all architectural, engineering and other contracts with
respect to the Project free of any claims other than outstanding amounts owed
under the Architectural Contract. In no event shall the Developer be obligated
to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of
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properly locating the Property on the Project. The Developer, the
Architects and Engineers shall consult with the Owner during the
process of preparing the Basic Plans. The Developer, Architect and the
Engineers shall have access to the Project for all such tests and
surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability
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of any construction materials or the Personal Property. The Owner shall be
notified of any such changes or substitutions in the Personal Property, however,
the Owner shall have final authority to make all decisions with respect to such
changes; provided, that, such changes result in construction, space, design,
personal property, equipment and interior and exterior design comparable in
overall design and quality to that shown on the Final Plans. Any change that
results in the loss or adjustment of square footage in the Project will require
approval by the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by
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the Owner's lender ("Punch-List Amount"). The Developer shall give its written
undertaking to complete each such item within forty-five (45) days (or such
other period of time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual cots for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
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Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
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(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
10
<PAGE>
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Westport, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
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<PAGE>
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 30th day of December, 1997 and executed under seal.
Witness: CHANCELLOR OF WESTPORT, INC.
__________________________ By: _____________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
12
TURNKEY CONSTRUCTION CONTRACT
Between
CAREPLEX OF CRAGGANMORE, INC.
and
THE CRAGGANMORE ASSOCIATES LIMITED PARTNERSHIP
<PAGE>
TURNKEY CONSTRUCTION CONTRACT
This Agreement is by and between CAREPLEX OF CRAGGANMORE, INC., a Delaware
corporation, with an office at 197 First Avenue, Needham, Massachusetts 02194
(the "Contractor"), and THE CRAGGANMORE ASSOCIATES LIMITED PARTNERSHIP, a
Connecticut Limited Partnership, with an office at 197 First Avenue, Needham,
Massachusetts 02197, (the "Owner") and is entered into for the purpose of
reducing to a formal writing all of their understandings with respect to the
construction of a proposed assisted living facility to be comprised of 84 to 96
units ("Facility") to be located at 58 Mulberry Street, Southington, Connecticut
(the "Premises").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Premises. Prior to April 30, 1996, the Owner (or its
nominee) shall own good, record and marketable title in fee simple to the
Premises consisting of approximately thirteen and eight-tenths (13.8) acres of
land as more fully described in Exhibit "A". Exhibit "A" and each of the other
Exhibits referred to in this Agreement shall be incorporated into this Agreement
by such reference as if fully set forth in this Agreement. The Premises shall be
free and clear of any and all encumbrances which would impair the construction
or operation of the Facility except as set forth on Exhibit "A-1", in the
Contractor's sole and absolute discretion, and free of any hazardous wastes or
materials except as set forth on Exhibit "A-2".
Section 1.2 - Encumbrances.
(a) Owner and Contractor acknowledge that the Premises may be subject to
easements, assessments, conditions, contracts, rights, claims,
encroachments, restrictions and other encumbrances as would be
disclosed on a title report (the "Existing Encumbrances"), to physical
conditions which would be disclosed by a survey of the Premises and to
those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other
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encumbrances resulting from Contractor securing regulatory,
development and construction approvals for the Facility and
attendant site improvements. Owner and Contractor each represents to
the other that it has reviewed or shall review prior to its purchase
of the Premises the boundary survey and the topographical survey of
the Premises and has made, or shall make prior to its purchase of the
Premises a careful physical inspection of the Premises to satisfy it
as to the site characteristics and attributes in all respects. The
Owner agrees to accept the Facility subject to the Existing
Encumbrances, the mortgages described herein, to the physical
conditions which exist and as such conditions may change during the
course of construction and to those easements, conditions, contracts,
rights, licenses, encroachments, restrictions and other encumbrances
resulting from Owner securing regulatory, development and construction
approvals for the Facility and attendant site improvements, provided
that the same do not interfere with the Owner's operation of the
Facility.
(b) Concurrently with the execution of this Agreement, Owner shall provide
Contractor with copies of all engineering, architectural and any other
plans, studies and surveys, title reports, environmental assessments,
appraisals and other information regarding the Premises or the
Facility which are in Owner's possession, custody or control.
(c) The Owner represents that to the best of its knowledge the Premises
have only the apparent site and off-site conditions and problems, if
any, as set forth on Exhibit "B" which require the implementation of
the measures if any, as set forth on Exhibit "B"
(d) Commencing on the date Contractor elects to commence construction in
accordance with this Agreement, Owner shall provide Contractor with
full possession and complete control of the Premises for purposes of
performing Contractor's obligations hereunder.
Section 1.3 - Permits and Approvals.
(a) Contractor represents that it shall use its reasonable best efforts to
obtain, prior to the date of the Closing, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
sewer agreements which may be needed in order to permit the
construction and operation of the Facility on the Premises (the
"Approvals"). Contractor covenants to
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diligently use its reasonable best efforts to obtain all of the
Approvals in an expeditious manner. In the event the Contractor is
unable to obtain the Approvals, the Contractor shall have no liability
whatsoever to the Owner, or any other party and at the Owner's or the
Contractor's option, this Agreement shall be terminated without
recourse to any party thereto at law or in equity.
(b) For the sole purpose of permitting Contractor to construct the
Facility, the Owner grants to the Contractor, to the extent required
by Contractor in order that the purpose of this Agreement be
effectuated, the rights under the Approvals and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Contractor's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms thereof.
Section 1.4 - Documentation. The Owner shall provide or obtain construction
and permanent financing for the Premises, the Facility and the Personal Property
(as defined herein) ("Project Loan") which shall be sufficient, together with
the Owner's equity contributions (which shall in no event exceed ten percent
(10%) of the Contract Price), to pay the full amount of the Contract Price (as
defined herein). The Owner covenants that it will provide fully and in a timely
fashion all reasonable documentation required by Owner's lender in connection
with the Project Loan. Such documentation includes, but is not limited to, all
zoning and plan approvals; all utility letters indicating positive availability
of service; inventory of concessions made to any or all municipal bodies; site
plan; title binders, and all other regulatory body approvals. Owner also
covenants that it will, in a timely manner, provide whatever financial or other
information Owner's lender might reasonably require in connection with
Contractor's applications for financing for the construction of the Facility and
as required by such lender in connection with the Project Loan. Owner will use
its reasonable best efforts to pursue its application for construction and
permanent financing for the Facility.
Section 1.5 - Other Agreements. The Owner and the Contractor each
represents to the other that neither entering into this Agreement nor performing
its respective obligations hereunder will violate any other agreements or
documents by which it may be bound.
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Section 1.6 - Utility Services. Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Facility
(including public water, sewer and electricity) are currently available to the
Premises in the capacities required to operate the Facility. No work need be
performed by or on behalf of Contractor to make such utilities available to the
Premises for the construction or operation of the Facility, other than
connecting the Facility's waste disposal line to the public sanitary sewer line.
Owner represents, warrants and covenants that the public sanitary sewer line is
available for hook-up no more than one hundred (100) feet from the boundary line
of the Premises. Copies of letters from the providers of such utility services
confirming such availability are annexed hereto as Exhibit "C".
Section 1.7 - Good Standing of Contractor. Contractor represents that it is
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Contractor represents that it is empowered and authorized to
execute, deliver and perform its obligations under this Agreement, and, upon
such execution and delivery and subject to the conditions subsequent set forth
in Section 5.1, this Agreement shall be valid, binding and legal obligation of
the Contractor, enforceable in accordance with its terms and duly authorized by
a vote of its Board of Directors in compliance with its certificate of
incorporation and bylaws and all applicable laws of the State of Delaware.
Section 1.8 - Good Standing of Owner. Owner represent that it is duly
organized and validly existing under the laws of the State of Connecticut. Owner
represents that it is empowered and authorized to execute, deliver and perform
its obligations under this Agreement, and, upon such execution and delivery and
subject to the satisfaction of the conditions subsequent set forth in Section
5.1, this Agreement shall be valid, binding and legal obligation of the Owner,
enforceable in accordance with its terms and duly authorized by a vote of its
General Partner in compliance with its Limited Partnership Agreement and all
applicable laws of the State of Connecticut.
ARTICLE II
Construction of the Facility
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of this Agreement that Contractor shall
have sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Facility, including, without
limitation, the expenditure of funds, the incurring of costs and
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all of the other matters referred to herein; so long as the same are in
compliance with the Approvals and all applicable laws.
Section 2.2 - Architectural Services. As a condition precedent to this
Agreement, the Contractor shall have reviewed, approved and adopted all drawings
and plans for the Facility prepared by Michael Herlands (the "Architect")
("Basic Plans"). A true, accurate and complete copy of the Basic Plans is
attached hereto as Exhibit "D". The parties acknowledge that the Architect has
or will be retained by the Contractor. The Contractor will be responsible for
payment of the architectural fees due to the Architect, pursuant to the contract
with respect to the Facility dated July 24, 1995 as amended (said contracts and
amendments herein collectively, the "Architectural Contract"). The Owner
represents and warrants to the Contractor that a true, accurate and complete
copy of the Architectural Contract is attached hereto as Exhibit "E". The
Contractor shall not be responsible to the Owner, or any other party for any
errors, omissions, breaches or failures thereof, or any damages resulting from
the acts or omissions of the Architect. At the Contractor's option, the Owner
shall assign to the Contractor all of its right, title and interest in the
Architectural Contract and any and all architectural, engineering and other
contracts with respect to the Facility free of any claims other than outstanding
amounts owed under the Architectural Contract. In no event shall the Contractor
be obligated to assume any of said contracts.
Section 2.3 - Other professionals and Limited Assumed Obligations. The
Owner represents that it has not engaged any architects or any engineers,
lawyers, consultants, accountants, or other professionals with respect to the
Facility other than the Architect which Owner shall be obligated to pay. The
Owner neither assumes nor shall be obliged for any debts, liabilities or
obligations of Owner or related to the Premises or the Facility other than
payments due to the Architect under the Architectural Contract.
Section 2.4 - Plans and Specifications. The Contractor shall direct
Architect to prepare as promptly as possible, but, in any event, within thirty
(30) days after the execution of this Agreement, final plans, specifications and
a site plan (the "Final Plans") based on the Basic Plans. Such Final Plans shall
include without limitation the details set forth on Exhibit "D".
Section 2.5 - Construction. The Contractor shall construct the Facility
substantially in accordance with the Final Plans, subject to field changes and
minor design changes. All work shall be done in a good and workmanlike manner
and in accordance with the Executive Office of Health and Human Services
Standards, the Approvals, if any, and all applicable laws. The structure
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shall be designed as an assisted living facility to be licensed for the bed
complement described above and shall be constructed in accordance with the
requirements in effect on the date of this Agreement of federal, state and local
governmental agencies having jurisdiction of the Facility, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) Exhibit "F" contains a representative list of the kinds of personal
property needed for the Facility (the "Personal Property"). Contractor
will furnish the specific items of Personal Property required for the
Facility, within the FFE Allowance. The allowance for the Personal
Property is Four Hundred Eighty-Seven Thousand dollars ($487,O00),
(the "FFE Allowance"), which FFE allowance shall be included in the
Contract Price (as defined below).
(b) In the event that the cost of the Personal Property furnished pursuant
to subsection (a) above shall exceed the FFE Allowance any such excess
shall be an increase adjustment to the Contract Price.
(c) In order to reduce the risk that the Personal Property will be
delivered prior to the Closing contemplated herein, Owner covenants
that it shall select such Personal Property as soon as practicable but
not later than approximately six (6) months prior to the estimated
date of Physical Completion.
Section 2.7 - Changes. Owner agrees that the Contractor shall also have
the right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction or if required due to the unavailability of any construction
material or Personal Property. Owner shall be notified of any such changes or
substitutions in the Personal Property but Contractor shall have final authority
to make all decisions with respect to such changes; provided that such changes
result in construction, space, design, personal property, equipment and interior
and exterior design comparable in overall design and quality to that shown on
the Final Plans.
Section 2.8 - Commencement of Construction. Construction of the Facility
will start on or prior to the date which is 30 days after the satisfaction of
the last of the conditions set forth in Section 5.1 to be satisfied, or as soon
thereafter as weather and ground conditions permit but not later than June 30,
1996.
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<PAGE>
Section 2.9 - Continuity of Construction. Construction, once undertaken,
shall proceed in a continuous and reasonably expeditious manner until Physical
Completion, as such term is defined in Section 2.10, is achieved, which shall
not occur later that eighteen (18) months after the completion of the foundation
for the Facility. Any delays caused by acts of God, fire, accident, casualty,
cessation of activity due to refusal to work by labor, or any other cause not
attributable to the failure of the Contractor to use reasonable care and due
diligence, however, shall be excused by the Owner, provided that Contractor
shall use its reasonable best efforts to minimize any such delays and shall
resume construction at the earliest possible time.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion" or
"Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Facility shall have been approved for temporary or
permanent occupancy by the local building inspector, and by the State
Fire Marshall in the event his approval is required. Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Punch-List listing
items requiring completion or correction, so long as such Punch-List
does not prevent or prohibit occupancy.
(b) Contractor will use its reasonable best efforts to notify Owner at
least ninety (90) days prior to the time Owner estimates that the
Facility will be Physically Completed, whereupon Owner will diligently
proceed to fulfill all other conditions necessary for licensure and
Owner will apply in a timely manner for all licenses and permits
necessary to commence operation of the Facility. After such notice
from Contractor, Owner, to the extent necessary to perform necessary
administrative activities may, so long as he does not interfere with
completion of construction, enter upon the Premises in an effort to
coordinate initial licensure with Physical Completion.
Section 2.11 - Owner's Noninvolvement. Owner shall have access to the
construction site while construction is in progress, but it shall have no
authority over Contractor, and
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<PAGE>
shall not be empowered to interfere or become involved with construction or
require changes thereto, provided, however that Owner's management agent shall
have the right to view the construction in progress and shall have access to the
site for the purpose of equipping the Facility and preparing the Facility for
operation.
Section 2.12 - Punch-List. If, at any time after the Facility has been
Physically Completed, there exist any items requiring completion or correction,
then the Contractor agrees to use all reasonable diligence to complete or
correct the items so that each conforms to the Final Plans. The parties shall
make a Punch-List of the items requiring completion or correction. Each item on
the Punch List shall be assigned a reasonable value based upon the reasonable
cost of completion or correction of the same or such other value as may be
required by Owner's lender ("Punch-list Amount"). The Contractor shall give
its written undertaking to complete each such item within ninety (90) days after
transfer of title, further agreeing to permit Owner to complete any such items
at Contractor's expense if Contractor has failed to complete the same within the
ninety (90) day time period.
Section 2.13 - Work and Warranties. Upon completion of construction,
landscaping and installation of Personal Property, Contractor will assign to
Owner, in addition to any warranties created by law, all warranties and
guarantees received from designers, the Architect, subcontractors and suppliers
of equipment and furnishings, to the extent assignable. Contractor will agree to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, Owner hereby waives and Contractor hereby disclaims all other express
and implied warranties of every kind or nature with respect to the Facility and
the Personal Property, including, without limitation, waiving all IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Subcontractors. Contractor agrees to indemnify and save
Owner harmless from claims for payment by any subcontractor who furnishes
materials or supplies or performs labor or services in the prosecution of the
work pursuant to this Agreement. Contractor reserves absolute discretion on the
selection of subcontractors.
Section 2.15 - Financing Arrangements.
(a) Owner will obtain a commitment for the Project Loan for construction
and permanent financing for the Facility which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the
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Contract Price. This Agreement may be terminated by the
Contractor-or-the Owner in its sole and absolute discretion and
without further recourse to any party in the event that the closing
and funding of the construction loan financing with respect to the
Facility pursuant to the Project Loan (with all conditions precedent
to such closing either satisfied or irrevocably waived by the lender)
shall not have occurred by April 30, 1997.
(b) The Owner and Contractor also contemplate that the Premises and
Facility, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Premises or Facility, together with any and all replacements thereto
and substitutions therefor or, and all proceeds thereof; and all
present and future rents, issues, leases, and profits of the Premises
and Facility will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to Owner. Owner
therefore, agrees to execute and deliver all commitments, promissory
notes, mortgages, collateral assignments, guaranties and all other
instruments, agreements, documents, certificates, affidavits, and
other writings required to be executed by any lender in connection
with such financing.
ARTICLE III
Closing
Section 3.1 - Date of Closing. The delivery of possession of the Premises
and Facility to the Owner and payment of the Contract Price shall take place
contemporaneously within three (3) working days after Physical Completion of the
Facility but in no event later than the date established in Section 2.9.
Section 3.2 - Contract Price.
(a) The price to be paid by the Owner to the Contractor for the
construction and furnishing of the Facility and for the Premises shall
be Nine Million, One Hundred Sixty-Six Thousand Two Hundred
Eighty-Four Thousand Dollars ($9,166,284) plus the costs incurred as
the result of any unforeseen site conditions and selection of
furniture, fixtures and equipment in excess of the FFE Allowance (the
"Contract Price").
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(b) In addition to the Contract Price, if the Closing does not take
place within three (3) working days after Physical Completion due to
delays incurred through the fault of or through circumstances under
the control of the Owner, the Owner shall pay to the Contractor
interest, payable monthly in arrears, on the Contract Price accruing
from the date which is three (3) days after Physical Completion to the
date of which is three (3) days after delivery of possession of the
Facility pursuant to Section 3.1; such monthly interest shall be
computed at a rate equal to the Prime Rate as announced by Fleet Bank,
N.A. from time to time plus two percent (2%) per annum.
Section 3.3 - Payment of Contract Price. At the time of transfer of title,
the balance of the Contract Price not paid via Contractor's requisitions under
the construction financing for the Facility shall be paid by the Owner to the
Contractor by wire transfer, certified check or other mutually acceptable means
less any Punch-list Amount or retainage required by Owner's lender.
Section 3.4 - Form of Conveyance and Status of Title. The Facility and
Personal Property shall be conveyed by warranty bill of sale. The Facility and
Personal Property may be subject to the mortgages and security interests
described in Section 2.15.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - Contractor's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Contractor shall have the following
responsibilities:
(a) To obtain and pay for necessary building permits and the Certificate
of Occupancy;
(b) To pay for all labor and material set forth in the Final Plans (except
as otherwise expressly set forth herein) and to pay for the Personal
Property to be provided;
(c) The Contractor shall at all times, commencing with the date upon which
construction begins, carry the following types of insurance with an
insurance carrier or carriers acceptable to the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
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(ii) Public liability insurance covering death or bodily injury with
limits of not less than $300,000 for one person and $1,000,000
for any one accident or disaster; and property damage coverage
limits of not less than $100,000; all of which insurance shall
name the Owner as an additional insured.
(iii) "Builders Risk" insurance against damage or destruction by fire
and full extended coverage, including vandalism and malicious
mischief, covering all improvements to be erected hereunder and
all materials for the same which are on or about the Premises, in
an amount equal to the full insurable value of such improvements
and materials; such insurance to be payable to the Owner, the
Contractor and Owner's lender as their interests may appear, with
standard mortgage endorsement to Owner's lender or its assigns as
mortgagee.
The Contractor shall furnish to the Owner and Owner's lender if
required by such lender, duplicate policies of insurance as set
forth in Subparagraphs (i), (ii), and (iii) hereof. Each of such
policies shall, if the insurance carriers so permit, contain a
provision to the effect that they may not be canceled except upon
ten days prior written notice to the Owner and Owner's lender.
(d) At Closing, Contractor shall deliver to Owner, at Owner's option:
(i) duly executed waivers of mechanic's liens signed by each
subcontractor which provided labor or materials on the project;
or
(ii) reasonable proof of payment or proof of a provision for payment
to such contractors; or
(iii) an indemnification to Owner with respect to same.
Section 4.2 - Owner's Responsibilities. In addition to his obligations
elsewhere expressed in this Agreement, the Owner shall have the following
responsibilities:
(a) To cooperate and assist in obtaining commitments for financing the
contemplated construction, including the furnishing of financial
statements, providing an appraisal of the Premises and Facility and by
execution
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of applications, notes, mortgages, assumption agreements and other
documents reasonably necessary to effectuate such financing or the
financing of the Personal Property.
(b) To pay for all professional and other staff personnel required for the
operation of the Facility in sufficient time to permit licensure by
the Department at the date of physical completion.
(c) To pay to Contractor, in addition to the Purchase Price, the costs for
correcting unusual site conditions. Such payment shall be made on the
basis of the actual costs of Owner in correcting the same plus fifteen
percent (15%) of such costs to cover Contractor's overhead expenses
and shall be due and payable upon the transfer of title to the Owner.
For the purpose of this Agreement, the term unusual site conditions
shall include, without limitation any of the following which have not
been noted in the Basic Plans or otherwise disclosed in the due
diligence materials:
(i) unusual soil or water conditions requiring extraordinary
preparation, i.e., piles, curtain drains, retaining walls,
blasting or riprap;
(ii) tying in of water or other utility services (other than the
sanitary sewer) beyond the boundary lines of the Premises;
(iii) holding tanks and pumps for the water system or the sprinkler
system;
(iv) water purification or filter system;
(v) leaching field; and
(vi) any requirement imposed upon Contractor by governmental agencies
having jurisdiction, if not provided for in the Final Plans,
because of reasons other than errors or omissions in such Final
Plans, such as requirements imposed as conditions of the granting
of any of the Approvals.
(d) Owner shall be solely responsible for the removal of any hazardous
wastes and materials, if any, from the Premises at Owner's sole cost
and expense and not as part of the Contract Price.
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Section 4.3 - Indemnification. The Contractor hereby agrees to indemnify
and hold the Owner harmless from all liabilities, claims, and demands for
personal injury or property damage arising out of or caused by any act or
omission of Contractor, its subcontractors, agents, or employees, or arising in
or about the Premises at any time from the date of this Agreement until transfer
of title. The Contractor further covenants to use proper care and caution in the
performance of its work hereunder so as not to cause damage to any adjoining or
adjacent property, and the Contractor shall indemnify and hold the Owner
harmless from any liabilities, claims, or demands for damage to such adjoining
or adjacent property.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of
Contractor shall, at the election of Owner be contingent upon the occurrence of
each of the following:
(a) Approvals. All of the Approvals and current utility availability
letters shall have been obtained by October 31, 1996.
(b) Title. An owner's title insurance policy commitment and Class A-2
survey, satisfactory to the Contractor in its sole discretion, shall
have been obtained by the Owner which confirms that there are no
exceptions or conditions which would render title to the Premises
unmarketable or which will prohibit or restrict the construction or
operation of the Facility or which would prevent an institutional
lender from closing a construction or permanent mortgage loan for the
Facility in the usual course of its business.
(c) Additional Due Diligence Regarding the Premises. The Contractor shall
have received due diligence information concerning the Premises,
satisfactory to the Contractor in its sole discretion, including,
without limitation, soil tests and utility service confirmations to
the extent not currently available.
(d) Purchase of the Premises. The Owner shall have purchased good record,
marketable fee simple title to the Premises as set forth in Section
1.1 by April 30, 1996.
(e) Construction Financing. The Owner shall have received construction
financing in the full amount of the Contract Price by April 30, 1997.
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<PAGE>
Section 5.2 - Failure of Contingencies. In the event that any one or
more of the contingencies set forth in this Article is not satisfied, waived or
deferred by the parties in writing, within the period of time set forth above,
then, upon Notice, either party may terminate this Agreement. In such event,
neither party shall have further responsibility or liability to the other.
Contractor reserves the right, at its option, to waive or defer any one or more
of the conditions precedent.
ARTICLE VI
Additional Covenants of Owner
Section 6.1 - Indemnification by Owner. Owner hereby indemnifies and
defends the Contractor against any claims for unpaid fees or costs associated
with the Premises or the Facility incurred by or on behalf of Owner or
Contractor as a result of any claim by any broker. The parties acknowledge that
no broker was responsible for procuring the transactions set forth in this
Letter, nor any part thereof, and each party will indemnify and defend the other
from any and all claims, actual or threatened, for a commission or other
compensation by any third person with whom such party has had dealings.
Section 6.2 - Confidentiality. Owner, its partners, affiliates, agents,
servants and employees (including outside counsel) hereby agree:
(a) To maintain in the strictest confidence the identity of the
Contractor; the contents of this Agreement; the negotiations between
the parties on the terms of this Agreement; and any of the
Contractor's proprietary information, including without limitation,
financial information, projects, copies of leases, real estate
appraisals, and other information regarding the Facility and the
business affairs and operations of the Contractor which any of said
parties obtain from the Contractor in the course of negotiations for
the transactions contemplated hereby (the "Confidential Information");
(b) Not to disclose, without the Contractor's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees (including outside counsel), bankers,
consultants and other advisors to whom disclosure is necessary in
order to effectuate the transactions contemplated hereby; and
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<PAGE>
(c) To comply therewith for a period of two (2) years commencing on
the date of this Agreement.
Section 6.3 - Provision of Further Information. The Contractor agrees to
supply complete financial information and any other data required in connection
with the construction or permanent financing for the Facility and to execute,
and cause to execute, any and all documents which are required by the terms
thereof.
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of
intent, and agreements between the parties are merged in and superseded by this
Agreement (including all Exhibits hereto), which together with the Owner's
partnership agreement and the management agreement between the Owner and its
management agent fully and completely expresses their understanding with respect
to its subject matters.
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived,
modified, altered or changed in any respect whatsoever except by a further
agreement, in writing, executed by each of the parties and consented to by the
Owner's limited partner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a
joint effort of the parties, and the resulting document shall not be construed
more severely against one of the parties than the other.
Section 7.5 - Brokers. Each of Owner and Contractor represents and warrants
to the other that no broker or finder has acted on its behalf in connection with
this Agreement or the transactions contemplated hereby or referred to herein;
and agrees to indemnify and hold and save the other harmless from any claim or
demand for commission or other compensation by any broker, finder or similar
agent claiming to have been employed by or on behalf of such party.
Section 7.6 - Assignment. Contractor shall have no right to assign his
rights nor delegate his obligations under this Agreement to another entity or
person without the prior written consent of Owner except that the Contractor
shall have the right to assign this Agreement to, merge with or consolidate with
an
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<PAGE>
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to Owner, it shall be sent to it
at the address set forth above and a copy therefore sent to The
Cragganmore Associates Limited Partnership, c/o CareMatrix
Corporation, 197 First Avenue, Needham, MA 02194, Attention:
President, with a copy to C.A. Moffie, Inc., 1261 South Main Street,
Plantsville, CT 06479, Attention: Calvin A. Moffie, or at such other
address or addresses Owner shall from time to time designate by notice
to Contractor.
(b) In the event that notice is directed to Contractor, it shall be sent
to CarePlex of Cragganmore, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Michael M. Gosman, with a copy to James M. Clary III, Esq.
at the same address; or at such other address or addresses as
Contractor shall from time to time designate by notice to Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Facility or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience
and reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original.
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<PAGE>
Section 7.12 - Severability. The invalidity or unenforceability of one or
more of the phrases, sentences, provisions, clauses, Sections or Articles
contained in this Agreement shall not affect the validity or enforceability of
the remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be
effective as of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this
Agreement shall not be deemed an offer. No rights are to be conferred upon any
party until this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws
of the State of Connecticut.
Dated this 3rd day of October, 1996 and executed under seal.
Witness: THE CRAGGANMORE ASSOCIATES
LIMITED PARTNERSHIP
By: CarePlex of Southington, Inc.
/s/ [ILLEGIBLE] By: /s/ James M. Clary III
- --------------- --------------------------
James M. Clary III
/s/ [ILLEGIBLE] Its General Partner
- --------------- Duly Authorized
CAREPLEX OF CRAGGANMORE, INC.
/s/ [ILLEGIBLE] By: /s/ Robert M. Kaufman
- --------------- -------------------------
Robert M. Kaufman
/s/ [ILLEGIBLE] Its President
- --------------- Duly Authorized
-17-
<PAGE>
EXHIBIT A
to
Turnkey Construction Contract
Legal Description
(See attached)
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
[ILLEGIBLE] two continguous parcels of land, with the buildings thereon,
situated in the Town of Southington, County of Hartford and State of
Connecticut, and more particularly bounded and described as follows:
FIRST PIECE: A certain piece or parcel of land, containing thirteen (13)
acres, more or less, with all buildings and improvements thereon, located on
the southerly side of Mulberry Street in the Village of Milldale, Town of
Southington, County of Hartford and State of Connecticut, bounded and described
as follows, to wit:
NORTHERLY by the highway, Mulberry Street, 100.3 feet and by land, now or
formerly, of Louise D. Matthews, in part by each;
EASTERLY by land now or formerly of Louise D. Matthews, and by land now
or formerly of Edward J. Talmade, partly by each;
SOUTHERLY by the Quinnipiac River; and,
WESTERLY by land now or formerly of Frederick and Ernestine Herb; and
a certain piece or parcel of land situated on the southerly side of Mulberry
Street, in the Town of Southington, County of Hartford and State of
Connecticut, being shown as lot No. 1 on a map entitled, "MAP OF PROPERTY OF
MRS. ERNESTINE HERB, Mulberry and South Main Streets, Southington, Conn., Nov.
2, 1940, Scale 1"=50', Mackenzie and Bowers Engineers and Surveyors, being
bounded:
NORTHERLY by the highway, Mulberry Street, 60 feet;
EASTERLY and
SOUTHEASTERLY by land of Bealda M. Bailey, a distance of 275 feet, more or less.
Excepting therefrom a portion of said premises conveyed to Edward E. O'Connell
and Ingrid H. O'Connell by warranty deed dated July 30, 1968 and recorded in
volume 223, page 19 of the Southington Land Records.
SECOND PIECE: All of that certain piece or parcel of land with all buildings and
improvements theron, situated in the Town of Southington, County of Hartford and
State of Connecticut, bounded and described as follows:
NORTHERLY by Mulberry Street, 111 feet;
EASTERLY by land now or formerly of Grace E. Ordway, 250 feet, more or
less;
NORTHERLY again by lands now or formerly of Grace E. Ordway, Roger M. and
Anita L. Savarin; Joseph Griffin and Elizabeth Lombard Gordon and
Lillian Swain, Natalie M. and Louis J. Bassola and John E. and
Hattie E. Oakes, each in part:
EASTERLY again by lands now or formerly of Allice N. Doolittle and Galdys
D. Joll, Robert E. Nyren and Albert and Doris Gagne, each in
part;
SOUTHWESTERLY by land now or formerly of Vincent C. Triompo, being an uneven
line;
SOUTHERLY by land now or formerly of Vincent C. Triompo and,
WESTERLY by land now or formerly of Vincent C. Triompo.
Excepting therefrom a portion of said premises conveyed to Louie J. Garrapy and
Mary F. Garrapy by warranty deed dated April 15, 1970 and recorded in volume 234
page 726 of the Southington Land Records.
Exhibit 10.119
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of One
Hundred Twenty Four (124) units (the "Project") to be located in Atlanta,
Georgia described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 5.4
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property
will be subject to the easements, assessments, conditions,
contracts, rights, claims, encroachments, restrictions and other
encumbrances as set forth on Exhibit "B" (the "Existing
Encumbrances"), to physical conditions disclosed by a boundary
survey to be prepared by Broward-Davis entitled "Title Survey",
dated July 19, 1996, for the Property, and will be subject to
those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from
the Developer securing regulatory, development and construction
approvals for the Project and attendant site improvements. The
Owner and the Developer each represents to the other that it has
reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical
inspection of the Property and is satisfied as to the site
characteristics and other attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner
shall provide the Developer with copies of all engineering,
architectural and any other plans, studies and surveys, title
reports, environmental assessments, appraisals and other
information regarding the Property or the Project which are in
the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if
any, as set forth on Exhibit "D" which require the implementation
of the measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences
construction in accordance with the terms of this Agreement, the
Owner shall provide the Developer with full possession and
complete control of the Property for purposes of performing the
Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts
to obtain, prior to the date of Physical Completion (as
hereinafter defined), all state, federal, county and municipal
land use approvals and permits, licenses, easements, and utility
agreements which are necessary for the development, construction
and opening of the Project on the Property as set forth on
Exhibit "E" (the "Developer's Approvals"). The Developer
covenants to diligently use its best efforts to obtain all of the
Developer's Approvals in an expeditious manner. In the event that
the Developer is unable to obtain the Developer's Approvals, the
Developer shall have no liability whatsoever to the Owner, or any
other party and at the Owner's or the Developer's option, this
Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion, all state,
federal, county and municipal land use approvals and permits,
licenses, easements, and utility agreements which are necessary
for the development, construction and operation of the Project on
the Property as set forth on Exhibit "F" (the "Owner's
Approvals"). The Owner covenants to diligently use its best
efforts to obtain all of the Owner's Approvals in an expeditious
manner. In the event that the Owner is unable to obtain the
Owner's Approvals, the Owner shall have no liability whatsoever
to the Developer, or any other party and at the Owner's or the
Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct
the Project, the Owner grants to the Developer, to the extent
required by the Developer in order that the purpose of this
Agreement be effectuated, the rights under the Developer's
Approvals and the Owner's Approvals (collectively, the
"Approvals") and any other grants of rights, permits, approvals,
or licenses, which may be necessary to complete the performance
of the Developer's obligations hereunder; provided, however that
no transfer or assignment of any of the foregoing shall occur
which is prohibited by applicable law or the respective terms
hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined
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herein) and related development costs (collectively, the "Project Loan") which
shall be sufficient, together with the Owner's equity contributions, if
necessary (which shall in no event exceed ten percent (10%) of the total costs
to construct the Project in accordance with the development budget), to pay the
full amount of the total costs to construct the Project in accordance with the
development budget. The Owner covenants that it will provide fully and in a
timely fashion all reasonable documentation required by the lender in connection
with the Project Loan. Such documentation shall include, but is not limited to,
all zoning and plan approvals, all utility letters indicating positive
availability of service, inventory of concessions made to and agreements with
any or all municipal bodies, site plans, title policies, and all other
regulatory body approvals. The Owner also covenants that it will, in a timely
manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
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<PAGE>
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Architecture Team and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall,
under the direction of the Developer and after consultation with
the Owner, prepare basic design plans (the "Basic Plans"). As a
part of this process, the Developer may engage engineers,
including the site engineers, to perform test borings and other
soil testing at the Property for purposes of properly locating
the Property on the Project. The Developer, the Architects and
Engineers shall consult with the Owner during the process of
preparing the Basic Plans. The Developer, Architect and the
Engineers shall have access to the Project for all such tests and
surveys.
(b) Within two (2) weeks after the date of the Architect's and
the Engineer's completion and delivery of the Basic Plans, the
Owner, the Developer, the Architect and Engineers shall meet to
review and approve the Basic Plans. The parties shall initial the
Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the
Developer shall direct the Architect and Engineers to prepare
final plans, specifications and a site plan (collectively the
"Final Plans") based upon the Basic Plans. Within two (2) weeks
after the completion of the Final Plans and their delivery to the
Owner, the parties will meet to review and approve the same, and
make any necessary revisions. The Owner agrees that it will not
unreasonably withhold its approval of the Final Plans if they
conform in all material respects to the Basic Plans. The parties
agree to use their best efforts to reach a prompt and reasonable
conclusion concerning the acceptability of the Final Plans (and
the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the
same.
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<PAGE>
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal
property contained in Exhibit "I" (the "Furniture, Furnishings &
Equipment" or the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be
delivered prior to the Closing contemplated herein, the Owner
covenants that it shall approve the F F & E as soon as
practicable but not later than approximately six (6) months prior
to the estimated date of Physical Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical
Completion" or "Physically Completed" shall mean the date on
which the building and improvements described and set forth in
the Final Plans have been completed and the Project shall have
been approved for and received a certificate for temporary or
permanent occupancy by the local building inspector, and by the
State Fire Marshall in the event his or her approval is required
(the "Certificate of Occupancy"). Physical Completion shall be
deemed to have been achieved notwithstanding that
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any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter
defined) listing items requiring completion or correction, so
long as such conditions or Punch-List items do not prevent or
prohibit occupancy as determined by the Owner, in its sole
discretion.
(b) The Developer will use its reasonable best efforts to notify
the Owner at least ninety (90) days prior to the time that the
Developer estimates that the Project will be Physically
Completed, whereupon the Owner will diligently proceed to fulfill
all other conditions necessary for licensure and the Owner will
apply in a timely manner for all licenses and permits necessary
to commence operation of the Project as set forth on Exhibit
"C-2". After such notice from the Developer, the Owner, to the
extent necessary to perform administrative activities may, so
long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial
licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be
sufficient, together with the Owner's equity contributions, to
pay the full amount of the costs to construct the Project in
accordance with the development budget.
The Owner and the Developer also contemplate that the Property
and the Project, together with all fixtures, furnishing,
equipment, and articles of personal property now owned or
hereafter acquired by the Owner which are or may be attached to
or used in connection with the Property
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or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all
present and future rents, issues, leases, and profits of the
Property and the Project will serve as security for the payment
obligations to any lenders relating to the Project Loan or
otherwise, and that the Owner will be the principal obligor for
the repayment of all financial obligations thereunder after the
transfer of title to the Owner. The Owner therefore, agrees to
execute and deliver all commitments, promissory notes, mortgages,
collateral assignments, documents, certificates, affidavits, and
other writings required to be executed by any lender in
connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate
of Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project
in accordance with the Final Plans (except as otherwise expressly
set forth herein);
(c) To at all times, commencing with the date upon which
construction begins, carry the following types of insurance with
an insurance carrier or carriers acceptable to the Owner and the
Owner's lender:
(i) Workman's compensation insurance fully covering all
persons engaged in the performance of this Agreement, in
accordance with applicable law.
(ii) Public liability insurance covering death or bodily
injury with limits of not less than $300,000 for one person and
$1,000,000 for any one accident or disaster; and property damage
coverage limits of not less than $100,000; all of which insurance
shall name the Owner's lender as an additional insured.
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The Developer shall furnish to the Owner and the Owner's
lender if required by such lender, duplicate policies of
insurance as set forth in subparagraphs (i) and (ii) hereof. Each
of such policies shall, if the insurance carriers so permit,
contain a provision to the effect that they may not be canceled
except upon ten (10) days prior written notice to the Owner and
the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the
Owner, at the Owner's option, duly executed waivers of mechanic's
liens signed by each contractor and subcontractor which provided
labor or materials on the Project.
(e) To expeditiously pursue obtaining commitments for financing
the contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel
required for the pre-opening and operation of the Project in
sufficient time to permit licensure by the applicable
governmental agency(ies) at the date of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then
obtainable) and current utility availability letters shall have
been obtained by December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA
survey, satisfactory to the Developer, in its sole discretion,
shall have been obtained by the Owner which confirms that there
are no exceptions or conditions which would render title to the
Property unmarketable or which will prohibit or restrict the
construction or operation of the Project or which would prevent
an institutional lender from closing a construction or permanent
mortgage loan for the Project in the usual course of its
business.
(c) Additional Due Diligence Regarding the Property. The
Developer shall have received due diligence information
concerning the Property, satisfactory to the Developer in its
sole discretion, including, without limitation, soil tests and
utility service confirmations to the extent not currently
available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth
in Section 1.1.
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Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations
between the parties on the terms of this Agreement; and any of
the Developer's proprietary information, including, without
limitation, financial information, projects, copies of leases,
real estate appraisals, and other information regarding the
Project and the business affairs and operations of the Developer
which any of said parties obtain from the Developer in the course
of negotiations for the transactions contemplated hereby (the
"Confidential Information");
(b) not to disclose, without the Developer's prior written
consent (except to the extent disclosure is required by
applicable law or regulation), any Confidential Information
except to such parties' own agents, servants and employees,
bankers, consultants and other advisors to whom disclosure is
necessary in order to effectuate the transactions contemplated
hereby; and
(c) to comply therewith for a period of one (1) year commencing
on the date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
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Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall
be sent to it at the address set forth above and a copy therefore
sent to Chancellor Senior Housing Group, Inc., 197 First Avenue,
Needham, MA 02194, Attention: Frederick R. Leathers, or at such
other address or addresses the Owner shall from time to time
designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it
shall be sent to CareMatrix of Massachusetts, Inc., 197 First
Avenue, Needham, MA 02194, Attention: President, with a copy to
James M. Clary, III, Esq. at the same address; or at such other
address or addresses as the Developer shall from time-to-time
designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
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Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 11th day of April, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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1
Exhibit 10.120
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of Sixty
(60) units (the "Project") to be located in Cape Elizabeth, Maine described
below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 6
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Oust Associates for
the Property, and will be subject to those easements, conditions,
contracts, rights, licenses, encroachments, restrictions and other
encumbrances resulting from the Developer securing regulatory,
development and construction approvals for the Project and attendant
site improvements. The Owner and the Developer each represents to the
other that it has reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical inspection
of the Property and is satisfied as to the site characteristics and
other attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that John M. Shesky & Associates and Gawton Architects (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fee
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
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Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
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(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
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Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
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Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this _____ day of _________, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.121
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
Ninety-Nine (99) units (the "Project") to be located in Durham, North Carolina
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 6.2
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Jim Morrow entitled
"Final Subdivision", dated August 30, 1996, for the Property, and will
be subject to those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates, Inc. and their consulting engineers (the "Architect
and Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The p rice to be paid by the Owner to the
Developer for the development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
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(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
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ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
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Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
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Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 11th day of April, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.122
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of One
Hundred Ten (110) units (the "Project") to be located in Ellicott City, Maryland
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 4
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Reimer Muegee entitled
"Boundary and Topographical Survey", dated February 4, 1997, for the
Property, and will be subject to those easements, conditions,
contracts, rights, licenses, encroachments, restrictions and other
encumbrances resulting from the Developer securing regulatory,
development and construction approvals for the Project and attendant
site improvements. The Owner and the Developer each represents to the
other that it has reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical inspection
of the Property and is satisfied as to the site characteristics and
other attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property(as defined
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herein) and related development costs (collectively, the "Project Loan") which
shall be sufficient, together with the Owner's equity contributions, if
necessary (which shall in no event exceed ten percent (10%) of the total costs
to construct the Project in accordance with the development budget), to pay the
full amount of the total costs to construct the Project in accordance with the
development budget. The Owner covenants that it will provide fully and in a
timely fashion all reasonable documentation required by the lender in connection
with the Project Loan. Such documentation shall include, but is not limited to,
all zoning and plan approvals, all utility letters indicating positive
availability of service, inventory of concessions made to and agreements with
any or all municipal bodies, site plans, title policies, and all other
regulatory body approvals. The Owner also covenants that it will, in a timely
manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
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Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates Inc. and their consulting engineers (the "Architect
and Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
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Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
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any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property
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or the Project, together with any and all replacements thereto and
substitutions therefor, and all proceeds thereof; and all present and
future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender
if required by such lender, duplicate policies of insurance as set
forth in subparagraphs (i) and (ii) hereof. Each of such
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policies shall, if the insurance carriers so permit, contain a
provision to the effect that they may not be canceled except upon ten
(10) days prior written notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither
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party shall have any further responsibility or liability to the other. The
Developer reserves the right, at its option, to waive or defer any one or more
of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
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Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
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Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 11th day of April, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.123
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
ninety-nine (99) units (the "Project") to be located in Houston, Texas described
below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 9
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Rayburn Cherry Eng.
entitled "Boundary Survey", dated October 16, 1995, for the Property,
and will be subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances resulting
from the Developer securing regulatory, development and construction
approvals for the Project and attendant site improvements. The Owner
and the Developer each represents to the other that it has reviewed or
shall review the boundary survey and the topographical survey of the
Property and has made a physical inspection of the Property and is
satisfied as to the site characteristics and other attributes in all
material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates, Inc. and their consulting engineers (the "Architect
and Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
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(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
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ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
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Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
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Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 31st day of March, 1996 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.124
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Agreement") made this 3rd day of July,
1996, by and between CarePlex of Newton, Inc., a Delaware corporation ("CNI"),
and CareMatrix of Massachusetts, Inc., a Delaware corporation ("CareMatrix").
W I T N E S S E T H
WHEREAS, CNI has entered into that certain Development Agreement with
Lasell Village, Inc. and Lasell Collage (collectively, "Lasell"), dated May 10,
1996 for the development of a senior housing facility to be located in Newton,
Massachusetts (the "Development Agreement"); and
WHEREAS, CNI desires to assign its rights and obligations under the
Development Agreement to CareMatrix and CareMatrix desires to assume such rights
and obligations.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. CNI hereby assigns, sets over and transfers unto CareMatrix to have
and to hold from and after the date hereof, all of the right, title and
interest of CNI in, to and under the Development Agreement, and
CareMatrix hereby accepts the within assignment and assumes and agrees
with CNI, to perform and comply with and to be bound by all of the
terms, covenants, agreements, provisions and conditions of the
Development Agreement on the part of CNI thereunder to be performed on
and after the date hereof, in the same manner and with the same force
and effect as if CareMatrix had originally executed the Development
Agreement.
2. This Agreement (i) shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, (ii)
shall be governed by the laws of the Commonwealth of Massachusetts, and
(iii) may not be modified orally, but only by a writing signed by each
of CNI and CareMatrix.
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2
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
CAREPLEX OF NEWTON, INC.
By: _________________________
Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
By: _________________________
Name:
Title:
Exhibit 10.125
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
Sixty-Three (63) units (the "Project") to be located in Merrillville, Indiana
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 3
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by McMahon Associates
Inc., dated September 9, 1997, for the Property, and will be subject to
those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Chester Architects and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
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information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold
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and save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
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Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
Exhibit 10.126
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and CCC of New Jersey, Inc., a
Delaware corporation, with an office at 197 First Avenue, Needham, Massachusetts
02194 (the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of 100
beds (the "Project") to be located in Park Ridge, New Jersey described below
(the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of the land as more
fully described in Exhibit "A". Exhibit "A" and each of the other Exhibits
referred to in this Agreement shall be incorporated into this Agreement by such
reference as if fully set forth in this Agreement. The Property shall be (i)
free and clear of any and all encumbrances which would, in the Developer's sole
discretion, impair the construction or operation of the Project except as set
forth on Exhibit "B", and (ii) free of any hazardous wastes or materials except
as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared for the Property, and
will be subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances resulting
from the Developer securing regulatory, development and construction
approvals for the Project and attendant site improvements. The Owner
and the Developer each represents to the other that it has reviewed or
shall review the boundary survey and the topographical survey of the
Property and has made a physical inspection of the Property and is
satisfied as to the site characteristics and other attributes in all
material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and
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surveys, title reports, environmental assessments, appraisals and other
information regarding the Property or the Project which are in the
Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
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Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
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(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
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Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of
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Occupancy. Aside from the foregoing, the Owner hereby waives and the Developer
hereby disclaims all other express and implied warranties of every kind or
nature with respect to the Project and the Personal Property, including, without
limitation, waiving all IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual cots for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
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(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
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Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other
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advisors to whom disclosure is necessary in order to effectuate the
transactions contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
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Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to CCC
of New Jersey, Inc., 197 First Avenue, Needham, MA 02194, Attention:
Frederick R. Leathers, or at such other address or addresses the Owner
shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
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Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 15th day of July, 1996 and executed under seal.
Witness: CCC OF NEW JERSEY, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.127
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
Ninety-Nine (99) units (the "Project") to be located in Pennington, New Jersey
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 7.39
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Robert Buda
Associates, dated September 26, 1997, for the Property, and will be
subject to those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as
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defined herein) and related development costs (collectively, the "Project Loan")
which shall be sufficient, together with the Owner's equity contributions, if
necessary (which shall in no event exceed ten percent (10%) of the total costs
to construct the Project in accordance with the development budget), to pay the
full amount of the total costs to construct the Project in accordance with the
development budget. The Owner covenants that it will provide fully and in a
timely fashion all reasonable documentation required by the lender in connection
with the Project Loan. Such documentation shall include, but is not limited to,
all zoning and plan approvals, all utility letters indicating positive
availability of service, inventory of concessions made to and agreements with
any or all municipal bodies, site plans, title policies, and all other
regulatory body approvals. The Owner also covenants that it will, in a timely
manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
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Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio & Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
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Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding
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that any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter
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acquired by the Owner which are or may be attached to or used in
connection with the Property or the Project, together with any and all
replacements thereto and substitutions therefor, and all proceeds
thereof; and all present and future rents, issues, leases, and profits
of the Property and the Project will serve as security for the payment
obligations to any lenders relating to the Project Loan or otherwise,
and that the Owner will be the principal obligor for the repayment of
all financial obligations thereunder after the transfer of title to the
Owner. The Owner therefore, agrees to execute and deliver all
commitments, promissory notes, mortgages, collateral assignments,
documents, certificates, affidavits, and other writings required to be
executed by any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
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(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
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(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
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ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
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Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.128
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
ninety-nine (99) units (the "Project") to be located in Pineville, North
Carolina described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 23
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by General Surveyors for
the Property, and will be subject to those easements, conditions,
contracts, rights, licenses, encroachments, restrictions and other
encumbrances resulting from the Developer securing regulatory,
development and construction approvals for the Project and attendant
site improvements. The Owner and the Developer each represents to the
other that it has reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical inspection
of the Property and is satisfied as to the site characteristics and
other attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and
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surveys, title reports, environmental assessments, appraisals and other
information regarding the Property or the Project which are in the
Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
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Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio & Associates, Inc. and Burton Engineering & Associates (the
"Architect and Engineers") have or will be retained by the Owner. The Owner
represents and warrants to the Developer that a true, accurate and complete copy
of the Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and
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approve the same, and make any necessary revisions. The Owner agrees
that it will not unreasonably withhold its approval of the Final Plans
if they conform in all material respects to the Basic Plans. The
parties agree to use their best efforts to reach a prompt and
reasonable conclusion concerning the acceptability of the Final Plans
(and the Personal Property, see Section 2.6). The parties shall initial
the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
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(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
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(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fee
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
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(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1998.
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(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
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Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First
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Avenue, Needham, MA 02194, Attention: Frederick R. Leathers, or at such
other address or addresses the Owner shall from time to time designate
by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
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Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this _____ day of _________, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.129
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
Seventy (70) units (the "Project") to be located in Reston, Virginia described
below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 5.42
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Urban Engineering and
Associates, Inc., dated March 30, 1997, for the Property, and will be
subject to those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates, Inc. and their consulting engineers (the "Architect
and Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
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Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees,
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or arising in or about the Property at any time from the date of this Agreement
until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information
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regarding the Project and the business affairs and operations of the
Developer which any of said parties obtain from the Developer in the
course of negotiations for the transactions contemplated hereby (the
"Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and
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save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
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Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.130
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
Ninety-Nine (99) units (the "Project") to be located in Tamarac, Florida
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 6.94
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by CCL Consultants, Inc.,
dated July 29, 1997, for the Property, and will be subject to those
easements, conditions, contracts, rights, licenses, encroachments,
restrictions and other encumbrances resulting from the Developer
securing regulatory, development and construction approvals for the
Project and attendant site improvements. The Owner and the Developer
each represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio & Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
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information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and
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save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
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Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.131
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
Seventy (70) units (the "Project") to be located in Upper Nyack, New York
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 11.1
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Caruso & Horowitz
Associates, P.C., dated December 9, 1996, for the Property, and will be
subject to those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Schofield Colgan Perry Lawler and their consulting engineers (the
"Architect and Engineers") have or will be retained by the Owner. The Owner
represents and warrants to the Developer that a true, accurate and complete copy
of the Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
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information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and
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save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
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Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.132
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Deerfield
Beach, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Owner"), and is entered into for the purpose
of reducing to a formal writing all of the parties understandings with respect
to the development and construction of an assisted/independent living project to
be comprised of one hundred twenty eight (128) units (the "Project") to be
located in Deerfield Beach, Florida described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately four
(4) acres of land as more fully described in Exhibit "A". Exhibit "A" and each
of the other Exhibits referred to in this Agreement shall be incorporated into
this Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey prepared by ConsulTech Engineering, Inc.
entitled "Boundary Survey", dated December 8, 1996 for the Property,
and will be subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances resulting
from the Developer securing regulatory, development and construction
approvals for the Project and attendant site improvements. The Owner
and the Developer each represents to the other that it has reviewed or
shall review the boundary survey and the topographical survey of the
Property and has made a physical inspection of the Property and is
satisfied as to the site characteristics and other attributes in all
material respects.
<PAGE>
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
<PAGE>
obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Domenic DiGiorgio Architects and their consulting engineers (the "Architect
and Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
<PAGE>
shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
<PAGE>
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
<PAGE>
equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
<PAGE>
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
<PAGE>
(f) To pay for all professional and other staff personnel required for the
pre-opening and operation of the Project in sufficient time to permit
licensure by the applicable governmental agency(ies) at the date of
Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
28, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
<PAGE>
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
<PAGE>
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Deerfield Beach, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
<PAGE>
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 19th day of March, 1997 and executed under seal.
Witness: CHANCELLOR OF DEERFIELD BEACH, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
Exhibit 10.133
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor of Stuart, Inc.,
a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of one hundred forty-eight (148) units (the "Project") to be located
in Jensen Beach, Florida described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 10.56
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Survey GCY, Inc.
entitled "Boundary & Topographic Survey for CareMatrix Corp.", dated
January 20, 1997, (Map No. 96-1029-01-01) for the Property, and will be
subject to those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
<PAGE>
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
<PAGE>
obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
<PAGE>
compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
<PAGE>
shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
<PAGE>
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
<PAGE>
equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
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(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
February 28, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
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ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
<PAGE>
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor of Stuart, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
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Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 30th day of January, 1997 and executed under seal.
Witness: CHANCELLOR OF STUART, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
Exhibit 10.134
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of One
Hundred Forty-Eight (148) units (the "Project") to be located in Jensen Beach
II, Florida described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 10.65
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by GCY, Inc., dated May
1997, for the Property, and will be subject to those easements,
conditions, contracts, rights, licenses, encroachments, restrictions
and other encumbrances resulting from the Developer securing
regulatory, development and construction approvals for the Project and
attendant site improvements. The Owner and the Developer each
represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio & Associates and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
Section 2.15 - Form of Conveyance and Status of Title. The Personal Property
shall be conveyed by warranty bill of sale and may be subject to the mortgages
and security interests described in Section 2.14.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by April
30, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
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information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and
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save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
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Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 26th day of September, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.135
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor at Logan Square,
Inc., a Delaware corporation, with an office at 197 First Avenue, Needham,
Massachusetts 02194 (the "Owner"), and is entered into for the purpose of
reducing to a formal writing all of the parties understandings with respect to
the development and construction of an assisted/independent living project to be
comprised of one hundred thirty-five (135) units (the "Project") to be located
in Philadelphia, Pennsylvania described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 0.7
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Pennoni Associates,
Inc., for the Property, and will be subject to those easements,
conditions, contracts, rights, licenses, encroachments, restrictions
and other encumbrances resulting from the Developer securing
regulatory, development and construction approvals for the Project and
attendant site improvements. The Owner and the Developer each
represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any
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of the foregoing shall occur which is prohibited by applicable law or
the respective terms hereof.
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Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget (the
"Projected Project Costs"). The Owner covenants that it will provide fully and
in a timely fashion all reasonable documentation required by the lender in
connection with the Project Loan. Such documentation shall include, but is not
limited to, all zoning and plan approvals, all utility letters indicating
positive availability of service, inventory of concessions made to and
agreements with any or all municipal bodies, site plans, title policies, and all
other regulatory body approvals. The Owner also covenants that it will, in a
timely manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
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ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that The Klett Group and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
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(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6 ). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
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Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of
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Occupancy. Aside from the foregoing, the Owner hereby waives and the Developer
hereby disclaims all other express and implied warranties of every kind or
nature with respect to the Project and the Personal Property, including, without
limitation, waiving all IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
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(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
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Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
January 31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
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to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
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Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor at Logan Square, Inc., 197 First Avenue, Needham, MA 02194,
Attention: Frederick R. Leathers, or at such other address or addresses
the Owner shall from time to time designate by notice to the Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
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Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this 5th day of December, 1997 and executed under seal.
Witness: CHANCELLOR AT LOGAN SQUARE, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.136
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of One
Hundred Twenty Three (123) units (the "Project") to be located in Ridgefield,
Connecticut described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 42.39
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Malone & MacBroom
entitled "Boundary Survey", dated August 15, 1996, for the Property,
and will be subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances resulting
from the Developer securing regulatory, development and construction
approvals for the Project and attendant site improvements. The Owner
and the Developer each represents to the other that it has reviewed or
shall review the boundary survey and the topographical survey of the
Property and has made a physical inspection of the Property and is
satisfied as to the site characteristics and other attributes in all
material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined
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herein) and related development costs (collectively, the "Project Loan") which
shall be sufficient, together with the Owner's equity contributions, if
necessary (which shall in no event exceed ten percent (10%) of the total costs
to construct the Project in accordance with the development budget), to pay the
full amount of the total costs to construct the Project in accordance with the
development budget. The Owner covenants that it will provide fully and in a
timely fashion all reasonable documentation required by the lender in connection
with the Project Loan. Such documentation shall include, but is not limited to,
all zoning and plan approvals, all utility letters indicating positive
availability of service, inventory of concessions made to and agreements with
any or all municipal bodies, site plans, title policies, and all other
regulatory body approvals. The Owner also covenants that it will, in a timely
manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
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Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio Associates, Inc. and their consulting engineers (the "Architect
and Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
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Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
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any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property
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or the Project, together with any and all replacements thereto and
substitutions therefor, and all proceeds thereof; and all present and
future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such
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policies shall, if the insurance carriers so permit, contain a
provision to the effect that they may not be canceled except upon ten
(10) days prior written notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the
Owner, at the Owner's option, duly executed waivers of mechanic's
liens signed by each contractor and subcontractor which provided
labor or materials on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the
date of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither
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party shall have any further responsibility or liability to the other. The
Developer reserves the right, at its option, to waive or defer any one or more
of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
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Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
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Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 11th day of April, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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EXHIBITS A - I
Documents in Development Files
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Exhibit 10.137
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of
ninety-nine (99) units (the "Project") to be located in Roswell, Georgia
described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 6
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Broward-Davis entitled
"Title Survey", dated January 13, 1997, for the Property, and will be
subject to those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other encumbrances resulting from the
Developer securing regulatory, development and construction approvals
for the Project and attendant site improvements. The Owner and the
Developer each represents to the other that it has reviewed or shall
review the boundary survey and the topographical survey of the Property
and has made a physical inspection of the Property and is satisfied as
to the site characteristics and other attributes in all material
respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Broward-Davis and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
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(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
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ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
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Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
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Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 11th day of April, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
14
Exhibit 10.138
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of Forty
(40) units (the "Project") to be located in Saco, Maine described below (the
"Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 2.4
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Owen Haskell, Inc.
entitled "Boundary Survey", dated September 13, 1996, for the Property,
and will be subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances resulting
from the Developer securing regulatory, development and construction
approvals for the Project and attendant site improvements. The Owner
and the Developer each represents to the other that it has reviewed or
shall review the boundary survey and the topographical survey of the
Property and has made a physical inspection of the Property and is
satisfied as to the site characteristics and other attributes in all
material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined
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herein) and related development costs (collectively, the "Project Loan") which
shall be sufficient, together with the Owner's equity contributions, if
necessary (which shall in no event exceed ten percent (10%) of the total costs
to construct the Project in accordance with the development budget), to pay the
full amount of the total costs to construct the Project in accordance with the
development budget. The Owner covenants that it will provide fully and in a
timely fashion all reasonable documentation required by the lender in connection
with the Project Loan. Such documentation shall include, but is not limited to,
all zoning and plan approvals, all utility letters indicating positive
availability of service, inventory of concessions made to and agreements with
any or all municipal bodies, site plans, title policies, and all other
regulatory body approvals. The Owner also covenants that it will, in a timely
manner, provide whatever financial or other information the lender might
reasonably require in connection with the Developer's applications for financing
for the construction of the Project and as required by such lender in connection
with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the State of Delaware.
ARTICLE II
Construction of the Project
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Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Architecture Team and their consulting engineers (the "Architect and
Engineers") have or will be retained by the Owner. The Owner represents and
warrants to the Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
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Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
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any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of equipment and furnishings.
The Developer will cause the applicable contractor to remedy any defect in
construction caused by poor workmanship or materials which are brought to its
attention by written notice within a period of one (1) year from the date of the
issuance of the Certificate of Occupancy. Aside from the foregoing, the Owner
hereby waives and the Developer hereby disclaims all other express and implied
warranties of every kind or nature with respect to the Project and the Personal
Property, including, without limitation, waiving all IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property
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or the Project, together with any and all replacements thereto and
substitutions therefor, and all proceeds thereof; and all present and
future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fees
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
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The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising out of or caused by any act or omission of the
Developer, its subcontractors, agents, or employees, or arising in or about the
Property at any time from the date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1997.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
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Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
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Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder or similar agent claiming to have been employed by or on behalf
of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect. Section 7.9 - Captions. The captions of
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent of
any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
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Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of this
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
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Dated this 11th day of April, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
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Exhibit 10.139
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is by and between CareMatrix of
Massachusetts, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 (the "Developer"), and Chancellor Senior Housing
Group, Inc., a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194 or any entity designated thereby as its nominee
(the "Owner"), and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the development and
construction of an assisted/independent living project to be comprised of one
hundred twenty-four (124) units (the "Project") to be located in Upper
Providence, Pennsylvania described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have or has good, record and
marketable title in fee simple to the Property consisting of approximately 15.5
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be (i) free and clear of any and all encumbrances which would, in
the Developer's sole discretion, impair the construction or operation of the
Project except as set forth on Exhibit "B", and (ii) free of any hazardous
wastes or materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) The Owner and the Developer acknowledge that the Property will be
subject to the easements, assessments, conditions, contracts, rights,
claims, encroachments, restrictions and other encumbrances as set forth
on Exhibit "B" (the "Existing Encumbrances"), to physical conditions
disclosed by a boundary survey to be prepared by Brandywine Valley
Engineering for the Property, and will be subject to those easements,
conditions, contracts, rights, licenses, encroachments, restrictions
and other encumbrances resulting from the Developer securing
regulatory, development and construction approvals for the Project and
attendant site improvements. The Owner and the Developer each
represents to the other that it has reviewed or shall review the
boundary survey and the topographical survey of the Property and has
made a physical inspection of the Property and is satisfied as to the
site characteristics and other attributes in all material respects.
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(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and
any other plans, studies and surveys, title reports, environmental
assessments, appraisals and other information regarding the Property or
the Project which are in the Owner's possession, custody or control.
(c) The Owner represents, to the best of its knowledge, that the
Property has only the apparent site and off-site conditions, if any, as
set forth on Exhibit "D" which require the implementation of the
measures, if any, as set forth on Exhibit "D".
(d) Commencing on the date that the Developer commences construction in
accordance with the terms of this Agreement, the Owner shall provide
the Developer with full possession and complete control of the Property
for purposes of performing the Developer's obligations hereunder.
Section 1.3 - Permit and Approvals.
(a) The Developer represents that it shall use its best efforts to
obtain, prior to the date of Physical Completion (as hereinafter
defined), all state, federal, county and municipal land use approvals
and permits, licenses, easements, and utility agreements which are
necessary for the development, construction and opening of the Project
on the Property as set forth on Exhibit "E" (the "Developer's
Approvals"). The Developer covenants to diligently use its best efforts
to obtain all of the Developer's Approvals in an expeditious manner. In
the event that the Developer is unable to obtain the Developer's
Approvals, the Developer shall have no liability whatsoever to the
Owner, or any other party and at the Owner's or the Developer's option,
this Agreement shall be terminated without recourse to either party
hereto at law or in equity.
(b) The Owner represents that it shall use its best efforts to obtain,
prior to the date of Physical Completion, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth
on Exhibit "F" (the "Owner's Approvals"). The Owner covenants to
diligently use its best efforts to obtain all of the Owner's Approvals
in an expeditious manner. In the event that the Owner is unable to
obtain the Owner's Approvals, the Owner shall have no liability
whatsoever to the Developer, or any other party and at the Owner's or
the Developer's option, this Agreement shall be terminated without
recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting the Developer to construct the
Project, the Owner grants to the Developer, to the extent required by
the Developer in order that the purpose of this Agreement be
effectuated, the rights under the Developer's Approvals and the Owner's
Approvals (collectively, the "Approvals") and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Developer's
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obligations hereunder; provided, however that no transfer or assignment
of any of the foregoing shall occur which is prohibited by applicable
law or the respective terms hereof.
Section 1.4 - Documentation. The Developer shall use its best efforts to obtain,
on behalf of the Owner, construction and permanent financing for the Property,
the Project, the Personal Property (as defined herein) and related development
costs (collectively, the "Project Loan") which shall be sufficient, together
with the Owner's equity contributions, if necessary (which shall in no event
exceed ten percent (10%) of the total costs to construct the Project in
accordance with the development budget), to pay the full amount of the total
costs to construct the Project in accordance with the development budget. The
Owner covenants that it will provide fully and in a timely fashion all
reasonable documentation required by the lender in connection with the Project
Loan. Such documentation shall include, but is not limited to, all zoning and
plan approvals, all utility letters indicating positive availability of service,
inventory of concessions made to and agreements with any or all municipal
bodies, site plans, title policies, and all other regulatory body approvals. The
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information the lender might reasonably require in connection
with the Developer's applications for financing for the construction of the
Project and as required by such lender in connection with the Project Loan.
Section 1.5 - Other Agreements. The Owner and the Developer each represents to
the other that neither entering into this Agreement nor performing their
respective obligations hereunder will violate any other agreements or documents
by which either may be bound.
Section 1.6 - Utility Services. The Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including, without limitation, public water, sewer and electricity) are
currently available to the Property in the capacities required to operate the
Project. No work need be performed by or on behalf of the Developer to make such
utilities available to the Property for the construction or operation of the
Project, except for the matters, if any, set forth on Exhibit "D". Copies of
letters from the providers of such utility services confirming such availability
are annexed hereto as Exhibit "G".
Section 1.7 - Good Standing of the Developer. The Developer represents that it
is duly organized, validly existing and in good standing under the laws of the
state of the State of Delaware. The Developer represents that it is empowered
and authorized to execute, deliver and perform its obligations under this
Agreement, and, upon such execution and delivery and subject to the conditions
subsequent set forth in Section 5.1, this Agreement shall be valid, binding and
legal obligation of the Developer, enforceable in accordance with its terms and
in compliance with its certificate of incorporation and bylaws and all
applicable laws of the state of its incorporation.
Section 1.8 - Good Standing of the Owner. The Owner represents that it is duly
organized and validly existing under the laws of the State of Delaware. The
Owner represents that it is empowered and authorized to execute, deliver and
perform its obligations under this Agreement, and upon such execution and
delivery and subject to Section 5.1, this Agreement shall be the valid, binding
and legal obligation of the Owner, enforceable in accordance with its terms and
in
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compliance with its certificate of incorporation and bylaws and all applicable
laws of the State of Delaware.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of the parties that the Owner shall have
sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that DiGiorgio & Associates, Inc. and Brandywine Valley Engineering (the
"Architect and Engineers") have or will be retained by the Owner. The Owner
represents and warrants to the Developer that a true, accurate and complete copy
of the Architectural Contract is attached hereto as Exhibit "H" (the "Architect
Contract"). The Developer shall not be responsible to the Owner, or any other
party for any errors, omissions, breaches or failures thereof, or any damages
resulting from the acts or omissions of the Architect. At the Developer's
option, the Owner shall assign to the Developer all of its right, title and
interest in the Architectural Contract and any and all architectural,
engineering and other contracts with respect to the Project free of any claims
other than outstanding amounts owed under the Architectural Contract. In no
event shall the Developer be obligated to assume any of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. The Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project,
other than the Architect, which the Owner shall be obligated to pay. The
Developer neither assumes nor shall be obliged for any debts, liabilities or
obligations of the Owner or related to the Property or the Project.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by the Owner shall, under the
direction of the Developer and after consultation with the Owner,
prepare basic design plans (the "Basic Plans"). As a part of this
process, the Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the
Property for purposes of properly locating the Property on the Project.
The Developer, the Architects and Engineers shall consult with the
Owner during the process of preparing the Basic Plans. The Developer,
Architect and the Engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
Engineer's completion and delivery of the Basic Plans, the Owner, the
Developer, the Architect and Engineers
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shall meet to review and approve the Basic Plans. The parties shall
initial the Basic Plans to indicate their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, the Developer
shall direct the Architect and Engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based
upon the Basic Plans. Within two (2) weeks after the completion of the
Final Plans and their delivery to the Owner, the parties will meet to
review and approve the same, and make any necessary revisions. The
Owner agrees that it will not unreasonably withhold its approval of the
Final Plans if they conform in all material respects to the Basic
Plans. The parties agree to use their best efforts to reach a prompt
and reasonable conclusion concerning the acceptability of the Final
Plans (and the Personal Property, see Section 2.6). The parties shall
initial the Final Plans as an indication of their approval of the same.
Section 2.5 - Construction. The Developer shall cause the Project to be
constructed in a good and workmanlike manner and in accordance with the Final
Plans, the Approvals, and all applicable laws subject to field changes and minor
design changes. The Project is to be licensed for the unit complement described
above and shall be constructed in accordance with the requirements in effect on
the date of this Agreement as set forth by all federal, state and local
governmental agencies having jurisdiction of the Project, including Life Safety
Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 - Personal Property.
(a) The Developer will furnish the specific items of personal property
contained in Exhibit "I" (the "Furniture, Furnishings & Equipment" or
the "F F & E") required for the Project.
(b) In order to reduce the risk that the F F & E will be delivered
prior to the Closing contemplated herein, the Owner covenants that it
shall approve the F F & E as soon as practicable but not later than
approximately six (6) months prior to the estimated date of Physical
Completion (defined below).
(c) The F F & E does not include kitchen and laundry equipment.
Section 2.7 - Changes. The Owner agrees that the Developer shall also have the
right to make changes in the Final Plans and in the Personal Property if
required by any federal, state or local governmental authority having
jurisdiction over the Project or if required due to the unavailability of any
construction materials or the Personal Property. The Owner shall be notified of
any such changes or substitutions in the Personal Property, however, the Owner
shall have final authority to make all decisions with respect to such changes;
provided, that, such changes result in construction, space, design, personal
property, equipment and interior and exterior design comparable in overall
design and quality to that shown on the Final Plans. Any change that results in
the loss or adjustment of square footage in the Project will require approval by
the Owner.
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Section 2.8 - Commencement of Construction. Construction of the Project will
start within thirty (30) days after notification to the Developer by the Owner,
or as soon thereafter as weather and ground conditions permit.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion is achieved.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion"
or "Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been
completed and the Project shall have been approved for and received a
certificate for temporary or permanent occupancy by the local building
inspector, and by the State Fire Marshall in the event his or her
approval is required (the "Certificate of Occupancy"). Physical
Completion shall be deemed to have been achieved notwithstanding that
any of such officials or agencies have issued a Certificate of
Occupancy with conditions or a Punch-List (as hereinafter defined)
listing items requiring completion or correction, so long as such
conditions or Punch-List items do not prevent or prohibit occupancy as
determined by the Owner, in its sole discretion.
(b) The Developer will use its reasonable best efforts to notify the
Owner at least ninety (90) days prior to the time that the Developer
estimates that the Project will be Physically Completed, whereupon the
Owner will diligently proceed to fulfill all other conditions necessary
for licensure and the Owner will apply in a timely manner for all
licenses and permits necessary to commence operation of the Project as
set forth on Exhibit "C-2". After such notice from the Developer, the
Owner, to the extent necessary to perform administrative activities
may, so long as it does not interfere with completion of construction,
enter upon the Property in an effort to coordinate initial licensure.
Section 2.11 - The Owner's Access. The Owner shall have access to the
construction site while construction is in progress.
Section 2.12 - Punch-List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then the Developer agrees to use all reasonable diligence to
complete or correct such item or items so that each conforms to the Final Plans.
The parties shall make a Punch-List of the items requiring completion or
correction (the "Punch List"). Each item on the Punch-List shall be assigned a
reasonable value based upon the reasonable cost of completion or correction of
the same or such other value as may be required by the Owner's lender
("Punch-List Amount"). The Developer shall give its written undertaking to
complete each such item within forty-five (45) days (or such other period of
time as is mutually agreed upon by the parties).
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of the Personal Property, the Developer will assist in
obtaining any and all warranties and guarantees received from designers, the
Architect, the general contractor and suppliers of
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equipment and furnishings. The Developer will cause the applicable contractor to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, the Owner hereby waives and the Developer hereby disclaims all other
express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitation, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Financing Arrangements.
(a) The Owner will obtain the Project Loan which shall be sufficient,
together with the Owner's equity contributions, to pay the full amount
of the costs to construct the Project in accordance with the
development budget.
The Owner and the Developer also contemplate that the Property and the
Project, together with all fixtures, furnishing, equipment, and
articles of personal property now owned or hereafter acquired by the
Owner which are or may be attached to or used in connection with the
Property or the Project, together with any and all replacements thereto
and substitutions therefor, and all proceeds thereof; and all present
and future rents, issues, leases, and profits of the Property and the
Project will serve as security for the payment obligations to any
lenders relating to the Project Loan or otherwise, and that the Owner
will be the principal obligor for the repayment of all financial
obligations thereunder after the transfer of title to the Owner. The
Owner therefore, agrees to execute and deliver all commitments,
promissory notes, mortgages, collateral assignments, documents,
certificates, affidavits, and other writings required to be executed by
any lender in connection with such financing.
ARTICLE III
Fee
Section 3.1 - Development Fee. The price to be paid by the Owner to the
Developer for development, pre-marketing, design and other services rendered
pursuant to this Agreement is as set forth on Schedule A attached hereto, as the
same may be amended by mutual agreement of the parties from time to time.
Section 3.2 - Incentive Fee. In the event that the actual costs for the
development and construction of the Project are less than the Projected Project
Costs (such difference being referred to as the "Savings"), fifty percent (50%)
of the Savings shall be paid to the Developer as an incentive fee.
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ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - The Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, the Developer (subject to reimbursement)
shall have the following responsibilities:
(a) To obtain the necessary building permits and the Certificate of
Occupancy;
(b) To arrange for and coordinate the obtaining of all labor and
materials required to develop, construct and furnish the Project in
accordance with the Final Plans (except as otherwise expressly set
forth herein);
(c) To at all times, commencing with the date upon which construction
begins, carry the following types of insurance with an insurance
carrier or carriers acceptable to the Owner and the Owner's lender:
(i) Workman's compensation insurance fully covering all persons
engaged in the performance of this Agreement, in accordance with
applicable law.
(ii) Public liability insurance covering death or bodily injury
with limits of not less than $300,000 for one person and $1,000,000 for
any one accident or disaster; and property damage coverage limits of
not less than $100,000; all of which insurance shall name the Owner's
lender as an additional insured.
The Developer shall furnish to the Owner and the Owner's lender if
required by such lender, duplicate policies of insurance as set forth
in subparagraphs (i) and (ii) hereof. Each of such policies shall, if
the insurance carriers so permit, contain a provision to the effect
that they may not be canceled except upon ten (10) days prior written
notice to the Owner and the Owner's lender.
(d) Upon Physical Completion, the Developer shall deliver to the Owner,
at the Owner's option, duly executed waivers of mechanic's liens signed
by each contractor and subcontractor which provided labor or materials
on the Project.
(e) To expeditiously pursue obtaining commitments for financing the
contemplated construction as provided herein.
(f) To pay for all professional and other staff personnel required for
the pre-opening and operation of the Project in sufficient time to
permit licensure by the applicable governmental agency(ies) at the date
of Physical Completion.
Section 4.2 - Indemnification. The Developer hereby agrees to indemnify and hold
the Owner harmless from all liabilities, claims, and demands for personal injury
or property damage arising
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out of or caused by any act or omission of the Developer, its subcontractors,
agents, or employees, or arising in or about the Property at any time from the
date of this Agreement until Physical Completion.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of the
Developer shall, at the election of the Owner be contingent upon the occurrence
of each of the following:
(a) Approvals. All of the Approvals (to the extent then obtainable) and
current utility availability letters shall have been obtained by
December 31, 1998.
(b) Title. An Owner's title insurance policy and Class A-2 ALTA survey,
satisfactory to the Developer, in its sole discretion, shall have been
obtained by the Owner which confirms that there are no exceptions or
conditions which would render title to the Property unmarketable or
which will prohibit or restrict the construction or operation of the
Project or which would prevent an institutional lender from closing a
construction or permanent mortgage loan for the Project in the usual
course of its business.
(c) Additional Due Diligence Regarding the Property. The Developer
shall have received due diligence information concerning the Property,
satisfactory to the Developer in its sole discretion, including,
without limitation, soil tests and utility service confirmations to the
extent not currently available.
(d) Purchase of the Property. The Owner shall have purchased good
record, marketable fee simple title to the Property as set forth in
Section 1.1.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
written notice, either party may terminate this Agreement. In such event,
neither party shall have any further responsibility or liability to the other.
The Developer reserves the right, at its option, to waive or defer any one or
more of the conditions precedent.
ARTICLE VI
Additional Covenants of The Owner
Section 6.1 - Confidentiality. The Owner, its partners, affiliates, agents, and
employees hereby agree:
(a) to maintain in the strictest confidence the identity of the
Developer; the contents of this Agreement; the negotiations between the
parties on the terms of this Agreement; and any of the Developer's
proprietary information, including, without limitation, financial
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information, projects, copies of leases, real estate appraisals, and
other information regarding the Project and the business affairs and
operations of the Developer which any of said parties obtain from the
Developer in the course of negotiations for the transactions
contemplated hereby (the "Confidential Information");
(b) not to disclose, without the Developer's prior written consent
(except to the extent disclosure is required by applicable law or
regulation), any Confidential Information except to such parties' own
agents, servants and employees, bankers, consultants and other advisors
to whom disclosure is necessary in order to effectuate the transactions
contemplated hereby; and
(c) to comply therewith for a period of one (1) year commencing on the
date of this Agreement.
Section 6.2 - Provision of Further Information. The Owner agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
Section 6.3 - Management Agreement. The Owner agrees that the Developer or its
nominee shall have the right to manage the Project beginning approximately one
hundred twenty (120) days prior to completion pursuant to the terms of a
Management Agreement, substantially in the form attached hereto as Exhibit "J".
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement
(including all Exhibits hereto).
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representations, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and the Developer represents and
warrants to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby or
referred to herein; and each agrees to indemnify and hold and
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save the other harmless from any claim or demand for commission or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of such party.
Section 7.6 - Assignment. The Developer shall have no right to assign his rights
nor delegate its obligations under this Agreement to another entity or person
without the prior written consent of the Owner except that the Developer shall
have the right to assign this Agreement to, merge with or consolidate with an
"Affiliate" (defined herein as defined in the Securities and Exchange Act of
1934 and the regulations thereunder) in connection with a public offering,
merger or other transfer.
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to the Owner, it shall be sent
to it at the address set forth above and a copy therefore sent to
Chancellor Senior Housing Group, Inc., 197 First Avenue, Needham, MA
02194, Attention: Frederick R. Leathers, or at such other address or
addresses the Owner shall from time to time designate by notice to the
Developer.
(b) In the event that notice is directed to the Developer, it shall be
sent to CareMatrix of Massachusetts, Inc., 197 First Avenue, Needham,
MA 02194, Attention: President, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as the
Developer shall from time-to-time designate by notice to the Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect
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the validity or enforceability of this remaining portions so long as the
material purposes of this Agreement can be determined and effectuated.
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
Dated this _____ day of _________, 1997 and executed under seal.
Witness: CHANCELLOR SENIOR HOUSING GROUP, INC.
__________________________ By: __________________________
Name: Name:
Title:
CAREMATRIX OF MASSACHUSETTS, INC.
_________________________ By: _____________________________
Name: Name:
Title:
DEVELOPMENT SERVICES AGREEMENT
THIS DEVELOPMENT SERVICES AGREEMENT (this "Agreement") entered into this
5th day of December, 1997, between Mayfair at Great Neck, LLC ("Owner"), a New
York limited liability company and CareMatrix of Massachusetts, Inc.
("CareMatrix"), a Delaware corporation, and Hassett-Belfer Senior Housing &
Services, LLC ("HBSH"), a New York limited liability company (collectively, the
"Developer").
WITNESSETH:
WHEREAS, Owner owns the property located at 96 Cuttermill Road, Great Neck,
New York and desires to develop a 148 unit senior housing facility on such
property (the "Project"); and
WHEREAS, Owner wishes to engage the Developer to provide such development
services as are set forth in this Agreement and Developer wishes to accept such
engagement upon all terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the murual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
ENGAGEMENT OF DEVELOPER; PAYMENT FOR SERVICES; TERM
1.1. Engagement of Developer. Owner hereby engages Developer as developer
of the Project on the terms and conditions provided for in this Agreement. Owner
authorizes Developer to exercise, subject to the terms and conditions of this
Agreement, such powers as may be necessary and appropriate for the development
of the Project. Developer hereby accepts such engagement and agrees to perform
the Development Services and other undertakings set forth in this Agreement.
1.2. Payment for Services. Owner shall pay CareMatrix $700,000.00 and HBSH
$700,000.00 (of which Owner shall pay HBSH and CareMatrix $250,000.00 each, on
the date hereof) for the Development Services provided by the Developer under
this Agreement. Payment shall be made in accordance with the terms of the
Reimbursement Agreement, of even date herewith, between Owner and Manufacturers
and Traders Trust Company.
<PAGE>
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1.3 Term. The term of this Agreement shall begin on the date of execution
of this Agreement and shall continue in full force and effect until the Project
has been substantially completed.
ARTICLE II
DUTIES OF DEVELOPER
2.1. Generally. Developer shall carry out the responsibilities and
obligations set forth in this Agreement using its best skill and judgement and
in accordance with good development standards for comparable projects in the
State of New York. Developer agrees to use all reasonable efforts to perform its
duties and obligations under this Agreement in an efficient, expeditious and
economical manner and consistent with the best interests of the Project. Without
limiting the generality of the foregoing, Developer shall provide to Owner the
specific services hereinafter set forth.
2.2. Developer's Services. Developer's obligations under this Agreement
shall include, but not be limited to, the following services with respect to the
planning, design and development of the Project:
(a) Developer shall use all reasonable efforts to obtain (or to cause
the appropriate contractors and consultants to obtain) all required building,
construction, environmental and other permits, approvals, certificates,
licenses, consents and authorizations, including any zoning approvals, necessary
to initiate, continue and complete development of the Project.
(b) Developer generally shall perform such other acts and things as
may be reasonably required for coordinating, monitoring, administering and
supervising the full and complete planning, design, construction and development
of the Project, including, without limitation, complete interior design of the
Project and all pre-opening marketing of the Project.
(c) Developer shall make necessary recommendations and shall otherwise
assist Owner in making decisions respecting all Project development
requirements, in accordance with all requirements, including: (A) time phasing
of the development; (B) design of public areas in all improvements; (C) design
of all services areas in all Improvements; (D) parking facilities; (E)
landscaping; (F) selection of special building features to accommodate special
building needs; and (G) obtaining all required insurance and bonds.
2.3. Service Contracts. (a) Subject to Owner's consent, Developer shall be
responsible for selecting and managing all accountants, architects, engineers,
public relations
<PAGE>
3
specialists, lobbyists, legal counsel, leasing agents, environmental specialists
and other service providers for the Project.
ARTICLE III
ASSIGNMENT
Neither party hereto may assign any of its rights or obligations under this
Agreement without the prior written consent of the other party, which may be
granted or denied in its sole discretion.
ARTICLE IV
INDEMNIFICATION
Developer shall indemnify, defend and hold harmless Owner and its
shareholders, officers, directors and employees from and against any and all
claims, demands, losses, liabilities, actions, lawsuits and other proceedings,
judgments and awards, and costs and expenses (including, without limitation
reasonable attorneys' fees and disbursements), arising out of the bad faith,
gross negligence, willful misconduct or misapplication of funds of Developer,
its officers, directors, agents, employees. The provisions of this Article IV
shall survive the termination of this Agreement.
ARTICLE V
MISCELLANEOUS
5.1. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto relating to the subject matter hereof, and there are no other
agreements or understandings between them relating to the subject matter hereof
other than as set forth herein. This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their successors and permitted
assigns. This Agreement may only be changed by written instrument signed by duly
authorized representatives or officers of the panics hereto.
5.2. Severability. If any term, provision or condition of this Agreement or
the application thereof to any person or circumstance shall be invalid or
unenforceable, the remainder of this Agreement or the application of such term,
provision or condition to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby, and each term,
provision or condition shall be valid and enforceable to the fullest extent
permitted by law.
<PAGE>
4
5.3. Waiver. The failure of either party to this Agreement to insist upon
the strict or timely performance of any of the other parry's obligations
hereunder or to exercise any right, remedy or election herein contained or
permitted by law shall not constitute or be construed as a waiver or
relinquishment for the future of any such obligation, right, remedy or election,
but the same shall continue and remain in full force and effect.
5.4. Supplemental Documents. Recognizing that the implementation of the
provisions hereof with respect to various actions of the parties may require the
execution of supplemental documents the precise nature of which cannot now be
determined, each of the parties agrees to assent to, execute and deliver such
other and further documents as may reasonably be required by the other party
hereto so long as such other and further documents are consistent with the terms
and provisions hereof, shall not impose additional obligations on any party,
shall not deprive any party of the privileges herein granted to it and shall be
in furtherance of the intent and purposes of this Agreement.
5.5. Governing law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of New York.
5.6 No Partnership. This Agreement does not create a partnership, limited
liability company or other joint venture between the parties.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MAYFAIR AT GREAT NECK, LLC
By: /s/ [ILLEGIBLE]
--------------------------
Name
Authorized Signatory
CAREMATRIX OF MASSACHUSETTS, INC.
By: /s/ [ILLEGIBLE]
--------------------------
Name:
Title
HASSETT-BELFER SENIOR HOUSING &
SERVICES, LLC
By: /s/ [ILLEGIBLE]
--------------------------
Name:
Title
Exhibit 10.141
DEVELOPMENT AGREEMENT
Between
CAREMATRIX OF AMBER LIGHTS, INC./NETWEST
DEVELOPMENT CORPORATION
And
AMBER LIGHTS ASSOCIATES
GENERAL PARTNERSHIP
<PAGE>
DEVELOPMENT AGREEMENT
This Development Agreement is by and between CareMatrix of Amber Lights, Inc.
("CareMatrix"), a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194, and Netwest Development Corporation ("Netwest"),
an Arizona Corporation, with an office at 2221 East Broadway Boulevard, Suite
211, Tucson, Arizona, 85719 (collectively the "Developer"), and Amber Lights
Associates General Partnership ("Amber Lights"), an Arizona general partnership,
with an office at 197 First Avenue, Needham, Massachusetts 02194 (the "Owner")
and is entered into for the purpose of reducing to a formal writing all of the
parties understandings with respect to the construction of a proposed assisted/
independent living project to be comprised of 120 units ( the "Project") to be
located in Tucson, Arizona, described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 -- Title to Property. The Owner shall have good, record and
marketable title in fee simple to the Property consisting of approximately 5.5
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be free and clear of any and all encumbrances which would, in the
Developer's sole discretion, impair the construction or operation of the Project
except as set forth on Exhibit "B". and free of any hazardous wastes or
materials except as set forth on Exhibit "C".
Section 1.2 -- Encumbrances.
(a) Owner and Developer acknowledge that the Property will be subject to
the easements, assessments, conditions, contracts, rights, claims,
encroachments, restrictions and other encumbrances as set forth on Exhibit
"B" (the "Existing Encumbrances"), to physical conditions disclosed by a
boundary survey to be prepared by McGovern MacVittie Lodge & Associates,
Inc. for the Property, and
<PAGE>
will be subject to those easements, conditions, contracts, rights,
licenses, encroachments, restrictions and other encumbrances resulting from
Developer securing regulatory, development and construction approvals for
the Project and attendant site improvements. Owner and Developer each
represents to the other that it has reviewed or shall review the boundary
survey and the topographical survey of the Property and has made a physical
inspection of the Property and is satisfied as to the site characteristics
and attributes in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and any
other plans, studies and surveys, title reports, environmental assessments,
appraisals and other information regarding the Property or the Project
which are in the Owner's possession, custody or control.
(c) The Owner represents that to the best of its knowledge the Property has
only the apparent site and off-site conditions, if any, as set forth on
Exhibit "D" and including the Development Agreement to be executed with
Pima County.
(d) Commencing on the date Developer elects to commence construction in
accordance with this Agreement, Owner shall provide Developer with full
possession and complete control of the Property for purposes of performing
Developer's obligations hereunder.
Section 1.3 -- Permits and Approvals
(a) Developer represents that it shall use its best efforts to obtain,
prior to the date of the Closing (as defined in Article III hereof), all
state, federal, county and municipal land use approvals and permits,
licenses, easements, and utility agreements which are necessary for the
development, construction and opening of the Project on the Property as set
forth on Exhibit "E" (the "Developer's Approvals"). Developer covenants to
diligently use its best efforts to obtain all of the Approvals in an
expeditious manner. In the event Developer is unable to obtain the
Approvals, Developer shall have no liability whatsoever to Owner, or any
other party and at Owner's or Developer's option, this Agreement shall be
terminated without recourse to either party hereto at law or in equity.
(b) Owner represents that it shall use its best efforts to obtain, prior to
the date of the Closing (as defined in Article III hereof), all state,
federal, county and municipal land use approvals and permits, licenses,
easements, and utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth on
Exhibit "F" ( the "Owner's Approvals"). Owner covenants to diligently use
its best efforts to obtain all of the Approvals in an expeditious manner.
In the event Owner is unable to obtain the Approvals, Owner shall have no
liability whatsoever to Developer, or any other
<PAGE>
party and at Owner's or Developer's option, this Agreement shall be
terminated without recourse to either party hereto at law or in equity.
(c) For the sole purpose of permitting Developer to construct the Project,
Owner grants to Developer, to the extent required by Developer in order
that the purpose of this Agreement be effectuated, the rights under the
Approvals and any other grants of rights, permits, approvals, or licenses,
which may be necessary to complete the performance of Developer's
obligations hereunder; provided, however that no transfer or assignment of
any of the foregoing shall occur which is prohibited by applicable law or
the respective terms hereof.
Section 1.4 -- Documentation. Owner shall provide or obtain construction and
permanent financing for the Property, the Project, the Personal Property (as
defined herein) and related development costs (collectively, the "Project Loan")
which shall be sufficient, together with Owner's equity contributions, if
necessary (which shall in no event exceed ten percent (10%) of the Contract
Price), to pay the full amount of the Contract Price (as defined herein). Owner
covenants that it will provide fully and in a timely fashion all reasonable
documentation required by Owner's lender in connection with the Project Loan.
Such documentation shall include, but is not limited to, all zoning and plan
approvals; all utility letters indicating positive availability of service;
inventory of concessions made to and agreements with any or all municipal
bodies; site plans; title policies, and all other regulatory body approvals.
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information Owner's lender might reasonably require in
connection with Developer's applications for financing for the construction of
the Project and as required by such lender in connection with the Project Loan.
Owner will use its best efforts to pursue its application for construction and
permanent financing for the Project.
Section 1.5 -- Other Agreements. Owner and Developer each represents to the
other that neither entering into this Agreement nor performing their respective
obligations hereunder will violate any other agreements or documents by which
either may be bound.
Section 1.6 -- Utility Services. Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project
(including public water, sewer and electricity) are currently available to the
Property in the capacities required to operate the Project. No work need be
performed by or on behalf of Developer to make such utilities available to the
Property for the construction or operation of the Project, except for the
matters, if any, set forth on Exhibit "D". Copies of letters from the providers
of such utility services confirming such availability are annexed hereto as
Exhibit "G".
Section 1.7 -- Good Standing of Developer. Developer represents that it is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Developer represents that it is empowered and authorized to
execute, deliver and perform its obligations under this Agreement, and, upon
such execution and
<PAGE>
delivery and subject to the conditions subsequent set forth in Section 5.1, this
Agreement shall be the valid, binding and legal obligation of the Developer,
enforceable in accordance with its terms and, duly authorized by a vote of its
Board of Directors in compliance with its certificate of incorporation and
bylaws and all applicable laws of the state of its incorporation.
Section 1.8 -- Good Standing of Owner. Owner represents that it is duly
organized and validly existing under the laws of the State of Arizona. Owner
represents that it is empowered and authorized to execute, deliver and perform
its obligations under this Agreement, and upon such execution and delivery and
subject to Section 5.1, this Agreement shall be the valid, binding and legal
obligation of the Owner, enforceable in accordance with its terms and duly
authorized by a vote of its General Partner in compliance with its General
Partnership Agreement and all applicable laws of the State of Arizona.
ARTICLE II
Construction of the Project
Section 2.1 -- Control of Construction. Subject to the express provisions
contained herein, it is the intention of this Agreement that Developer shall
have sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein; so long as the same are in compliance with
Approvals, the Final Plans (as defined below) and all applicable laws. It is
understood by both parties that on those projects which Netwest brings to
CareMatrix, of which Amber Lights is such a project, Netwest will be the lead
developer, and on those projects which CareMatrix brings to Netwest, CareMatrix
will be lead developer. Both parties will communicate, cooperate and consult
with each other throughout the development process. CareMatrix and Netwest agree
to use their best efforts to resolve any disputes with respect to decisions as
Developer hereunder. Notwithstanding the foregoing, in the event that CareMatrix
and Netwest are unable to agree on any matter hereunder after using such best
efforts, CareMatrix shall have final authority to decide any and all isues
hereunder.
Section 2.2 -- Architectural and Engineering Services. The parties acknowledge
that Bruker Brown Architects and their consulting engineers (the "Architect and
Engineers") have or will be retained by Developer. Developer will be responsible
for the payment of the architectural fees due to the Architect, pursuant to the
contract with respect to the Project dated February 26, 1996 (said contracts
herein collectively, the "Architectural Contract"). Owner represents and
warrants to Developer that a true, accurate and complete copy of the
Architectural Contract is attached hereto as Exhibit "I". The Developer shall
not be responsible to Owner, or any other party for any errors, omissions,
breaches or failures thereof, or any damages resulting from the acts or
omissions of the Architects. At Developer's option, Owner shall assign to
Developer all of its right, title and interest in the Architectural Contract and
any and all architectural, engineering and
<PAGE>
other contracts with respect to the Project free of any claims other than
outstanding amounts owed under the Architectural Contract. In no event shall
Developer be obligated to assume any of said contracts.
Section 2.3 -- Other Professionals and General Assumed Obligations. Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project
other than those in the Architectural Contract which Owner shall be obligated to
pay. Developer neither assumes nor shall be obliged for any debts, liabilities
or obligations of Owner or related to the Property or the Project other than
payments due to the Architect under the Architectural Contract.
Section 2.4 -- Plans and Specifications.
(a) The Architect and Engineers retained by Developer shall, under the
direction of Developer and after consultation with Owner, prepare basic
design plans (the "Basic Plans") attached hereto as Exhibit "H". As a part
of this process, Developer may engage engineers, including the site
engineers, to perform test borings and other soil testing at the Property
for purposes of properly locating the Property on the Project. Developer,
the Architects and the engineers shall consult with Owner during the
process of preparing the Basic Plans. Developer, Architect and engineers
shall have access to the Project for all such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
engineer's completion of the Basic Plans and delivery to Owner, the
Developer, the Architect and the engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, Developer shall
direct the Architect and the engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based upon
the Basic Plans. Within two (2) weeks after the completion of the Final
Plans and their delivery to Owner, the parties will meet to review and
approve the same, and make any necessary revisions. Owner agrees that it
will not unreasonably withhold its approval of the Final Plans if they
conform in all material respects to the Basic Plans. The parties agree to
use their best efforts to reach a prompt and reasonable conclusion
concerning the acceptability of the Final Plans (and Personal Property, see
Section 2.6). The parties shall initial the Final Plans (attached herein as
Exhibit H) as an indication of their approval of the same.
Section 2.5 -- Construction. Developer shall construct the Project in a good and
workmanlike manner and in accordance with the Final Plans, Approvals, and all
applicable laws subject to field changes and minor design changes. The Project
is to be licensed for the unit complement described above and shall be
constructed in accordance with the requirements in effect on the date of this
Agreement as set forth by all federal, state and
<PAGE>
local governmental agencies having jurisdiction of the Project, including Life
Safety Code requirements imposed by the Federal Department of Health and Human
Services.
Section 2.6 -- Personal Property.
(a) Developer will furnish the specific items of personal property
contained in Exhibit "J" (the "Major Moveables") required for the Project
within the allowance (defined below). The allowance for the Major Moveables
is FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) (the "Major Moveables
Allowance"), which Major Moveables shall be included in the Contract Price
(as defined below).
(b) Developer will furnish the specific items of personal property
contained in Exhibit "K"( the "Minor Moveables") required for the Project
within the allowance (defined below). The allowance for the Minor Moveables
is TWENTY-NINE THOUSAND DOLLARS ($29,000.00) the "Minor Moveables
Allowance"), which Minor Moveables Allowance shall be included in the
Contract Price (as defined below).
(c) In the event that the cost of the Personal Property furnished pursuant
to subsection 2.6 (a) and (b) above shall exceed the Major Moveables and/or
the Minor Moveables Allowance, any such excess shall be an increase to the
Contract Price.
(d) In order to reduce the risk that the Major Moveables and Minor
Moveables will be delivered prior to the Closing contemplated herein, Owner
covenants that it shall approve such Major Moveables and Minor Moveables as
soon as practicable but not later than approximately six (6) months prior
to the estimated date of Physical Completion (defined below).
(e) Major Moveables and Minor Moveables do not include Kitchen and Laundry
Equipment.
Section 2.7 -- Changes. Owner agrees that Developer shall also have the right to
make changes in the Final Plans and in the Personal Property if required by any
federal, state, or local governmental authority having jurisdiction over the
Project or if required due to the unavailability of any construction materials
or Personal Property. Owner shall be notified of any such changes or
substitutions in the Personal Property, however, Developer shall have final
authority to make all decisions with respect to such changes; provided that such
changes result in construction, space, design, personal property, equipment and
interior and exterior design comparable in overall design and quality to that
shown on the Final Plans. Any change that results in the loss or adjustment of
square footage in the Project will require approval by Owner.
Section 2.8 -- Commencement of Construction. Construction of the Project will
start on or prior to the date which is thirty (30) days after the satisfaction
of the last of the
<PAGE>
conditions set forth in Section 5.1 to be satisfied, or as soon thereafter as
weather and ground conditions permit but not later than July 1, 1997).
Section 2.9 -- Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion, as such term is defined in Section 2.10, is achieved, which shall
not occur later than 18 months after the completion of the foundation for the
Project. Any delay caused by acts of God, fire, accident, casualty, cessation of
activity due to refusal to work by labor, or any other caused not attributable
to the failure of Developer to use reasonable care and due diligence, however,
shall be excused by Owner, provided that Developer shall use its best efforts to
minimize any such delays and shall resume construction at the earliest possible
time.
Section 2.10 -- Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion" or
"Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been completed
and the Project shall have been approved for and received a certificate for
temporary or permanent occupancy by the local building inspector, and by
the State Fire Marshall in the event his or her approval is required ( the
"Certificate of Occupancy"). Physical Completion shall be deemed to have
been achieved notwithstanding that any of such officials or agencies have
issued a Certificate of Occupancy with conditions or that there exists a
Punch-List listing items requiring completion or correction, so long as
such conditions or Punch-List items do not prevent or prohibit occupancy as
determined by Owner in its sole discretion.
(b) Developer will use its reasonable best efforts to notify Owner at least
ninety (90) days prior to the time that Developer estimates that the
Project will be Physically Completed, whereupon Owner will diligently
proceed to fulfill all other conditions necessary for licensure and Owner
will apply in a timely manner for all licenses and permits necessary to
commence operation of the Project. After such notice from Developer, Owner,
to the extent necessary to perform administratiave activities may, so long
as it does not interfere with completion of construction, enter upon the
Property in an effort to coordinate initial licensure.
Section 2.11 -- Owner's Noninvolvement. Owner shall have access to the
construction site while construction is in progress, but it shall not be
empowered to interfere or become involved with construction or require changes
(other than through a formal change order process) thereto, provided, however
that Owner's agents shall have the right to view the construction in progress
and shall have access to the site for the purpose of equipping the Project and
preparing the Project for Operation.
Section 2.12 -- Punch List. If, at any time after the Project has been
Physically Completed, there shall exist any item or items requiring completion
or correction, then
<PAGE>
Developer agrees to use all reasonable diligence to complete or correct such
item or items so that each conforms to the Final Plans. The parties shall make a
Punch-List of the items requiring completion or correction (the "Punch List").
Each item on the Punch-List shall be assigned a reasonable value based upon the
reasonable cost of completion or correction of the same or such other value as
may be required by Owner's lender ("Punch - List Amount"). Developer shall give
its written undertaking to complete each such item within forty-five (45) days
(or such other period of time as is mutually agreed upon by the parties) after
transfer of the title, further agreeing to permit Owner to complete any such
items, at Developer's expense, if Developer has failed to complete the same
within the forty-five (45) day time period.
Section 2.13 -- Work and Warranties. Upon completion of construction,
landscaping and installation of Personal Property, Developer will assign to
owner, in addition to any warranties created by law, all warranties and
guarantees received from designers, the Architect, the general contractor and
suppliers of equipment and furnishings, to the extent assignable. Developer will
agree to remedy any defect in construction caused by poor workmanship or
materials which are brought to its attention by written notice within a period
of one (1) year from the date of the issuance of the Certificate of Occupancy.
Aside from the foregoing, Owner hereby waives and Developer hereby disclaims all
other express and implied warranties of every kind or nature with respect to the
Project and the Personal Property, including, without limitations, waiving all
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 -- Subcontractors. Developer agrees to indemnify and save Owner
harmless from claims for payment by any subcontractor who furnishes materials or
supplies or performs labor or services in the prosecution of the work pursuant
to this Agreement. Developer reserves absolute discretion on the selection of
subcontractors.
Section 2.15 -- Financing Arrangements.
(a) Owner will obtain the Project Loan which shall be sufficient, together
with the Owner's equity contributions, to pay the full amount of the
Contract Price. This Agreement may be terminated by, if any, Developer or
Owner in its sole and absolute discretion and without further recourse to
any party (except for reimbursement of Project related expenses) in the
event that the closing and funding of the construction loan financing with
respect to the Project pursuant to the Project Loan (with all conditions
precedent to such closing either satisfied or irrevocably waived by the
lender) shall not have occurred by July 1, 1997.
(b) Owner and Developer also contemplate that the Property and Project,
together with all fixtures, furnishing, equipment, and articles of personal
property now owned or hereafter acquired by Owner which are or may be
attached to or used in connection with the Property or Project, together
with any and all replacements thereto and substitutions therefor, and all
proceeds thereof and all present and future rents, issues, leases, and
profits of the Property and Project will serve as
<PAGE>
security for the payment obligations to any lenders relating to the Project
Loan or otherwise, and that Owner will be the principal obligor for the
repayment of all financial obligations thereunder after the transfer of
title to Owner. Owner therefore, agrees to execute and deliver all
commitments, promissory notes, mortgages, collateral assignments,
documents, certificates, affidavits, and other writings required to be
executed by any lender in connection with such financing.
ARTICLE III
Closing
Section 3.1 -- Date of Closing. The delivery of possession of the Property and
Project to Owner and payment of the Contract Price, less 150% of the value of
the Punch-List, shall take place contemporaneously within three (3) working days
after Physical Completion of the Project but in no event later than the date
established in Section 2.9; provided, however, that Developer has completed its
obligations as set forth in this Agreement, including, but not limited to,
Sections 2.10 and 2.13.
Section 3.2 -- Contract Price.
(a) The price to be paid by Owner to Developer for the development,
construction and furnishing of the Project and for the Property shall be
ELEVEN MILLION ELEVEN THOUSAND EIGHT HUNDRED FOURTEEN DOLLARS
($11,011,814.00) the cost incurred as the result of any unforeseen site
conditions and cost of Major and Minor Moveables in excess of their
respective Allowances (the "Contract Price").
(b) In addition to the Contract Price, if the Closing does not take place
within three (3) business days after Physical Completion due to delays
incurred through the fault of or through circumstances under the control of
Owner, Owner shall pay to Developer interest, payable monthly in arrears,
on the Contract Price accruing from the date which is three (3) days after
Physical Completion to the date of which is three (3) days after delivery
of possession of the Project pursuant to Section 3.1; such monthly interest
shall be computed at a rate equal to the Prime Rate as announced by Fleet
Bank, N.A. from time to time plus two percent (2%) per annum.
Section 3.3 -- Payment of Contract Price. At the time of transfer of title, the
balance of the Contract Price not paid through Developer's requisitions under
the construction financing for the Project shall be paid by Owner to Developer
by wire transfer, certified check or other mutually acceptable means less any
Punch-List Amount or retainage required by Owner's lender.
<PAGE>
Section 3.4 -- Form of Conveyance and Status of Title. The Project and Personal
Property shall be conveyed by warranty bill of sale. The Project and Personal
Property may be subject to the mortgages and security interests described in
Section 2.15.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 -- Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, Developer shall have the following
responsibilities:
(a) To obtain and pay for necessary building permits and the Certificate of
Occupancy;
(b) To pay for all labor and material required to develop, construct and
furnish the Project in accordance with the Final Plans (except as otherwise
expressly set forth herein) and to pay for the Personal Property to be
provided;
(c) Developer shall at all times, commencing with the date upon which
construction begins, carry the following types of insurance with an
insurance carrier or carriers acceptable to Owner's lender:
(i) Worker's compensation insurance fully covering all persons engaged
in the performance of this Agreement, in accordance with applicable
law.
(ii) Public liability insurance covering death or bodily injury with
limits of not less than $300,000 for one person and $1,000,000 for any
one accident or disaster; and property damage coverage limits of not
less than $100,000; all of which insurance shall name Owner's lender
as an additional insured.
(iii) "Builders Risk" insurance against damage or destruction by fire
and full extended coverage, including vandalism and malicious
mischief, covering all improvements to be erected hereunder and all
materials for the same which are on or about the Property, in an
amount equal to the full insurable value of such improvements and
materials; such insurance to be payable to Owner, Developer and
Owner's lender as their interests may appear, with a standard
mortgagee endorsement to Owner's lender or its assigns as mortgagee.
Developer shall furnish to Owner and Owner's lender if required by
such lender, duplicate policies of insurance as set forth in
subparagraphs (i), (ii), and (iii) hereof. Each of such policies
shall, if the insurance carriers so permit, contain a provision to the
effect that they may not be canceled
<PAGE>
except upon ten (10) days prior written notice to Owner and Owner's
lender.
(d) At Closing, Developer shall deliver to Owner, at Owner's option:
(i) duly executed waivers of mechanic's liens signed by each
subcontractor which provided labor or materials on the Project; or
(ii) reasonable proof of payment or proof of a provision for payment
to such subcontractors; or
(iii) an indemnification to Owner with respect to same.
Section 4.2 -- Owner's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, Owner shall have the following
responsibilities:
(a) To expeditiously pursue obtaining commitments for financing the
contemplated construction, including the furnishing of financial
statements, providing an appraisal of the Property and Project and by
execution of applications, notes, mortgages, assumption agreements and
other documents reasonably necessary to effectuate such financing or the
financing of the Personal Property.
(b) To pay for all professional and other staff personnel required for the
pre-opening and operation of the Project in sufficient time to permit
licensure by the Department at the date of physical completion.
(c) To pay to Developer, in addition to the Contract Price, the costs for
correcting unusual site conditions. Such payment shall be made on the basis
of the actual costs of Owner in correcting the same plus fifteen percent
(15%) of such costs to cover Developer's overhead expenses and shall be due
and payable upon the transfer of title to Owner. For the purpose of this
Agreement, the term unusual site conditions shall include, without
limitations, any of the following which have not been noted in the Final
Plans or otherwise disclosed in the due diligence materials:
(i) unusual soil or water conditions requiring extraordinary
preparation, i.e., piles, curtain drains, retaining walls, blasting or
rip-rap;
(ii) tying in of water, sewer or other utility services beyond the
locations as shown in the Final Plans;
(iii) holding tanks and pumps for the water system or the sprinkler
system;
(iv) water purification or filter system;
<PAGE>
(v) leaching field; and
(vi) any requirement imposed upon Developer by governmental agencies
having jurisdiction, if not provided for in the Final Plans, because
of reasons other than errors or omissions in such Final Plans, such as
requirements imposed as conditions for the granting of any of the
Approvals.
(d) Owner shall be solely responsible for the removal of any hazardous
wastes and materials, if any, from the Property, at Owner's sole cost and
expense, and not as part of the Contract Price.
Section 4.3 -- Indemnification. Developer hereby agrees to indemnify and hold
Owner harmless from all liabilities, claims, and demands for personal injury or
property damage arising out of or caused by any act or omission of Developer,
its subcontractors, agents, or employees, or arising in or about the Property at
any time from the date of this Agreement until transfer of title. Developer
further covenants to use proper care and caution in the performance of its work
hereunder so as not to cause damage to any adjoining or adjacent property, and
Developer shall indemnify and hold Owner harmless from any liabilities, claims,
or demands for damage to such adjoining or adjacent property.
ARTICLE V
Contingencies
Section 5.1 -- Required Occurrences. This Agreement and the undertakings of
Developer shall, at the election of Owner be contingent upon the occurrence of
each of the following:
(a) Approvals. All of the Approvals and current utility availability
letters shall have been obtained by May 1, 1997.
(b) Title. An owner's title insurance policy commitment and Class A-2 ALTA
survey, satisfactory to Developer, in its sole discretion, shall have been
obtained by Owner which confirms that there are no exceptions or conditions
which would render title to the Property unmarketable or which will
prohibit or restrict the construction or operation of the Project or which
would prevent an institutional lender from closing a construction or
permanent mortgage loan for the Project in the usual course of its
business.
(c) Additional Due Diligence Regarding the Property. Developer shall have
received due diligence information concerning the Property, satisfactory to
Developer, in its sole discretion, including, without limitation, soil
tests and utility service confirmations to the extent not currently
available. On or before February 1, 1997, developer shall notify Owner of
any issues.
<PAGE>
(d) Purchase of the Property. The Owner shall have purchased good record,
marketable fee simple title to the Property as set forth in Section 1.1 by
not later than the closing of the Project Loan.
(e) Construction Financing. The Owner shall have received construction
financing in the full amount of the Contract Price by June 1, 1997.
Section 5.2 -- Failure of Contingencies. In the event that any one or more of
the contingencies set forth in this Article is not satisfied, waived or deferred
by the parties in writing, within the period of time set forth above, then, upon
Notice, either party may terminate this Agreement. In such event, neither party
shall have any further responsibility or liability to the other. Developer
reserves the right, at its option, to waive or defer any one or more of the
conditions precedent.
ARTICLE VI
Additional Covenants of the Owner
Section 6.1 -- Indemnification by Owner. Owner hereby indemnifies and defends
Developer against any claims for unpaid fees or costs associated with the
Property or the Project incurred by or on behalf of Owner or Developer as a
result of any claim by any broker. The parties acknowledge that no broker was
responsible for procuring the transactions set forth in this Agreement, nor any
part hereof, and each party will indemnify and defend the other from any and all
claims, actual or threatened, for a commission or other compensation by any
third person with whom such party has had dealings.
Section 6.2 -- Confidentiality. Owner, its partners, affiliates, agents,
servants and employees hereby agree:
(a) To maintain in the strictest confidence the identity of developer; the
contents of this Agreement; the negotiations between the parties on the
terms of this Agreement; and any of Developer's proprietary information,
including, without limitation, financial information, projects, copies of
leases, real estate appraisals, and other information regarding the Project
and the business affairs and operations of developer which any of said
parties obtain from Developer in the course of negotiations for the
transactions contemplated hereby (the "Confidential Information");
(b) Not to disclose, without Developer's prior written consent (except to
the extent disclosure is required by applicable law or regulation), any
Confidential Information except to such parties' own agents, servants and
employees, bankers, consultants and other advisors to whom disclosure is
necessary in order to effectuate the transactions contemplated hereby; and
<PAGE>
(c) To comply therewith for a period of two (2) years commencing on the
date of this Agreement.
Section 6.3 -- Provision of Further Information. Developer agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
ARTICLE VII
Concluding Provisions
Section 7.1 -- Entire Agreement. All prior understandings, letters of intent,
and agreements between the parties are merged in and superseded by this
Agreement (including all Exhibits hereto), which together with Owner's
partnership agreement and the management agreement between Owner and its
management agent fully and completely expresses their understanding with respect
to its subject matter.
Section 7.2 -- Representations. None of the parties shall be bound by any
promises, representation, or agreements except as herein expressly set forth.
Section 7.3 -- Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 -- Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 -- Brokers. Each of the Owner and Developer represents and warrants
to the other that no broker or finder has acted on its behalf in connection with
this Agreement or the transactions contemplated hereby or referred to herein;
and agrees to indemnify and hold and save the other harmless from any claim or
demand for commission or other compensation by any broker, finder or similar
agent claiming to have been employed by or on behalf of such party.
Section 7.6 -- Assignment. Developer shall have no right to assign his right nor
delegate its obligation under this Agreement to another entity or person without
the prior written consent of Owner except that Developer shall have the right to
assign this Agreement to, merge with or consolidate with an "Affiliate" (defined
herein as defined in the Securities and Exchange Act of 1934 and the regulations
thereunder) in connection with a public offering.
<PAGE>
Section 7.7 -- Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to Owner, it shall be sent to it
at the address set forth above and a copy therefore sent to Amber Lights
Associates General Partnership, c/o CareMatrix Corporation, 197 First
Avenue, Needham, MA 02194, Attention: Andrew D. Gosman, with a copy to
Netwest Development Corporation, 2221 East Broadway Boulevard, Suite 211,
Tucson, AZ 85719, Attention: Priscilla S. Kuhn, or at such other address or
addresses as Owner shall from time to time designate by notice to
Developer.
(b) In the event that notice is directed to Developer, it shall be sent to
Netwest Development Corporation, 2221 East Broadway Boulevard, Suite 211,
Tucson, AZ 85719, Attention: Priscilla S. Kuhn with a copy to Dee T.
O'Neill at the same address and CareMatrix Corporation, 197 First Avenue,
Needham, MA 02194, Attention: Kevin J. Maley, with a copy to James M.
Clary, III, Esq. at the same address; or at such other address or addresses
as Developer shall from time-to-time designate by notice to Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 -- Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 -- Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof
Section 7.10 -- Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 -- Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 -- Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of the
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
<PAGE>
Section 7.13 -- Effective Date. This Agreement shall be deemed to be effective
as of the date set forth below.
Section 7.14 -- No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 -- Governing Law. This Agreement shall be governed by the laws of
the State of Arizona.
Dated this 10th day of December, 1996 and executed under seal.
OWNER:
Witness: AMBER LIGHTS ASSOCIATES
GENERAL PARTNERSHIP
/s/ [ILLEGIBLE]
- ---------------------------
By: CareMatrix of Tucson, Inc.
Its General Partner/Managing Partner
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
By: Netwest Development Corporation
Its General Partner
/s/ Dee T. O'Neill
- ---------------------------
By: /s/ Priscilla S. Kuhn
----------------------------------
Name:
Title: President
DEVELOPER:
Witness: CAREMATRIX OF AMBER LIGHTS, INC.
/s/ [ILLEGIBLE]
- --------------------------- By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
NETWEST DEVELOPMENT CORPORATION
/s/ Dee T. O'Neill By: /s/ Priscilla S. Kuhn
- --------------------------- ----------------------------------
Name:
Title: President
DEVELOPMENT AGREEMENT
Between
CAREMATRIX OF AMETHYST ARBOR, INC./
NETWEST DEVELOPMENT CORPORATION
And
AMETHYST ARBOR ASSOCIATES
GENERAL PARTNERSHIP
<PAGE>
Exhibit 10.142
DEVELOPMENT AGREEMENT
This Development Agreement is by and between CareMatrix of Amethyst Arbor, Inc.
("CareMatrix"), a Delaware corporation, with an office at 197 First Avenue,
Needham, Massachusetts 02194, and Netwest Development Corporation ("Netwest"),
an Arizona Corporation, with an office at 2221 East Broadway Boulevard, Suite
211, Tucson, Arizona, 85719 (collectively the "Developer"), and Amethyst Arbor
Associates General Partnership ("Amethyst Arbor"), an Arizona general
partnership, with an office at 197 First Avenue, Needham, Massachusetts 02194
(the "Owner") and is entered into for the purpose of reducing to a formal
writing all of the parties understandings with respect to the construction of a
proposed assisted! independent living project to be comprised of 118 units (the
"Project") to be located in Peoria, AZ, described below (the "Property").
In consideration of the undertakings of each of the parties to the other:
IT IS AGREED:
ARTICLE I
Representations
The parties make each of the following material representations:
Section 1.1 - Title to Property. The Owner shall have good, record and
marketable title in fee simple to the Property consisting of approximately 8.93
acres of land as more fully described in Exhibit "A". Exhibit "A" and each of
the other Exhibits referred to in this Agreement shall be incorporated into this
Agreement by such reference as if fully set forth in this Agreement. The
Property shall be free and clear of any and all encumbrances which would, in the
Developer's sole discretion, impair the construction or operation of the Project
except as set forth on Exhibit "B". and free of any hazardous wastes or
materials except as set forth on Exhibit "C".
Section 1.2 - Encumbrances.
(a) Owner and Developer acknowledge that the Property will be subject to
the easements, assessments, conditions, contracts, rights, claims,
encroachments, restrictions and other encumbrances as set forth on Exhibit
"B"(the "Existing Encumbrances"), to physical conditions disclosed by a
boundary survey to be prepared by Castro, Fleet, Fisher Engineering, Inc.
for the Property, and will be subject to those easements, conditions,
contracts, rights, licenses, encroachments,
<PAGE>
restrictions and other encumbrances resulting from Developer securing
regulatory, development and construction approvals for the Project and
attendant site improvements. Owner and Developer each represents to the
other that it has reviewed or shall review the boundary survey and the
topographical survey of the Property and has made a physical inspection of
the Property and is satisfied as to the site characteristics and attributes
in all material respects.
(b) Concurrently with the execution of this Agreement, the Owner shall
provide the Developer with copies of all engineering, architectural and any
other plans, studies and surveys, title reports, environmental assessments,
appraisals and other information regarding the Property or the Project
which are in the Owner's possession, custody or control.
(c) The Owner represents that to the best of its knowledge the Property has
only the apparent site and off-site conditions, if any, as set forth on
Exhibit "D" and including the Development Agreement to be executed with the
City of Peoria.
(d) Commencing on the date Developer elects to commence construction in
accordance with this Agreement, Owner shall provide Developer with full
possession and complete control of the Property for purposes of performing
Developer's obligations hereunder.
Section 1.3 - Permits and Approvals
(a) Developer represents that it shall use its best efforts to obtain,
prior to the date of the Closing (as defined in Article III hereof), all
state, federal, county and municipal land use approvals and permits,
licenses, easements, and utility agreements which are necessary for the
development, construction and opening of the Project on the Property as set
forth on Exhibit "E" (the "Developer's Approvals"). Developer covenants to
diligently use its best efforts to obtain all of the Approvals in an
expeditious manner. In the event Developer is unable to obtain the
Approvals, Developer shall have no liability whatsoever to Owner, or any
other party and at Owner's or Developer's option, this Agreement shall be
terminated without recourse to either party hereto at law or in equity.
(b) Owner represents that it shall use its best efforts to obtain, prior to
the date of the Closing (as defined in Article III hereof), all state,
federal, county and municipal land use approvals and permits, licenses,
easements, and utility agreements which are necessary for the development,
construction and operation of the Project on the Property as set forth on
Exhibit "F"( the "Owner's Approvals"). Owner covenants to diligently use
its best efforts to obtain all of the Approvals in an expeditious manner.
In the event Owner is unable to obtain the Approvals, Owner shall have no
liability whatsoever to Developer, or any other party and at Owner's or
Developer's option, this Agreement shall be terminated without recourse to
either party hereto at law or in equity.
<PAGE>
(c) For the sole purpose of permitting Developer to construct the Project,
Owner grants to Developer, to the extent required by Developer in order
that the purpose of this Agreement be effectuated, the rights under the
Approvals and any other grants of rights, permits, approvals, or licenses,
which may be necessary to complete the performance of Developer's
obligations hereunder; provided, however that no transfer or assignment of
any of the foregoing shall occur which is prohibited by applicable law or
the respective terms hereof
Section 1.4 - Documentation. Owner shall provide or obtain construction and
permanent financing for the Property, the Project, the Personal Property (as
defined herein) and related development costs (collectively, the "Project Loan")
which shall be sufficient, together with Owner's equity contributions, if
necessary ( which shall in no event exceed ten percent (10%) of the Contract
Price), to pay the full amount of the Contract Price (as defined herein). Owner
covenants that it will provide fully and in a timely fashion all reasonable
documentation required by Owner's lender in connection with the Project Loan.
Such documentation shall include, but is not limited to, all zoning and plan
approvals; all utility letters indicating positive availability of service;
inventory of concessions made to and agreements with any or all municipal
bodies; site plans; title policies, and all other regulatory body approvals.
Owner also covenants that it will, in a timely manner, provide whatever
financial or other information Owner's lender might reasonably require in
connection with Developer's applications for financing for the construction of
the Project and as required by such lender in connection with the Project Loan.
Owner will use its best efforts to pursue its application for construction and
permanent financing for the Project.
Section 1.5 - Other Agreements. Owner and Developer each represents to the other
that neither entering into this Agreement nor performing their respective
obligations herunder will violate any other agreements or documents by which
either may be bound.
Section 1.6 - Utility Services. Owner represents that, to the best of its
knowledge, all utility services required to construct and operate the Project (
including public water, sewer and electricity) are currently available to the
Property in the capacities required to operate the Project. No work need be
performed by or on behalf of Developer to make such utilities available to the
Property for the construction or operation of the Project, except for the
matters, if any, set forth on Exhibit "D". Copies of letters from the providers
of such utility services confirming such availability are annexed hereto as
Exhibit "G".
Section 1.7 - Good Standing of Developer. Developer represents that it is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Developer represents that it is empowered and authorized to
execute, deliver and perform its obligations under this Agreement, and, upon
such execution and delivery and subject to the conditions subsequent set forth
in Section 5.1, this Agreement shall be the valid, binding and legal obligation
of the Developer, enforceable in accordance
<PAGE>
with its terms and, duly authorized by a vote of its Board of Directors in
compliance with its certificate of incorporation and bylaws and all applicable
laws of the state of its incorporation.
Section 1.8 - Good Standing of Owner. Owner represents that it is duly organized
and validly existing under the laws of the State of Arizona. Owner represents
that it is empowered and authorized to execute, deliver and perform its
obligations under this Agreement, and upon such execution and delivery and
subject to Section 5.1, this Agreement shall be the valid, binding and legal
obligation of the Owner, enforceable in accordance with its terms and duly
authorized by a vote of its General Partner in compliance with its General
Partnership Agreement and all applicable laws of the State of Arizona.
ARTICLE II
Construction of the Project
Section 2.1 - Control of Construction. Subject to the express provisions
contained herein, it is the intention of this Agreement that Developer shall
have sole, complete and absolute authority and discretion to decide any and all
issues pertaining to the construction of the Project, including, without
limitation, the expenditure of funds, the incurring of costs and all of the
other matters referred to herein; so long as the same are in compliance with
Approvals, the Final Plans (as defined below) and all applicable laws. It is
understood by both parties that on those projects which Netwest brings to
CareMatrix, of which Amethyst Arbor is such a project, Netwest will be the lead
developer, and on those projects which CareMatrix brings to Netwest, CareMatrix
will be lead developer. Both parties will communicate, cooperate and consult
with each other throughout the development process. CareMatrix and Netwest agree
to use their best efforts to resolve any disputes with respect to decisions as
Developers hereunder. Nothwithstanding the foregoing, in the event that
CareMatrix and Netwest are unable to agree on any matter hereunder after using
such best efforts, CareMatrix shall have final authority to decide any and all
issues hereunder.
Section 2.2 - Architectural and Engineering Services. The parties acknowledge
that Bruker Brown Architects and their consulting engineers (the "Architect and
Engineers") have or will be retained by Developer. Developer will be responsible
for the payment of the architectural fees due to the Architect, pursuant to the
contract with respect to the Project dated (said contracts herein collectively,
the "Architectural Contract"). Owner represents and warrants to Developer that a
true, accurate and complete copy of the Architectural Contract is attached
hereto as Exhibit "I". The Developer shall not be responsible to Owner, or any
other party for any errors, omissions, breaches or failures thereof, or any
damages resulting from the acts or omissions of the Architects. At Developer's
option, Owner shall assign to Developer all of its right, title and interest in
the Architectural Contract and any and all architectural, engineering and other
contracts with respect to the Project free of an claims other than outstanding
amounts owed under the
<PAGE>
Architectural Contract. In no event shall Developer be obligated to assume any
of said contracts.
Section 2.3 - Other Professionals and General Assumed Obligations. Owner
represents that it has not engaged any architects or any engineers, lawyers,
consultants, accountants, or other professionals with respect to the Project
other than the Architect which Owner shall be obligated to pay. Developer
neither assumes nor shall be obliged for any debts, liabilities or obligations
of Owner or related to the Property or the Project other than payments due to
the Architect under the Architectural Contract.
Section 2.4 - Plans and Specifications.
(a) The Architect and Engineers retained by Developer shall, under the
direction of Developer and after consultation with Owner, prepare basic
design plans (the "Basic Plans"). As a part of this process, Developer may
engage engineers, including the site engineers, to perform test borings and
other soil testing at the Property for purposes of properly locating the
Property on the Project. Developer, the Architects and the engineers shall
consult with Owner during the process of preparing the Basic Plans.
Developer, Architect and engineers shall have access to the Project for all
such tests and surveys.
(b) Within two (2) weeks after the date of the Architect's and the
engineer's completion of the Basic Plans and delivery to Owner, the
Developer, the Architect and the engineers shall meet to review and approve
the Basic Plans. The parties shall initial the Basic Plans to indicate
their approval of such Basic Plans.
(c) Upon the approval by the parties of the Basic Plans, Developer shall
direct the Architect and the engineers to prepare final plans,
specifications and a site plan (collectively the "Final Plans") based upon
the Basic Plans. Within two (2) weeks after the completion of the Final
Plans and their delivery to Owner, the parties will meet to review and
approve the same, and make any necessary revisions. Owner agrees that it
will not unreasonably withhold its approval of the Final Plans if they
conform in all material respects to the Basic Plans. The parties agree to
use their best efforts to reach a prompt and reasonable conclusion
concerning the acceptability of the Final Plans (and Personal Property, see
Section 2.6). The parties shall initial the Final Plans as an indication of
their approval of the same.
Section 2.5 - Construction. Developer shall construct the Project in a good and
workmanlike manner and in accordance with the Final Plans, Approvals, and all
applicable laws subject to field changes and minor design changes. The Project
is to be licensed for the unit complement described above and shall be
constructed in accordance with the requirements in effect on the date of this
Agreement as set forth by all federal, state and local governmental agencies
having jurisdiction of the Project, including Life Safety Code requirements
imposed by the Federal Department of Health and Human Services.
<PAGE>
Section 2.6 - Personal Property.
(a) Developer will furnish the specific items of personal property
contained in Exhibit "J" (the "Major Moveables") required for the Project
within the allowance (defined below). The allowance for the Major Moveables
is FOUR HUNDRED SEVENTY-ONE THOUSAND EIGHT HUNDRED EIGHTY-TWO DOLLARS
($471,882), (the "Major Moveables Allowance"), which Major Moveables
Allowance is based on $3,999 per residential unit and shall be included in
the Contract Price (as defined below).
(b) Developer will furnish the specific items of personal property
contained in Exhibit "K" ( the "Minor Moveables") required for the Project
within the allowance (defined below). The allowance for the Minor Moveables
is TWENTY-EIGHT THOUSAND DOLLARS ($28,000) the "Minor Moveables
Allowance"), which Minor Moveables Allowance shall be included in the
Contract Price (as defined below).
(c) In the event that the cost of the Personal Property furnished pursuant
to subsection 2.6 (a) and (b) above shall exceed the Major Moveables and/or
the Minor Moveables Allowance, any such excess shall be an increase to the
Contract Price.
(d) In order to reduce the risk that the Major Moveables and Minor
Moveables will be delivered prior to the Closing contemplated herein, Owner
covenants that it shall approve such Major Moveables and Minor Moveables as
soon as practicable but not later than approximately six (6) months prior
to the estimated date of Physical Completion (defined below).
(e) Major Moveables and Minor Moveables do not include Kitchen and Laundry
Equipment.
Section 2.7 - Chances. Owner agrees that Developer shall also have the right to
make changes in the Final Plans and in the Personal Property if required by any
federal, state, or local governmental authority having jurisdiction over the
Project or if required due to the unavailability of any construction materials
or Personal Property. Owner shall be notified of any such changes or
substitutions in the Personal Property, however, Developer shall have final
authority to make all decisions with respect to such changes; provided that such
changes result in construction, space, design, personal property, equipment and
interior and exterior design comparable in overall design and quality to that
shown on the Final Plans. Any change that results in the loss or adjustment of
square footage in the Project will require approval by Owner.
Section 2.8 - Commencement of Construction. Construction of the Project will
start on or prior to the date which is thirty (30) days after the satisfaction
of the last of the
<PAGE>
conditions set forth in Section 5.1 to be satisfied, or as soon thereafter as
weather and ground conditions permit but not later than October 1, 1997.
Section 2.9 - Continuity of Construction. Construction, once undertaken, shall
proceed in a continuous and reasonably expeditious manner until Physical
Completion, as such term is defined in Section 2.10, is achieved, which shall
not occur later than 18 months after the completion of the foundation for the
Project. Any delay caused by acts of God, fire, accident, casualty, cessation of
activity due to refusal to work by labor, or any other caused not attributable
to the failure of Developer to use reasonable care and due diligence, however,
shall be excused by Owner, provided that Developer shall use its best efforts to
minimize any such delays and shall resume construction at the earliest possible
time.
Section 2.10 - Completion of Construction.
(a) For the purposes of this Agreement, the terms "Physical Completion" or
"Physically Completed" shall mean the date on which the building and
improvements described and set forth in the Final Plans have been completed
and the Project shall have been approved for and received a certificate for
temporary or permanent occupancy by the local building inspector, and by
the State Fire Marshall in the event his or her approval is. required ( the
"Certificate of Occupancy"). Physical Completion shall be deemed to have
been achieved notwithstanding that any of such officials or agencies have
issued a Certificate of Occupancy with conditions or a Punch-List listing
items requiring completion or correction, so long as such conditions or
Punch-List items do not prevent or prohibit occupancy as determined by
Owner in its sole discretion.
(b) Developer will use its reasonable best efforts to notify Owner at least
ninety (90) days prior to the time that Developer estimates that the
Project will be Physically Completed, whereupon Owner will diligently
proceed to fulfill all other conditions necessary for licensure and Owner
will apply in a timely manner for all licenses and permits necessary to
commence operation of the Project as set forth on Exhibit "C-2". After such
notice from Developer, Owner, to the extent necessary to perform
administrative activities may, so long as it does not interfere with
completion of construction, enter upon the Property in an effort to
coordinate initial licensure.
Section 2.11 - Owner's Noninvolvement. Owner shall have access to the
construction site while construction is in progress, but it shall not be
empowered to interfere or become involved with construction or require changes
(other than through a formal change order process) thereto, provided, however
that Owner's agents shall have the right to view the construction in progress
and shall have access to the site for the purpose of equipping the Project and
preparing the Project for Operation.
<PAGE>
Section 2.12 - Punch List. If, at any time after the Project has been Physically
Completed, there shall exist any item or items requiring completion or
correction, then Developer agrees to use all reasonable diligence to complete or
correct such item or items so that each conforms to the Final Plans. The parties
shall make a Punch-List of the items requiring completion or correction (the
"Punch List"). Each item on the Punch-List shall be assigned a reasonable value
based upon the reasonable cost of completion or correction of the same or such
other value as may be required by Owner's lender ("Punch - List Amount").
Developer shall give its written undertaking to complete each such item within
forty-five (45) days (or such other period of time as is mutually agreed upon by
the parties) after transfer of the title, further agreeing to permit Owner to
complete any such items, at Developer's expense, if Developer has failed to
complete the same within the forty-five (45) day time period.
Section 2.13 - Work and Warranties. Upon completion of construction, landscaping
and installation of Personal Property, Developer will assign to owner, in
addition to any warranties created by law, all warranties and guarantees
received from designers, the Architect, the general contractor and suppliers of
equipment and furnishings, to the extent assignable. Developer will agree to
remedy any defect in construction caused by poor workmanship or materials which
are brought to its attention by written notice within a period of one (1) year
from the date of the issuance of the Certificate of Occupancy. Aside from the
foregoing, Owner hereby waives and Developer hereby disclaims all other express
and implied warranties of every kind or nature with respect to the Project and
the Personal Property, including, without limitations, waiving all IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Section 2.14 - Subcontractors. Developer agrees to indemnify and save Owner
harmless from claims for payment by any subcontractor who furnishes materials or
supplies or performs labor or services in the prosecution of the work pursuant
to this Agreement. Developer reserves absolute discretion on the selection of
subcontractors.
Section 2.15 -Financing Arrangements.
(a) Owner will obtain the Project Loan which shall be sufficient, together
with the Owner's equity contributions, to pay the full amount of the
Contract Price. This Agreement may be terminated by, if any, Developer or
Owner in its sole and absolute discretion and without further recourse to
any party (except for reimbursement of Project related expenses) in the
event that the closing and funding of the construction loan financing with
respect to the Project pursuant to the Project Loan ( with all conditions
precedent to such closing either satisfied or irrevocably waived by the
lender) shall not have occurred by September 1, 1997.
(b) Owner and Developer also contemplate that the Property and Project,
together with all fixtures, furnishing, equipment, and articles of personal
property now owned or hereafter acquired by Owner which are or may be
attached to or used in connection with the Property or Project, together
with any and all replacements
<PAGE>
thereto and substitutions therefor, and all proceeds thereof, and all
present and future rents, issues, leases, and profits of the Property and
Project will serve as security for the payment obligations to any lenders
relating to the Project Loan or otherwise, and that Owner will be the
principal obligor for the repayment of all financial obligations thereunder
after the transfer of title to Owner. Owner therefore, agrees to execute
and deliver all commitments, promissory notes, mortgages, collateral
assignments, documents, certificates, affidavits, and other writings
required to be executed by any lender in connection with such financing.
ARTICLE III
Closing
Section 3.1 - Date of Closing. The delivery of possession of the Property and
Project to Owner and payment of the Contract Price, less 150% of the value of
the Punch-List, shall take place contemporaneously within three (3) working days
after Physical Completion of the Project but in no event later than the date
established in Section 2.9; provided, however, that Developer has completed its
obligations as set forth in this Agreement, including, but not limited to,
Sections 2.10 and 2.13.
Section 3.2 - Contract Price.
(a) The price to be paid by Owner to Developer for the development,
construction and furnishing of the Project and for the Property shall be
NiNE MILLION FIVE HUNDRED TWENTY-SIX THOUSAND ELEVEN DOLLARS ($9,526,011)
the cost incurred as the result of any unforeseen site conditions and cost
of Major and Minor Moveables in excess of their respective Allowances (the
"Contract Price").
(b) In addition to the Contract Price, if the Closing does not take place
within three (3) business days after Physical Completion due to delays
incurred through the fault of or through circumstances under the control of
Owner, Owner shall pay to Developer interest, payable monthly in arrears,
on the Contract Price accruing from the date which is three (3) days after
Physical Completion to the date of which is three (3) days after delivery
of possession of the Project pursuant to Section 3.1; such monthly interest
shall be computed at a rate equal to the Prime Rate as announced by Fleet
Bank, N.A. from time to time plus two percent (2%) per annum.
Section 3.3 - Payment of Contract Price. At the time of transfer of title, the
balance of the Contract Price not paid through Developer's requisitions under
the construction financing for the Project shall be paid by Owner to Developer
by wire transfer, certified check or other mutually acceptable means less any
Punch-List Amount or retainage required by Owner's lender.
<PAGE>
Section 3.4 - Form of Conveyance and Status of Title. The Project and Personal
Property shall be conveyed by warranty bill of sale. The Project and Personal
Property may be subject to the mortgages and security interests described in
Section 2.15.
ARTICLE IV
Additional Responsibilities of Parties
Section 4.1 - Developer's Responsibilities. In addition to its obligations
elsewhere expressed in this Agreement, Developer shall have the following
responsibilities:
(a) To obtain and pay for necessary building permits and the Certificate of
Occupancy;
(b) To pay for all labor and material required to develop, construct and
furnish the Project in accordance with the Final Plans ( except as
otherwise expressly set forth herein) and to pay for the Personal Property
to be provided;
(c) Developer shall at all times, commencing with the date upon which
construction begins, carry the following types of insurance with an
insurance carrier or carriers acceptable to Owner's lender:'
(i) Worker's compensation insurance fully covering all persons engaged
in the performance of this Agreement, in accordance with applicable
law.
(ii) Public liability insurance covering death or bodily injury with
limits of not less than $300,000 for one person and $1,000,000 for any
one accident or disaster; and property damage coverage limits of not
less than $100,000; all of which insurance shall name Owner's lender
as an additional insured.
(iii) "Builders Risk" insurance against damage or destruction by fire
and full extended coverage, including vandalism and malicious
mischief, covering all improvements to be erected hereunder and all
materials for the same which are on or about the Property, in an
amount equal to the full insurable value of such improvements and
materials; such insurance to be payable to Owner, Developer and
Owner's lender as their interests may appear, with a standard
mortgagee endorsement to Owner's lender or its assigns as mortgagee.
Developer shall furnish to Owner and Owner's lender if required by
such lender, duplicate policies of insurance as set forth in
subparagraphs (i), (ii), and (iii) hereof Each of such policies shall,
if the insurance carriers so permit, contain a provision to the effect
that they may not be canceled
<PAGE>
except upon ten (10) days prior written notice to Owner and Owner's
lender.
(d) At Closing, Developer shall deliver to Owner, at Owner's option:
(i) duly executed waivers of mechanic's liens signed by each
subcontractor which provided labor or materials on the Project; or
(ii) reasonable proof of payment or proof of a provision for payment
to such subcontractors; or
(iii) an indemnification to Owner with respect to same.
Section 4.2 - Owner's Responsibilities. In addition to its obligations elsewhere
expressed in this Agreement, Owner shall have the following responsibilities:
(a) To expeditiously pursue obtaining commitments for financing the
contemplated construction, including the furnishing of financial
statements, providing an appraisal of the Property and Project and by
execution of applications, notes, mortgages, assumption agreements and
other documents reasonably necessary to effectuate such financing or the
financing of the Personal Property.
(b) To pay for all professional and other staff personnel required for the
preopening and operation of the Project ii2 sufficient time to permit
licensure by the Department at the date of physical completion.
(c) To pay to Developer, in addition to the Contract Price, the costs for
correcting unusual site conditions. Such payment shall be made on the basis
of the actual costs of Owner in correcting the same plus fifteen percent
(15%) of such costs to cover Developer's overhead expenses and shall be due
and payable upon the transfer of title to Owner. For the purpose of this
Agreement, the term unusual site conditions shall include, without
limitations, any of the following which have not been noted in the Final
Plans or otherwise disclosed in the due diligence materials:
(i) unusual soil or water conditions requiring extraordinary
preparation, i.e., piles, curtain drains, retaining walls, blasting or
rip-rap;
(ii) tying in of water, sewer or other utility services beyond the
locations as shown in the Final Plans;
(iii) holding tanks and pumps for the water system or the sprinkler
system;
(iv) water purification or filter system;
<PAGE>
(v) leaching field; and
(vi) any requirement imposed upon Developer by governmental agencies
having jurisdiction, if not provided for in the Final Plans, because
of reasons other than errors or omissions in such Final Plans, such as
requirements imposed as conditions for the granting of any of the
Approvals.
(d) Owner shall be solely responsible for the removal of any hazardous
wastes and materials, if any, from the Property, at Owner's sole cost and
expense, and not as part of the Contract Price.
Section 4.3 - Indemnification. Developer hereby agrees to indemnify and hold
Owner harmless from all liabilities, claims, and demands for personal injury or
property damage arising out of or caused by any act or omission of Developer,
its subcontractors, agents, or employees, or arising in or about the Property at
any time from the date of this Agreement until transfer of title. Developer
further covenants to use proper care and caution in the performance of its work
hereunder so as not to cause damage to any adjoining or adjacent property, and
Developer shall indemnify and hold Owner harmless from any liabilities, claims,
or demands for damage to such adjoining or adjacent property.
ARTICLE V
Contingencies
Section 5.1 - Required Occurrences. This Agreement and the undertakings of
Developer shall, at the election of Owner be contingent upon the occurrence of
each of the following:
(a) Approvals. All of the Approvals and current utility availability
letters shall have been obtained by September 1, 1997.
(b) Title. An owner's title insurance policy commitment and Class A-2 ALTA
survey, satisfactory to Developer, in its sole discretion, shall have been
obtained by Owner which confirms that there are no exceptions or conditions
which would render title to the Property unmarketable or which will
prohibit or restrict the construction or operation of the Project or which
would prevent an institutional lender from closing a construction or
permanent mortgage loan for the Project in the usual course of its
business.
(c) Additional Due Diligence Regarding the Property. Developer shall have
received due diligence information concerning the Property, satisfactory to
Developer, in its sole discretion, including, without limitation, soil
tests and utility service confirmations to the extent not currently
available. On or before February 1, 1997, developer shall notify Owner of
any issues.
<PAGE>
(d) Purchase of the Property. The Owner shall have purchased good record,
marketable fee simple title to the Property as set forth in Section 1.1 by
not later than the closing of the Project Loan.
(e) Construction Financing. The Owner shall have received construction
financing in the full amount of the Contract Price by October 1, 1997.
Section 5.2 - Failure of Contingencies. In the event that any one or more of the
contingencies set forth in this Article is not satisfied, waived or deferred by
the parties in writing, within the period of time set forth above, then, upon
Notice, either party may terminate this Agreement. In such event, neither party
shall have any further responsibility or liability to the other. Developer
reserves the right, at its option, to waive or defer any one or more of the
conditions precedent.
ARTICLE VI
Additional Covenants of the Owner
Section 6.1 - Indemnification by Owner. Owner hereby indemnifies and defends
Developer against any claims for unpaid fees or costs associated with the
Property or the Project incurred by or on behalf of Owner or Developer as a
result of any claim by any broker. The parties acknowledge that no broker was
responsible for procuring the transactions set forth in this Agreement, nor any
part hereof, and each party will indemnify and defend the other from any and all
claims, actual or threatened, for a commission or other compensation by any
third person with whom such party has had dealings.
Section 6.2 - Confidentiality. Owner, its partners, affiliates, agents, servants
and employees hereby agree:
(a) To maintain in the strictest confidence the identity of developer; the
contents of this Agreement; the negotiations between the parties on the
terms of this Agreement; and any of Developer's proprietary information,
including, without limitation, financial information, projects, copies of
leases, real estate appraisals, and other information regarding the Project
and the business affairs and operations of developer which any of said
parties obtain from Developer in the course of negotiations for the
transactions contemplated hereby (the "Confidential Information");
(b) Not to disclose, without Developer's prior written consent (except to
the extent disclosure is required by applicable law or regulation), any
Confidential Information except to such parties' own agents, servants and
employees, bankers, consultants and other advisors to whom disclosure is
necessary in order to effectuate the transactions contemplated hereby; and
<PAGE>
(c) To comply therewith for a period of two (2) years commencing on the
date of this Agreement.
Section 6.3 - Provision of Further Information. Developer agrees to supply
complete financial information and any other data required in connection with
the construction or permanent financing for the Project and to execute, and
cause to execute, any and all documents which are required by the terms thereof.
ARTICLE VII
Concluding Provisions
Section 7.1 - Entire Agreement. All prior understandings, letters of intent, and
agreements between the parties are merged in and superseded by this Agreement (
including all Exhibits hereto), which together with Owner's partnership
agreement and the management agreement between Owner and its management agent
fully and completely expresses their understanding with respect to its subject
matter.
Section 7.2 - Representations. None of the parties shall be bound by any
promises, representation, or agreements except as herein expressly set forth.
Section 7.3 - Amendments. This Agreement may not be amended, waived, modified,
altered or changed in any respect whatsoever except by a further agreement, in
writing, executed by each of the parties and consented to by the Owner.
Section 7.4 - Joint Effort. The preparation of this Agreement has been a joint
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
Section 7.5 - Brokers. Each of the Owner and Developer represents and warrants
to the other that no broker or finder has acted on its behalf in connection with
this Agreement or the transactions contemplated hereby or referred to herein;
and agrees to indemnify and hold and save the other harmless from any claim or
demand for commission or other compensation by any broker, finder or similar
agent claiming to have been employed by or on behalf of such party.
Section 7.6 - Assignment. Developer shall have no right to assign his right nor
delegate its obligation under this Agreement to another entity or person without
the prior written consent of Owner except that Developer shall have the right to
assign this Agreement to, merge with or consolidate with an "Affiliate" (defined
herein as defined in the Securities and Exchange Act of 1934 and the regulations
thereunder) in connection with a public offering.
<PAGE>
Section 7.7 - Notices. All notices which may be given to any of the parties
hereunder shall be in writing and shall be hand delivered or sent by registered
or certified mail, return receipt requested, or by Federal Express, and postage
prepaid as follows:
(a) In the event that notice is directed to Owner, it shall be sent to it
at the address set forth above and a copy therefore sent to Amethyst Arbor
Associates General Partnership, c/o CareMatrix Corporation, 197 First
Avenue, Needham, MA 02 194, Attention: Andrew D. Gosman, with a copy to
Netwest Development Corporation, 2221 East Broadway Boulevard, Suite 211,
Tucson, AZ 85719, Attention: Priscilla S. Kuhn, or at such other address or
addresses as Owner shall from time to time designate by notice to
Developer.
(b) In the event that notice is directed to Developer, it shall be sent to
Netwest Development Corporation, 2221 East Broadway Boulevard, Suite 211,
Tucson, AZ 85719, Attention: Priscilla S. Kuhn with a copy to Dee O'Neill
at the same address and CareMatrix Corporation, 197 First Avenue, Needham,
MA 02194, Attention: Kevin J. Maley, with a copy to James M. Clary, III,
Esq. at the same address; or at such other address or addresses as
Developer shall from time-to-time designate by notice to Owner.
The effective date of any such notice shall be the earlier of actual receipt by
the addressee or three (3) days after such notice is properly deposited for
mailing.
Section 7.8 - Arbitration. Any dispute or controversy arising between the
parties involving the interpretation or application of any provisions of the
Agreement, or arising out of this Agreement, or concerning the construction of
the proposed Project or the furnishing thereof shall be submitted to and
determined by arbitration in accordance with the rules of the American
Arbitration Association then in effect.
Section 7.9 - Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof
Section 7.10 - Successors. This Agreement shall be binding upon the parties
hereto, their respective heirs, executors, administrators, successors, and
assigns.
Section 7.11 - Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
Section 7.12 - Severability. The invalidity or unenforceability of one or more
of the phrases, sentences, provisions, clauses, Sections or Articles contained
in this Agreement shall not affect the validity or enforceability of the
remaining portions so long as the material purposes of this Agreement can be
determined and effectuated.
<PAGE>
Section 7.13 - Effective Date. This Agreement shall be deemed to be effective as
of the date set forth below.
Section 7.14 - No Offer. The delivery of an unexecuted copy of this Agreement
shall not be deemed an offer. No rights are to be conferred upon any party until
this Agreement has been executed and delivered to each party.
Section 7.15 - Governing Law. This Agreement shall be governed by the laws of
the State of Arizona.
Dated this 28th day August 1996 and executed under seal.
OWNER:
Witness: AMETHYST ARBOR ASSOCIATES
GENERAL PARTNERSHIP
/s/ ELIZABETH DERRIN By: CareMatrix of Peoria,Inc.
- -------------------------------- Its General Partner/Managing Partner
Elizabeth Derrin
By: /s/ JAMES M. CLARY
-------------------------------
Name: James M. Clary
Title: Vice President
/s/ KAY ANDERSON By: Netwest Development Corporation
- -------------------------------- Its General Partner
Kay Anderson
By: /s/ PRISCILLA S. KUHN
-------------------------------
Name: Priscilla S. Kuhn
Title:
DEVELOPER:
Witness: CAREMATRIX OF AMETHYST ARBOT INC.
/s/ ELIZABETH DERRIN By: /s/ JAMES M. CLARY
- -------------------------------- -------------------------------
Elizabeth Derrin Name: James M. Clary
Title: Vice President
NETWEST DEVELOPMENT CORPORATION
/s/ KAY ANDERSON By: /s/ PRISCILLA S. KUHN
- -------------------------------- -------------------------------
Kay Anderson Name: Priscilla S. Kuhn
Title:
CAREMATRIX SUBSIDIARIES EXHIBIT 21
CareMatrix of Massachusetts, Inc.
CareMatrix of Amber Lights, Inc.
CareMatrix of Amethyst Arbor, Inc.
CareMatrix of Emerald Springs, Inc.
CareMatrix of Cypress Station, Inc.
CarePlex of Cragganmore, Inc.
CarePlex of Homestead, Inc.
CareMatrix of Darien, Inc.
CarePlex of Miami Shores, Inc.
CareMatrix of ARI, Inc.
CCC of Maryland, Inc.
AMA New Jersey Development, Inc.
CareMatrix of Annapolis, Inc.
CareMatrix of Needham, Inc.
CareMatrix of Westfield Court, Inc.
Bailey Retirement Center, Inc.
Adams Square, Inc.
Stan/Oak Development Corp.
Dominion Villages, Inc.
Piedmont Villages, Inc.
Standish Lakes Region Villages, Inc.
Lowry Village, Inc.
CareMatrix of Lauderhill I, Inc.
CareMatrix of Palm Beach, Inc.
CareMatrix of Dedham, Inc.
CareMatrix of Lauderhill II, Inc.
CareMatrix of Sahara Lakes, Inc.
CareMatrix of Ridgefield (SNF), Inc.
CareMatrix of Palm Beach Gardens (SNF), Inc.
CareMatrix of Clearfield, Inc.
CareMatrix of Avon, Inc.
CareMatrix of Woodbridge, Inc.
CareMatrix of Milford, Inc.
CareMatrix of Hamden, Inc.
CareMatrix of Desert Inn, Inc.
CareMatrix of the Inn at the Amethyst, Inc.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
CareMatrix Corporation on Forms S-8 (File Nos. 333-18103 and 333-34727) of our
report dated February 6, 1998 on our audits of the financial statements and
financial statement schedule of CareMatrix Corporation as of December 31, 1997
and 1996 and for the years ended December 31, 1997, 1996 and 1995, which report
is included in this Annual Report on Form 10-K.
Boston, Massachusetts
March 27, 1998
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<ALLOWANCES> (1,105,432)
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<CURRENT-ASSETS> 181,499,262
<PP&E> 5,327,474
<DEPRECIATION> (676,651)
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233,000
<COMMON> 863,095
<OTHER-SE> 98,065,205
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 58,803,105
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0
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<TOTAL-LIABILITY-AND-EQUITY> 108,065,144
<SALES> 12,907,445
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<TOTAL-COSTS> 10,078,919
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