SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission file number 33-44980
THE CHESTNUT PARTNERSHIP THE CHESTNUT REAL ESTATE PARTNERSHIP
(exact name of registrants as specified in their charters)
Maryland
(State or other jurisdiction of incorporation or organization)
52-1640655 42-1352739
(IRS Employer (IRS Employer
Identification No.) Identification No.)
2330 West Joppa Road, Suite 210, Lutherville, Maryland 21093
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (301)-494-9200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
- --------------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days. Yes _X_ No___
No voting interests of either partnership are held by non-affiliates.
Documents incorporated by reference: None
Total pages in this report 131. Exhibit Index is at page 46.
THE CHESTNUT PARTNERSHIP
AND
THE CHESTNUT REAL ESTATE PARTNERSHIP
1996 Form 10-K Annual Report
Table of Contents
PART I
Item 1. Business....................................................... 3
Item 2. Properties.....................................................14
Item 3. Legal Proceedings..............................................14
Item 4. Submission of Matters to a Vote of Security Holders ...........14
PART II
Item 5. Market for the Registrant's Common Equity and
Related Bondholder Matters.....................................15
Item 6. Selected Financial Data .......................................15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...........................16
Item 8. Financial Statements and Supplementary Data ...................19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ...........................19
PART III
Item 10. Directors and Executive Officers of the Registrant.............20
Item 11. Executive Compensation .......................................22
Item 12. Security Ownership of Certain Beneficial Owners
and Management.................................................22
Item 13. Certain Relationships and Related Transactions.................24
PART IV
Item 14. Exhibits and Financial Statement Schedules.....................26
PART I
Item 1. Business
The Chestnut Partnership ("Partnership"), a Maryland general
partnership, was organized June 3, 1988, for the purpose of developing,
marketing, constructing, equipping, and operating a life-care
retirement community designed for the elderly to be located in the
Ruxton-Riderwood area near Towson, Baltimore County, Maryland, known as
Blakehurst ("Project or Community").
The Chestnut Real Estate Partnership ("Real Estate Partnership") a
Maryland general partnership, was organized on April 25, 1990, to own
the real estate of the Partnership. Real Estate Partnership has two
general partners, each owning 50%, West Joppa Road Limited Partnership
("West Joppa") and Blakehurst Joint Venture ("BJV") (together the
"partners").
On April 25, 1990, by assignment of interest from Partnership, Real
Estate Partnership received 98% of the partners' interest in
Partnership. Partnership and Real Estate Partnership have entered into
an operating and use agreement which obligates Partnership to develop,
operate, and manage the project at Partnership's expense. Real Estate
Partnership guarantees the performance by Partnership of all its
obligations under the Residency Agreements.
A life-care retirement community such as Blakehurst is intended to
address the needs of individuals, age 62 or older, who are in good
health but who no longer desire to reside in their own homes or
apartments. Fully-equipped private living units are provided together
with a variety of services, such as housekeeping, maintenance, and meal
arrangements which ease such everyday burdens as shopping, cooking, and
cleaning and substantially relieves senior adults of the burden of
procuring such goods and services themselves or relying on family
members or others to do so. In addition, residents are provided with
skilled nursing services and limited medical services through a health
care center that is part of the facility.
The Community is being built in several phases. The first phase of the
Community ("Phase I") consists of 177 residential units, a dining room,
a clubhouse, and a health care center with 36 comprehensive care beds
and 14 domiciliary care units. Cessation of major construction activity
associated with Phase I occurred in December 1993. The Community
commenced occupancy in late summer 1993 and by December 31, 1993 was
60%. Occupancy was 75% at December 31, 1994. Occupancy increased to 87%
by December 31, 1995, and at December 31, 1996, was 92%.
In Phase II, an auditorium was constructed and renovation of a carriage
house occurred in late 1995 and early 1996. The auditorium and
renovation were essentially completed in March 1996.
The Partnership filed with the Maryland Office on Aging, on February
28, 1996, an Application for Preliminary Certificate of Registration
for Phase III. The Application was approved on April 30, 1996. Phase
III will consist of a 35 apartment unit addition, surface garages and
under-building parking spaces, an enclosed swimming pool, an exercise
room and additional surface parking. Construction began in August 1996
and is scheduled to be completed in August 1997. As of December 31,
1996, all 35 apartment units had been reserved by receipt of the
Partnership of 10% of the ultimate Entrance Payments.
As of December 31, 1996, the Community had 117 full-time equivalent
employees, an increase in the year of 10 full-time equivalent
employees, none of whom were members of a collective bargaining
agreement.
THE PROJECT
The 177 Phase I residential units are in a six-story building with four
wings. The adjacent clubhouse includes the dining room, administrative
offices, a convenience shop, a library, a billiard room, an arts and
crafts studio, an exercise room, a beauty/barber shop, and a
woodworking shop. The residential units consist of a mixture of
one-bedroom and two-bedroom units. Each unit has complete kitchen
facilities with major appliances, individually controlled air
conditioning, and heating, carpet, and other amenities, and has been
designed with the special physical needs of the elderly in mind. Grab
rails are provided in all bathrooms; doors and cabinets are accessible
to persons in wheelchairs; and each bedroom and bathroom is equipped
with an emergency call system linked to the health care center. In
addition, each residential unit is equipped with safety features, such
as a sprinkler system and smoke alarm.
The following table sets forth information with respect to the types of
residential units available in Phase I at the community:
Estimated
Type of Units (Quantity) Square Feet
------------------------ -----------
One-Bedroom (10) 640
One-Bedroom Deluxe (30) 822
One-Bedroom Custom (17) 955
Two-Bedroom (48) 1,028
Two-Bedroom Custom (10) 1,093
Two-Bedroom Deluxe (39) 1,233
Two-Bedroom Grand (23) 1,520
The health care center contains 36 comprehensive care beds, consisting
of 24 semiprivate beds and 12 private beds. This portion of the
Community contains all equipment and services necessary to provide
temporary to long-term nursing care. The health care center also
contains 14 domiciliary care units, each consisting of a private studio
apartment with bath and combination living/sleeping area. A domiciliary
care unit resident receives assistance with day to day tasks and
benefits from 24-hour supervision by the health care center staff.
The health care center contains a dining room, a physical therapy room,
an arts and crafts therapy area, and an outpatient clinic for use by
all community residents. Health care center residents who are able will
have ready access to other common areas of the facility, and thus to
the Community's recreational and social life.
The auditorium and renovated carriage house provide additional commons
areas for the resident activities.
Phase III will consist of 35 apartment units, 12 surface garages, 20
under-building garage spaces, an enclosed swimming pool, an exercise
room and additional surface parking.
The following table sets forth information with respect to the types of
residential units to be available in Phase III of the community:
Estimated
Type of Units (Quantity) Square Feet
------------------------ -----------
One-bedroom (6) 640
One-bedroom Deluxe (6) 822
One-bedroom with Den (6) 900
Two-bedroom (5) 1,028
Two-bedroom End Unit (12) 1,156
ADMISSION OF RESIDENTS
In order to be accepted for residency in a residential unit at the
Community, a resident must execute a residency agreement (the
"Residency Agreement"). The Residency Agreement is a contract which
describes the rights and obligations of the resident and the
Partnership in connection with residency at the Community.
In 1994, the Community began offering a limited number of a second type
of Residency Agreement ("Traditional Plan") in addition to its original
Residency Agreement ("Return of Capital Plan"). The criteria for
admission to the community is identical under either plan. The plans
are different as to economic terms and conditions, however. The
Traditional Plan requires a lower Entrance Payment on certain units for
which it is offered, than the Entrance Payment under the Return of
Capital Plan. The Return of Capital Plan defines a portion of the
Entrance Payment received from the new resident as a loan that must be
repaid after the resident leaves the Community. The Traditional Plan,
however, does not have a loan and limits any refund based on time at
the Community--the longer the time in residency, the lower the refund.
After 50 months the Traditional Plan holder does not receive a refund.
In order to be accepted for residency in the Community, a resident must
be at least 62 years old or the spouse of a resident who is at least 62
years old, capable of independent living, be free of communicable
disease and have assets and income sufficient to pay the entrance
payments, the monthly fees and other ordinary and customary living
expenses.
The Residency Agreement requires at least one resident of each
residential unit who is at least 65 years old to be entitled to
Medicare Part A benefits, to be enrolled in the Medicare Part B program
at the time of initial occupancy, and to maintain coverage under
Medicare Part A, Medicare Part B, and one health insurance policy
acceptable to the Partnership to supplement Medicare coverage while a
resident of the community. If there is a second resident in any
residential unit, the Residency Agreement also requires that such
resident must be qualified and enroll for the above Medicare benefits
if he or she has reached the age entitling him or her to such benefits.
If the required health insurance coverage is not maintained by the
resident, the Partnership may revoke the resident's right to reside at
the Community and cancel the Residency Agreement.
Entrance Payments (Return of Capital Plan only). The payments which
must be made by all Community residents as condition to their initial
admission to the Community (the "Entrance Payments") consist of the
Admission Fee (as hereinafter defined) and the Residency Loan (as
hereinafter defined).
Entrance Payments (Traditional Plan only). The payments which must be
made by all Community residents as condition to their initial admission
to the Community (the "Entrance Payments") consist of the Admission Fee
(as hereinafter defined) and the Entrance Costs (as hereinafter
defined).
Admission Fee (Return of Capital Plan and Traditional Plan). Upon
execution of a Residency Agreement, the prospective resident must pay
an admission fee based upon the unit the resident wishes to occupy
(such amount, the "Admission Fee"). The Admission Fee increases for a
second resident of the unit. The Admission Fee is deposited in an
escrow account and, subject to the resident's rights to a refund prior
to occupancy, will be released to the Partnership as soon as (i)
Project construction is complete, (ii) a final certificate of
registration has been obtained from the Maryland Office on Aging, (iii)
a certificate of occupancy has been received from the appropriate local
authorities, and (iv) the appropriate licenses or certificates have
been issued by the Maryland Department of Health and Mental Hygiene or
by the Maryland Office on Aging.
Residency Loan (Return of Capital Plan only). Upon the earlier of (i)
occupancy of his or her unit or (ii) 15 days after the date the unit is
available for occupancy, the resident must loan to the Partnership an
amount based on the type of unit being occupied (the "Residency Loan").
The Residency Loan will be evidenced by a written loan agreement, and
the repayment in full of the principal of the loan will be fully and
unconditionally guaranteed by the Real Estate Partnership. The Real
Estate Partnership's guaranty of the Residency Loans are collateralized
by a mortgage on the Community, subordinate to the lien securing the
1992 Series I and Series II Bonds.
Upon cancellation of the Residency Agreement, the resident's Residency
Loan will be repaid upon the earlier of (i) the date that a successor
resident occupies the unit or (ii) the date that is 12 months after the
resident's death or cancellation of the Residency Agreement.
Entrance Costs (Traditional Plan only). Upon the earlier of (i)
occupancy of the unit or (ii) 15 days after the date the unit is
available for occupancy, the resident must pay the balance of the
entrance fee ("Entrance Costs") to the Partnership.
Upon termination of the Residency Agreement, the resident's Entrance
Costs will be refunded less the greater of (i) the Admission Fee(s)
paid by the resident or (ii) an amount equal to two percent of the
Entrance Costs per month of occupancy by the resident to a maximum of
the Entrance Costs. The refunded portion of the Entrance Costs, if any,
will be repaid within 30 days of the date the apartment is reoccupied,
but in no event later than 12 months following the date of termination
of residency.
The following table sets forth as of December 31, 1996, information
with respect to the ranges of total Entrance Payments for the Return of
Capital Plan and Traditional Plan for the types of residential units
offered by the Community:
<TABLE>
<CAPTION>
First Person Entrance Payments(1)
Range of Entrance Payments (2)
------------------------------
Type of Unit (Quantity) Return of Capital Plan Traditional Plan
----------------------- ---------------------- ----------------
<S> <C> <C> <C>
One-Bedroom (10) $156,900 - $158,900 -- --
One-Bedroom Deluxe (30) $208,200 - $210,200 -- --
One-Bedroom Custom (17) $231,100 - $232,900 -- --
Two-Bedroom (48) $264,900 - $268,000 -- --
Two-Bedroom Custom (10) $287,300 - $290,400 -- --
Two-Bedroom Deluxe (39) $337,500 - $342,600 $226,000 - $231,000
Two-Bedroom Grand (23) $411,300 - $419,500 $274,000 - $282,000
</TABLE>
(1) The Admission Fee is increased by $8,500 for a second
resident.
(2) 90% of the Entrance Payment represents the Residency Loan
(Return of Capital Plan) or Entrance Costs (Traditional Plan);
10% represents the Admission Fee.
Monthly Service Fee (Return of Capital Plan and Traditional Plan)
Each month, residents reimburse the Community for their share of the
operating cash needs of the Community.
A resident's share of the total cash needs depends, among other things,
on the type of unit, the presence of a second occupant, and the
projected occupancy rate of the Community for the following year. The
total cash needs include the operating costs, capital repair and
replacement, and debt service of the Community.
The following tables set forth as of December 31, 1996 and January 1,
1997, information with respect to the ranges of total Monthly Service
Fees for the Return of Capital Plan and Traditional Plan for the types
of units at the Community:
Monthly Service Fees (Return of Capital Plan)
<TABLE>
<CAPTION>
As of Dec. 31, 1996 As of Jan. 1, 1997
------------------- ------------------
Type of Unit First Second First Second
(Quantity) Person Person Person Person
------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
One-Bedroom (10) $1,814 $777 $1,903 $815
One-Bedroom Deluxe (30) $1,918 $777 $2,012 $815
One-Bedroom Custom (17) $2,018 $777 $2,117 $815
Two-Bedroom (48) $2,120 $777 $2,224 $815
Two-Bedroom Custom (10) $2,255 $777 $2,365 $815
Two-Bedroom Deluxe (39) $2,460 $777 $2,581 $815
Two-Bedroom Grand (23) $2,799 $777 $2,936 $815
</TABLE>
<TABLE>
<CAPTION>
Monthly Service Fees (Traditional Plan)
As of Dec. 31, 1996 As of Jan. 1, 1997
------------------- ------------------
Type of Unit First Second First Second
(Quantity) Person Person Person Person
------------ ------ ------ ------- ------
<S> <C> <C> <C> <C>
Two-Bedroom Deluxe (39) $2,460 $777 $2,581 $815
Two-Bedroom Grand (23) $2,799 $777 $2,936 $815
</TABLE>
Capital Reserve Fee (Return of Capital Plan and Traditional Plan). In
addition to the Entrance Payments and Monthly Fees, at the time a
resident enters into the Residency Loan (Return of Capital Plan) or
pays the Entrance Costs (Traditional Plan) the resident is required to
pay a one-time capital reserve fee (the "Capital Reserve Fee") to the
Partnership in an amount equal to the then-current Monthly Service Fee.
The Capital Reserve Fee is not refundable, and the Partnership is
required to use the Capital Reserve Fee for purposes related to the
Community.
THE MARKET AREA
The Community is located in the Ruxton-Riderwood neighborhood west of
Towson, in southern Baltimore County, Maryland. Towson is located
approximately ten miles north of the center of Baltimore City, Maryland
and is largely suburban in character. The Community is located
approximately one mile south of Interstate 695 (the Baltimore Beltway)
and is in a primarily residential area, with a predominately commercial
area located approximately one mile to the east.
Under the Development Agreement, Life Care Services Corporation (LCS)
formulated and implemented an occupancy development program for the
Community. LCS is an Iowa corporation based in Des Moines, Iowa
specializing since 1961 (when it was a division of another company) in
the development of continuing care retirement communities (CCRC's). LCS
is affiliated with the Partnership through common ownership.
The primary market area for the Community is the surrounding local
area, including Towson, Ruxton, Lutherville, Timonium and northern
Baltimore City. Residents at Blakehurst have primarily come from the 16
zip code areas that are within approximately 5 to 10 miles of the
Project. Of the 189 residents that have moved into Blakehurst since the
community opened in August 1993, 147 (78%) have come from those zip
codes.
The secondary market for the Project is comprised of the rest of the
Baltimore, Maryland metropolitan area and the Washington D.C. area.
Eleven (approximately 6%) of the residents that had moved into
Blakehurst as of December 31, 1996 originated from this secondary
market.
Consistent with December 1995, at December 1996 approximately 16%, (up
from 13% at December 31, 1994 and 8% at December 31, 1993) of the
residents originated in markets beyond the primary and secondary
markets.
Residents typically sell their homes prior to moving into a retirement
community, and may use all or part of the proceeds to pay the entrance
fee. Of the 16 zip codes that make up the Project's primary market, 10
had median home values of $150,000 and above in 1996.
In order to qualify for residence at the Residential Center,
prospective residents generally must be at least 62 years of age, be
able to care for themselves at the time of occupancy and demonstrate
sufficient financial resources to pay the initial entrance payments as
well as the required fees, particularly the Monthly Service Fee.
The monthly service fees established for prospective single residents
during 1996 ranged from $21,768 to $33,588 per residential unit on an
annualized basis. The approximate weighted average first-person Monthly
Service Fee was $26,753 on an annualized basis. To provide for payment
of Monthly Service Fees and other expenses associated with independent
living, the Partnership would generally require prospective residents
to have incomes of two times the annualized Monthly Service Fee. Annual
income is defined by Management as total income received in a calendar
year by all household members. Therefore, in 1996 Management would
generally require residents to demonstrate annual incomes from
approximately $43,536 to $67,176 (approximately $53,506 weighted
average). Management therefore believes the target age- and
income-eligible market consists of those primary market area households
over 65 years old with annual incomes of $35,000 and above.
The income- and age-qualified market for the primary market area is
projected by an independent market research firm to increase
approximately 10.6% over the next 5-year period.
Utilizing the above defined potential market available for the
Residential Center, both on the basis of 65 years of age and older and
75 years of age and older, the required market penetration rate for the
Residential Center to achieve full occupancy is estimated as follows:
<TABLE>
<CAPTION>
Estimate of Required Project Penetration
Primary Market Area
Eligible Market Likely Market
(65 and older) (75 and older)
--------------- -------------
<S> <C> <C>
Estimated age and income of qualified households 16,207 6,092
Less competitive occupied units (1,744) (1,744)
------ ------
Qualified households not currently residing in a
competitive facility (a) 14,463 4,348
====== =====
Project unit occupancy assumed to originate from
the primary market area (80%) 170 170
Divided by qualified households not currently
residing in a competitive facility (a) 14,463 4,348
------ -----
Required Project Penetration (b) 1.2% 3.9%
====== =====
</TABLE>
(a) Competitive facilities include Broadmead, Edenwald, Glen
Meadows (f/k/a Notchcliff), North Oaks, and Oak Crest.
(b) Required Project Penetration is the percentage of the age and
income qualified households the Project will need to draw to
achieve functional occupancy, assuming 80% of occupancy will
originate from the primary market area.
<TABLE>
<CAPTION>
Estimate of Market Saturation
Eligible Market Likely Market
(65 and older) (75 and older)
--------------- -------------
<S> <C> <C>
Total units available (a)
(occupied and unoccupied)
expected to draw from primary market area 1,623 1,623
Divided by estimated age and income qualified
households (b) 16,207 6,092
------ -----
Required Market Saturation (c) 10.0% 26.6%
====== ======
</TABLE>
(a) Facilities include Blakehurst, Broadmead, Edenwald, Glen
Meadows , North Oaks, and Oak Crest. Based on buyer origins to
date, it is expected that about 80% of the Blakehurst units
will be filled by households from the primary market area. For
this calculation, it is assumed that 70% of the competitor's
units will be filled from households from the same primary
market area. As discussed in the section "Competition," Oak
Crest Village added 789 units in 1996. Also, Blakehurst
commenced sales of 35 Phase II apartments in 1996. The Oak
Crest Village and Blakehurst units represent the major change
in 1996 from 1995 experience, and is why the required market
saturation increased significantly.
(b) Income qualified households for Blakehurst residency are those
with annual incomes of $35,000 and over. Competitors
(especially Glen Meadows) have lower fees and presumably also
draw from households earning less than $35,000; therefore,
this estimate of the qualified households is considered to be
lower than the number actually eligible for the units
available.
(c) Required Market Saturation measures the percentage of the age
and income qualified households that will be living in the
Project or a competitive facility when all have been fully
occupied. Although the market saturation rate for the age 75
and older group indicates that marketing opportunities require
moderate success rates, management believes that, based on the
estimates of required Project penetration of 1.2% to 3.9% and
on the re-marketing experience at similar facilities with
which LCS has been involved, the Project will be able to
market its remaining unoccupied units.
COMPETITION
Competitive Facilities. Management believes that certain other
facilities currently operating or marketing residential units represent
competition for the Project. In general, facilities considered to be
competitors:
1) offer independent retirement living with services
including dining, flat laundry, housekeeping,
utilities, activities, and other services.
2) offer nursing care in an on-site nursing center, and
3) are located within the Project's primary market area.
Those competitive facilities identified are:
* Broadmead
* Edenwald
* Glen Meadows (f/k/a Notchcliff)
* North Oaks
* Oak Crest
Broadmead. Broadmead opened in 1979, was developed and is owned and
managed by the Friends Lifetime Care Center of Baltimore. The project
consists of 269 units comprised of studio, one-bedroom, and two-bedroom
living units, predominantly single-level/garden apartments, as well as
a 95-bed health care center, situated on approximately 80 acres.
Residential units were 97% occupied and health care center beds 90%
occupied as of December 31, 1996. Broadmead is located in Cockeysville,
seven miles north of the Project.
Entrance fees range from $64,500 to $165,500, with a $20,000
second-person fee, and are refundable on a decreasing scale during the
first four years of occupancy. Monthly service fees range from $1,604
to $2,566, with a $962 second-person fee. Residents are entitled to
receive up to three meals per day, weekly linen and housekeeping
services, utilities, and scheduled transportation. Residents may also
receive unlimited nursing care in the on-site health care center should
the need arise. Management believes its superior location and service
package and the associated higher entrance fees differentiate the
Project from Broadmead in the marketplace.
Edenwald. Edenwald is located in Towson approximately 1.5 miles
northeast of Blakehurst. Edenwald is an 18-story high-rise community
situated on a 4.5-acre site, and includes 241 independent living units
which were approximately 95% occupied as of December 1996. The 115-bed
health care center was 98% occupied as of December 1996. The community
opened in 1985, and was developed and is owned and managed by the
General German Aged People's Home of Baltimore.
Residents of Edenwald pay both an entrance fee and a monthly fee.
Entrance fees currently range from $59,000 to $192,000, with a $15,000
second-person fee, and the refund of those fees declines over time.
Monthly service fees range from $1,287 to $2,402, with a $687
second-person fee. Residents receive such services as one meal per day,
bi-weekly housekeeping, flat laundry, scheduled transportation, and
utilities, as well as unlimited nursing care in the on-site
comprehensive care unit nursing center. In-house facilities include a
bank, a store, and a beauty/barber shop. Management believes its
superior location and service package and the associated higher
entrance fees differentiate the Project from Edenwald in the
marketplace.
Glen Meadows (f/k/a Notchcliff). Glen Meadows is located in a rural
setting on a 483-acre site in Glen Arm, approximately 10 miles
northeast of the Project. The prior project owner, facing financial
difficulties resulting from unsuccessful marketing, filed for
reorganization under Chapter 11 in 1988. In 1990 Presbyterian Senior
Services, Inc. purchased Glen Meadows and appointed EMA Management,
Inc. to manage the operations. The 214 independent living units were
95% occupied, and the 31-bed health center was 99% occupied as of
December 1996.
Entrance fees at December 31, 1996 range from $44,100 to $171,300 and
are structured with a 100% refund upon resale of the unit. Monthly
service fees ranged from $960 to $1,395, with a $400 second-person fee.
Included are three meals per day, weekly housekeeping and flat laundry
service, utilities, scheduled transportation, and on-site nursing care.
Management does not believe the current marketing efforts of Glen
Meadows have significantly affected the marketing efforts of the
Project because of difficulties Glen Meadows has had marketing units
while experiencing financial instability and reorganization. Management
also believes its superior location and service package and the
associated higher entrance fees differentiate the Project from Glen
Meadows in the marketplace.
North Oaks. North Oaks is a life-care retirement community located on a
10-acre site in Owings Mills, approximately seven miles southwest of
the Project. North Oaks, which was completed in May 1991, consists of
183 one- and two- bedroom independent living units and a 46-bed health
care center. Occupancy, which began December 26, 1990, was 95% in the
independent living units and 92% in the health care center as of
December 1996. North Oaks is owned by affiliates of the Partnership,
with LCS providing development and management services.
Entrance payments for the independent living units under a 90%
refundable plan range from $97,000 to $245,000. In 1994, North Oaks
added a traditional declining refund entrance fee plan. Under that
plan, entrance fees range from $65,000 to $164,200. Under both plans,
there is a $5,000 second person entrance fee. Monthly service fees
range from $1,601 to $2,962 with a $734 second-person fee. Residents
receive such services as one meal per day, utilities, weekly
housekeeping and linen service, scheduled transportation, and planned
activities, as well as certain nursing care in the on-site
comprehensive and domiciliary care nursing center. In-house facilities
include a bank, a convenience store, and beauty/barber shops.
Management believes that while the service package at North Oaks is
essentially the same as at the Project, the unique location and
associated higher entrance fees differentiate the Project from North
Oaks in the marketplace.
Oak Crest Village. Oak Crest Village is a project under construction on
85 acres in Parkville, approximately 7 miles east of Blakehurst. The
project opened March 1, 1995, and as of December 31,1996, there were
1,169 independent living apartments built which were 75% occupied. At
completion, the project will include 1,525 independent living
apartments. Oak Crest has added 789 apartments since December 31, 1995,
and will add the remaining 356 apartments during 1997. Senior Campus
Living, Inc., who also developed Charlestown in Catonsville, is the
developer of Oak Crest Village.
Entrance fees at the project range from $67,000 to $295,000. Monthly
service fees range from $813 to $1,492, with a $401 second-person fee.
Oak Crest Village opened a 112 unit assisted living facility in January
of 1996. A 240 bed nursing care facility is planned for the campus with
120 beds opening around June 1997, and another 120 beds opening in
1998.
In addition to the competitive facilities discussed above, Management
has identified four other facilities which, while comparable in some
respects to the Project, are not considered primary competitors. These
comparable facilities are:
* Brightwood
* Charlestown Retirement Home
* Fairhaven
* Roland Park Place
Brightwood. Brightwood is a condominium project targeted to retirees
which opened in January 1991. It is located on a 60-acre site in
Lutherville, approximately two miles west of Blakehurst. Brightwood
consists of 80 independent living units. As of December 1996, 96% of
the units were occupied.
Maryland National Bank assumed ownership of Brightwood in November 1992
as part of a debt restructuring with developer, MacKenzie and
Associates, Inc. The developer and Cooperative Retirement Services of
America are co-managing the project.
Brightwood does not have an on-site health care center; however, it
does have an agreement with the nearby unaffiliated Meridian Nursing
Center - Brightwood to admit Brightwood residents on a priority basis.
It is because of the condominium ownership structure and the lack of
integrated health care that Brightwood is not considered to be a
competitor of Blakehurst.
Condominium prices range from $225,000 to $680,000. Monthly service
fees range from $1,775 to $1,905, with a $645 second-person fee.
Services include evening meal, weekly housekeeping and flat laundry
service and scheduled transportation.
Charlestown Retirement Home. Charlestown Retirement Home is located
approximately 12 miles southwest of Blakehurst in Catonsville. It
contains 1,614 independent living units situated on a 120-acre site,
and is owned and operated by a non-profit corporation, Charlestown
Community, Inc. The community, which opened in 1984, was developed from
a former Catholic college and seminary. The apartments were 98%
occupied as of December 1996. The on-site health care center, which
consists of 270 comprehensive care beds and a 132-unit assisted living
center, was 97% occupied as of December 1996.
Entrance fees as of December 1996 ranged from $48,000 to $248,000 and
are fully refundable. Monthly service fees range from $806 to $1,283,
with a $400 second-person fee. Residents receive one meal per day,
utilities, and scheduled transportation. Nursing care is provided on a
fee-for-service basis, with a guarantee to residents of access to the
nursing center. Charlestown Retirement Home is not located within the
Project's primary market area, and, therefore, is not considered to be
a competitor of Blakehurst.
Fairhaven. Fairhaven is located in Sykesville, approximately 20 miles
west of the Project. It was developed and is owned by Episcopal
Ministries to the Aging, Inc. and is managed by a subsidiary, EMA
Management, Inc. (which also manages Glen Meadows as discussed above).
Fairhaven consists of 275 independent living units situated on 300
acres, and was 98% occupied as of December 1996. The on-site health
center includes 101 nursing care beds and a 125 beds for Alzheimer's
patients, and was 100% occupied as of December 1996.
As of December 1996, entrance fees under a 50-month declining refund
plan range from $52,000 to $189,000, with a $15,000 second-person fee.
In January 1993, Fairhaven added a 90% refundable entrance fee plan
with entrance fees of $85,800 to $311,850 and a second-person fee of
$24,750. Monthly service fees under both plans range from $1,490 to
$2,620, with a second-person fee of $1,175. Services include three
meals per day, weekly housekeeping and flat laundry, utilities, and
scheduled transportation. Unlimited nursing care is provided to
Fairhaven residents. Because Fairhaven is not located within the
Project's primary market area, it is not considered to be a competitor
of Blakehurst.
Roland Park Place. Located approximately six miles south of the Project
is Roland Park Place. This 235-unit community, situated on 9 acres, was
developed and is jointly operated by the First English Evangelical
Lutheran Church, inc., the Lutheran Home and Hospital Association and
St. Luke Lutheran Health Care, Inc. The community offers both one- and
two-bedroom apartments, and occupancy stood at approximately 87% as of
December 1996. There are 71 beds in the on-site health care center
which were 83% occupied as of December 1996.
Entrance fees range from $98,500 to $323,300, with a $15,000
second-person fee, refundable on a declining basis during the first
five years of occupancy. Monthly service fees range from $1,911 to
$3,501 with a $643 second-person fee. Services include one meal per
day, weekly flat laundry, bi-weekly apartment cleaning, utilities and
scheduled transportation, as well as unlimited access to the on-site
nursing center. Because Roland Park Place is not located within the
Project's primary market area, it is not considered to be a competitor
of Blakehurst.
REGULATORY APPROVALS
Certificate of Need and Licensure. In connection with the operation of
the comprehensive care beds in the health care center, the Partnership
has received an exemption from the certificate of need requirements
from the State of Maryland Health Resources Planning Commission
("HRPC"). HRPC has granted such exemption subject to the restrictions
that (i) the 36 comprehensive care beds will be available only for
occupancy by residents and other subscribers and (ii) the number of
comprehensive care beds may not exceed 20% of the number of residential
units in the Community.
Health Care Center Licensure. The Partnership received initial
licensure of the comprehensive and domiciliary care beds in August,
1993 and annually renews such license. Operation of comprehensive care
beds requires licensure by the state of Maryland Department of Health
and Mental Hygiene, Office of Licensing and Certification Program
("OLC") pursuant to Sections 19-318 through 19-326 of the
Health-General Article of the Annotated Code of Maryland.
Maryland Office on Aging. In 1975, the Maryland General Assembly
created the Office on Aging, by enacting the Office on Aging Statute
(currently codified in Article 70B of the Annotated Code of Maryland
1987 Cumulative Supplement). The Office on Aging was created as part of
the Executive Department and consists of a Director on Aging and the
Commission on Aging.
By the terms of the Office on Aging Statute, no provider of continuing
care, including the Partnership, is permitted to enter into or renew a
contract for continuing care in the state of Maryland without a
Certificate of Registration from the Office on Aging, which certificate
must be renewed annually within 120 days after the end of the
provider's fiscal year. The Partnership is operating under a
Certificate of Registration. The Partnership plans to renew the
Certificate of Registration prior to expiration.
To the best of the Partnership's knowledge, licenses and permits
discussed above represent all authorizations required under Maryland
law to operate the Project. Additional licensing and permit
requirements, such as annual health department inspections and other
matters, also apply to the operation of the Project. The Partnership
believes that all necessary permits, licenses, and material authority
has been obtained.
Item 2. Properties
Pursuant to the terms of the June 8, 1988 Real Property Contract, as
amended, entered into between the Partnership and The Mission Helpers
of the Sacred Heart, an order of Catholic Nuns ("Seller"), the
Partnership purchased the Property on which the community is being
constructed. The Property consists of a parcel of approximately 40.5
acres out of a total of 45 acres owned by the Seller. See "Business The
Project" for a more complete description of the Project.
The Real Estate Partnership was formed for the express purpose of
holding title to the Property. In accordance with the terms of the
Operating and Use Agreement, the Partnership purchased the Property in
the name of the Real Estate Partnership contemporaneous with the
closing on the Construction Loan and the sale of 1992 Series I Bonds,
utilizing a portion of the proceeds therefrom. See "Certain
Relationships and Related Transactions - Partnership - Real Estate
Partnership."
Item 3. Legal Proceeding
There are no legal proceedings involving the Partnership or Real Estate
Partnership.
Item 4. Submission of Matters to a Vote of Security Holders
No matter has been submitted to a vote of the Bondholders.
PART II
Item 5. Market for Registrant's Common Equity and Related Bondholder Matters
(a) Market Information
There is no established public trading market for the Bonds.
(b) Holder
There are 936 Series I Bondholders as of December 31, 1996, and 653
Series II Bondholders as of December 31, 1996.
Item 6. Selected Financial Data
The historical financial data set forth below present the combined financial
data of the Partnership and the Real Estate Partnership for the most recent five
year period. The Partnership was formed June 3, 1988 and the Real Estate
Partnership was formed April 25, 1990. The Project was initially occupied in
August, 1993. This data should be read in conjunction with the historical
financial statements and related notes included elsewhere herein. See "Certain
Relationships and Related Transactions."
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Project under development/
operating property (net) $ 28,154,615 $ 50,243,451 $ 49,024,846 $ 47,707,783 $ 48,920,626
============= ============= ============= =============== =================
Funds held in escrow under
Residency Agreements $ 5,051,235 $ 3,816,344 $ 1,426,884 $ 137,290 $ 1,280,777
============= ============= ============= =============== =================
Total assets $ 34,874,249 $ 56,347,679 $ 57,117,049 $ 54,710,509 $ 58,029,891
============= ============= ============= =============== =================
Refundable deposits,
Residency Agreements $ 4,853,427 $ 136,688 $ 664,036 $ 744,151 $ 1,635,717
============= ============= ============= =============== =================
Bonds payable $ 14,000,000 $ 14,000,000 $ 13,940,000 $ 13,935,000 $ 13,805,000
============= ============= ============= =============== =================
Loans from residents $ 0 $ 24,848,830 $ 32,033,010 $ 37,572,750 $ 39,059,790
============= ============= ============= =============== =================
Notes payable to partners $ 12,020,940 $ 12,791,217 $ 6,872,377 $ - - $ 1,600,000
============= ============= ============= =============== =================
Total liabilities $ 34,874,043 $ 55,871,597 $ 56,416,627 $ 54,941,497 $ 60,596,908
============= ============= ============= =============== =================
Partners'equity (deficit)$ 206 $ 476,082 $ 700,424 $ (230,988) $ (2,567,017)
============= ============= ============= =============== =================
STATEMENT OF OPERATIONS DATA:
Total revenues $ 0 $ 686,020 $ 3,980,861 $ 7,666,447 $ 7,560,999
============= ============= ============= =============== =================
Operating expenses $ 0 $ 210,144 $ 3,130,068 $ 7,527,620 $ 7,219,031
============= ============= ============= =============== =================
Net income (loss) $ 0 $ 475,876 $ 224,342 $ (1,281,390) $ (736,029)
============= ============= ============= =============== =================
</TABLE>
Item 7. Management's Discussion and Analysis of The Chestnut Partnership and
the Chestnut Real Estate Partnership
Overall Financial Condition. The Community's Phase I consists of 177 residential
apartment units and a 50-bed health center. As of December 31, 1996, 171 of the
residential units (97%) had been reserved or occupied.
During 1996, emphasis was placed on move-ins and reselling and closing 6 of the
9 units in Phase I that became available due to attrition, and closing 3 units
for the first time. At December 31, 1996, there are 8 units sold pending
closing.
During 1996 the working capital funds of $1,350,000, as required by the Bond
documents, were established and the Phase II activities completed. Phase II
consisted of an auditorium addition and a renovation of a carriage house, both
of which provide more common areas. The Phase II construction cost approximately
$350,000 and was funded by the Partners through capital contributions in 1995.
Distributions to the partners were made from the proceeds of closing the
remaining previously unsold units and from net attrition income.
Because Phase I is 97% sold, the Partnership has begun the development of Phase
III - a 35 unit expansion. Regulatory approval was obtained in April 1996 and
reservations in the form of refundable deposits of Admission Fees were accepted.
As of December 31, 1996, all 35 units were reserved.
The overall impact of Phase III will be to substantially increase the net
operating revenue without substantially increasing the fixed operating costs.
Results of Operations. Occupancy began in late August, 1993. Occupancy increased
from 133 units (75%) at December 31, 1994, to 154 units (87%) at December 31,
1995, to 163 units (92%) at December 31, 1996.
In 1996 total revenue decreased marginally (-1.4%), even though apartment
service fees revenue increased almost 19%. The apartment service fee revenue
increased because of a fee increase of 5% effective January 1, 1996, and because
the average number of units occupied increased approximately 11%. Health Center
revenues increased in 1996 by 10% over 1995 Health Center revenues because of an
increase in average occupancy of approximately 5% and a rate increase of
approximately 6% effective July 1, 1996. The amortization of non-refundable
admission fees declined by enough to offset all of these increases. The
amortization declined due to fewer move-ins in 1996 when total occupancy
increased 5% compared to a total increase of 12% in 1995.
Total operating expense declined 4% in 1996 compared to 1995 because of a
decrease in development fee amortization as fewer move-ins occurred (it is
amortized pro rata with the amortization of non refundable admission fees).
There was a decrease in general and administrative expenses due to expense
control activities. Operating expenses for resident care, dietary, plant and
housekeeping increased as occupancy increased.
Interest expense declined in 1996 because all Advances Payable to Partners
received prior to December 31, 1994, had been repaid by December 31, 1995. New
advances of $1,600,000 were reserved as described below, in conjunction with
Phase III construction.
As in 1994, meaningful comparisons of 1995 to 1994 operating revenues and
expenses relating to resident activities cannot be made. In 1994, operating
revenues and expenses relating to resident activities were capitalized for 7.5
months. Consequently, comparing a 12 month period (1995) to a 4.5 month period
(1994) cannot be meaningful.
However, certain comparisons may be made as between 1995 and 1994:
* In 1995, Admission Fees revenue was slightly lower than in 1994 as
the community moved from 75% occupancy to 88% occupancy at the end
of 1995 -- a 13% increase -- compared to a 15% increase in
occupancy in 1994.
* Increased occupancy and a 5% monthly service fee increase in
January 1995 also increased the Apartment revenues.
* Health Center revenues increased in 1995 due to increased
reimbursement from third party payers.
* Revenue from Capital Reserve Fees also declined as fewer
residents moved in during 1995, compared to 1994.
* Increases in expenses, when compared to increased occupancy
explains the increases in Operating expenses, except for General
and Administrative expenses and Plant expenses. Plant expenses
increased as the community assumed full responsibility for the
grounds and structures, in the absence of usual one year warranties
provided by the contractors. General and Administrative expenses
increased as more marketing and sales expenditures were made to
complete the initial sales of all units within a reasonably short
period of time.
* Because the Development Fee expense is amortized pro rata with the
amortization of the non-refundable Admission Fees, the decrease in
Development Fee expense declined as the Admission Fee revenue
declined
Liquidity and Capital Resources. As of May 28, 1992, significant financing
activities were concluded. Construction financing and long-term financing both
were achieved on that date. Construction financing in the amount of $20,000,000
from a group of lenders was achieved and the Partnership raised $14,000,000
(before deduction of costs of underwriting) through long-term financing.
The Partnership in May 1992 issued two types of taxable bonds. One type was
issued in an underwritten public offering of $8,000,000 principal amount of
Blakehurst 10 Year Put Option Mortgage Bonds 1992, Series I. Also in May 1992,
the Partnership issued in a private transaction to affiliates of the
Partnership, a total of $6,000,000 principal amount of Blakehurst Retirement
Community Put Option Bonds, Private Placement Series on terms substantially
identical to the public offering except that the Private Placement Bonds
provided for redemption of such bonds from the proceeds of the sale of 1992
Series II Bonds. The affiliates of the Partnership re-sold the 1992 Series II
Bonds in the amount of $6,000,000 in August 1992.
During 1993, the construction loan was borrowed and repaid.
Scheduled repayment of Series I and II Bonds began in 1995, during which $65,000
of principal was paid to the bondholders; in 1996, $130,000 of principal was
paid.
Also during 1995, Advances Payable to Partners in the amount of $6,872,377 were
paid. These advances had been made in conjunction with the original financing in
1992. During 1994, $5,918,840 of Advances Payable to Partners had been repaid.
As of December 31, 1995, there were no Advances Payable to Partners.
All of the repayment of the construction loan and Advances Payable to Partners
was ultimately funded by Residency Loans. The majority of the capital
expenditures are therefore made from Residency Loans.
During 1995, the Partners made capital contributions of $349,978 towards the
construction of the auditorium and renovation of a carriage house (Phase II),
which is complete.
Phase III expansion, described under Item 1, is estimated to cost approximately
$10,600,000, which includes the construction management fee to Mullan and
development fee to LCSD. To fund the expansion, the Partners expect to obtain
permanent parity debt financing of $1,900,000 and resident loans and fees of
$8,700,000. Construction period financing will be provided by the Partners.
During 1996 the Partnership distributed $1,600,000 to the Partners after working
capital reserve requirements of $1,350,000 as defined in the bond documents were
established. The Partners advanced $1,600,000 to the Partnerships in 1996 in
connection with Phase III.
As of December 31, 1996, all 35 units in the Phase III expansion had been
reserved by receipt of a deposit. Occupancy is expected to begin in late summer
1997.
During late 1994, a new residency agreement was introduced, as described above
Traditional Plan. The economic impact is to reduce the total initial loans from
residents. The Partners believe, however, the receipt of monthly service fees
due to more rapid increase in occupancy, is better for the community as a whole.
The Partners are therefore deferring receipt of the optimum proceeds until the
units are resold under a Return of Capital Residency agreement.
Net cash provided by operating activities in 1996 improved approximately
$775,000. Major contributing factors to this were:
<TABLE>
<CAPTION>
<S> <C>
* Better operating results due to increased occupancy and control of expenses $545,000
* Decreased amortization of non refundable fees and development fees 509,000
* Increased operating assets and liabilities 349,000
* Decrease in Admission fees due to fewer move-ins (638,000)
</TABLE>
Net cash provided by operating activities in 1995 was essentially the same as in
1994. Admission Fees received increased substantially due to move ins to larger
apartments. This increase was offset by the increased interest cost because
interest cost was capitalized during the initial 7.5 months of 1994, and
expensed for all of 1995.
Net cash used in investing activities in 1996 increased significantly because of
these major contributing factors:
<TABLE>
<CAPTION>
<S> <C>
* Receipt of Admission Fees from perspective Phase III residents, placed in escrow $893,000
* Net cash balance increase from Partners of Phase III construction funds 556,000
* Additions to operating property greater than in 1995, essentially because of (2,069,000)
Phase III construction
* Increase in health center reserves due to increased permanent assignments 682,000
* Increase in construction costs payable 1,650,000
</TABLE>
In 1995, the substantial decrease in net cash used in investing activities
relates primarily to much lower capital expenditures in 1995 compared to 1994.
In 1995, the auditorium addition was the major capital expenditure, and was
funded by the Partners.
Net cash provided by financing activities increased approximately $3,000,000 in
1996 compared to 1995 because of the repayment of all Partner Advances in 1995
($6,872,000) and the decline in net new resident loans of $3,300,000.
Because occupancy of Phase I units continues to now exceed 90%, the introduction
of new residency agreement types in 1994, the complete pre-sale of Phase III,
the resident financing, and the long-term financing described above, the
Partnership believes adequate capital resources are available.
The long-term success of the project is, however, ultimately dependent upon
marketing of substantially all available units and health center beds,
maintaining adequate levels of occupancy, and operating the Project efficiently.
Item 8. Financial Statements and Supplementary Data
See pages 27 through 45 for financial statement information.
Item 9. Change in and Disagreement with Accountants on Accounting and Financial
Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has three general partners: West Joppa with a 1% interest,
Blakehurst Joint Venture with a 1% interest and the Real Estate Partnership with
a 98% interest. The Real Estate Partnership has in turn two general partners:
West Joppa and Blakehurst Joint Venture, each with a 50% interest.
GENERAL PARTNERS
Blakehurst Joint Venture (BJV). BJV is an Iowa general partnership formed
December 16, 1991, for the sole purpose of holding partnership interests in the
Partnership and the Real Estate Partnership. The general partners of BJV are
Chestnut Village, Inc. (Chestnut Village) and Prime Holdings, Inc. (Prime
Holdings). Both Chestnut Village and Prime Holdings were formed for the sole
purpose of acting as general partners of BJV.
Chestnut Village, Inc.. Chestnut Village is an Iowa corporation formed February
1, 1988. On February 28, 1995, Chestnut Village's only shareholder and parent,
Continuing Care Communities of America, Inc. (CCCA), an Iowa Corporation,
changed its name to Home Health Care Services Corporation (HHCSC) at the time of
HHCSC's merger into CCCA. At the same time, CCCA's only shareholder and parent,
The Weitz Corporation (Weitz), an Iowa corporation, changed its name to LCS
Holdings, Inc. (Holdings). Holdings, through one of its two principal
subsidiaries, LCS, engages in the development and operation of life care
facilities across the United States.
The directors and executive officers of Chestnut Village are as follows:
Stan G. Thurston, age 50, has served as a director and President and Chief
Executive Officer of Chestnut Village since February, 1990. He has also served
as a director and the President and Chief Operating Officer of LCS since 1990,
being named CEO in March, 1995. He is a director, President, and CEO of
Holdings. Mr. Thurston joined LCS in 1977 as project development manager, was
promoted to Vice President in 1979, and was responsible for managing LCS's
nationwide development until February of 1987. From then until 1990, Mr.
Thurston served as Vice President-Operations Management.
Stephen J. Hoover, age 46, has served as the Secretary of Chestnut since March
of 1995, and has been a director and Secretary for LCS and Holdings since March,
1995; Mr. Hoover is a director of Holdings. Mr. Hoover joined LCS as Project
Development Manager in 1984 and was promoted to Senior Project Development
Manager in 1986. Mr. Hoover was named Vice President/Director of Development in
1987 and Senior Vice President of Marketing and Sales in 1991. Prior to 1984,
Mr. Hoover served with The Weitz Company, Inc. as Project Engineer (1976),
Construction Manager (1977), Project Manager (1978), and Senior Project Manager
(1981).
Arthur V. Neis, age 56, a Certified Public Accountant, has served as the
Treasurer and Chief Financial Officer of Chestnut Village since February 1988,
and has been the Treasurer and Chief Financial Officer of Holdings, LCS and
Weitz since 1987. He has been a director of Holdings since March 1995. Mr. Neis
joined Weitz in 1986 as Controller. Prior to then, Mr. Neis was the Controller
of Fru-Con Corporation, a construction company located in St. Louis, Missouri.
Edward R. Kenny, age 41, has served as the Senior Vice President of Chestnut
Village since April 1990, and has been the Senior Vice President of LCS,
responsible for operations management since April 1990. He has been a director
of Chestnut Village and Holdings since March 1995. Mr. Kenny joined LCS in 1979
as administrator-in-training, was promoted to administrator in 1980, and
regional administrator in 1985 before being named Director of Operations
Management in 1987.
Mary Harrison, age 46, has served as a director and Vice President of Chestnut
Village since March of 1995, and has been a Vice President/Director of
Operations Management of LCS since 1992. Ms. Harrison joined LCS in 1981 as
administrator-in-training and was promoted to administrator in 1983. In 1985,
she was promoted to regional administrator and acquired responsibility for
overseeing the various home health agencies affiliated with LCS. Ms. Harrison
became an assistant director of operations management in 1990 and was promoted
to Director of Operations Management in 1991.
All members of the Board of Directors of each of Chestnut Village, LCS, and
Holdings are elected by the stockholders of such companies at the annual
stockholders' meeting for a term of one year; all of the officers of each of
Chestnut Village, LCS, and Holdings are appointed by the directors of such
companies at the annual directors' meeting and serve for a term of one year.
Prime Holdings, Inc. Prime Holdings is an Iowa corporation and the direct,
wholly-owned subsidiary of IASD Health Services Corp., an Iowa corporation. The
directors of Prime Holdings are Robert G. Millen, Craig Hennesy, and Richard A.
Stilley, all residents of Des Moines, Iowa. Mr. Millen, age 50, has been a
director and the President of Prime Holdings since December 1991.
Mr. Millen also serves as Chief Development Officer of IASD, a position he has
held since August 1990. Prior to joining IASD, Mr. Millen was a Chief Executive
Officer of Boatmen's National Bank of Des Moines.
Mr. Hennesy, age 52, has been a director of Prime Holdings since December 1991.
Mr. Hennesy has also served as Chief Operating Officer of IASD since April 1989.
From 1987 to April 1989, Mr. Hennesy was Senior Vice President, Internal
Operations for IASD.
Richard A. Stilley, age 49, has been a director of Prime Holdings since December
1991. Mr. Stilley has also served as Chief Administrative Officer for IASD since
September 1989. Prior to that time, Mr. Stilley served as Corporate Counsel for
IASD.
Michele A. Druker, age 41, has been Secretary of Prime Holdings since December
1991. Ms. Druker has also served as Associate Counsel for IASD since April 1988
and as of January 1996, she served as General Counsel. Prior to that time, Ms.
Druker was an attorney with Dickinson, Throckmorton, Parker, Mannheimer and
Raife, Des Moines, Iowa.
Richard C. Anderson, age 43, has been Treasurer of Prime Holdings, Inc. since
December 1991. Mr. Anderson has also served as Senior Vice President, Finance
Division, for IASD Health Services Corp. since November 1983.
The West Joppa Road Limited Partnership. West Joppa Road is a limited
partnership organized under the laws of Maryland for the sole purpose of holding
partnership interests in the Partnerships. West Joppa Road has two general
partners, Rosedale Care, Inc., and Continental Care, Inc., and several limited
partnerships of which the majority partners are directly or indirectly Thomas F.
Mullan, III; John A. Luetkemeyer, Jr.; and J. Mark Schapiro.
Rosedale Care, Inc. Rosedale Care, Inc. is a Maryland corporation formed in 1991
for the purpose of acting as a corporate general partner of West Joppa Road
Limited Partnership in connection with the Project. The President, Treasurer,
and sole director of Rosedale Care, Inc. is Thomas F. Mullan, III.
Thomas F. Mullan, III, age 53, serves as President and Treasurer of Rosedale
Care, Inc. and has served in such capacities since Rosedale Care, Inc.'s
formation in December 1991. Mr. Mullan served as the Chairman and Chief
Executive Officer of both The Mullan Contracting Company, Inc. and Mullan
Enterprises, Inc. for the past six years, and owns 51% of the common stock of
Mullan Enterprises, Inc.
Norman W. Wilder, age 36, is Vice President and Secretary of Rosedale Care, Inc.
and President and Treasurer of Mullan Enterprises, Inc. Mr. Wilder has served as
the Chief Financial Officer of Rosedale Care, Inc. since December 1991 and other
Mullan Enterprises, Inc. affiliates since June 1991. Prior to June 1991, Mr.
Wilder was employed by the accounting firm of Wolpoff & Co. for five years.
Directors of all of Rosedale Care, Inc., The Mullan contracting Company, Inc.,
and Mullan Enterprises, Inc. are each elected by the stockholders of such
companies to serve for a term of one year; officers are appointed by the
directors of such companies and serve for a term of one year.
Continental Care, Inc. Continental Care is a Maryland Subchapter S corporation
formed in 1985 for the purpose of acting as a corporate general partner of West
Joppa Road Limited Partnership in connection with the Project. John A.
Luetkemeyer, Jr., age 55, and J. Mark Schapiro, age 53, are the two directors of
Continental Care.
Mr. Luetkemeyer also serves as the President and Treasurer of Continental Care
and Mr. Schapiro is its Vice President, and Secretary. Since 1980, Mr.
Luetkemeyer has primarily been responsible for overseeing the development of the
real estate operations of Continental Realty Corporation, a Baltimore-based real
estate development and management company which holds and manages over 4,000
residential apartments and seventeen commercial and retail properties.
Mr. Schapiro, as Vice President of Continental Realty Corporation, has been
responsible primarily for the management of its properties since 1980. From 1982
to 1988, Mr. Schapiro and Mr. Luetkemeyer were also part owners of JF Theaters,
Inc., an owner/operator of 17 movie theaters located throughout the greater
Baltimore metropolitan area.
Messrs. Mullan, Wilder, Luetkemeyer, and Schapiro are all residents of Maryland.
None of the individual directors and/or officers of BJV, West Joppa, Chestnut
Village, Prime Holdings, Continental Care or Rosedale receive any salary or
other renumeration solely for serving as representatives of such entities.
Item 11. Executive Compensation
None
Item 12. Security Ownership of Certain Beneficial Owners and Management
On January 28, 1995, shareholders of Weitz approved a Split-Off Agreement and
Plans of Reorganization (Plan), which was effective March 1, 1995. Pursuant to
this Plan, Weitz split-off certain of its subsidiaries in a partially tax free
exchange of stock with certain of its shareholders and changed its name to LCS
Holdings, Inc.
Following this transaction, and as of December 31, 1996, the following table
sets forth certain information as to the number of shares of common stock of
Holdings owned by (i) each person who is known by Holdings to own beneficially
5% or more of the Holdings common stock, (ii) each director of Holdings, and
(iii) all directors and officers of Holdings as a group. As of such date, there
were 38,842 shares of Holdings common stock outstanding. Holdings common stock
was the only class of voting securities of Holdings outstanding.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address (2) of Beneficial Ownership (1)(4) of Class
-------------------- ------------------------------ --------
<S> <C> <C>
Stan G. Thurston, Director 20,469 (3) 52.8%
President & CEO
Stephen J. Hoover, Director 16,477 (3) 42.4%
Senior Vice President of Marketing & Sales
Arthur V. Neis, Director 14,669 (3) 37.8%
Treasurer & CFO
Edward R. Kenny, Director 14,062 (3) 36.2%
Senior Vice President/Operations Management
Mary J. Harrison, Director 13,726 (3) 35.4%
Vice President/Director of Operations Management
LCS Holdings, Inc. 12,750 32.8%
Employee Stock Ownership Plan
c/o Bankers Trust, N.A., Trustee
665 Locust
Des Moines, IA 50309
Joseph M. Brucella, Director 953 2.5%
Vice President/Director of Operations Management
Malcolm K. Booher, Director 1,327 3.4%
Vice President/Director of Operations Management
Rick W. Exline, Director 1,025 2.6%
Vice President/Director of Operations Management
LisJ Everly, Director 0 0%
Director of Human Resources
Kent C. Larson, Director 1,026 2.6%
Vice President/Director of Project Development
Joseph A. Martin, Director 1,316 3.4%
Vice President/Director of Operations Management
Edward J. Nichols, Director 820 2.1%
Director of Finance & Property Development
Richard L. Seibert, Director 909 2.3%
Director of Corporate Marketing/Consulting
Terrance M. Ward, Director 1,124 2.9%
Vice President/Director of Occupancy Development
All Officers and Directors as a group (14 persons) 36,903 (3) 95.0%
</TABLE>
- --------------------
(1) Except as otherwise indicated, each shareholder has sole power to vote
and to dispose of all of the Holdings common stock listed opposite
their name.
(2) Address is c/o LCS Holdings, Inc., 800 Second Avenue, Suite 200, Des
Moines, Iowa 50309, unless otherwise noted.
(3) Includes 12,750 shares held by the LCS Holdings, Inc. Employee Stock
Ownership Plan over which the individual shares voting power and
investment power as a member of the ESOP Committee for the Plan.
(4) All directors participate in a Director Stock Compensation Plan which
has granted each the right to exercise an option for up to 150 shares
of stock of LCS Holdings, Inc. at a price per share that is less than
the fair market value at the date of the grant. Such options expire
March 31, 2004.
The following table sets forth as of December 31, 1996 certain information as to
the number of shares of non-voting preferred stock of Holdings owned by (i) each
person who is known by Holdings to own beneficially five percent (5%) or more of
the Holdings preferred stock, (ii) each director of Holdings, and (iii) all
directors and officers of Holdings as a group. As of such date there were 20,000
shares of Holdings preferred stock outstanding and the Holdings non-voting
preferred stock outstanding was the only class of equity security of Holdings
outstanding other than shares of Holdings common stock referenced above.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address of Beneficial Ownership (1) of Class
---------------- --------------------------- --------
<S> <C> <C>
Essex Meadows, Inc. and subsidiaries 20,000 100%
800 Second Avenue, Suite 110
Des Moines, IA 50309
</TABLE>
- ----------------------
(1) Direct ownership is held by a wholly owned subsidiary of Essex Meadows,
Inc.
Item 13. Certain Relationships and Related Transactions
Partnership - Real Estate Partnership. The Partnership was originally organized
June 3, 1988 and had two general partners, Chestnut Village and West Joppa, each
holding a 50% interest. The Real Estate Partnership was organized April 25, 1990
and had two general partners, Chestnut Village and West Joppa, each holding a
50% interest. On April 25, 1990, each of Chestnut Village and West Joppa
transferred and assigned 98% of their respective partnership to the Real Estate
Partnership. The transfer resulted in the Partnership being comprised of three
general partners: the Real Estate Partnership with a 98% interest, and Chestnut
Village and West Joppa, each with a 1% interest. On December 16, 1991, Chestnut
Village transferred its interests in the Partnership and the Real Estate
Partnership to BJV.
The Partnership and the Real Estate Partnership entered into an operating and
use agreement (the "Operating and Use Agreement"), which obligates the
Partnership to purchase the Property in the name of the Real Estate Partnership
and to develop, operate and manage the Project at the Partnership's expense.
Under the Operating and Use Agreement, the Partnership pays to the Real Estate
Partnership an annual use fee equal to the Real Estate Partnership's projected
taxable loss for federal income tax purposes for each year, to the extent
required for federal income tax purposes. As of this date, the Partnership
anticipates that no annual use fee will be required to be paid. During the term
of the Operating and Use Agreement, the Partnership has the right to receive and
retain all revenues from the Project. The Operating and Use Agreement will
terminate upon the dissolution, liquidation, or other termination of the
Partnership or upon acceleration by the Trustee of the principal of and accrued
interest on the 1992 Series I Bonds following an Event of Default under the
Indenture.
Under the Operating and Use Agreement, the Real Estate Partnership has
guaranteed the performance by the Partnership of its obligations under the
Residency Agreements. The covenants, agreements and, undertakings contained in
the Operating and Use Agreement are for the express benefit of, and are
expressly enforceable by, residents of the Community.
Construction Manager. The Weitz Company, Inc. ("Weitz Construction"), until
March 1, 1995 a wholly-owned subsidiary of The Weitz Corporation, was the
construction manager for the Project. Weitz Construction was affiliated until
March 1, 1995 with Continuing Care Communities of America, Inc. (now renamed
Home Health Care Services Corporation), also a wholly-owned subsidiary of the
Weitz Corporation (now renamed LCS Holdings, Inc.), which in turn owns 100% of
Chestnut Village, Inc., one of the general partners of BJV, which is a general
partner of both the Partnership and the Real Estate Partnership. The
construction of Phase I was completed in early 1994. There are no contractual
matters yet to be resolved relating to this construction management agreement.
Mullan Contracting Company, an affiliate of Rosedale Care, Inc., is the
construction manager for Phase II, now completed, and Phase III, now underway.
Mullan Contracting is to receive a fixed fee of $371,571 of which $94,794 was
earned in 1996, and $25,001 in 1995, plus reimbursement of certain costs. The
contract contains a guaranteed maximum cost and general conditions guarantee,
together with a provision for sharing any savings.
Developer. The Partnership has retained LCS to assist it in developing the
Project. Under the terms of the Development Agreement, the Partnership agreed to
pay LCS a Phase I development fee (the "Development Fee") consisting of 4.75% of
the total Project costs, excluding certain costs, as budgeted prior to
construction and approved by LCS and the Partnership. Additionally, the
Partnership has agreed to reimburse LCS for certain out-of-pocket costs incurred
by LCS in the performance of the Development Agreement. Such Development
Agreement was completely paid in 1993.
In December, 1994, the Development Agreement was amended (Amendment #1) to
include terms relative to Phase II. The Amendment #1 provided that Rosedale
Care, Inc. and Continental Care, Inc., partners of West Joppa, would jointly and
severally, with LCS, be responsible for providing marketing, interior
decoration, and be primarily responsible for community relations. Further, Phase
II development fees were to be paid one-half to LCS and one quarter each to
Rosedale Care, Inc. and Continental Care, Inc.
In October 1996 the Development Agreement was further amended (Amendment #2)
with regard to Phase III. The Amendment #2 provides that Life Care Services
Development Corporation, a subsidiary of LCS, shall provide development services
for Phase III, receiving a total fee of $585,000, none of which was paid in
1996. The Amendment #2 also eliminated any development fee being paid to
Rosedale Care, Inc., or Continental Care, Inc.
BJV - West Joppa. The Partners had advanced to the Partnership a total of
$6,872,377 as of December 31, 1994, which funds were used to defray certain
development, marketing and other costs of the Project. All such advances were
repaid in 1995.
Trustee's Counsel. Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, Iowa
("Davis, Brown"), has acted as Trustee's counsel in connection with the issuance
of the 1992 Series I Bonds. A. Arthur Davis, a partner at Davis, Brown, was a
director of The Weitz Corporation through February, 1995. David S. Strutt, an
employee of Weitz Construction, served as General Counsel and Secretary through
February, 1995 of Chestnut Village, LCS, The Weitz Corporation, and Weitz
Construction and was formerly a partner at Davis, Brown.
During 1996, Donald J. Brown, a partner at Davis, Brown, has been outside
general counsel to LCS and Holdings.
PART IV
<TABLE>
<CAPTION>
Page No.
--------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
<S> <C> <C> <C>
(a) Documents Filed as a Part Hereof
(1) Separate and Combined Financial Statements - The
Chestnut Real Estate Partnership and The Chestnut
Partnership
Report of Independent Auditors 27
Separate and Combined Balance Sheets, December 31, 1996 and
1995 28
Separate and Combined Statements of Operations for the
years ended December 31, 1996, 1995, and 1994 30
Separate and Combined Statements of Partner's Equity (Deficit)
for the years ended December 31, 1996, 1995, and 1994 33
Separate and Combined Statements of Cash Flows for the years
ended December 31, 1996, 1995, and 1994 34
Notes to Financial Statements 37
(2) Exhibits. The Exhibits listed on the Index to
Exhibits appearing on page 46
(b) Reports on Form 8-K
None
</TABLE>
[LOGO]
COOPERS & LYBRAND
Report of Independent Accountants
To the Partners
The Chestnut Real Estate Partnership
and The Chestnut Partnership:
We have audited the accompanying separate and combined balance sheets of The
Chestnut Real Estate Partnership (a general partnership) and The Chestnut
Partnership (a general partnership) as of December 31, 1996 and 1995, the
related separate and combined statements of operations, statements of partners'
equity (deficit) and cash flows for the years ended December 31, 1996, 1995 and
1994. These financial statements are the responsibility of the Partnerships'
management. Our responsibility is to express an opinion on these separate and
combined financial statements 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 separate and combined financial statements referred to above
present fairly, in all material respects, the financial position of The Chestnut
Real Estate Partnership and The Chestnut Partnership as of December 31, 1996 and
1995, the results of their operations and cash flows for the years ended
December 31, 1996, 1995 and 1994, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Des Moines, Iowa
February 28, 1997
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland.
THE CHESTNUT REAL ESTATE PARTNERSHIP AND
THE CHESTNUT PARTNERSHIP
<TABLE>
<CAPTION>
SEPARATE AND COMBINED BALANCE SHEETS
DECEMBER 31, 1996
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
ASSETS PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,394,227 $ 1,394,227
Accounts receivable 197,444 197,444
Prepaid expenses and other 274,133 274,133
Assets whose use is limited or restricted:
Under bond indenture agreements, held by trustee 393,293 393,293
Under letter of credit agreements, held in escrow 57,874 57,874
--------------- ---------------
Total current assets 2,316,971 2,316,971
Assets whose use is limited or restricted:
Under bond indenture agreements, held by trustee 1,591,297 1,591,297
Under residency agreements, held in escrow 1,280,777 1,280,777
Health Center reserves 751,627 751,627
Phase III construction funds 555,721 555,721
Operating property, at cost 305,421 $ 48,615,205 48,920,626
Costs of acquiring initial contracts 1,701,335 1,701,335
Deferred bond financing costs 911,537 911,537
--------------- --------------- ---------------
Total assets $ 9,414,686 $ 48,615,205 $ 58,029,891
=============== =============== ===============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities:
Bonds payable, current portion $ 150,000 $ 150,000
Accounts payable 149,151 149,151
Accrued expenses 213,581 213,581
Accrued property taxes 142,485 142,485
Accrued interest payable 235,595 235,595
Refundable deposits, residency agreements 743,167 743,167
--------------- ---------------
Total current liabilities 1,633,979 1,633,979
Construction costs payable 1,703,277 1,703,277
Refundable deposits, escrowed 892,550 892,550
Bonds payable, less current portion 13,655,000 13,655,000
Loans from residents 39,059,790 39,059,790
Advances payable to partners 1,600,000 1,600,000
Deferred revenues from admission fees 2,052,312 2,052,312
Equity in deficit of The Chestnut Partnership $ 51,182,222
--------------- --------------- ---------------
Total liabilities 60,596,908 51,182,222 60,596,908
Commitments and contingencies
Partners' deficit (51,182,222) (2,567,017) (2,567,017)
--------------- --------------- ---------------
Total liabilities and partners' deficit $ 9,414,686 $ 48,615,205 $ 58,029,891
=============== =============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED BALANCE SHEETS
DECEMBER 31, 1995
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
ASSETS PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 601,767 $ 601,767
Accounts receivable 270,498 270,498
Prepaid expenses and other 297,110 297,110
Assets whose use is limited or restricted:
Under bond indenture agreements, held by trustee 455,790 455,790
Under letter of credit agreements, held in escrow 109,697 109,697
--------------- ---------------
Total current assets 1,734,862 1,734,862
Assets whose use is limited or restricted:
Under bond indenture agreements, held by trustee 1,502,481 1,502,481
Under residency agreements, held in escrow 137,290 137,290
Health Center reserves 806,490 806,490
Operating property, at cost 531,145 $ 47,176,638 47,707,783
Costs of acquiring initial contracts 1,861,460 1,861,460
Deferred bond financing costs 960,143 960,143
--------------- --------------- ---------------
Total assets $ 7,533,871 $ 47,176,638 $ 54,710,509
=============== =============== ===============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities:
Bonds payable, current portion $ 130,000 $ 130,000
Accounts payable 107,384 107,384
Accrued expenses 159,891 159,891
Accrued property taxes 163,641 163,641
Accrued interest payable 217,216 217,216
Advances payable 190,153 190,153
Refundable deposits, residency agreements 744,151 744,151
--------------- ---------------
Total current liabilities 1,712,436 1,712,436
Construction costs payable 55,719 55,719
Bonds payable, less current portion 13,805,000 13,805,000
Loans from residents 37,572,750 37,572,750
Deferred revenues from admission fees 1,795,592 1,795,592
Equity in deficit of The Chestnut Partnership $ 47,407,626
--------------- --------------- ---------------
Total liabilities 54,941,497 47,407,626 54,941,497
Commitments and contingencies
Partners' deficit (47,407,626) (230,988) (230,988)
--------------- --------------- ---------------
Total liabilities and partners' deficit $ 7,533,871 $ 47,176,638 $ 54,710,509
=============== =============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C>
Revenues:
Amortization of nonrefundable admission fees $ 895,120 $ 895,120
Apartment revenues 4,663,281 4,663,281
Health Center revenues 1,917,684 1,917,684
Capital reserve fees 50,304 50,304
Other revenue 34,610 34,610
Income from The Chestnut Partnership $ 483,601
--------------- --------------- ---------------
Total revenues 7,560,999 483,601 7,560,999
--------------- --------------- ---------------
Operating expenses:
Development fee amortization 226,129 226,129
General and administrative 1,671,803 1,671,803
Resident care 1,450,840 1,450,840
Dietary 1,283,991 1,283,991
Plant 814,717 814,717
Housekeeping 338,769 338,769
Depreciation and amortization 213,152 1,219,630 1,432,782
--------------- --------------- ---------------
Total expenses 5,999,401 1,219,630 7,219,031
--------------- --------------- ---------------
Income (loss) from operations 1,561,598 (736,029) 341,968
--------------- --------------- ---------------
Other income (expense):
Interest income 246,019 246,019
Interest expense (1,324,016) (1,324,016)
--------------- ---------------
(1,077,997) (1,077,997)
--------------- --------------- ---------------
Net income (loss) $ 483,601 $ (736,029) $ (736,029)
=============== =============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C>
Revenues:
Amortization of nonrefundable admission fees $ 1,878,879 $ 1,878,879
Apartment revenues 3,920,710 3,920,710
Health Center revenues 1,740,580 1,740,580
Capital reserve fees 92,642 92,642
Other revenue 33,636 33,636
Loss from The Chestnut Partnership $ (70,280)
--------------- --------------- ---------------
Total revenues 7,666,447 (70,280) 7,666,447
--------------- --------------- ---------------
Operating expenses:
Development fee amortization 700,458 700,458
General and administrative 1,835,051 1,835,051
Resident care 1,330,434 1,330,434
Dietary 1,179,834 1,179,834
Plant 762,368 762,368
Housekeeping 295,214 295,214
Depreciation and amortization 213,151 1,211,110 1,424,261
--------------- --------------- ---------------
Total expenses 6,316,510 1,211,110 7,527,620
--------------- --------------- ---------------
Income (loss) from operations 1,349,937 (1,281,390) 138,827
--------------- --------------- ---------------
Other income (expense):
Interest income 232,282 232,282
Interest expense (1,652,499) (1,652,499)
--------------- ---------------
(1,420,217) (1,420,217)
--------------- -------------- ----------------
Net loss $ (70,280) $ (1,281,390) $ (1,281,390)
=============== =============== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C>
Revenues:
Amortization of nonrefundable admission fees $ 1,971,147 $ 1,971,147
Apartment revenues 1,293,654 1,293,654
Health Center revenues 547,891 547,891
Capital reserve fees 156,329 156,329
Other revenue 11,840 11,840
Income from The Chestnut Partnership $ 653,338
--------------- --------------- ---------------
Total revenues 3,980,861 653,338 3,980,861
--------------- --------------- ---------------
Operating expenses:
Development fee amortization 782,253 782,253
General and administrative 553,016 553,016
Resident care 473,005 473,005
Dietary 444,623 444,623
Plant 252,205 252,205
Housekeeping 115,982 115,982
Depreciation and amortization 79,988 428,996 508,984
--------------- --------------- ---------------
Total expenses 2,701,072 428,996 3,130,068
--------------- --------------- ---------------
Income from operations 1,279,789 224,342 850,793
--------------- --------------- ---------------
Other income (expense):
Interest income 106,588 106,588
Interest expense (733,039) (733,039)
--------------- ---------------
(626,451) (626,451)
--------------- --------------- ---------------
Net income $ 653,338 $ 224,342 $ 224,342
=============== =============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED STATEMENTS OF PARTNERS' EQUITY (DEFICIT) FOR THE YEARS
ENDED DECEMBER 31, 1996, 1995 AND 1994
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C> <C>
Balance, January 1, 1994 $ (39,627,518) $ 476,082 $ 476,082
Net income 653,338 224,342 224,342
Transfer of project under development assets to
The Chestnut Real Estate Partnership (8,118,639)
--------------- --------------- ---------------
Balance, December 31, 1994 (47,092,819) 700,424 700,424
Net loss (70,280) (1,281,390) (1,281,390)
Transfer of project under development assets to
The Chestnut Real Estate Partnership (594,505)
Contributions from partners 349,978 349,978 349,978
--------------- --------------- ---------------
Balance, December 31, 1995 (47,407,626) (230,988) (230,988)
Net income (loss) 483,601 (736,029) (736,029)
Transfer of project under development assets to
The Chestnut Real Estate Partnership (2,658,197)
Distributions to partners (1,600,000) (1,600,000) (1,600,000)
--------------- --------------- ---------------
Balance, December 31, 1996 $ (51,182,222) $ (2,567,017) $ (2,567,017)
=============== =============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 483,601 $ (736,029) $ (736,029)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 1,219,330 1,219,630
Other amortization 213,152 213,152
Amortization of nonrefundable admission fees (895,120) (895,120)
Amortization of development fees 226,129 226,129
Admission fees received 1,151,840 1,151,840
Partnership income (483,601)
Change in operating assets and liabilities:
Accounts receivable 73,054 73,054
Prepaid expenses and other 22,977 22,977
Accounts payable 41,767 41,767
Accrued expenses 50,913 50,913
---------------- ---------------- ----------------
Net cash provided by operating activities 1,368,313 - 1,368,313
---------------- ---------------- ----------------
Cash flows from investing activities:
Increase in funds escrowed under residency agreements (1,143,487) (1,143,487)
Additions to operating property (2,663,023) (2,663,023)
Increase in construction payable 1,647,558 1,647,558
Increase in Phase III construction funds from partner advances (555,721) (555,721)
Increase in assets held by trustee (26,319) (26,319)
Decrease in funds escrowed under letter of credit agreement 51,823 51,823
Decrease in Health Center reserves 54,863 54,863
---------------- ---------------- ----------------
Net cash used in investing activities (2,634,306) - (2,634,306)
---------------- ---------------- ----------------
Cash flows from financing activities:
Distributions to partners (1,600,000) (1,600,000)
Proceeds from partner advances 1,600,000 1,600,000
Change in advances payable (190,153) (190,153)
Refunds of resident loans, advance fees and deposits (3,361,071) (3,361,071)
Proceeds from loans from residents and refundable deposits 5,739,677 5,739,677
Principal payments on bonds (130,000) (130,000)
---------------- ---------------- ----------------
Net cash provided by financing activities 2,058,453 - 2,058,453
---------------- ---------------- ----------------
Net increase in cash 792,460 792,460
Cash and cash equivalents, beginning of year 601,767 601,767
---------------- ---------------- ----------------
Cash and cash equivalents, end of year $ 1,394,227 $ - $ 1,394,227
================ ================ ================
</TABLE>
Supplemental disclosure of cash flow information:
Interest paid during the year $1,305,637
Supplemental schedule of noncash investing activities:
For the year ended December 31, 1996, The Chestnut Partnership transferred
$2,658,197 of project under development assets to The Chestnut Real Estate
Partnership.
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (70,280) $ (1,281,390) $ (1,281,390)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 1,211,110 1,211,110
Other amortization 213,151 213,151
Amortization of nonrefundable admission fees (1,878,879) (1,878,879)
Amortization of development fees 700,458 700,458
Admission fees received 1,789,800 1,789,800
Partnership loss 70,280
Change in operating assets and liabilities:
Accounts receivable (101,066) (101,066)
Prepaid expenses and other (73,723) (73,723)
Accounts payable (33,503) (33,503)
Accrued expenses 47,821 47,821
---------------- ---------------- ----------------
Net cash provided by operating activities 593,779 - 593,779
---------------- ---------------- ----------------
Cash flows from investing activities:
Decrease in funds escrowed under residency agreements 1,289,594 1,289,594
Additions to operating property (594,505) (594,505)
Increase in assets held by trustee (39,612) (39,612)
Increase in funds escrowed under letter of credit agreement (5,330) (5,330)
Increase in Health Center reserves (627,030) (627,030)
---------------- ---------------- ----------------
Net cash provided by investing activities 23,117 - 23,117
---------------- ---------------- ----------------
Cash flows from financing activities:
Repayment of partner advances (6,872,377) (6,872,377)
Contributions from partners 349,978 349,978
Change in advances payable (82,845) (82,845)
Refunds of resident loans, advance fees and deposits (575,165) (575,165)
Proceeds from loans from residents and refundable deposits 6,195,020 6,195,020
Principal payments on bonds (65,000) (65,000)
---------------- ---------------- ----------------
Net cash used in financing activities (1,050,389) - (1,050,389)
---------------- ---------------- ----------------
Net decrease in cash (433,493) (433,493)
Cash and cash equivalents, beginning of year 1,035,260 1,035,260
---------------- ---------------- ----------------
Cash and cash equivalents, end of year $ 601,767 $ - $ 601,767
================ ================ ================
</TABLE>
Supplemental disclosure of cash flow information:
Interest paid during the year $1,668,280
Supplemental schedule of noncash investing activities:
For the year ended December 31, 1995, The Chestnut Partnership transferred
$594,505 of project under development assets to The Chestnut Real Estate
Partnership.
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SEPARATE AND COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994
THE CHESTNUT
THE CHESTNUT REAL ESTATE COMBINED
PARTNERSHIP PARTNERSHIP PARTNERSHIPS
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 653,338 $ 224,342 $ 224,342
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 428,996 428,996
Other amortization 79,988 79,988
Amortization of nonrefundable admission fees (1,971,147) (1,971,147)
Amortization of development fees 782,253 782,253
Admission fees received 1,067,610 1,067,610
Partnership income (653,338)
Change in operating assets and liabilities:
Accounts receivable 10,900 10,900
Prepaid expenses and other (223,387) (223,387)
Accounts payable 44,511 44,511
Accrued expenses 139,680 139,680
---------------- ---------------- ----------------
Net cash provided by operating activities 583,746 - 583,746
---------------- ---------------- ----------------
Cash flows from investing activities:
Decrease in funds escrowed under residency agreements 2,389,460 2,389,460
Additions to project under development (3,645,905) (3,645,905)
Increase in assets held by trustee (170,770) (170,770)
Increase in funds escrowed under letter of credit agreement (4,967) (4,967)
Increase in Health Center reserves (179,460) (179,460)
---------------- ---------------- ----------------
Net cash used in investing activities (1,611,642) - (1,611,642)
---------------- ---------------- ----------------
Cash flows from financing activities:
Repayment of partner advances (5,918,840) (5,918,840)
Change in advances payable 10,205 10,205
Refunds of resident loans, advance fees and deposits (1,099,202) (1,099,202)
Proceeds from loans from residents and refundable deposits 8,810,730 8,810,730
---------------- ---------------- ----------------
Net cash provided by financing activities 1,802,893 - 1,802,893
---------------- ---------------- ----------------
Net increase in cash 774,997 774,997
Cash and cash equivalents, beginning of year 260,263 260,263
---------------- ---------------- ----------------
Cash and cash equivalents, end of year $ 1,035,260 $ - $ 1,035,260
================ ================ ================
</TABLE>
Supplemental disclosure of cash flow information:
Interest paid during the year $2,131,985
Interest capitalized during the year $1,411,130
Supplemental schedule of noncash investing activities:
For the year ended December 31, 1994, The Chestnut Partnership transferred
$8,118,639 of project under development assets to The Chestnut Real Estate
Partnership.
Upon project completion in August, 1994, unamortized balances of costs of
acquiring initial contracts of $2,081,633 and deferred bond financing costs
of $1,033,109 were transferred from the project under development. The
remaining project under development costs were transferred to operating
property.
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE SEPARATE AND COMBINED
FINANCIAL STATEMENTS.
NOTES TO SEPARATE AND COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS:
ORGANIZATION: The separate and combined financial statements include The
Chestnut Real Estate Partnership (the "Real Estate Partnership") and its
98% owned subsidiary The Chestnut Partnership (the "Partnership"). Both
the Real Estate Partnership and the Partnership are general partnerships.
The Real Estate Partnership is owned 50% by Blakehurst Joint Venture (the
"Venture") and 50% by West Joppa Road Limited Partnership ("West Joppa").
The Venture is owned by Chestnut Village, Inc., ("Chestnut Village") and
Prime Holdings, Inc. The Venture and West Joppa own the remaining 2% of
the Partnership.
The Real Estate Partnership was formed to hold title to property which is
being developed for use as a life care facility under the terms of an
operating and use agreement with the Partnership.
The Real Estate Partnership and the Partnership are hereinafter referred
to as the "Partnerships". The Partnerships were formed to develop, own
and operate a life care community to be called Blakehurst Retirement
Community (the "Community") in the Towson area of Baltimore County,
Maryland. The Community contains a total of 177 residential apartment
units, 14 domiciliary care units, and 36 comprehensive care beds. Because
the Partnerships have common ownership and do not have independent
operating activities the, accompanying financial statements present the
separate and combined statements of the Partnerships.
For purposes of preparing the combined financial statements, all material
transactions between the Partnerships have been eliminated but not
displayed, including the elimination of the Real Estate Partnership's
obligation to the Partnership.
OPERATING PROPERTY: Costs incurred relating to the acquisition of land
and the design, development, construction, marketing and interest (net of
interest income) of the Community have been capitalized. Upon completion
of Phase I in August, 1994, these costs were classified as land,
buildings, equipment, and other asset classifications, as appropriate,
and are being depreciated or amortized over the life of the respective
assets or the period of anticipated benefits.
These assets are classified as operating property and recorded at cost.
Depreciation is being computed by the straight-line method over the
estimated useful lives ranging from seven to fifty years.
In 1995-96, an auditorium was added, and a carriage house was renovated,
providing more common areas for the residents. In 1996, construction
began on a 35-apartment unit wing expansion.
CAPITALIZATION OF OPERATING EXPENSES AND CERTAIN REVENUES: The Community
began operations in August, 1993 when the initial occupancy of the
Community occurred. The Partnership's policy is to capitalize operating
costs, net of revenues (except for admission fees and capital reserve
fees) prior to reaching substantial occupancy of the Community or a
period not to exceed one year. Capitalization of net operating costs
continued through August, 1994, at which time recognition of revenues and
expenses commenced.
Prior to that date, $816,404 in accumulated start-up losses were
capitalized to project under development, all of which had been incurred
prior to the completion of construction of the Community.
DEFERRED BOND FINANCING COSTS: Expenses directly related to the issuance
of bonds are deferred and amortized over the life of the related debt
using the interest method.
COSTS OF ACQUIRING INITIAL CONTRACTS: Costs incurred to originate a
resident contract that result from and are essential to acquire initial
contracts through August, 1994, were capitalized. These costs are being
amortized on a straight-line basis over the average expected remaining
lives of the residents under contract commencing in August, 1994.
REVENUES AND EXPENSES: Admission fees are recorded as deferred revenue
when the right to access a housing unit is established through the
closing of the transaction. These fees are subsequently amortized into
income over a 24 month period. Upon occupancy, an owner's supervision fee
for each resident is billed monthly and recognized as revenue. These fees
are not refundable and are unrestricted as to use.
At the time of initial occupancy, the resident pays a capital reserve fee
equal to the then current monthly service fee (described below). This
one-time nonrefundable charge is recognized as income when the right to
access a housing unit is established. Its use is restricted for purposes
specified in the residency agreement.
Residents pay a monthly service fee, determined annually. The residency
agreement provides that residents pay the funds required to operate the
Community, which includes all operating expenses, debt service for
nonresident debt, repairs and replacements, capital improvements, and
working capital. The monthly service fee may only be used for purposes
specified in the residency agreement.
Development fees incurred in connection with the development of the
Community are amortized pro rata as admission fee revenue is recognized.
INCOME TAXES: The Partnerships are not subject to federal income taxes.
Each partner will be taxed on their share of the Partnerships' taxable
income, whether or not distributed, and will be entitled to deduct on
their own tax return, their share of any net loss of the Partnership and
any separate tax items, to the extent allowed under the Internal Revenue
Code.
FUTURE SERVICE OBLIGATION: The Partnerships annually calculate the
present value of the net cost of future services and uses of facilities
to be provided to current residents, and compare this amount to the
revenue anticipated from these residents. The present value of the net
cost of future services and uses of facilities does not exceed the
revenue anticipated, and therefore, no future service obligation is
recorded.
CASH AND CASH EQUIVALENTS: The Partnerships consider investments with
maturities of three months or less when purchased to be cash equivalents.
Use of Estimates in the 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 dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from these
estimates.
2. RELATED PARTY TRANSACTIONS:
The Partnerships have agreements with Life Care Services Development
Corp. ("LCSD") and Life Care Services Corporation ("LCS"), affiliates
through common ownership of Chestnut Village, for development and for
management of the Community, respectively. LCSD administers planning,
development, financing and marketing functions for the Partnerships. LCS
also has been retained to supervise the day-to-day operations of the
Community.
The Partnerships entered into a construction management agreement with
Mullan Contracting Company ("Mullan"), an affiliate through common
ownership of one partner of West Joppa, for Phases II and III.
There were no fees incurred under the development agreements in 1996 and
1995. Management fees of $333,194 and $293,882 were paid to LCS during
1996 and 1995, respectively. Additionally, LCS has funded Community costs
incurred and is subsequently reimbursed by the Partnership.
At December 31, 1995, advances payable to LCS were $190,153. Mullan
earned a construction management fee of $94,794 and $25,001 in 1996 and
1995, respectively.
At December 31, 1996, a total of $1,600,000 had been advanced to the
Partnership by Blakehurst Joint Venture and West Joppa in connection with
Phase III and will be repaid at the time residents move into Phase III.
The Partnership and the Real Estate Partnership entered into a long-term
operating and use agreement in 1992. This grants the Partnership use of
the property until dissolution, liquidation, or other termination by
mutual agreement. The agreement requires the Partnership to pay all costs
associated with the construction, equipping, and furnishing of the
Community. The agreement also provides for an annual fee to be paid by
the Partnership to the Real Estate Partnership if necessary for federal
income tax purposes.
3. RESIDENCY AGREEMENTS:
The Partnership has entered into residency agreements with occupants and
prospective occupants of the Community. Until 1994, only a Return of
Capital Plan residency agreement was offered. In 1994, a second type of
residency agreement, the Traditional Plan Agreement, was also offered.
The plans provide for the lifetime use of an apartment with payment by
the resident of an admission fee and monthly charges sufficient to cover
the operating cash needs and long-term debt service and a loan to the
Partnership under the Return of Capital Plan or an entrance fee under the
Traditional Plan.
The admission fees are deposited in an escrow account and will be
released to the Partnership after various contractual and regulatory
requirements have been met. The liability for refundable deposits of
$743,167 and $744,151 at December 31, 1996 and 1995, respectively,
includes the admission fees plus interest due to residents and
prospective residents.
Coincident with the marketing of Phase III which began in 1996, admission
fees have been received and deposited in an escrow account, to be
released when the newly constructed units are occupied. At December 31,
1996, the liability for Phase III refundable deposits was $892,550.
The funds held in escrow under residency agreements at December 31, 1996
and 1995 which are the result of admission fees received plus interest
are invested primarily in money market funds.
The Return of Capital Plan residency agreement also provides that the
resident will, upon occupancy, make a loan to the Partnership. These
loans are collateralized by a deed of trust on the real estate subject to
certain permitted encumbrances, including the revenue bonds referred to
in Note 7. The loans will be repaid upon the earlier of reoccupancy of
the unit or 12 months after termination of the residency agreement, 30
years from the date of the loan agreement, or such other date as the
resident and the Partnership may agree. The loans are subject to
interest; however, the Partnership will receive revenue in the form of an
annual fee from the residents in the same amount. These interest payments
have no effect on the financial statements, and are offset in the
accompanying financial statements. The outstanding loans totaled
$38,004,000 and $36,756,428 at December 31, 1996 and 1995, respectively.
The Traditional Plan residency agreement requires the payment of an
entrance fee (admission fee plus entrance cost) prior to the occupancy
of a unit. Upon termination of the Traditional Plan residency agreement,
a calculated portion of the entrance costs may be repaid. At December 31,
1996 and 1995, such refundable entrance costs equaled $1,055,790 and
$816,322, respectively and are included in loans from residents.
Other funds held in escrow are being released to the Partnership for
general use upon the occurrence of certain events relating to the
completion of the Community. These amounts are valued at cost which
approximates market.
The State of Maryland requires that an operating reserve be established
in the amount of 15% of operating expenses excluding depreciation and
amortization. The required $868,000 is included in cash and cash
equivalents as of December 31, 1996.
4. OPERATING PROPERTY:
Upon Community completion in August, 1994, costs previously recorded as
project under development were classified as operating property. A
summary of these costs as of December 1996 and 1995, follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Land $ 6,178,644 $ 6,178,644
Land improvements 1,016,100 1,005,288
Buildings and fixed equipment 34,859,420 34,838,888
Equipment and furnishings 2,662,500 2,575,342
Other costs including accumulated start-up
loss through August 1994 of $816,404 6,321,772 6,321,772
Phase III construction in progress 2,665,333 120,814
----------------- -----------------
53,703,769 51,040,748
Less accumulated depreciation of $2,864,564 and $1,640,110
and accumulated amortization of $1,918,579 and
$1,692,855, respectively 4,783,143 3,332,965
----------------- -----------------
$ 48,920,626 $ 47,707,783
================= =================
</TABLE>
5. ASSETS WHOSE USE IS LIMITED UNDER BOND INDENTURE AGREEMENTS:
Assets whose use is limited that are required for obligations classified
as current liabilities are reported in current assets. Funds held by bond
trustees represent those assets (cash, cash equivalents, U.S. government
securities and interest receivable) which are encumbered by covenants in
revenue bond indentures. These assets are classified as held to maturity
and are carried at cost which approximates market. The only investment
not a cash equivalent is a one-year Treasury Bill maturing in May, 1997
and which is being held to maturity. Amortized cost of $1,533,654
approximates market. The use of these funds is restricted to the payments
of obligations arising from bond issues. The specific accounts provided
for in the indentures and held by the bond trustees are as follows:
<TABLE>
<CAPTION>
FUND 1996 1995
<S> <C> <C>
Debt Service Reserve Fund $ 1,591,297 $ 1,502,481
Bond Fund 218,380 309,153
Construction Fund 42 40
Real Estate Tax Reserve Fund 174,871 146,597
Less funds held by trustee classified as current (393,293) (455,790)
----------------- -----------------
$ 1,591,297 $ 1,502,481
================= =================
</TABLE>
6. LETTER OF CREDIT AGREEMENTS:
The Partnership obtained a bank letter of credit for $98,900 in 1993. At
December 31, 1996, no borrowings were outstanding on this letter. The
letter of credit is collateralized by certificates of deposits totaling
$57,874.
7. LONG-TERM DEBT:
A summary of the Partnership's long-term debt at December 31, 1996 and
1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
9.5% Blakehurst Retirement Community 1992 Series I Mortgage Bonds, due
in varying semi-annual installments beginning November 1, 1995
through November 1, 2022, collateralized by a mortgage on the
land, buildings and fixtures constituting the Community and also
by an interest in the equipment and other personal property of,
and the revenues to be generated by the Community, shared equally
and ratably with the Series II Bonds. The debt is
guaranteed by the Real Estate Partnership. $ 7,895,000 $ 7,965,000
8.75% Blakehurst Retirement Community 1992 Series II Mortgage Bonds,
due in varying semi-annual installments beginning November 1, 1995
through May 1, 2022, collateralized by a mortgage on the land,
buildings and fixtures constituting the Community and also by an
interest in the equipment and other personal property of, and the
revenues to be generated by the Community, shares equally and
ratably with the Series I Bonds. The debt is
guaranteed by the Real Estate Partnership. 5,910,000 5,970,000
----------------- -----------------
13,805,000 13,935,000
Less current portion 150,000 130,000
----------------- -----------------
$ 13,655,000 $ 13,805,000
================= =================
</TABLE>
Scheduled principal repayments on long-term debt are as follows:
1997 $ 150,000
1998 155,000
1999 175,000
2000 190,000
2001 215,000
Later years 12,920,000
----------------
$ 13,805,000
================
The 1992 Series I and II Mortgage Bonds are subject to redemption without
premium or penalty by the Partnership prior to their stated maturity at a
redemption price equal to principal plus accrued interest to the date of
redemption.
8. COMMITMENTS AND CONTINGENCIES:
The realization of the costs of the Community is ultimately dependent
upon the sale of the remaining units, and occupancy of the Community.
Maintenance and efficient operation of the Community are also critical to
the long-term success of the Community.
During 1996, the Partnerships commenced Phase III of the Community which
includes the addition of 35 residential apartment units, a core tower,
additional parking facilities and other amenities. Total Phase III
development costs are estimated to be approximately $10,600,000 which
include construction management fees to Mullan and development fees to
LCSD (Note 2).
The sources of funds for Phase III are ultimately expected to be
permanent parity debt financing ($1,900,000) and resident loans and fees
($8,700,000). Construction period financing will be provided by the
partners.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments.
The carrying value of cash and cash equivalents approximates fair value
because of the short maturity of those instruments. The investment in a
U.S. government security is valued based on quoted market prices (see
Note 5). Based on the borrowing rates currently available to the
Partnership's debt with similar terms and average maturities, the fair
value of the bonds is $15,100,000. The redemption price to the
Partnership as of December 31, 1996 is 100% or $13,805,000.
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit Page
No. Description of Exhibit No.
- ------- ---------------------- ----
<S> <C> <C>
3.1 First Amended and Restated Agreement
of Partnership of The Chestnut Partnership
dated as of April 25, 1990; Assignment, Acceptance
and Consent dated April 25, 1990; Assignment,
Acceptance and Consent dated December 16, 1992. (1)
3.2 Agreement of Partnership of The Chestnut Real Estate
Partnership dated as of April 25, 1990; Assignment,
Acceptance and Consent dated April 25, 1990;
Assignment, Acceptance and Consent dated
December 16, 1991. (1)
4.1 Trust Indenture, dated as of May 1, 1992, Between
The Chestnut Partnership and Boatmen's National Bank
of Des Moines, as Trustee. (1)
4.1.1 First Supplemental Trust Indenture Dated as of
August 1, 1992, between The Boatmen's National
Bank of Des Moines, as Trustee. (1)
4.2 Guaranty Agreement dated as of May 1, 1992,
between The Chestnut Real Estate Partnership and
Boatmen's National Bank of Des Moines,. (1)
4.3 Owner's Guaranty of Payment and Performance dated
as of May 28, 1992, made by The Chestnut Real
Estate Partnership to The Sumitomo Trust & Banking
Co., Ltd., New York Branch. (1)
4.4 Indemnity Deed of Trust and Security Agreement
dated as of May 28, 1992, among The Chestnut Real
Estate Partnership; Boatmen's National Bank of
Des Moines, Des Moines, Iowa, as Trustee; and The
Sumitomo Trust & Banking Co., Ltd., New York
Branch. (1)
4.5 Form of Subordination Agreement between Life
Care Services Corporation, Continuing Care
Communities of America, Inc., West Joppa Road
Limited Partnership, and Boatmen's National Bank
of Des Moines, Des Moines, Iowa, as Trustee. (1)
4.6 Inter-creditor Agreement dated as of May 28, 1992,
between Boatmen's National Bank of Des Moines,
Des Moines, Iowa, as Trustee, and The Sumitomo
Trust & Banking Co., Ltd., New York Branch.
10.1 Contract of Purchase and Sales dated as of June 8,
1988, between The Chestnut Partnership and The
Mission Helpers of the Sacred Heart, as amended. (1)
10.1.1 Letter Agreement dated March 23, 1992, from the
Chestnut Real Estate Partnership to the Mission
Helpers of Baltimore City. (1)
10.1.2 License Agreement dated April 23, 1992, between
The Chestnut Real Estate Partnership, and Herbert
R. O'Conor, III and Kathalee M. O'Conor. (1)
10.2 Escrow Agreement dated June 8, 1988, among The
Chestnut Partnership, The Mission Helpers of the
Sacred Heart and O'Connor Piper & Flynn. (1)
10.3 License Agreement dated June 20, 1991, between
Institute of Mission Helpers of Baltimore City and
The Chestnut Real Estate Partnership. (1)
10.4 Restrictive Covenant Agreement dated October 13,
1988, among The Chestnut Partnership and The
Ruxton-Riderwood-Lake Roland Area Improvement
Association, Inc. and the Advisory Board, as amended. (1)
10.5 Consent Order dated October 25, 1988. (1)
10.6 Form of Residency Agreement, with addendum. (1)
10.6.1 Form of Domiciliary Care Residency Agreement. (1)
10.6.2 Form of Addendum to Residency Agreement
Regarding Admittance to the Health Care Center. (1)
10.6.3 Form of Residency Agreement with amendment,
September 7, 1993 (2)
10.6.35 Residency Agreement dated April 25, 1996 (3) 53-71
10.6.4 Form of Domiciliary Care Residency Agreement
with addendum, July 29, 1993 (2)
10.6.5 Residency Agreement for Traditional Plan, dated
November 1, 1993 and approved for use in late
summer, 1994 (2)
10.6.55 Residency Agreement for Traditional Plan, dated April 25,
1996 (3) 72-88
10.7 Form of Assignment of Rights to Repayments between
Resident/Assignor and Assignee. (1)
10.8 Admission Fee Escrow Agreement dated as of
January 19, 1990, by and between The Chestnut
Partnership and American Security Bank, N.A. (1)
10.8.1 Amended and Restated Admission Fee Escrow Agreement - Phase I, 89-92
dated July 18, 1996, between The Chestnut Partnership and
The First National Bank of Maryland (3)
10.8.2 Amended and Restated Wait List Escrow Agreement, 93-95
dated July 18, 1996, between The Chestnut Partnership and
The First National Bank of Maryland (3)
10.8.3 Amended and Restated Health Center Resident Loans 96-100
Escrow Agreement, dated July 18, 1996, between The
Chestnut Partnership and The First National Bank of Maryland (3)
10.8.4 Admission Fee Escrow Agreement - Phase II (Phase III), dated 101-104
April 29, 1996, between The Chestnut Partnership and The First
National Bank of Maryland (3)
10.9 Form of Guaranty Agreement by The Chestnut Real
Estate Partnership. (1)
10.10 Form of Indemnity Deed of Trust and Security
Agreement from The Chestnut Real Estate Partnership
to __________, as trustee. (1)
10.11 Form of Subordination Agreement from __________, as
trustee, to Boatmen's National Bank of Des Moines,
as Trustee and The Sumitomo Trust & Banking Co.,
Ltd. - New York Branch. (1)
10.12 Health Center Resident Loans Escrow Agreement
between The Chestnut Partnership and __________,
as Escrow Agent. (1)
10.13 Development Agreement dated as of June 3, 1988,
between The Chestnut Partnership and Life Care
Services Corporation. (1)
10.13.1 Amendment to Development Agreement dated
December 30, 1994 between The Chestnut Partnership,
Life Care Services Corporation, Rosedale Care, Inc.,
and Continental Care, Inc. (2)
10.13.2 Amendment #2 to Development Agreement dated 105-110
October 30, 1996, between The Chestnut Partnership,
Life Care Services Corporation, Rosedale Care, Inc.,
and Continental Care, Inc. (3)
10.14 Management Agreement dated as of September 28,
1990, between The Chestnut Partnership and Life
Care Services Corporation. (1)
10.15 Services Agreement dated as of June 3, 1988,
between The Chestnut Partnership and West Joppa
Road Limited Partnership. (1)
10.16 Performance Agreement dated as of May 31, 1991,
between Chestnut Village, Inc. and Life Care
Services Corporation. (1)
10.17 Operating and Use Agreement between The
Chestnut Partnership and The Chestnut Real
Estate Partnership. (1)
10.18 Architect Agreement dated December 10, 1987,
between The Chestnut Partnership and D'Aleo, Inc.,
as amended. (1)
10.19 Construction Management Agreement dated
November 22, 1991, between The Chestnut Partnership
and The Weitz Company, Inc. (1)
10.19.1 Amendment No. 1 to Construction Management
Agreement. (1)
10.19.2 Construction Management Agreement dated July 11, 111-125
1996, between The Chestnut Partnership and The Mullan
Contracting Company. (3)
10.19.3 Supplement to Construction Management Agreement, 126-127
dated October 30, 1996, between The Chestnut
Partnership and The Mullan Contracting Company. (3)
10.20 Asbestos and HazMat Abatement Engineering
Agreement dated August 11, 1988, between The
Chestnut Partnership and ATEC Associates. (1)
10.20.1 March 31, 1992, letter from Atec Associates, Inc. to
Life Care Services Corporation regarding Removal of
Underground Fuel Storage Tanks. (1)
10.21 Construction Contract dated August 6, 1991, between
The Chestnut Partnership and Marcor of Maryland, Inc. (1)
10.22 Retail Lease Agreement dated February 2, 1990,
between Cockney's Tavern Partnership and Life Care
Services Corporation, as amended. (1)
10.23 Office Building Lease dated June 22, 1989, between
Cockney's Tavern Partnership and The Chestnut
Partnership. (1)
10.25 Construction Loan Agreement dated as of May 28,
1992, between The Sumitomo Trust & Banking Co.,
Ltd., New York Branch and The Chestnut Partnership
and The Chestnut Real Estate Partnership. (1)
10.26 $20,000,000 Promissory Note dated May 28, 1992,
from The Chestnut Partnership to The Sumitomo
Trust & Banking Co., Ltd. - New York Branch. (1)
10.27 Guaranty of Payment Note dated as of May 28,
1992, from Continuing Care Communities of America,
Inc. to The Sumitomo Trust & Banking Co., Ltd.
New York Branch. (1)
10.28 Guaranty of Payment dated as of May 28, 1992,
Continuing Care Communities of America, Inc. to
The Sumitomo Trust & Banking Co., Ltd.,
New York Branch. (1)
10.29 Guaranty of Completion dated as of May 28, 1992,
from Life Care Services Corporation to The Sumitomo
Trust & Banking Co., Ltd. - New York Branch. (1)
10.30 Purchase Money Mortgage dated as of March 23, 1992,
from the Chestnut Real Estate Partnership to the
Mission Helpers of Baltimore City. (1)
10.31 Environmental Indemnification Agreement dated as
of May 28, 1992, from The Chestnut Partnership,
The Chestnut Real Estate Partnership, and The
Sumitomo Trust & Banking Co., Ltd. - New York Branch. (1)
10.32 Owner's Certification letter dated as of May 28,
1992, to Boatmen's National Bank of Des Moines,
Iowa, as Trustee, and The Sumitomo Trust & Banking
Co., Ltd., New York Branch. (1)
10.33 Letter Agreement dated as of May 28, 1992, from
The Chestnut Real Estate Partnership to Boatmen's
National Bank of Des Moines, Des Moines, Iowa, as
Trustee, and The Sumitomo Trust & Banking Co.,
Ltd., New York Branch. (1)
10.34 Assignment and Security Agreement dated as of May 28,
1992, among The Chestnut Partnership and American
Security Bank to The Sumitomo Trust & Banking
Co., Ltd., New York Branch. (1)
10.35 Consent and Subordination Agreement dated as of
May 28, 1992, by The Chestnut Partnership. (1)
10.36 Assignment of Subcontracts dated as of May 28,
1992, from The Weitz Company, Inc. to The
Sumitomo Trust & Banking Co., Ltd., New York
Branch and Boatmen's National Bank of
Des Moines. (1)
10.41 Escrow Agreement I dated as of January 23, 1992,
among Prime Holdings, Inc., The Chestnut
Partnership, The Chestnut Real Estate Partnership,
and The Sumitomo Trust & Banking Co., Ltd.,
New York Branch. (1)
10.42 Escrow Agreement II dated as of January 23, 1992,
among West Joppa Road Limited Partnership, The
Chestnut Partnership, The Chestnut Real Estate
Partnership, and The Sumitomo Trust & Banking Co.,
Ltd., New York Branch. (1)
10.43 Security Agreement dated as of May 28, 1992,
between The Chestnut Partnership, Boatmen's
National Bank of Des Moines, as Bond Trustee,
and The Sumitomo Trust & Banking Co., Ltd.,
New York Branch. (1)
10.44 Indemnity Collateral Assignment of Leases,
Residency Agreements, Rents and Fees dated as of
May 28, 1992, from The Chestnut Real Estate
Partnership to Boatmen's National Bank of Des
Moines, as Bond Trustee and The Sumitomo Trust
& Banking Co., Ltd., New York Branch. (1)
10.45 Collateral Assignment of Leases, Residence
Agreements, Rents and Fees dated as of May 28,
1992, among The Chestnut Partnership to Boatmen's
National Bank of Des Moines, Iowa, as Trustee
and The Sumitomo Trust & Banking Co., Ltd.,
New York Branch. (1)
10.46 Collateral Assignment of Contracts, Plans and
Permits dated as of May 28, 1992, among The
Chestnut Partnership to Boatmen's National Bank
of Des Moines, Des Moines, Iowa, as Trustee and
The Sumitomo Trust & Banking Co., Ltd., New
York Branch. (1)
10.50 Joint Venture Agreement of the Blakehurst Joint
Venture dated December 16, 1991, entered into by
and between Chestnut Village, Inc. and Prime
Holdings, Inc. (1)
10.52 Indemnity Agreement dated as of March 11, 1992,
among The Chestnut Partnership, The Chestnut Real
Estate Partnership, Mullan-North Oaks Limited
Partnership, Life Care Services Corporation and
North Oaks Properties, Inc. (1)
10.53 Construction Management Agreement with Mullan
Contracting Company, entered into July, 1994 (2)
27.1 Financial Data Schedule - The Chestnut Partnership (3) 128
27.2 Financial Data Schedule - The Chestnut Real Estate 129
Partnership (3)
</TABLE>
- -----------------------
(1) Incorporated by reference from Registrants Statement on Form
S-1 previously filed with Commission (Commission File No:
33-32197), January 28, 1992, and August 7, 1992 and by
Registrant's Form 10-K filed December 31, 1992 and 1993.
(2) Incorporated by reference from the Registrant's Form 10-K,
December 31, 1994, previously filed with the Commission.
(3) Filed herewith.
SIGNATURES
THE CHESTNUT REAL ESTATE PARTNERSHIP
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Chestnut Real Estate Partnership has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE CHESTNUT REAL ESTATE PARTNERSHIP
By: BLAKEHURST JOINT VENTURE, a
General Partner
By: CHESTNUT VILLAGE, INC.,
General Partner
Date: March 28, 1997 by: /s/ Stan G. Thurston
---------------------
Stan G. Thurston, President
and Chief Executive Officer
Date: March 28, 1997 by: /s/ Arthur V. Neis
-------------------
Arthur V. Neis, Treasurer
(Principal Financial and
Accounting Officer)
And By: THE WEST JOPPA ROAD LIMITED
PARTNERSHIP, General Partner
By: ROSEDALE CARE, INC.,
General Partner
Date: March 28, 1997 by: /s/ T. F. Mullan
-----------------
Thomas F. Mullan III,
President
Date: March 28, 1997 by: /s/ J. A. Luetkemeyer, Jr.
---------------------------
John A. Luetkemeyer, Jr.,
President
SIGNATURES
THE CHESTNUT PARTNERSHIP
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Chestnut Partnership has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE CHESTNUT PARTNERSHIP
By: BLAKEHURST JOINT VENTURE, a
General Partner
By: CHESTNUT VILLAGE, INC.,
General Partner
Date: March 28, 1997 by: /s/ Stan G. Thurston
----------------------
Stan G. Thurston, President
and Chief Executive Officer
(Principal Executive Officer)
Date: March 28, 1997 by: /s/ Arthur V. Neis
-------------------
Arthur V. Neis, Treasurer
(Principal Financial and
Accounting Officer)
And By: THE WEST JOPPA ROAD LIMITED
PARTNERSHIP, General Partner
By: ROSEDALE CARE, INC.,
General Partner
Date: March 28, 1997 by: /s/ Thomas F. Mullan
---------------------
Thomas F. Mullan III,
President
Date: March 28, 1997 by: /s/ J. A. Luetkemeyer, Jr.
---------------------------
John A. Luetkemeyer, Jr.,
President
And By: THE CHESTNUT REAL ESTATE
PARTNERSHIP, General Partner
By: BLAKEHURST JOINT VENTURE, a
General Partner
By: CHESTNUT VILLAGE, INC.,
General Partner
Date: March 28 , 1997 by: /s/ Stan G. Thurston
---------------------
Stan G. Thurston, President
and Chief Executive Officer
Date: March 28, 1997 by: /s/ Arthur V. Neis
-------------------
Arthur V. Neis, Treasurer
Exhibit 10.6.35
BLAKEHURST
RESIDENCY AGREEMENT
THE CHESTNUT PARTNERSHIP
APRIL 25, 1996
GLOSSARY
THE FOLLOWING TERMS ARE DESCRIBED AS USED IN THE ACCOMPANYING AGREEMENT.
REFERENCE TO THE AGREEMENT AND THE CONTEXT IN WHICH THE TERMS ARE USED IS
RECOMMENDED TO PROVIDE A FULLER UNDERSTANDING OF EACH OF THE TERMS.
"ADMISSION FEE" means the fee identified in Section 1.1.1 of the Agreement,
which is paid to us to initially reserve your Apartment and to compensate us for
undertaking the initial development risks and planning.
"AGREEMENT" means this Residency Agreement.
"ANNUAL FEE" means the fee identified in Section 6 of the Agreement, which is
paid to us in an amount equal to the interest expense incurred by us for your
Loan.
"APARTMENT" means the living unit at the Community identified in Section 1.1 of
this Agreement in which you are entitled to live pursuant to the Agreement in
exchange for making the Loan and paying the Monthly Charges.
"CAPITAL RESERVE FEE" means the fee identified in Section 1.2 of the Agreement,
which is paid to us one time to establish a working capital account for the
Community.
"THE COMMUNITY" means that continuing care retirement community known as
Blakehurst, including living units, the Community Health Center, and all club
areas.
"THE COMMUNITY HEALTH CENTER" means the facility forming a part of the
Community, which is intended to provide health center services as described in
Section 9 of the Agreement. The Community Health Center consists of private
domiciliary care beds and semi-private comprehensive care beds.
"ENTRANCE FEE" means the Admission Fee paid to us and the Loan made to us
pursuant to the Agreement.
"FAIR SHARE ALLOCATION" means the method for determining your Service Fee.
"HEALTH CENTER SERVICES" means nursing care services or domiciliary care
services provided to a resident in the Community Health Center, depending on the
level of health care services required by the resident.
"LOAN" means the Loan identified in Section 1.1.2 of the Agreement, which is
made to us pursuant to the Agreement and the Loan Agreement attached as Exhibit
A.
"MONTHLY CHARGES" means all those Monthly Charges payable by you pursuant to the
terms of the Agreement, including the Owner's Supervision Fee, the Service Fee,
the fees for optional services, the additional Monthly Charges for health center
services, if any, and all other fees and charges payable monthly pursuant to the
terms of the Agreement, as appropriate in the particular instance.
"OCCUPANCY" means the date on which you make the Loan to us pursuant to Section
1.1.2 of the Agree ment.
"OWNER'S SUPERVISION FEE" means the fixed monthly fee identified in Section 4.1
of the Agreement, which is payable on a per resident basis for occupying the
Community.
"RESIDENT" OR "YOU" means the person or persons who sign the Agreement as
Resident. Sometimes a second Resident (if there are two of you) is referred to
in the Agreement as the "second person." Unless otherwise indicated, "you"
refers to both of you if there are two of you.
"SERVICE FEE" means the monthly fee identified in Section 4.2 of the Agreement,
which is payable in consideration for the services and facilities provided to
all residents.
"WE" OR "US" means The Chestnut Partnership, a Maryland proprietary general
partnership formed for the purpose of developing and operating the Community.
BLAKEHURST RESIDENCY AGREEMENT
THE CHESTNUT PARTNERSHIP
1. ENTRANCE FEE AND ONE-TIME CAPITAL RESERVE FEE.
1.1 ENTRANCE FEE. To assure you, ______________________________________
(hereafter "you" or "Resident"), a place in Blakehurst, a life-care
retirement community located at 1055 West Joppa Road, Towson, Maryland
(hereafter the "Community"), in accordance with all the terms of this
Agreement, you will pay to The Chestnut Partnership (hereafter "we" or
"us") an Admission Fee and make a Loan to us for a combined total of
$_______________________. Your Admission Fee and Loan together
constitute your Entrance Fee. Payment of your Admission Fee will
reserve for you the ___________________________, living unit no._______
(hereafter "Apartment"). Payment of your Loan and the Monthly Charges
(described below) entitles you to live in the Apartment at the
Community for as long as you are capable of independent living, and in
the Community Health Center if you are no longer capable of independent
living, all in accordance with the terms of this Agreement.
1.1.1 ADMISSION FEE. Your Admission Fee of $______________ for
one person is paid herewith, and an additional $_______________________
if there are two of you, is paid at the time of your Loan payment. Your
Admission Fee will be held in escrow pursuant to the terms of the
Admission Fee Escrow Agreement established by us for the Community. A
copy of the Admission Fee Escrow Agreement is available for your review
upon your request. Your Admission Fee will be released to us as soon as
the following events have occurred: (i) the issuance of a final
certificate of registration to the Community by the Maryland Office on
Aging; (ii) the completion of construction; (iii) the issuance of a
certificate of occupancy, or the equivalent, by the appropriate local
jurisdiction; and (iv) the issuance of appropriate licenses or
certificates by the Department of Health and Mental Hygiene or by the
Maryland Office on Aging. We may not provide continuing care until we
receive a final certificate of registration from the Maryland Office on
Aging. The Maryland Office on Aging shall issue a final certificate of
registration when it determines that all of the following conditions
have been met: (i) we have been issued a preliminary certificate of
registration; (ii) we have filed all required documents with the
Maryland Office on Aging; (iii) we have submitted documentation with
demonstrates that continuing care agreements have been executed for
sixty-five percent (65%) of the living units, and a minimum of ten
percent (10%) of the total entrance fee has been paid for each
contracted living unit; and (iv) we have submitted documentation of a
commitment for per manent long-term financing and construction
financing.
1.1.2 LOAN. Your Loan of $ ____________________ will be made
to us on the earlier of (i) fifteen (15) days after your apartment is
ready for occupancy (provided that we give you at least thirty (30)
days' advance notice of the date on which your Apartment will be ready
for occupancy) or (ii) the date you move into the Community. In
exchange for making the Loan and paying all Monthly Charges, this
Agreement grants you a license to the lifetime use of the Apartment and
other Community facilities and to available services. Your Loan will be
evidenced by a Loan Agreement, a copy of which is attached as Exhibit
A. Your Loan and the loans of all other residents of the Community
living units will be guaranteed by The Chestnut Real Estate
Partnership, and such Guaranty will be secured by an Indemnity Deed of
Trust on the real estate owned by The Chestnut Real Estate Partnership
and will be subject to certain permitted encumbrances as described in
the Indemnity Deed of Trust. We will file the Indemnity Deed of Trust
upon initial occupancy of the Community. The terms of the Guaranty are
hereby incorporated herein. A copy of the Indemnity Deed of Trust and
of the Guaranty have been provided to you prior to your execution of
this Agreement. Your rights to repayment of the Loan may not be
mortgaged, sold, discounted, assigned, or otherwise transferred by you,
except with our prior written approval and in our sole discretion.
1.2 ONE-TIME CAPITAL RESERVE FEE. At the same time you pay your initial
Service Fee, you will pay us an amount equal to the then current
monthly Service Fee (as described in Section 4.2). This is a one-time
nonrefundable charge which we will place in a working capital account
to be used by us only for purposes related to the Community.
2. REFUND OF ADMISSION FEE PRIOR TO OCCUPANCY.
2.1 RIGHT OF RESCISSION. YOU MAY RESCIND THIS AGREEMENT AT ANY TIME
PRIOR TO OCCUPANCY. UPON ANY RESCISSION, YOUR REFUND RIGHTS WILL BE AS
SET FORTH BELOW IN THIS SECTION 2.
2.2 FIRST 30 DAYS. IF PRIOR TO OCCUPANCY WE DO NOT ACCEPT YOU FOR
RESIDENCY WITHIN THIRTY (30) DAYS, OR IF YOU CHANGE YOUR MIND AND GIVE
US WRITTEN NOTICE OF CANCELLATION OF THIS AGREEMENT WITHIN THIRTY (30)
DAYS FROM THE DATE YOU ENTER INTO THIS AGREE MENT, THIS AGREEMENT WILL
BE AUTOMATICALLY RESCINDED AND THE ADMISSION FEE WHICH YOU HAVE PAID TO
US WILL BE RETURNED TO YOU (WITHOUT INTEREST) WITHIN THIRTY (30) DAYS.
2.3 CHANGE IN CONDITION. IF PRIOR TO OCCUPANCY (i) YOU (OR EITHER OF
YOU IF THERE ARE TWO OF YOU) DIE OR BECOME UNABLE TO OCCUPY YOUR
APARTMENT OR THE COMMUNITY HEALTH CENTER BECAUSE OF ILLNESS, INJURY, OR
INCAPACITY OR (ii) YOU ELECT TO CANCEL THIS AGREEMENT BECAUSE OF A
SUBSTANTIAL CHANGE IN YOUR PHYSICAL, MENTAL, OR FINANCIAL CONDITION,
THIS AGREEMENT WILL BE AUTOMATICALLY CANCELLED. IN SUCH EVENT, WE WILL
RETURN TO YOU OR YOUR LEGAL REPRESENTA TIVE (WITHOUT INTEREST) THE
ADMISSION FEE WHICH YOU HAVE PAID TO US WITHIN THIRTY (30) DAYS OF
NOTICE OF CANCELLATION.
2.4 CANCELLATION AFTER 30 DAYS. IF PRIOR TO OCCUPANCY, YOU CANCEL THIS
AGREEMENT AFTER THIRTY (30) DAYS FROM THE DATE YOU ENTER INTO THIS
AGREEMENT FOR ANY REASON OTHER THAN THE REASONS IDENTIFIED IN SECTION
2.3, THE ADMISSION FEE WHICH YOU HAVE PAID TO US WILL BE RETURNED TO
YOU (WITHOUT INTEREST) WITHIN SIXTY (60) DAYS FOLLOWING OUR RECEIPT OF
YOUR NOTICE OF CANCELLATION, EXCEPT THAT WE WILL RETAIN A PROCESSING
FEE IN THE AMOUNT OF THREE HUNDRED DOLLARS ($300).
2.5 CONSTRUCTION DELAYS. IF YOUR APARTMENT IN THE COMMUNITY IS NOT
AVAILABLE FOR OCCUPANCY WITHIN THREE YEARS AFTER THE DATE OF THIS
AGREEMENT, YOU OR WE MAY CANCEL THIS AGREEMENT UPON WRITTEN NOTICE BY
REGISTERED OR CERTIFIED MAIL. IN SUCH EVENT, THE FULL AMOUNT OF THE
ADMISSION FEE YOU HAVE PAID WILL BE REFUNDED TO YOU WITH INTEREST AT
THE NET RATE EARNED ON SUCH DEPOSITS WHILE HELD IN ESCROW WITHIN SIXTY
(60) DAYS FROM THE DATE OF RECEIPT OF SUCH NOTICE OF CANCELLATION.
2.6 SPECIAL COSTS. IN ALL CASES PRIOR TO OCCUPANCY OTHER THAN AS
PROVIDED IN SECTION 2.5 ABOVE, ANY SPECIAL COSTS INCURRED FOR MODIFI
CATIONS IN THE STRUCTURE OR FURNISHINGS OF THE APARTMENT, SPECIFICALLY
REQUESTED BY YOU AND SET FORTH IN WRITING IN A SEPARATE ADDENDUM TO
THIS AGREE MENT SIGNED BY YOU, WILL NOT BE REIMBURSED.
3. REPAYMENT OF LOAN AND REFUND OF ADMISSION FEE FOLLOWING OCCUPANCY.
3.1 REPAYMENT OF LOAN. AFTER OCCUPANCY, YOUR RIGHT OF RESCISSION
CEASES, EXCEPT AS MAY BE PROVIDED IN SECTION 14(C) OF ARTICLE 70B OF
THE ANNOTATED CODE OF MARYLAND. AFTER OCCUPANCY, IF YOU DIE OR THIS
AGREEMENT IS CANCELLED BY YOU FOR ANY REASON, THE REPAYMENT OF YOUR
LOAN WILL BE MADE IN ACCORDANCE WITH THE LOAN AGREEMENT, A COPY OF
WHICH IS ATTACHED AS EXHIBIT A. AFTER OCCUPANCY, THE ADMISSION FEE IS
NOT REFUNDABLE, EXCEPT AS DESCRIBED IN SECTION 3.2 BELOW.
3.2 CANCELLATION BY US. AFTER OCCUPANCY, IF WE CANCEL THIS AGREEMENT
PURSUANT TO SECTION 11, WE SHALL REFUND TO YOU (OR YOUR PERSONAL
REPRESENTATIVE) THE GREATER OF (i) THE AMOUNT TO BE REPAID TO YOU IN
ACCORDANCE WITH YOUR LOAN AGREEMENT OR (ii) THE AMOUNT EQUAL TO THE
ENTRANCE FEE DIVIDED BY YOUR YEARS OF LIFE EXPECTANCY AT ADMISSION AND
MULTIPLIED BY YOUR YEARS OF LIFE EXPECTANCY AT CANCELLATION.
THE LIFE TABLES OF THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
MOST RECENTLY PUBLISHED AT THE TIME OF CAN CELLATION SHALL BE USED TO
COMPUTE BOTH LIFE EXPECTANCIES. SUCH REFUND AMOUNT, IF ANY, WILL BE
PAID TO YOU WITHIN SIXTY (60) DAYS FOLLOWING THE DATE OF OUR
CANCELLATION OF THIS AGREEMENT.
3.3 OFFSETS AGAINST REFUND. YOU AGREE TO REIMBURSE US FOR ANY
DELINQUENT MONTHLY CHARGES OWED BY YOU, ANY HEALTH CARE EXPENSES THAT
WE HAVE ADVANCED ON YOUR BEHALF, AND ANY OTHER SUMS OWED BY YOU TO US.
SUCH SUMS MAY BE DIRECTLY OFFSET AGAINST THE REFUND OR LOAN PAYMENTS
EXCEPT AGAINST THE REFUND AMOUNT WE ARE REQUIRED BY LAW TO MAKE BASED
ON THE FORMULA SET FORTH UNDER SECTION 3.2.
3.4 SPECIAL COSTS AND PROCESSING FEE. IN ALL CASES FOLLOWING OCCU
PANCY, A PROCESSING FEE IN THE AMOUNT OF THREE HUNDRED DOLLARS ($300)
AND ANY SPECIAL COSTS INCURRED FOR MODIFICA TIONS IN THE STRUCTURE OR
FURNISHINGS OF THE APARTMENT, SPECIFICALLY REQUESTED BY YOU AND SET
FORTH IN WRITING IN A SEPARATE ADDENDUM TO THIS AGREEMENT SIGNED BY
YOU, WILL NOT BE REIMBURSED.
4. MONTHLY CHARGES.
4.1 OWNER'S SUPERVISION FEE. You will pay an Owner's Supervision Fee of
$___________________ a month per Resident for occupying your Apartment
or the Community Health Center. There shall be no increase in your
Owner's Supervision Fee during the term of this Agreement. The Owner's
Supervision Fee may be used by us for any purpose.
4.2 SERVICE FEE. You will pay the following Service Fee for the
services and features provided under Section 7:
4.2.1 INITIAL SERVICE FEE. If the Community were in operation
during the fiscal year ended December 31, 19__, this Service Fee would
be $_____________ a month for one person and an additional $___________
a month if there are two of you. For sub sequent fiscal years and until
the Fair Share Allocation has been implemented, the Service Fee will be
adjusted on the basis of the best information available at the time and
the prior year's inflation rate. The Fair Share Allocation will be
implemented when, in our sole discretion, the Community has had a
sufficient operating history to support its use and determination.
4.2.2 FAIR SHARE ALLOCATION. Upon implementation of the Fair
Share Allocation, the Service Fee will thereafter be your fair share of
the cash requirement of the Community (as described in Section 4.4).
The Fair Share Allocation has been developed to apportion the cash
requirement of the Community among its residents, based on such factors
as living unit size and type, number of second persons, and other
relevant factors as determined by us from time to time. A sample of the
current form of Fair Share Allocation formula is included in our most
current Information Booklet.
4.3 TOTAL MONTHLY CHARGES FOR APARTMENT. If the Community were in
operation during the fiscal year ending December 31, 19__, you would
pay total Monthly Charges (including second person charges if there are
two of you) of $______________ for the Owner's Super vision Fee and
Service Fee.
4.4 CASH REQUIREMENT. The cash requirement of the Community is that
projected amount necessary to provide services and facilities to the
residents. The cash requirement is charged to all residents through the
Service Fee and application of the Fair Share Allocation. Generally, we
will determine the cash requirement based upon (i) the costs incurred
in connection with the operation of the Community for the prior fiscal
year, (ii) with adjustments made for inflation or deflation, occupancy
rates, changes to reserves, and nonrecurring expenses, and (iii)
reduced by certain projected Community income for the next fiscal year.
Once determined, the cash requirement is allocated among the residents
pursuant to the Fair Share Allocation. The determination of the cash
requirement is further explained below:
4.4.1 COSTS. Based upon the costs incurred in connection with
the operation of the Community for the prior fiscal year, we will
determine all anticipated expenses, costs, and other charges to the
Community for the next fiscal year, including but not limited to
salaries, wages, and fringe benefits of the Community employees and
other persons at the Community (including administrators); payroll
taxes; telephone; utilities; license fees, occupational taxes, property
taxes, sales taxes, permits, and other taxes (excluding only our income
taxes); legal and accounting fees and costs; bad debts and other
losses; insurance premiums, commissions, deductibles, and claims;
consulting fees; directors' expenses; food; supplies; interior,
exterior, and grounds replacement, repair, and maintenance, includ ing
living unit refurbishment costs; capital improvements to the extent
funds are not available for such use from the Community's Capital
Replacement Reserve Fund (as described in Section 4.10); an amount
equal to three percent (3%) of the prior year's total cash requirement
to fund the Capital Replacement Reserve; management fees paid to
others; management fees paid to Life Care Services Corporation or to an
affiliate of Life Care Services Corporation of five percent (5%) of the
total of revenues (including first and second person Service Fees),
plus reimbursable costs incurred in performing management services as
described in the management agreement; debt service, including
principal and interest (excluding only principal payments on loans from
residents); initial start-up losses, if any, incurred after the earlier
of ninety percent (90%) occupancy or nine (9) months following initial
occupancy; lease payments; occupancy development costs; and other
similar expenses, costs, and charges to the Community.
4.4.2 ADJUSTMENTS. The foregoing projected expenses, costs,
and charges are then further adjusted by us to take into account
anticipated changes in reserves, working capital needs, services,
Community Health Center utilization, living unit occu pancy, inflation
or deflation, nonrecurring expenses, and other relevant factors.
4.4.3 COMMUNITY INCOME. The foregoing adjusted expenses,
costs, and charges are then reduced for certain projected income of the
Community for the next fiscal year, consisting of fees for additional
services, the Community Health Center services, and investment income
from the Health Center Resident Loans Escrow, to result in the cash
requirement of the Community for the next fiscal year.
4.5 SERVICE FEE CHANGES.
4.5.1 EXCEPT AS SET FORTH IN SECTION 4.5.2 BELOW, WE WILL
NOTIFY YOU AT LEAST THIRTY (30) DAYS PRIOR TO THE END OF EACH FISCAL
YEAR OF THE NEW SERVICE FEE THAT WILL GO INTO EFFECT AT THE START OF
THE NEXT FISCAL YEAR. WE WILL NOT ADJUST YOUR SERVICE FEE MORE THAN
ONCE EACH YEAR, EXCEPT FOR THE YEAR DURING WHICH THE FAIR SHARE
ALLOCATION IS IMPLEMENTED.
4.5.2 IF YOU OCCUPY A DOMICILIARY CARE BED IN THE COMMUNITY
HEALTH CENTER, WE WILL NOTIFY YOU AT LEAST FORTY-FIVE (45) DAYS BEFORE
ANY CHANGE IN THE SERVICE FEE IS EFFECTIVE.
4.6 USE OF SERVICE FEE. The Service Fee will be used by us only for
purposes related to the Community. As part of the annual audit of the
Community, we will obtain an opinion of a nationally recognized firm of
independent auditors which confirms that the Service Fee has been used
by us only for purposes related to the Community. A copy of the annual
audit of the Community is available for your review upon your request.
4.7 CREDIT AGAINST INITIAL MONTHLY CHARGES. You will receive a credit
towards the payment of your Monthly Charges until the credit is fully
used. The credit is not available for any other purpose. The credit
will be in an amount equal to simple interest of five and one-half
percent (5.5%) per annum on your Admission Fee computed from the date
of its payment until the commencement of your Service Fee. The credit
may result in tax consequences to you as described in Section 14.9.
4.8 PAYMENT. You will pay a pro rata portion of the Owner's Supervision
Fee and Service Fee commencing on the earlier of (i) fifteen (15) days
after your Apartment is ready for occupancy (provided we give you at
least thirty (30) days' advance notice of the date on which your
Apartment will be ready for occupancy) or (ii) the date you move into
the Community. Thereafter, such Monthly Charges will be payable on the
first day of each month in advance. Any additional charges for optional
services requested by you will be paid on the first day of each month
for the optional services obtained during the preceding month.
4.9 CANCELLATION OF MONTHLY CHARGES FOR APARTMENT. The Monthly Charges
for your Apartment will continue until the earlier of (i) your death
(if there are two of you, the death of the survivor) or (ii) the
release of your Apartment pursuant to the provisions regarding the
Community Health Center usage or (iii) the cancellation of this
Agreement pursuant to Section 10 or Section 11 of this Agreement.
Notwithstanding the foregoing, the Monthly Charges for your Apartment
will continue at least until your furniture and other property are
removed from the Apartment. If removal of your furniture and other
property is not accom plished within thirty (30) days after the earlier
of (i) your death (if there are two of you, the death of the survivor)
or (ii) the release of your Apartment pursuant to the provisions
regarding the Community Health Center usage or (iii) the cancellation
of this Agreement pursuant to Section 10 or Section 11 of this
Agreement, then we may remove and store such furniture and other
property at the expense and risk of you and your estate. In the event
there are two of you who occupy the Apartment and one of you dies, the
second person fees will cease and the remaining person will continue to
pay the first person Service Fee and Owner's Super vision Fee.
4.10 CAPITAL REPLACEMENT RESERVE FUND. We will establish a Community
Capital Replacement Reserve Fund to be used only for improving or
replacing capital items of the Community which cost over $50,000. Such
reserve will be funded from monthly Service Fees as set forth in
Section 4.4.1. A copy of the Capital Replacement Reserve Escrow
Agreement is available for review by you or by your advisors upon
request.
5. BENEFITS TO US OR AN AFFILIATE.
The property comprising the Community is owned by The Chestnut Real
Estate Partnership, a Maryland proprietary general partnership and an
affiliate of ours. The Community is not affiliated with any religious
or charitable group or association. We and The Chestnut Real Estate
Partnership are solely responsible for all financial and contractual
obligations related to the Community. No portion of the expenses,
costs, and charges included in the Service Fee are paid to us or an
affiliate as fees (except a management fee which is limited in amount
to five percent (5%) of the total of revenues which include first and
second person Service Fees). Our compensation from the Com munity
consists solely of the Admission Fees, the Owner's Supervision Fees,
the Loans (subject to our obligation to repay the Loans), the five
percent (5%) management fee, and the potential appreciation of the
Community and other benefits generally associated with the ownership of
real estate. The fees collected by us may not be used for purposes
other than those set forth in this Agreement.
6. ANNUAL FEE CHARGED FOR COMMUNITY RESIDENCY.
You are obligated to pay to us annually, on the date determined by us,
an Annual Fee in an amount equal to the interest expense incurred by us
for your Loan. The Annual Fee will be an amount which is calculated by
multiplying the annual interest rate set forth in your Loan Agreement
when you make your Loan, times an amount equal to the difference
between the principal balance of your Loan and the amount which is
exempt from the below-market interest provisions of Section 7872 of the
Internal Revenue Code of 1986, as amended. You are obligated to pay the
Annual Fee until your Loan is repaid.
7. SERVICES AND FEATURES PROVIDED TO ALL APARTMENT RESIDENTS.
Unless this Agreement is amended as provided in Section 13, we will
furnish at the Community, so long as you reside in the Apartment, the
following services and features, which are included in the Service Fee:
7.1 One meal per day in the dining room;
7.2 Modified diet for the one meal per day in the dining room when
ordered by the medical director or director of nursing services;
7.3 Tray service for up to thirty (30) days if ordered by the
assistance-in-living director, director of nursing services, or medical
director;
7.4 Water, sewer, air conditioning, heating, and electricity;
7.5 Building janitor and maintenance;
7.6 Weekly light housekeeping service;
7.7 Weekly laundry service for flat linens;
7.8 Planned activities -- social, cultural, and recreational for those
who wish to participate;
7.9 Common use of washers and dryers on residential floors;
7.10 Carpeting (except in kitchen and bath where there will be
alternate floor covering);
7.11 Complete kitchen, including refrigera tor, range/oven, garbage
disposal, and dish washer;
7.12 Local transportation scheduled by us;
7.13 24-hour emergency nursing service to your Apartment;
7.14 Use of all common areas in the Community;
7.15 Common use of uncovered, surface parking;
7.16 24-hour security;
7.17 TV cable to Apartment (service not provided); and
7.18 Assistance-in-living services for a limited period of time as
determined on a case-by-case basis at the time such services are
required, at our sole discretion. A determination that
assistance-in-living services are required to maintain independent
living in the Apartment is made by a multi- disciplinary committee
staffed by employees of the Community. You may obtain these services
through the Blakehurst assistance-in- living program or through other
providers or persons under arrangements acceptable to us. A copy of our
current policy governing the extent of assistance-in-living services
offered by us at no additional charge and listing the charges for
assistance-in-living services available for an extended period of time,
is available through administration. This policy is subject to change
from time to time.
8. ADDITIONAL SERVICES PROVIDED FOR AN EXTRA CHARGE.
We will also make available at the Community, at your request and so
long as you reside in the Apartment at the Community, at the then
prevailing rates of extra charge, additional meals over those provided
in consideration for the Service Fee; additional tray service to your
Apartment when ordered by the medical director or director of nursing
services; additional housekeeping; physical therapy; guest rooms;
beauty parlor/barber shop; extended assistance-in-living services as
determined on a case-by-case basis at the time such services are
required, at our sole discretion; and certain other services as may be
provided from time to time.
9. THE COMMUNITY HEALTH CENTER.
If, in the opinion of the medical director or your attending physician,
you need health center services in the Community Health Center, you
will be requested to relocate to a private domiciliary care bed or a
semi-private comprehensive care bed, depending on the level of health
center services required by you. We will provide you health center
services to the extent authorized by our license on the following
terms.
9.1 FIRST NINETY (90) DAYS OF HEALTH CENTER SERVICES. We will provide
health center services in a private domiciliary care bed or a
semi-private comprehensive care bed in the Community Health Center
without additional charge for ninety (90) cumulative days for you
(ninety (90) days for each of you if there are two of you, but the
allowance cannot be combined and used by only one of you), except that
you will pay the cost of the extra meals not covered by the Service Fee
for your Apartment at the then current charge for extra meals and for
any additional health services as described in Section 9.6. The monthly
Service Fee for your Apartment, the Owner's Supervision Fee, and the
Annual Fee will continue as before.
9.2 MORE THAN NINETY (90) DAYS OF HEALTH CENTER SERVICES WHEN THERE IS
ONE OF YOU. If there is one of you, and you require health center
services beyond the ninety (90) cumulative days and you relocate to a
private domiciliary care bed or a semi-private compre hensive care bed
in the Community Health Center, your Monthly Charges will depend upon
whether you choose to release your Apartment:
9.2.1 If you choose to release your Apartment for occupancy by
someone else, the monthly Service Fee for your Apartment will cease.
Monthly Charges for your health center services will be equal to the
then current Service Fee for the one-bedroom deluxe apartment (unless
your Service Fee for your Apartment is less in which case the lesser
Service Fee shall apply). You will continue to pay your Owner's
Supervision Fee and the Annual Fee. In addition, you will pay the cost
of two meals per day at the then current charge for extra meals and for
any additional health services as described in Section 9.6.
9.2.2 If you choose to not release your Apartment for
occupancy by someone else, the monthly Service Fee for your Apartment,
the Owner's Supervision Fee, and the Annual Fee will continue. You will
also pay Monthly Charges for your health center services which will be
equal to the then current monthly Service Fee for the one-bedroom
deluxe apartment (unless your Service Fee for your Apartment is less in
which case the lesser Service Fee shall apply) plus an additional
Owner's Supervision Fee. In addition, you will pay for the cost of one
meal per day at the then current charge for extra meals and for any
additional health services as described in Section 9.6.
9.3 MORE THAN NINETY (90) DAYS OF HEALTH CENTER SERVICES WHEN THERE ARE
TWO OF YOU. If there are two of you, and only one of you requires
health center services beyond the ninety (90) cumulative days and such
Resident relocates to a private domi ciliary care bed or a semi-private
comprehensive care bed in the Community Health Center, there will be no
additional Monthly Charges for health center services except that you
will pay the cost of the two meals per day not covered by the Service
Fee for your Apartment at the then current charge for extra meals and
for any additional health services as described in Section 9.6. The
monthly Service Fee, including the second person Service Fee, for your
Apartment, the Owner's Supervision Fees, and the Annual Fee will
continue as before. If both of you require health center services
beyond the ninety (90) cumulative days, and both of you relocate to a
private domiciliary care bed or a semi-private comprehensive care bed
in the Community Health Center, your Monthly Charges will depend upon
whether you choose to release your Apartment:
9.3.1 If you choose to release your Apartment for occupancy by
someone else, the monthly Service Fee, including the second person
Service Fee, for your Apartment will cease. Monthly Charges for your
health center services will be equal to the then current monthly
Service Fee, including the second person Service Fee, for the
one-bedroom deluxe apartment (unless your Service Fees for your
Apartment are less in which case the lesser monthly Service Fees shall
apply). You will continue to pay your Owner's Supervision Fees and the
Annual Fee. In addition, you will pay the cost of four meals per day at
the then current charge for extra meals and for any additional health
services as described in Section 9.6.
9.3.2 If you choose to not release your Apartment for
occupancy by someone else, the monthly Service Fee, including the
second person Service Fee for your Apartment, your Owner's Supervision
Fees, and the Annual Fee will continue. You will also pay Monthly
Charges for your health center services which will be equal to the then
current monthly Service Fee, including the second person Service Fee,
for the one-bedroom deluxe apartment (unless your Service Fees for your
Apartment are less in which case the lesser Service Fees shall apply)
plus additional Owner's Supervision Fees. In addition, you will pay the
cost of two meals per day at the then current charge for extra meals
and for any additional health services as described in Section 9.6.
9.4 HEALTH CENTER RESIDENT LOANS ESCROW. If you release your Apartment
because you have moved to the Community Health Center, we will attempt
to reoccupy your Apartment. Upon reoccupancy of your Apartment, we will
deposit into escrow an amount equal to the principal of your Loan
balance. The funds will be maintained in escrow for the benefit of
residents of the Community Health Center whose living units have been
released and reoccupied. Earnings from such Health Center Resident
Loans Escrow will be used by us only for purposes related to the
Community. Upon cancellation of this Agreement, such identified deposit
will be applied in repayment of your Loan. All deposits to the Health
Center Resident Loans Escrow will be subject to certain permitted
encumbrances as described in the Health Center Resident Loans Escrow
Agreement.
9.5 RETURN TO APARTMENT. If you have released your Apartment because
you have moved to the Community Health Center, and if later you are
able, in the opinion of the medical director, to return to a living
unit, we will provide you a living unit of the same type as your
Apartment as soon as one becomes available. Upon reoccupying such
living unit, your Monthly Charges will be based on the then current
charges for the living unit. Your deposit in the Health Center Resident
Loans Escrow will be released to us and your Loan will again be secured
by the Indemnity Deed of Trust.
9.6 ADDITIONAL HEALTH SERVICES. We may also provide special services
and supplies in the Community Health Center such as therapy,
pharmaceutical supplies, personal laundry, and rental of equipment.
These additional services and supplies are not included in the Service
Fee and/or health center service fees, but will be available for an
extra charge. Fees from such additional services will be used by us
only for purposes related to the Community.
9.7 MEDICAL DIRECTOR. We will designate a member in good standing of
the Baltimore County Medical Society as medical director who will be
available for emergency calls. You will be at liberty to engage the
services of the medical director at your own expense. We will not be
responsible for the cost of medical treatment by the medical director,
nor will we be responsible for the cost of medicine, drugs, prescribed
therapy, and similar additional services and supplies. If we incur or
advance costs for your medical treatment or for medicine, drugs,
prescribed therapy, and similar additional services and supplies, (even
though such medical care is given at the direction of your attending
physician or the medical director without your prior approval), you
will promptly reimburse us for such costs.
9.8 SUPPLEMENTAL INSURANCE. The Community will participate in the
Medicare program. Upon initial occupancy of your Apartment, you will
represent that you are entitled to Medicare Part A benefits and are
enrolled in the Medicare Part B program. Further, you will maintain,
while you are a resident of the Community, Medicare Part A, Medicare
Part B, and one health insurance policy to supplement Medicare or
equivalent insurance coverage acceptable to us, and, upon our request,
furnish us copies of such policies. Notwithstanding the foregoing, if,
upon initial occupancy, you are not eligible to enroll in the Medicare
program, you will not be required to enroll in the Medicare program
until you reach the age of eligibility. If such coverage is not
maintained by you, we may revoke your right to reside at the Community
and cancel this Agreement as provided in Section 11. The Community will
not participate in the Medicaid program, and you will not be required
to apply for Medicaid as a condition of continued residency.
9.9 HEALTH CENTER ADDENDUM. If required by Maryland law in connection
with your relocation to the Community Health Center, you and we agree
to enter into an addendum to this Agreement which more specifically
describes the related health services and related charges.
9.10 EMERGENCY ENTRY AND RELOCATION. We may enter your Community Health
Center room should it be necessary to protect your health and safety or
the health and safety of other residents. Should it be necessary to
modify facilities to meet requirements of the law which necessitate
temporary vacation of your Community Health Center room, we will
provide alternate facilities for you without additional cost within or
outside the Community. If relocation is recommended by the medical
director or your attending physician, we will request that you relocate
to another Community Health Center room only for the protection of your
health or safety or for the health or safety of the other residents of
the Community.
10. YOUR CANCELLATION RIGHTS.
You may cancel this Agreement at any time by giving us written notice
of cancellation signed by you (both of you if there are two of you) and
sent by registered or certified mail. If you give such notice prior to
your occupancy of the Community, the cancellation will be effective as
described in Section 2 above. If you give such notice after your
occupancy of the Community, this Agreement will be cancelled upon the
expiration of one hundred twenty (120) days from the date we receive
such notice of cancellation. If you give such notice, you will pay your
Monthly Charges until the expiration of such 120 days. Your Loan will
be repaid in accordance with the Loan Agreement. Your Annual Fee will
continue until your Loan is repaid.
11. OUR CANCELLATION RIGHTS.
11.1 JUST CAUSE. After we have accepted you for residency, we will not
cancel this Agreement except for just cause. Just cause is defined as:
11.1.1 Nonpayment; or
11.1.2 Material breach of this Agreement or the rules of the
Community; or
11.1.3 Health status or behavior which constitutes a
substantial threat to your health or safety or to the health or safety
of the other residents of the Community.
11.2 FINANCIAL DIFFICULTY. If, after you have paid the Entrance Fee,
you encounter financial difficulties making it impossible for you to
pay the full Monthly Charges, then:
11.2.1 You shall in any case be permitted to remain at the
Community for one hundred twenty (120) days after the date of failure
to pay, during which time you shall continue to pay reduced Monthly
Charges based on your current income; and
11.2.2 Because it is and shall continue to be our declared
policy to not cancel your residency solely by reason of your financial
inability to pay the full Monthly Charges, you shall be permitted to
remain at the Community at reduced Monthly Charges based on your
ability to pay for so long as you establish facts to justify deferral
of such charges, and the deferral of such charges can, in our sole
discretion, be granted without impairing our ability to operate on a
sound financial basis. The loss of revenue to the Community from any
such deferral of charges will be borne by us and will not be charged
back to other residents under the Fair Share Allocation. This provision
shall not apply if you have impaired your ability to meet your
financial obligations hereunder by making unapproved gifts or other
transfers. To evidence these agreements based on the circumstances at
the time, you agree to enter into a special hardship agreement with us
at the time of any such deferrals to reflect the reduced charges
currently payable and the interest rate to be applied to the deferrals
and to provide us with a perfected first security interest in your Loan
repayment rights. Any payments otherwise due to you from us, including
the repayment of your Loan, will be offset against any such deferred
charges as provided in Section 3.3.
11.3 NOTICE OF CANCELLATION. Prior to any cancellation of the Agreement
by us, we will give you notice in writing of the reasons, and you will
have sixty (60) days thereafter to correct the problem. If we determine
that the problem is corrected within such time, this Agreement shall
remain in effect. If we determine that the problem is not corrected
within such time, this Agreement will be cancelled and you must leave
the Community.
11.4 EMERGENCY NOTICE. Notwithstanding the above, if the medical
director determines that either the giving of notice or the waiting
period described above might be detrimental to you or others, then such
notice and/or waiting period shall not be required before relocation to
a hospital or other appropriate facility. Under such circumstances, we
are expressly authorized to transfer you to such hospital or other
facility, and we will promptly notify your representative and your
attending physician. Upon transferring you to such hospital or other
facility, we will immediately provide you with a notice of
cancellation. This Agreement shall be cancelled sixty (60) days
following notice, unless your condition improves and you are
subsequently readmitted to the Community.
12. MISCELLANEOUS PROVISIONS WITH RESPECT TO YOUR APARTMENT.
12.1 USE OF APARTMENT. The Apartment is for living only and shall not
be used for carrying on any business or profession, nor in any manner
in violation of zoning restrictions.
12.2 DURATION OF YOUR RIGHT TO OCCUPY THE APARTMENT. You may reside in
your Apartment for as long as you live unless you are not capable of
maintaining yourself in independent living in the Apartment or this
Agreement is cancelled by you or by us. If, in the opinion of the
medical director or your attending physician, your physical or mental
health requires that health center services be given, you will be
requested to relocate to the Community Health Center where we are
licensed to provide such care. You will not be requested to relocate to
the Community Health Center unless necessary for your health or safety
or the health or safety of others. If there are no beds available in
the Community Health Center, you will be requested to relocate to
another health facility with which we will contract to provide health
center services. You will continue to pay only applicable Monthly
Charges and the Annual Fee, and you will be relocated to the Community
Health Center as soon as a bed is available.
12.3 OCCUPANCY OF APARTMENT. Except as hereinafter provided, no person
other than you may occupy the Apartment except with our express written
approval. In the event that a second person who is not a party to this
Agree ment is accepted for residency under this Agreement at a time
subsequent to the date hereof (said acceptance to be in accordance with
our then current admission policies), you shall pay the then current
second person Admission Fee as determined by us, and each month
thereafter, you shall pay the then current additional Monthly Charges
for second persons. If such second person does not meet the
requirements for residency, such second person will not be permitted to
occupy the Apartment for more than thirty (30) days (except with our
express written approval), and you may cancel this Agreement as
provided in Section 10.
12.4 EMERGENCY ENTRY AND RELOCATION. We may enter your Apartment should
it be necessary in an emergency to protect your health and safety or
the health and safety of other residents. Should it be necessary to
modify facilities to meet the requirements of law which necessitate
temporary vacation of your Apartment, we will provide alternate
facilities for you without additional cost within or outside the
Community. If relocation is recommended by the medical director or your
attending physician, we will request that you relocate to another
living unit within the Community or to the Community Health Center only
for the protection of your health or safety or for the health or safety
of the other residents of the Community.
12.5 FURNISHINGS. Furnishings within the Apartment will not be provided
by us. Furnishings provided by you shall not be such as to interfere
with the health or safety of other residents or others.
12.6 ALTERATIONS BY YOU. You may not undertake any alterations to your
Apartment without our prior written approval.
12.7 REFURBISHMENT. Customary and normal refurbishment costs of your
Apartment will be borne by all residents of the Com munity under the
Fair Share Allocation. Any necessary refurbishment costs beyond those
which are customary and normal will be paid by you.
13. AMENDMENTS.
13.1 THIS AGREEMENT. This Agreement may be amended by agreement of the
parties to this Agreement.
13.2 ALL AGREEMENTS. In addition, with the approval of not less than
eighty percent (80%) of the residents of the living units in the
Community, and us, any designated residency agreements, which may
include this Agree ment, may be amended in any respect upon receipt of
evidence of any required regulatory approval; provided, however, that
no such amendment shall:
13.2.1 Reduce the aforesaid number of residents which is
required to consent to any such amendment; or
13.2.2 Permit the preference or priority of any resident
without the consent of each resident.
Upon our approval and upon our receipt of evidence of the approval of
not less than eighty percent (80%) of such residents as aforesaid, such
amendment shall be effective and any designated residency agreements,
which may include this Agreement, shall automatically be amended.
Accordingly, any of the terms of this Agreement may be amended,
including the scope and type of services provided, upon our approval
and approval of not less than eighty percent (80%) of the residents of
the living units.
13.3 COMPLIANCE WITH LAWS. This Agreement may be modified by us at any
time in order to comply with laws and regulations.
14. MISCELLANEOUS LEGAL PROVISIONS.
14.1 GOVERNING LAW. This Agreement will be interpreted according to the
laws of the State of Maryland and will become effective upon acceptance
and execution by us. The Glossary which sets forth the definitions of
certain terms used in this Agreement is by this reference incorporated
herein and made a part of this Agreement.
14.2 SEPARABILITY. The invalidity of any restriction, condition, or
other provision of this Agreement, or any part of the same, shall not
impair or affect in any way the validity or enforceability of the rest
of this Agreement.
14.3 CAPACITY. This Agreement has been executed on our behalf by our
duly authorized agent, and no officer, director, agent, or employee
shall have any personal liability to you hereunder under any
circumstances.
14.4 RESIDENT. When Resident consists of more than one person, the
rights and obligations of each are joint and several, except as the
context otherwise requires.
14.5 NATURE OF RIGHTS. You understand and agree that (i) this Agreement
or your rights (including the use of the Apartment) under it may not be
assigned, and no rights or benefits under this Agreement shall inure to
the benefit of your heirs, legatees, assignees, or representatives,
except for repayment of the Loan; (ii) this Agreement and your
contractual right to occupy the Apartment shall exist and continue to
exist during your lifetime unless cancelled as provided herein; (iii)
this Agreement grants you a revocable license to occupy and use space
in the Community but does not give you exclusive possession of the
Apartment as against us, and you shall not be entitled to any rights of
specific performance but shall be limited to such remedies as set forth
herein; (iv) this Agreement is not a lease or easement and does not
transfer or grant you any interest in real property; and (v) this
Agreement grants to us complete decision-making authority regarding the
management and operation of the Community.
14.6 RELEASE. We are not responsible for loss of or damage to your
personal property, unless such loss or damage is caused by our
negligent acts or omissions or the negligent acts or omissions of our
agents or employees, and you hereby release us from any such liability.
You may want to obtain at your own expense insurance to protect against
such losses.
14.7 INDEMNITY. We shall not be liable for, and you agree to indemnify,
defend, and hold us harmless from claims, damages, and expenses,
including attorneys' fees and court costs, resulting from any injury or
death to persons and any damages to property to the extent caused by,
resulting from, attributable to, or in any way connected with your
negligent or intentional act or omission.
14.8 ENTIRE AGREEMENT. This Agreement and any addenda or exhibits
hereto contain our entire understanding with respect to your residency.
14.9 TAX CONSEQUENCES. Each person considering executing this Agreement
should consult with his or her tax advisor regarding the tax
consequences associated with this Agreement and the Loan Agreement,
including the application of the below-market loan provisions of
Section 7872 of the Internal Revenue Code of 1986, as amended. We will
provide you with annual informational returns which reflect the amount
of income, if any, resulting from your Loan and from the credit
described in Section 4.7 above. Any taxes payable by you as a result of
such income remains your responsibility.
14.10 LOAN SECURITY. Your mortgage rights which secure the repayment of
the Loan will always be prior to the lien of all indentures of trust,
mortgages, or other documents creating liens encumbering the Community
or any of the assets of the Community, which have been or will be
executed by us, with the exception of the "permitted encumbrances" as
described in the Indemnity Deed of Trust. Upon request, you agree to
sign, acknowledge, and deliver to such holders of any permitted
encumbrances such further written evidence of such subordination as
such holders may reasonably require, except that such subordination
will not apply to your statutory refund rights as described under
Section 3.2. Except to the extent of your obligation to pay the Service
Fee, you will not be liable for any such indebtedness evidenced by the
permitted encumbrances.
14.11 TRANSFERS. We may from time to time issue additional equity
interests or sell or transfer interest in the Community, provided that
in such latter event the buyer shall agree to assume this Agreement and
all other existing residency agreements. In addition, we may sell or
otherwise transfer the land or other portions of the Community and
lease back such land or other portions. Your signature hereto
constitutes your consent and approval to any such future transfer.
14.12 LAW CHANGES. If changes are made in any of the statutes or
regulations applicable to the Community prior to the completion of
construction of the Community, we shall have the right to cancel this
Agreement or submit to you a revised agreement based on the changes in
the law.
14.13 RESIDENTS' ASSOCIATION. Residents shall have the right to
organize and operate a Residents' Association at the Community and to
meet privately to conduct business of the Residents' Association. It is
our policy to encourage the organization and operation of a Residents'
Association.
14.14 ARBITRATION. Except for your statutory right to bring an action
for recovery in any court of general jurisdiction for injuries arising
out of our violation of the provisions of Article 70B of the Annotated
Code of Maryland as described in Section 14.17, any dispute, claim, or
controversy of any kind between you and us arising out of, in
connection with, or relating to this Agreement and any amendment
hereof, or the breach hereof, which cannot be resolved by mutual
agreement, will be submitted to and determined by arbitration in
Towson, Maryland in accordance with the then current commercial
arbitration rules of the American Arbitration Association; provided,
however, that you and we will each be required to submit a proposed
resolution of such dispute or controversy to the arbitrator, and the
arbitrator will be required to render a decision adopting, in full,
either one or the other of such proposed resolutions, and no
compromises or alternative resolutions shall be allowed or considered
by the arbitrator. Both you and we will be bound by the arbitrator's
decision, and judgment upon such decision may be entered in any federal
or state court having jurisdiction unless the arbitration is fraudulent
or so grossly erroneous as to necessarily imply bad faith. You and we
will jointly agree on an arbitrator. If you and we are unable to agree
in good faith and within a reasonable time on the selection of an
arbitrator, either you or we may request appointment of an arbitrator
by the American Arbitration Association. Costs of arbitration,
including our legal costs and attorneys' fees, arbitrators' fees, and
similar costs, will be borne by all residents of the Community under
the Fair Share Allocation provided that the arbitrator may choose to
award the costs of arbitration against us if the arbitrator determines
that the proposed resolution urged by us was not reasonable. Any direct
arbitration costs incurred by you will be borne by you. If the issue
affects more than one resident, we may elect to join all affected
residents into a single arbitration proceeding, and you hereby consent
to such joinder.
14.15 RESIDENT REPRESENTATIONS. By executing this Agreement, you
represent and warrant that you are capable of independent living, free
of communicable disease, and have assets and income which are
sufficient under foreseeable circumstances and after provision for
payment of your obligations under this Agreement to meet your ordinary
and customary living expenses after assuming occupancy, and that all
written representations made to us with respect to such matters by you
or on your behalf on the Confidential Data Application or otherwise are
true.
14.16 FEE ADJUSTMENTS FOR ABSENCES. No fee adjustments for absences
from the Community will be made, except at our sole discretion.
14.17 LEGAL REMEDIES. Residents of facilities such as the Community are
protected by the provisions of Article 70B of the Annotated Code of
Maryland, which provides that residents injured by violation of that
subtitle may bring an action for the recovery of damages in any court
of general jurisdiction, and the award may include reasonable
attorneys' fees in the event of a favorable judgment. In addition,
residents injured by a violation of that subtitle, or the Maryland
Office on Aging on behalf of any resident, may institute an action for
an appropriate temporary restraining order or injunction. Any injured
resident, or the Maryland Office on Aging on behalf of any injured
resident, may petition for the appointment of a receiver in the event
of a threat of immediate closure of a facility or if the provider is
not honoring its contracts with its residents or to prohibit the
diversion of assets and records from the facility or the State of
Maryland.
14.18 FUNERAL AND BURIAL SERVICES. No funeral or burial services or
expenses are provided by us pursuant to this Agreement.
14.19 CERTIFIED FINANCIAL STATEMENTS. Upon request, we will make
available to you any certified financial statements transmitted to the
Maryland Office on Aging as required by Article 70B of the Annotated
Code of Maryland.
A PRELIMINARY OR FINAL CERTIFICATE OF REGISTRATION IS NOT AN
ENDORSEMENT OR GUARANTEE OF THIS FACILITY BY THE STATE OF MARYLAND. THE
MARYLAND OFFICE ON AGING URGES YOU TO CONSULT WITH AN ATTORNEY AND A
SUITABLE FINANCIAL ADVISOR BEFORE SIGNING ANY DOCUMENTS.
EXECUTED AT _______________________________________________,
Maryland this __________ day of ___________________________,
19_____.
- ------------------------------------------------------------
RESIDENT
- ------------------------------------------------------------
Witness
- ------------------------------------------------------------
RESIDENT
- ------------------------------------------------------------
Witness
For THE CHESTNUT PARTNERSHIP
d/b/a BLAKEHURST
By__________________________________________________________
Authorized Representative
Apartment Type______________________________________________
Apartment Number____________________________________________
Admission Fee $_____________________________________________
Loan Amount $_______________________________________________
Monthly Charges as of_______________________________________
$------------------
I have received a copy of the provider's latest certified financial statement at
least two (2) weeks before signing this Agreement and I have reviewed the
certified financial statement provided.
- -----------------------------------------
Applicant
- -----------------------------------------
Applicant
Date:____________________________________
[GRAPHIC]
EQUAL HOUSING
OPPORTUNITY
EXHIBIT A
LOAN AGREEMENT
(TO BE EXECUTED UPON LOAN PAYMENT)
1. Payment of Loan. Pursuant to the Residency Agreement dated
___________________, 19___, the undersigned resident ("you") hereby
loans $______________ to The Chestnut Partnership doing business as
Blakehurst (hereafter "we" or "us"). We agree to repay such amount upon
the terms and conditions hereinafter set forth. The Loan proceeds may
be used by us for any purpose.
2. Interest. No interest shall accrue or be paid on the amount of your
Loan which is exempt from the below market interest provisions of
Section 7872 of the Internal Revenue Code of 1986, as amended. Interest
at the "applicable federal rate" of __________ percent per annum shall
accrue with respect to the balance of your Loan and shall be paid
annually to you by The Chestnut Partnership.
3. Security. If you have not released your Apartment pursuant to the
provisions regarding Community Health Center usage, your Loan and the
loans of all other residents of the Community whose living units have
not been so released, shall be guaranteed by The Chestnut Real Estate
Partnership, and such Guaranty shall be secured by an Indemnity Deed of
Trust on the real estate known as Blakehurst which is owned by The
Chestnut Real Estate Partnership. The Indemnity Deed of Trust will be
subject to certain "permitted encumbrances" as described in the
Indemnity Deed of Trust. A copy of the Indemnity Deed of Trust and the
Guaranty have been provided to you. If you have released your Apartment
pursuant to the provisions regarding the Community Health Center usage
and your Apartment is reoccupied, your Loan shall be secured by funds
maintained in the Health Center Resident Loans Escrow. The Health
Center Resident Loans Escrow will be subject to certain "permitted
encumbrances" as described in the Health Center Resident Loans Escrow
Agreement.
4. Repayment. Your Loan shall become due and payable in full upon the
earlier of (i) the date that your Apartment is reoccupied by a new
resident to the Community in the event of your death or in the event
you cancel your Residency Agreement, but in no event shall such date be
more than twelve (12) months from the date of your death or
cancellation, or (ii) thirty (30) years from the date hereof. In the
event your Residency Agreement is cancelled by us, your Loan shall
become due and payable within sixty (60) days in accordance with
Section 3.2 of the Residency Agreement. You agree to look solely to the
assets of The Chestnut Partnership or The Chestnut Real Estate
Partnership for the repayment of your Loan. We may offset against any
Loan repayment any amounts then due by you to us, except against the
refund amount we are required by law to make based on the formula set
forth under Section 3.2 of the Residency Agreement.
5. Successors and Assigns. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Defined terms used herein
are used as defined in the Residency Agreement.
- --------------------------------------------------
Resident
- --------------------------------------------------
Witness
Date______________________________________________
- --------------------------------------------------
Resident
- --------------------------------------------------
Witness
Date______________________________________________
THE CHESTNUT PARTNERSHIP
d/b/a BLAKEHURST
By:_______________________________________________
Authorized Representative
Exhibit 10.6.55
BLAKEHURST
TRADITIONAL PLAN
RESIDENCY AGREEMENT
THE CHESTNUT PARTNERSHIP
APRIL 25, 1996
GLOSSARY
THE FOLLOWING TERMS ARE DESCRIBED AS USED IN THE ACCOMPANYING AGREEMENT.
REFERENCE TO THE AGREEMENT AND THE CONTEXT IN WHICH THE TERMS ARE USED IS
RECOMMENDED TO PROVIDE A FULLER UNDERSTANDING OF EACH OF THE TERMS.
"ADMISSION FEE" means the fee identified in Section 1.1.1 of the Agreement,
which is paid to us to initially reserve your Apartment, and to compensate us
for undertaking the initial development risks and planning.
"AGREEMENT" means this Residency Agreement.
"APARTMENT" means the living unit at the Community identified in Section 1.1 of
this Agreement in which you are entitled to live pursuant to the Agreement.
"CAPITAL RESERVE FEE" means the fee identified in Section 1.2 of the Agreement,
which is paid to us one time to establish a working capital account for the
Community.
"THE COMMUNITY" means that continuing care retirement community known as
Blakehurst, including living units, the Community Health Center, and all club
areas.
"THE COMMUNITY HEALTH CENTER" means the facility forming a part of the
Community, which is intended to provide health center services as described in
Section 8 of the Agreement. The Community Health Center consists of private
domiciliary care beds and semi-private comprehensive care beds.
"ENTRANCE FEE" means the Admission Fee and balance of the Entrance Fee paid to
us pursuant to the Agreement.
"FAIR SHARE ALLOCATION" means the method for determining your Service Fee.
"HEALTH CENTER SERVICES" means nursing care services or domiciliary care
services provided to a resident in the Community Health Center, depending on the
level of health care services required by the resident.
"MONTHLY CHARGES" means all those Monthly Charges payable by you pursuant to the
terms of the Agreement, including the Owner's Supervision Fee, the Service Fee,
the fees for optional services, the additional Monthly Charges for health center
services, if any, and all other fees and charges payable monthly pursuant to the
terms of the Agreement, as appropriate in the particular instance.
"OCCUPANCY" means the date on which you pay the balance of the Entrance Fee to
us pursuant to Section 1.1.2.
"OWNER'S SUPERVISION FEE" means the fixed monthly fee identified in Section 4.1
of the Agreement, which is payable on a per resident basis for occupancy in the
Community.
"RESIDENT" OR "YOU" means the person or persons who sign the Agreement as
Resident. Sometimes a second Resident (if there are two of you) is referred to
in the Agreement as the "second person." Unless otherwise indicated, "you"
refers to both of you if there are two of you.
"SERVICE FEE" means the monthly fee identified in Section 4.2 of the Agreement,
which is payable in consideration for the services and facilities provided to
all residents.
"WE" OR "US" means The Chestnut Partnership, a Maryland proprietary general
partnership formed for the purpose of developing and operating the Community.
BLAKEHURST RESIDENCY AGREEMENT
THE CHESTNUT PARTNERSHIP
1. ENTRANCE FEE AND ONE-TIME CAPITAL RESERVE FEE.
1.1 ENTRANCE FEE. To assure you, __________________________________
(hereafter "you" or "Resident"), a place in Blakehurst, a life-care
retirement community located at 1055 West Joppa Road, Towson, Maryland
(hereafter the "Community"), in accordance with all the terms of this
Agreement, you will pay to The Chestnut Partnership (hereafter "we" or
"us") an Admission Fee and the balance of the Entrance Fee for a combined
total of $________________. Your Admission Fee and the balance of the
Entrance Fee together constitute your total Entrance Fee. Payment of your
Admission Fee will reserve for you the _______________________________
living unit no. _______________ (hereafter "Apartment"). Payment of the
balance of your Entrance Fee and the Monthly Charges (described below)
entitles you to live in the Apartment at the Community for as long as you
are capable of independent living, and in the Community Health Center if
you are no longer capable of independent living, all in accordance with
the terms of this Agreement.
1.1.1 ADMISSION FEE. Your Admission Fee of $____________________
for one person is paid herewith, and an additional $_____________ if
there are two of you, is due at the time you pay the balance of your
Entrance Fee. Your Admission Fee will be held in escrow pursuant to the
terms of the Admission Fee Escrow Agreement established by us for the
Community. A copy of the Admission Fee Escrow Agreement is available for
your review upon your request. Your Admission Fee will be released to us
as soon as the following events have occurred: (i) the issuance of a
final certificate of registration to the Community by the Maryland Office
on Aging; (ii) the completion of construction; (iii) the issuance of a
certificate of occupancy, or the equivalent, by the appropriate local
jurisdiction; and (iv) the issuance of the appropriate licenses or
certificates by the Department of Health and Mental Hygiene or by the
Maryland Office on Aging. We may not provide continuing care until we
receive a final certificate of registration from the Maryland Office on
Aging. The Maryland Office on Aging shall issue a final certificate of
registration when it determines that all of the following conditions have
been met: (i) we have been issued a preliminary certificate of
registration; (ii) we have filed all required documents with the Maryland
Office on Aging; (iii) we have submitted documenta tion which
demonstrates that continuing care agreements have been executed for
sixty-five percent (65%) of the living units, and a minimum of ten
percent (10%) of the total Entrance Fee has been paid for each contracted
living unit; and (iv) we have submitted documentation of a commitment for
permanent long-term financing and construction financing.
1.1.2 BALANCE OF ENTRANCE FEE. The balance of the Entrance Fee
will be paid to us on the earlier of (i) fifteen (15) days after your
Apartment is ready for occupancy (provided that we give you at least
thirty (30) days' advance notice of the date on which your Apartment will
be ready for occupancy) or (ii) the date you move into the Community. In
exchange for paying the Entrance Fee and paying all Monthly Charges, this
Agreement grants you a license to the lifetime use of the Apartment and
other Community facilities and to available services.
1.2 ONE-TIME CAPITAL RESERVE FEE. At the same time you pay your initial
Service Fee, you will pay us an amount equal to the then current monthly
Service Fee (as described in Section 4.2). This is a one-time
non-refundable charge which we will place in a working capital account to
be used by us only for purposes related to the Community.
2. REFUND OF ADMISSION FEE PRIOR TO OCCUPANCY.
2.1 RIGHT OF RESCISSION. YOU MAY RESCIND THIS AGREEMENT AT ANY TIME PRIOR
TO OCCUPANCY. UPON ANY RESCISSION, YOUR REFUND RIGHTS WILL BE AS SET
FORTH BELOW IN THIS SECTION 2.
2.2 FIRST 30 DAYS. IF PRIOR TO OCCUPANCY WE DO NOT ACCEPT YOU FOR
RESIDENCY WITHIN THIRTY (30) DAYS, OR IF YOU CHANGE YOUR MIND AND GIVE US
WRITTEN NOTICE OF CANCELLATION OF THIS AGREEMENT WITHIN THIRTY (30) DAYS
FROM THE DATE YOU ENTER INTO THIS AGREEMENT, THIS AGREEMENT WILL BE
AUTOMATICALLY RESCINDED AND THE ADMISSION FEE WHICH YOU HAVE PAID TO US
WILL BE RETURNED TO YOU (WITHOUT INTEREST) WITHIN THIRTY (30) DAYS.
2.3 CHANGE IN CONDITION. IF PRIOR TO OCCUPANCY (i) YOU (OR EITHER OF YOU
IF THERE ARE TWO OF YOU) DIE OR BECOME UNABLE TO OCCUPY YOUR APARTMENT OR
THE COMMUNITY HEALTH CENTER BECAUSE OF ILLNESS, INJURY, OR INCAPACITY OR
(ii) YOU ELECT TO CANCEL THIS AGREEMENT BECAUSE OF A SUBSTANTIAL CHANGE
IN YOUR PHYSICAL, MENTAL, OR FINANCIAL CONDITION, THIS AGREEMENT WILL BE
AUTOMATICALLY CANCELED. IN SUCH EVENT, WE WILL RETURN TO YOU OR YOUR
LEGAL REPRESENTATIVE (WITHOUT INTEREST) THE ADMISSION FEE WHICH YOU HAVE
PAID TO US WITHIN THIRTY (30) DAYS OF NOTICE OF CANCELLATION.
2.4 CANCELLATION AFTER 30 DAYS. IF PRIOR TO OCCUPANCY YOU CANCEL THIS
AGREEMENT AFTER THIRTY (30) DAYS FROM THE DATE YOU ENTER INTO THIS
AGREEMENT FOR ANY REASON OTHER THAN THE REASONS IDENTIFIED IN SECTION
2.3, THE ADMISSION FEE WHICH YOU HAVE PAID TO US WILL BE RETURNED TO YOU
(WITHOUT INTEREST) WITHIN SIXTY (60) DAYS FOLLOWING OUR RECEIPT OF YOUR
NOTICE OF CANCELLATION, EXCEPT THAT WE WILL RETAIN A PROCESSING FEE IN
THE AMOUNT OF THREE HUNDRED DOLLARS ($300).
2.5 CONSTRUCTION DELAY. IF YOUR APARTMENT IN THE COMMUNITY IS NOT
AVAILABLE FOR OCCUPANCY WITHIN THREE YEARS AFTER THE DATE OF THIS
AGREEMENT, YOU OR WE MAY CANCEL THIS AGREEMENT UPON WRITTEN NOTICE BY
REGISTERED OR CERTIFIED MAIL. IN SUCH EVENT, THE FULL AMOUNT OF THE
ADMISSION FEE YOU HAVE PAID WILL BE REFUNDED TO YOU WITH INTEREST AT THE
NET RATE EARNED ON SUCH DEPOSITS WHILE HELD IN ESCROW WITHIN SIXTY (60)
DAYS FROM THE DATE OF RECEIPT OF SUCH NOTICE OF CANCELLATION.
2.6 SPECIAL COSTS. IN ALL CASES PRIOR TO OCCUPANCY, OTHER THAN AS
PROVIDED IN SECTION 2.5 ABOVE, ANY SPECIAL COSTS INCURRED FOR
MODIFICATIONS IN THE STRUCTURE OR FURNISHINGS OF THE APARTMENT,
SPECIFICALLY REQUESTED BY YOU AND SET FORTH IN WRITING IN A SEPARATE
ADDENDUM TO THIS AGREEMENT SIGNED BY YOU, WILL NOT BE REIMBURSED.
3. REFUND OF ENTRANCE FEE FOLLOWING OCCUPANCY.
3.1 TERMINATION BY YOU. AFTER OCCUPANCY, YOUR RIGHT OF RESCISSION CEASES
EXCEPT AS MAYBE PROVIDED IN SECTION 14(C) OF ARTICLE 70B OF THE ANNOTATED
CODE OF MARYLAND. AFTER OCCUPANCY, IF YOU DIE OR THIS AGREEMENT IS
CANCELED BY YOU FOR ANY REASON, WE WILL RETAIN FROM YOUR ENTRANCE FEE THE
GREATER OF (i) YOUR ADMISSION FEE OR (ii) AN AMOUNT EQUAL TO TWO PERCENT
(2%) OF YOUR ENTRANCE FEE PER MONTH OR PARTIAL MONTH OF OCCUPANCY UNTIL
THE FULL AMOUNT OF YOUR ENTRANCE FEE IS EARNED BY US. THE BALANCE OF YOUR
ENTRANCE FEE, IF ANY, WILL BE REFUNDED WITHOUT INTEREST TO YOU (OR YOUR
LEGAL REPRESENTATIVE) WITHIN THIRTY (30) DAYS FOLLOWING THE DATE WE
RECEIVE THE NEXT ENTRANCE FEE FOR YOUR APARTMENT, BUT IN NO EVENT LATER
THAN TWELVE (12) MONTHS FOLLOWING THE DATE OF CANCELLATION.
3.2 CANCELLATION BY US. AFTER OCCUPANCY, IF WE CANCEL THIS AGREEMENT
PURSUANT TO SECTION 10, WE SHALL REFUND TO YOU (OR YOUR PERSONAL
REPRESENTATIVE) THE AMOUNT EQUAL TO THE ENTRANCE FEE DIVIDED BY YOUR
YEARS OF LIFE EXPECTANCY AT ADMISSION AND MULTIPLIED BY YOUR YEARS OF
LIFE EXPECTANCY AT CANCELLATION.
THE LIFE TABLES OF THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES MOST
RECENTLY PUBLISHED AT THE TIME OF CANCELLATION SHALL BE USED TO COMPUTE
BOTH LIFE EXPECTANCIES. SUCH REFUND AMOUNT, IF ANY, WILL BE PAID TO YOU
WITHIN SIXTY (60) DAYS FOLLOWING THE DATE OF OUR CANCELLATION OF THIS
AGREEMENT.
3.3 OFFSETS AGAINST REFUND. YOU AGREE TO REIMBURSE US FOR ANY DELINQUENT
MONTHLY CHARGES OWED BY YOU, ANY HEALTH CARE EXPENSES THAT WE HAVE
ADVANCED ON YOUR BEHALF, AND ANY OTHER SUMS OWED BY YOU TO US. SUCH SUMS
MAY BE DIRECTLY OFFSET AGAINST THE REFUND EXCEPT AGAINST THE REFUND
AMOUNT WE ARE REQUIRED BY LAW TO MAKE BASED ON THE FORMULA SET FORTH
UNDER SECTION 3.2.
3.4 SPECIAL COSTS AND PROCESSING FEE. IN ALL CASES FOLLOWING OCCUPANCY,
A PROCESSING FEE IN THE AMOUNT OF THREE HUNDRED DOLLARS ($300) AND ANY
SPECIAL COSTS INCURRED FOR MODIFICATIONS IN THE STRUCTURE OR
FURNISHINGS OF THE APARTMENT, SPECIFICALLY REQUESTED BY YOU AND SET
FORTH IN WRITING IN A SEPARATE ADDENDUM TO THIS AGREEMENT SIGNED BY
YOU, WILL NOT BE REIMBURSED.
4. MONTHLY CHARGES.
4.1 OWNER'S SUPERVISION FEE. You will pay an Owner's Supervision Fee of
$___________________ a month per Resident for occupying your Apartment or
the Community Health Center. There shall be no increase in your Owner's
Supervision Fee during the term of this Agreement. The Owner's
Supervision Fee may be used by us for any purpose.
4.2 SERVICE FEE. You will pay the following Service Fee for the services
and features provided under Section 6:
4.2.1 INITIAL SERVICE FEE. If the Community were in operation
during the fiscal year ending December 31, 19__, the Service Fee would be
$________________ a month for one person and an additional $_____________
a month if there are two of you. For subsequent fiscal years and until
the Fair Share Allocation has been implemented, the Service Fee will be
adjusted on the basis of the best information available at the time and
the prior year's inflation rate. The Fair Share Allocation will be
implemented when, in our sole discretion, the Community has had a
sufficient operating history to support its use and determination.
4.2.2 FAIR SHARE ALLOCATION. Upon implementation of the Fair
Share Allocation, the Service Fee will thereafter be your fair share of
the cash requirement of the Community (as described in Section 4.4
below).
The Fair Share Allocation has been developed to apportion the cash
requirement of the Community among its residents, based on such factors
as living unit size and type, number of second persons, and other
relevant factors as determined by us from time to time. A sample of the
current form of Fair Share Allocation formula is included in our most
current Information Booklet.
4.3 TOTAL MONTHLY CHARGES FOR APARTMENT. If the Community were in
operation during the fiscal year ending December 31, 19 , you would pay
total Monthly Charges (including second person charges if there are two
of you) of $_________ for the Owner's Supervision Fee and Service Fee.
4.4 CASH REQUIREMENT. The cash requirement of the Community is that
projected amount necessary to provide services and facilities to the
residents. The cash requirement is charged to all residents through the
Service Fee and application of the Fair Share Allocation. Generally, we
will determine the cash requirement based upon (i) the costs incurred in
connection with the operation of the Community for the prior fiscal year,
(ii) with adjustments made for inflation or deflation, occupancy rates,
changes to reserves, and nonrecurring expenses, and (iii) reduced by
certain projected Community income for the next fiscal year. Once
determined, the cash requirement is allocated among the residents
pursuant to the Fair Share Allocation. The determination of the cash
requirement is further explained below:
4.4.1 COSTS. Based upon the costs incurred in connection with
the operation of the Community for the prior fiscal year, we will
determine all anticipated expenses, costs, and other charges to the
Community for the next fiscal year, including but not limited to
salaries, wages, and fringe benefits of the Community employees and other
persons at the Community (including administrators); payroll taxes;
telephone; utilities; license fees, occupational taxes, property taxes,
sales taxes, permits, and other taxes (excluding only our income taxes);
legal and accounting fees and costs; bad debts and other losses;
insurance premiums, commissions, deductibles, and claims; consulting
fees; directors' expenses; food; supplies; interior, exterior, and
grounds replacement, repair, and maintenance, including living unit
refurbishment costs; capital improvements to the extent funds are not
available for such use from the Community's Capital Replacement Reserve
Fund (as described in Section 4.10); an amount equal to three percent
(3%) of the prior year's total cash requirement to fund the Capital
Replacement Reserve; management fees paid to others; management fees paid
to Life Care Services Corporation or to an affiliate of Life Care
Services Corporation of five percent (5%) of the total of revenues
(including first and second person Service Fees), plus reimbursable costs
incurred in performing management services as described in the management
agreement; debt service, including principal and interest (excluding only
principal payments on loans from residents); initial start-up losses, if
any, incurred after the earlier of ninety percent (90%) occupancy or nine
(9) months following initial occupancy; lease payments; occupancy
development costs; and other similar expenses, costs, and charges to the
Community.
4.4.2 ADJUSTMENTS. The foregoing projected expenses, costs, and
charges are then further adjusted by us to take into account anticipated
changes in reserves, working capital needs, services, the Community
Health Center utilization, living unit occupancy, inflation or deflation,
nonrecurring expenses, and other relevant factors.
4.4.3 COMMUNITY INCOME. The foregoing adjusted expenses, costs,
and charges are then reduced for certain projected income of the
Community for the next fiscal year, consisting of fees for additional
services, Community Health Center services, and investment income from
the Health Center Resident Loans Escrow, to result in the cash
requirement of the Community for the next fiscal year.
4.5 SERVICE FEE CHANGES.
4.5.1 EXCEPT AS SET FORTH IN SECTION 4.5.2 BELOW, WE WILL NOTIFY
YOU AT LEAST THIRTY (30) DAYS PRIOR TO THE END OF EACH FISCAL YEAR OF THE
NEW SERVICE FEE THAT WILL GO INTO EFFECT AT THE START OF THE NEXT FISCAL
YEAR. WE WILL NOT ADJUST YOUR SERVICE FEE MORE THAN ONCE EACH YEAR,
EXCEPT FOR THE YEAR DURING WHICH THE FAIR SHARE ALLOCATION IS
IMPLEMENTED.
4.5.2 IF YOU OCCUPY A DOMICILIARY CARE BED IN THE COMMUNITY
HEALTH CENTER, WE WILL NOTIFY YOU AT LEAST FORTY-FIVE (45) DAYS BEFORE
ANY CHANGE IN THE SERVICE FEE IS EFFECTIVE.
4.6 USE OF SERVICE FEE. The Service Fee will be used by us only for
purposes related to the Community. As part of the annual audit of the
Community, we will obtain an opinion of a nationally recognized firm of
independent auditors which confirms that the Service Fee has been used by
us only for purposes related to the Community. A copy of the annual audit
of the Community is available for your review upon your request.
4.7 CREDIT AGAINST INITIAL MONTHLY CHARGES. You will receive a credit
toward the payment of your Monthly Charges until the credit is fully
used. The credit is not available for any other purpose. The credit will
be in an amount equal to simple interest of five and one-half percent
(5.5%) per annum on your Admission Fee computed from the date of its
payment until the commencement of your Service Fee. The credit may result
in tax consequences to you as described in Section 13.9.
4.8 PAYMENT. You will pay a pro rata portion of the Owner's Supervision
Fee and Service Fee commencing on the earlier of (i) fifteen (15) days
after your Apartment is ready for occupancy (provided we give you at
least thirty (30) days' advanced notice of the date on which your
Apartment will be ready for occupancy) or (ii) the date you move into the
Community. Thereafter, such Monthly Charges will be payable on the first
day of each month in advance. Any additional charges for optional
services requested by you will be paid on the first day of each month for
the optional services obtained during the preceding month.
4.9 CANCELLATION OF MONTHLY CHARGES FOR APARTMENT. The Monthly Charges
for your Apartment will continue until the earlier of (i) your death (if
there are two of you, the death of the survivor) or (ii) the release of
your Apartment pursuant to the provisions regarding the Community Health
Center usage or (iii) the cancellation of this Agreement pursuant to
Section 10 or Section 11 of this Agreement. Notwithstanding the
foregoing, the Monthly Charges for your Apartment will continue at least
until your furniture and other property are removed from the Apartment.
If removal of your furniture and other property is not accomplished
within thirty (30) days after the earlier of (i) your death (if there are
two of you, the death of the survivor) or (ii) the release of your
Apartment pursuant to the provisions regarding the Community Health
Center usage or (iii) the cancellation of this Agreement pursuant to
Section 10 or Section 11 of this Agreement, then we may remove and store
such furniture and other property at the expense and risk of you and your
estate. In the event there are two of you who occupy the Apartment and
one of you dies, the second person fees will cease and the remaining
person will continue to pay the first person Service Fee and Owner's
Supervision Fee.
4.10 CAPITAL REPLACEMENT RESERVE FUND. We will establish a Community
Capital Replacement Reserve Fund to be used only for improving or
replacing capital items of the Community which cost over $50,000. Such
reserve will be funded from monthly Service Fees as set forth in Section
4.4.1. A copy of the Capital Replacement Reserve Escrow Agreement is
available for review by you or by your advisors upon request.
5. BENEFITS TO US OR AN AFFILIATE.
The property comprising the Community is owned by The Chestnut Real
Estate Partnership, a Maryland proprietary general partnership and an
affiliate of ours. The Community is not affiliated with any religious or
charitable group or association. We and The Chestnut Real Estate
Partnership are solely responsible for all financial and contractual
obligations related to the Community. No portion of the expenses, costs,
and charges included in the Service Fee are paid to us or an affiliate as
fees (except a management fee which is limited in amount to five percent
(5%) of the total of revenues which include first and second person
Service Fees). Our compensation from the Community consists solely of the
Admission Fees, the Owner's Supervision Fees, Entrance Fees, the Loans
(subject to our obligation to repay the Loans), the five percent (5%)
management fee, and the potential appreciation of the Community and other
benefits generally associated with the ownership of real estate. The fees
collected by us may not be used for purposes other than those set forth
in this Agreement.
6. SERVICES AND FEATURES PROVIDED TO ALL APARTMENT RESIDENTS.
Unless this Agreement is amended as provided in Section 12, we will
furnish at the Community, so long as you reside in the Apartment, the
following services and features, which are included in the Service Fee:
6.1 One meal per day in the dining room;
6.2 Modified diet for the one meal per day in the dining room when
ordered by the medical director or director of nursing services;
6.3 Tray service for up to thirty (30) days if ordered by the
assistance-in-living director, director of nursing services, or medical
director;
6.4 Water, sewer, air conditioning, heating, and electricity;
6.5 Building janitor and maintenance;
6.6 Weekly light housekeeping service;
6.7 Weekly laundry service for flat linens;
6.8 Planned activities -- social, cultural, and recreational for those
who wish to participate;
6.9 Common use of washers and dryers on residential floors;
6.10 Carpeting (except in kitchen and bath where there will be alternate
floor covering);
6.11 Complete kitchen, including refrigerator, range/oven, garbage
disposal, and dishwasher;
6.12 Local transportation scheduled by us;
6.13 24-hour emergency nursing service to your Apartment;
6.14 Use of all common areas in the Community;
6.15 Common use of uncovered, surface parking;
6.16 24-hour security;
6.17 TV cable to Apartment (service not provided); and
6.18 Assistance-in-living services for a limited period of time as
determined on a case-by-case basis at the time such services are required
at our sole discretion. A determination that assistance-in-living
services are required to maintain independent living in the Apartment is
made by a multi-disciplinary committee staffed by employees of the
Community. You may obtain these services through the Blakehurst
assistance-in-living program or through other providers or persons under
arrangements acceptable to us. A copy of our current policy governing the
extent of assistance-in-living services offered by us at no additional
charge and listing the charges for assistance-in-living services
available for an extended period of time, is available through
administration. This policy is subject to change from time to time.
7. ADDITIONAL SERVICES PROVIDED FOR AN EXTRA CHARGE.
We will also make available at the Community, at your request and so long
as you reside in the Apartment at the Community, at the then prevailing
rates of extra charge, additional meals over those provided in
consideration for the Service Fee; additional tray service to your
Apartment when ordered by the medical director or director of nursing
services; additional housekeeping; physical therapy; guest rooms; beauty
parlor/barber shop; extended assistance-in-living services as determined
on a case-by-case basis at the time such services are required at our
sole discretion; and certain other services as may be provided from time
to time.
8. THE COMMUNITY HEALTH CENTER.
If, in the opinion of the medical director or your attending physician,
you need health center services in the Community Health Center, you will
be requested to relocate to a private domiciliary care bed or a
semi-private comprehensive care bed, depending on the level of health
center services required by you. We will provide you health center
services to the extent authorized by our license on the following terms.
8.1 FIRST NINETY (90) DAYS OF HEALTH CENTER SERVICES. We will provide
health center services in a private domiciliary care bed or a
semi-private comprehensive care bed in the Community Health Center
without additional charge for ninety (90) cumulative days for you (ninety
(90) days for each of you if there are two of you, but the allowance
cannot be combined and used by only one of you), except that you will pay
the cost of the extra meals not covered by the Service Fee for your
Apartment at the then current charge for extra meals and for any
additional health services as described in Section 8.5. The monthly
Service Fee for your Apartment and your Owner's Supervision Fee will
continue as before.
8.2 MORE THAN NINETY (90) DAYS OF HEALTH CENTER SERVICES WHEN THERE IS
ONE OF YOU. If there is one of you, and you require health center
services beyond the ninety (90) cumulative days and you relocate to a
private domiciliary care bed or a semi-private comprehensive care bed in
the Community Health Center, your Monthly Charges will depend upon
whether you choose to release your Apartment:
8.2.1 If you choose to release your Apartment for occupancy by
someone else, the monthly Service Fee for your Apartment will cease.
Monthly Charges for your health center services will be equal to the then
current Service Fee for the one-bedroom deluxe apartment (unless your
Service Fee for your Apartment is less in which case the lesser Service
Fee shall apply). You will continue to pay your Owner's Supervision Fee.
In addition, you will pay for the cost of two meals per day at the then
current charge for extra meals and for any additional health services as
described in Section 8.5.
8.2.2 If you choose to not release your Apartment for occupancy
by someone else, the monthly Service Fee for your Apartment and your
Owner's Supervision Fee will continue. You will also pay Monthly Charges
for your health center services which will be equal to the then current
monthly Service Fee for the one-bedroom deluxe apartment (unless your
Service Fee for your Apartment is less in which case the lesser Service
Fee shall apply) plus an additional Owner's Supervision Fee. In addition,
you will pay for the cost of one meal per day at the then current charge
for extra meals and for any additional health services as described in
Section 8.5.
8.3 MORE THAN NINETY (90) DAYS OF HEALTH CENTER SERVICES WHEN THERE ARE
TWO OF YOU. If there are two of you, and only one of you requires health
center services beyond the ninety (90) cumulative days, and such Resident
relocates to a private domiciliary care bed or a semi-private
comprehensive care bed in the Community Health Center, there will be no
additional Monthly Charges for health center services except that you
will pay the cost of the two meals per day not covered by the Service Fee
for your Apartment at the then current charge for extra meals and for any
additional health services as described in Section 8.5. The monthly
Service Fee, including the second person Service Fee, for your Apartment
and the Owner's Supervision Fees will continue as before. If both of you
require health center services beyond the ninety (90) cumulative days,
and both of you relocate to a private domiciliary care bed or a
semi-private comprehensive care bed in the Community Health Center, your
Monthly Charges will depend upon whether you choose to release your
Apartment:
8.3.1 If you choose to release your Apartment for occupancy by
someone else, the monthly Service Fee, including the second person
Service Fee, for your Apartment will cease. Monthly Charges for your
health center services will be equal to the then current monthly Service
Fee, including the second person Service Fee, for the one-bedroom deluxe
apartment (unless your Service Fees for your Apartment are less in which
case the lesser monthly Service Fees shall apply). You will continue to
pay your Owner's Supervision Fees. In addition, you will pay for the cost
of four meals per day at the then current charge for extra meals and for
any additional health services as described in Section 8.5.
8.3.2 If you choose to not release your Apartment for occupancy
by someone else, the monthly Service Fee, including the second person
Service Fee, for your Apartment and your Owner's Supervision Fees will
continue. You will also pay Monthly Charges for your health center
services which will be equal to the then current monthly Service Fee,
including the second person Service Fee, for the one-bedroom deluxe
apartment (unless your Service Fees for your Apartment are less in which
case the lesser Service Fees shall apply) plus additional Owner's
Supervision Fees. In addition, you will pay the cost of two meals per day
at the then current charge for extra meals and for any additional health
services as described in Section 8.5.
8.4 RETURN TO APARTMENT. If you have released your Apartment because you
have moved to the Community Health Center, and if later you are able, in
the opinion of the medical director, to return to a living unit, we will
provide you a living unit of the same type as your Apartment as soon as
one becomes available. Upon reoccupying such living unit, your Monthly
Charges will be based on the then current charges for the living unit.
8.5 ADDITIONAL HEALTH SERVICES. We may also provide special services and
supplies in the Community Health Center such as therapy, pharmaceutical
supplies, personal laundry, and rental of equipment. These additional
services and supplies are not included in the Service Fees and the
Monthly Charges for health center services, but will be available for an
extra charge. Fees from such additional services will be used by us only
for purposes related to the Community.
8.6 MEDICAL DIRECTOR. We will designate a member in good standing of the
Baltimore County Medical Society as medical director who will be
available for emergency calls. You will be at liberty to engage the
services of the medical director at your own expense. We will not be
responsible for the cost of medical treatment by the medical director,
nor will we be responsible for the cost of medicine, drugs, prescribed
therapy, and similar additional services and supplies. If we incur or
advance costs for your medical treatment or for medicines, drugs,
prescribed therapy, and similar additional services and supplies (even
though such medical care is given at the direction of your attending
physician or the medical director without your prior approval), you will
promptly reimburse us for such costs.
8.7 SUPPLEMENTAL INSURANCE. The Community will participate in the
Medicare program. Upon initial occupancy of your Apartment, you will
represent that you are entitled to Medicare Part A benefits and are
enrolled in the Medicare Part B program. Further, you will maintain,
while you are a resident of the Community, Medicare Part A, Medicare Part
B, and one health insurance policy to supplement Medicare or equivalent
insurance coverage acceptable to us and, upon our request, furnish us
copies of such policies. Notwithstanding the foregoing, if, upon initial
occupancy, you are not eligible to enroll in the Medicare program, you
will not be required to enroll in the Medicare program until you reach
the age of eligibility. If such coverage is not maintained by you, we may
revoke your right to reside at the Community and cancel this Agreement as
provided in Section 10. The Community will not participate in the
Medicaid program, and you will not be required to apply for Medicaid as a
condition of continued residency.
8.8 HEALTH CENTER ADDENDUM. If required by Maryland law in connection
with your relocation to the Community Health Center, you and we agree to
enter into an addendum to this Agreement which more specifically
describes the related health center services and related charges.
8.9 EMERGENCY ENTRY AND RELOCATION. We may enter your Community Health
Center room should it be necessary to protect your health and safety or
the health and safety of other residents. Should it be necessary to
modify facilities to meet requirements of the law which necessitate
temporary vacation of your Community Health Center room, we will provide
alternate facilities for you without additional cost within or outside
the Community. If relocation is recommended by the medical director or
your attending physician, we will request that you relocate to another
Community Health Center room only for the protection of your health or
safety or for the health or safety of the other residents of the
Community.
9. YOUR CANCELLATION RIGHTS.
You may cancel this Agreement at any time by giving us written notice of
cancellation signed by you (both of you if there are two of you) and sent
by registered or certified mail. If you give such notice prior to your
occupancy of the Community, cancellation will be effective as described
in Section 2 above. If you give such notice after your occupancy of the
Community, this Agreement will be cancelled upon the expiration of one
hundred twenty (120) days from the date we receive such notice of
cancellation. If you give such notice, you will pay your Monthly Charges
until the expiration of such 120 days. Any unearned portion of your
Entrance Fee will be refunded as provided in Section 3.1.
10. OUR CANCELLATION RIGHTS.
10.1 JUST CAUSE. After we have accepted you for residency, we will not
cancel this Agreement except for just cause. Just cause is defined as:
10.1.1 Nonpayment;
10.1.2 Material breach of this Agree ment or the rules of the
Community; or
10.1.3 Health status or behavior which constitutes a substantial
threat to your health or safety or to the health or safety of the other
residents of the Community.
10.2 FINANCIAL DIFFICULTY. If after you have paid the Entrance Fee you
encounter financial difficulties making it impossible for you to pay the
full Monthly Charges, then:
10.2.1 You shall in any case be permitted to remain at the
Community for one hundred twenty (120) days after the date of failure to
pay, during which time you shall continue to pay reduced Monthly Charges
based on your current income; and
10.2.2 Because it is and shall continue to be our declared
policy to not cancel your residency solely by reason of your financial
inability to pay the full Monthly Charges, you shall be permitted to
remain at the Community at reduced Monthly Charges based on your ability
to pay for so long as you establish facts to justify deferral of such
charges, and the deferral of such charges can, in our sole discretion, be
granted without impairing our ability to operate on a sound financial
basis. The loss of revenue to the Community from any such deferral of
charges will be borne by us and will not be charged back to other
residents under the Fair Share Allocation. This provision shall not apply
if you have impaired your ability to meet your financial obligations
hereunder by making unapproved gifts or other transfers. To evidence
these agreements based on the circumstances at the time, you agree to
enter into a special hardship agreement with us at the time of any such
deferrals to reflect the reduced charges currently payable and the
interest rate to be applied to the deferrals. Any payments otherwise due
to you from us, including the refund of your Entrance Fee, will be offset
against any such deferred charges as provided in Section 3.3.
10.3 NOTICE OF CANCELLATION. Prior to any cancellation of the Agreement
by us, we will give you notice in writing of the reasons, and you will
have sixty (60) days thereafter to correct the problem. If we determine
that the problem is corrected within such time, this Agreement shall
remain in effect. If we determine that the problem is not corrected
within such time, this Agreement will be cancelled and you must leave the
Community.
10.4 EMERGENCY NOTICE. Notwithstanding the above, if the medical director
determines that either the giving of notice or the waiting period
described above might be detrimental to you or others, then such notice
and/or waiting period shall not be required before relocation to a
hospital or other appropriate facility. Under such circumstances, we are
expressly authorized to transfer you to such hospital or other facility,
and we will promptly notify your representative and your attending
physician. Upon transferring you to such hospital or other facility, we
will immediately provide you with a notice of cancellation. This
Agreement shall be cancelled sixty (60) days following notice, unless
your condition improves and you are subsequently readmitted to the
Community.
11. MISCELLANEOUS PROVISIONS WITH RESPECT TO YOUR APARTMENT.
11.1 USE OF APARTMENT. The Apartment is for living only and shall not be
used for carrying on any business or profession, nor in any manner in
violation of zoning restrictions.
11.2 DURATION OF YOUR RIGHT TO OCCUPY THE APARTMENT. You may reside in
your Apartment for as long as you live unless you are not capable of
maintaining yourself in independent living in the Apartment or this
Agreement is cancelled by you or by us. If, in the opinion of the medical
director or your attending physician, your physical or mental health
requires that health center services be given, you will be requested to
relocate to the Community Health Center where we are licensed to provide
such care. You will not be requested to relocate to the Community Health
Center unless necessary for your health or safety or the health or safety
of others. If there are no beds available in the Community Health Center,
you will be requested to relocate to another health facility with which
we will contract to provide health center services. You will continue to
pay the applicable Monthly Charges to us, and you will be relocated to
the Community Health Center as soon as a bed is available.
11.3 OCCUPANCY OF APARTMENT. Except as hereinafter provided, no person
other than you may occupy the Apartment except with our express written
approval. In the event that a second person who is not a party to this
Agreement is accepted for residency under this Agreement at a time
subsequent to the date hereof (said acceptance to be in accordance with
our then current admission policies), you shall pay the then current
second person Admission Fee as determined by us, and each month
thereafter, you shall pay the then current additional Monthly Charges
for second persons. If such second person does not meet the requirements
for residency, such second person will not be permitted to occupy the
Apartment for more than thirty (30) days (except with our express written
approval), and you may cancel this Agreement as provided in Section 9.
11.4 EMERGENCY ENTRY AND RELOCATION. We may enter your Apartment should
it be necessary in an emergency to protect your health and safety or the
health and safety of other residents. Should it be necessary to modify
facilities to meet requirements of the law which necessitate temporary
vacation of your Apartment, we will provide alternate facilities for you
without additional cost within or outside the Community. If relocation is
recommended by the medical director or your attending physician, we will
request that you relocate to another living unit within the Community or
to the Community Health Center only for the protection of your health or
safety or for the health or safety of the other residents of the
Community.
11.5 FURNISHINGS. Furnishings within the Apartment will not be provided
by us.
Furnishings provided by you shall not be such as to interfere with the
health or safety of other residents or others.
11.6 ALTERATIONS BY YOU. You may not undertake any alterations to your
Apartment without our prior written approval.
11.7 REFURBISHMENT. Customary and normal refurbishment costs of your
Apartment will be borne by all residents of the Community under the Fair
Share Allocation. Any necessary refur bishment costs beyond those which
are customary and normal will be paid by you.
12. AMENDMENTS.
12.1 THIS AGREEMENT. This Agreement may be amended by agreement of the
parties to this Agreement.
12.2 ALL AGREEMENTS. In addition, with the approval of not less than
eighty percent (80%) of the residents of the living units in the
Community and us, any designated residency agreements, which may include
this Agreement, may be amended in any respect upon receipt of evidence of
any required regulatory approval; provided, however, that no such
amendment shall:
12.2.1 Reduce the aforesaid number of residents which is
required to consent to any such amendment; or
12.2.2 Permit the preference or priority of any resident without
the consent of each resident.
Upon our approval and upon our receipt of evidence of the approval of not
less than eighty percent (80%) of such residents as aforesaid, such
amendment shall be effective and any designated residency agreements,
which may include this Agreement, shall automatically be amended.
Accordingly, any of the terms of this Agreement may be amended, including
the scope and type of services provided, upon our approval and approval
of not less than eighty percent (80%) of the residents of the living
units.
12.3 COMPLIANCE WITH LAWS. This Agreement may be modified by us at any
time in order to comply with laws and regulations.
13. MISCELLANEOUS LEGAL PROVISIONS.
13.1 GOVERNING LAW. This Agreement will be interpreted according to the
laws of the State of Maryland and will become effective upon acceptance
and execution by us. The Glossary which sets forth the definitions of
certain terms used in this Agreement is by this reference incorporated
herein and made a part of this Agreement.
13.2 SEPARABILITY. The invalidity of any restriction, condition, or other
provision of this Agreement, or any part of the same, shall not impair or
affect in any way the validity or enforceability of the rest of this
Agreement.
13.3 CAPACITY. This Agreement has been executed on our behalf by our duly
authorized agent and no officer, director, agent, or employee shall have
any personal liability to you hereunder under any circumstances.
13.4 RESIDENT. When Resident consists of more than one person, the rights
and obligations of each are joint and several, except as the context
otherwise requires.
13.5 NATURE OF RIGHTS. You understand and agree that (i) this Agreement
or your rights (including the use of the Apartment) under it may not be
assigned, and no rights or benefits under this Agreement shall inure to
the benefit of your heirs, legatees, assignees, or representatives,
except as to refunds of the amounts described in Section 2 and 3; (ii)
this Agreement and your contractual right to occupy the Apartment shall
exist and continue to exist during your lifetime unless cancelled as
provided herein; (iii) this Agreement grants you a revocable license to
occupy and use space in the Community but does not give you exclusive
possession of the Apartment as against us, and you shall not be entitled
to any rights of specific performance but shall be limited to such
remedies as set forth herein; (iv) this Agreement is not a lease or
easement and does not transfer or grant you any interest in real
property; and (v) this Agreement grants to us complete decision-making
authority regarding the management and operation of the Community.
13.6 RELEASE. We are not responsible for loss of or damage to your
personal property, unless such loss or damage is caused by our negligent
acts or omissions of our agents or employees, and you hereby release us
from any such liability. You may want to obtain at your own expense
insurance to protect against such losses.
13.7 INDEMNITY. We shall not be liable for, and you agree to indemnify,
defend, and hold us harmless from claims, damages, and expenses,
including attorneys' fees and court costs, resulting from any injury or
death to persons and any damages to property to the extent caused by,
resulting from, attributable to, or in any way connected with your
negligent or intentional act or omission.
13.8 ENTIRE AGREEMENT. This Agreement and any addenda or exhibits hereto
contain our entire understanding with respect to your residency.
13.9 TAX CONSEQUENCES. Each person considering executing this Agreement
should consult with his or her tax advisor regarding the tax consequences
associated with this Agreement.
13.10 TRANSFERS. We may from time to time issue additional equity
interests or sell or transfer interest in the Community, provided that in
such latter event the buyer shall agree to assume this Agreement and all
other existing residency agreements. In addition, we may sell or
otherwise transfer the land or other portions of the Community and lease
back such land or other portions. Your signature hereto constitutes your
consent and approval to any such future transfer.
13.11 LAW CHANGES. If changes are made in any of the statutes or
regulations applicable to the Community prior to the completion of
construction of the Community, we shall have the right to cancel this
Agreement or submit to you a revised Agreement based on the changes in
the law.
13.12 RESIDENTS' ASSOCIATION. Residents shall have the right to organize
and operate a Residents' Association at the Community and to meet
privately to conduct business of the Residents' Association. It is our
policy to encourage the organization and operation of a Residents'
Association.
13.13 ARBITRATION. Except for your statutory right to bring an action for
recovery in any court of general jurisdiction for injuries arising out of
our violation of the provisions of Article 70B of the Annotated Code of
Maryland as described in Section 13.16, any dispute, claim, or
controversy of any kind between you and us arising out of, in connection
with, or relating to this Agreement and any amendment hereof, or the
breach hereof, which cannot be resolved by mutual agreement, will be
submitted to and determined by arbitration in Towson, Maryland in
accordance with the then current commercial arbitration rules of the
American Arbitration Association; provided, however, that you and we will
each be required to submit a proposed resolution of such dispute or
controversy to the arbitrator, and the arbitrator will be required to
render a decision adopting, in full, either one or the other of such
proposed resolutions, and no compromises or alternative resolutions shall
be allowed or considered by the arbitrator. Both you and we will be bound
by the arbitrator's decision, and judgment upon such decision may be
entered in any federal or state court having jurisdiction unless the
arbitration is fraudulent or so grossly erroneous as to necessarily imply
bad faith. You and we will jointly agree on an arbitrator. If you and we
are unable to agree in good faith and within a reasonable time on the
selection of an arbitrator, either you or we may request appointment of
an arbitrator by the American Arbitration Association. Costs of
arbitration, including our legal costs and attorneys' fees, arbitrators'
fees, and similar costs, will be borne by all residents of the Community
under the Fair Share Allocation provided that the arbitrator may choose
to award the costs of arbitration against us if the arbitrator determines
that the proposed resolution urged by us was not reasonable. Any direct
arbitration costs incurred by you will be borne by you. If the issue
affects more than one resident, we may elect to join all affected
residents into a single arbitration proceeding, and you hereby consent to
such joinder.
13.14 RESIDENT REPRESENTATIONS. By executing this Agreement, you
represent and warrant that you are capable of independent living, free of
communicable disease, and have assets and income which are sufficient
under foreseeable circumstances and after provision for payment of your
obligations under this Agreement to meet your ordinary and customary
living expenses after assuming occupancy, and that all written
representations made to us with respect to such matters by you or on your
behalf on the Confidential Data Application or otherwise are true.
13.15 FEE ADJUSTMENTS FOR ABSENCES. No fee adjustments for absences from
the Community will be made, except at our sole discretion.
13.16 LEGAL REMEDIES. Residents of facilities such as the Community are
protected by the provisions of Article 70B of the Annotated Code of
Maryland, which provides that residents injured by violation of that
subtitle may bring an action for the recovery of damages in any court of
general jurisdiction, and the award may include reasonable attorneys'
fees in the event of a favorable judgment. In addition, residents injured
by a violation of that subtitle, or the Maryland Office on Aging on
behalf of any resident, may institute an action for an appropriate
temporary restraining order or injunction. Any injured resident, or the
Maryland Office on Aging on behalf of any injured resident, may petition
for the appointment of a receiver in the event of a threat of immediate
closure of a facility or if the provider is not honoring its contracts
with its residents or to prohibit the diversion of assets and records
from the facility or the State of Maryland.
13.17 FUNERAL AND BURIAL SERVICES. No funeral or burial services or
expenses are provided by us pursuant to this Agreement.
13.18 CERTIFIED FINANCIAL STATEMENTS. Upon request, we will make
available to you any certified financial statements transmitted to the
Maryland Office on Aging as required by Article 70B of the Annotated Code
of Maryland.
A PRELIMINARY OR FINAL CERTIFICATE OF REGISTRATION IS NOT AN ENDORSEMENT OR
GUARANTEE OF THIS FACILITY BY THE STATE OF MARYLAND. THE MARYLAND OFFICE ON
AGING URGES YOU TO CONSULT WITH AN ATTORNEY AND A SUITABLE FINANCIAL ADVISOR
BEFORE SIGNING ANY DOCUMENTS.
EXECUTED AT _____________________________________,
Maryland this __________ day
of _____________________________________, 19 ___.
- --------------------------------------------------------------------------------
RESIDENT
- --------------------------------------------------------------------------------
Witness
- --------------------------------------------------------------------------------
RESIDENT
- --------------------------------------------------------------------------------
Witness
For THE CHESTNUT PARTNERSHIP
d/b/a BLAKEHURST
By _____________________________________________________________________________
Authorized Representative
Apartment Type________________________________________
Apartment Number______________________________________
Admission Fee $_______________________________________
Balance of Entrance Fee $_____________________________
Monthly Charges as of_________________________________
$-------------------
I have received a copy of the provider's latest certified financial statement at
least two (2) weeks before signing this Agreement and I have reviewed the
certified financial statement provided.
- --------------------------------------
Applicant
- --------------------------------------
Applicant
Date:_________________________________
[GRAPHIC]
EQUAL HOUSING
OPPORTUNITY
Exhibit 10.8.1
AMENDED AND RESTATED ADMISSION FEE
ESCROW AGREEMENT - PHASE I
(THE CHESTNUT PARTNERSHIP)
THIS AMENDED AND RESTATED ADMISSION FEE ESCROW AGREEMENT-PHASE I
("Agreement") is made this 18th day of July, 1996, by and between THE CHESTNUT
PARTNERSHIP, a Maryland general partnership (the "Partnership"), and THE FIRST
NATIONAL BANK OF MARYLAND, a National Banking Association (the "Escrow Agent").
WHEREAS, the Partnership is the owner of a life-care retirement
community known as "Blakehurst," located in Baltimore County, Maryland, and is a
"provider" within the meaning of Section 7 of Article 70B of the Annotated Code
of Maryland.
WHEREAS, in order to protect the residents of Blakehurst - Phase I (the
"Resident") the parties have entered into this Agreement setting forth the terms
and provisions under which certain deposits will be made with the Escrow Agent.
WHEREAS, this Agreement amends and restates the Admission Fee Escrow
Agreement of the Partnership for Blakehurst date January 19, 1990 between the
Partnership and American Security Bank, N.A., the Previous Escrow Agent (the
"Prior Agreement") relating to the escrowing of deposits.
WHEREAS, the Partnership and Escrow Agent wish by this Agreement to
supersede and replace the Prior Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the parties agree as follows:
1. All deposits held by the Previous Escrow Agent pursuant to the Prior
Agreement shall become subject to the terms of this Agreement.
2. The Partnership expects to receive a deposit of a portion of an
entrance fee (the "Deposit") from each prospective resident of Blakehurst Phase
I at the time of execution of a Residency Agreement. The Partnership will accept
such Deposit in the form of a check from a Resident made payable to the Escrow
Agent, and will deposit the same in an escrow account maintained by the Escrow
Agent (the "Escrow Account") as soon as practicable in the ordinary course of
business.
3. The Escrow Agent shall maintain each Deposit described in Section 2
of this Agreement in the name of the Resident in the Escrow Account separate and
apart from any funds of the Partnership.
4. The Partnership represents to the Escrow Agent that it will furnish
to each Resident of Blakehurst - Phase I, a written receipt of the Deposit made
by the Resident in the form of a fully executed Residency Agreement signed by
the Partnership and the Resident.
5. The Escrow Agent agrees to the following: (a) upon request of the
Partnership, to issue a statement indicating the status of the Escrow Account
maintained by the Escrow Agent pursuant to this Agreement; (b) upon request of a
Resident, to issue a statement indicating the status of such Resident's balance
in the Escrow Account maintained by the Escrow Agent pursuant to this Agreement;
and (c) to furnish the Partnership with a monthly statement indicating the
amount of any disbursements from or deposits to the Escrow Account during the
monthly period covered by the statement.
6. If the Escrow Agent receives written notice from the Partnership of
an election by the Resident to rescind his or her obligations under the
Residency Agreement, the Escrow Agent shall return such Deposit directly to the
Resident (or the estate of the Resident, if the Resident is deceased), in the
amount specified by the Partnership and in accordance with the Partnership's
written instruction. The Escrow Agent shall promptly refer to the Partnership
any and all communications or requests for refunds received directly from
Residents.
7. If the Resident does not elect to rescind his or her obligations
under the Residency Agreement, the Deposit shall thereafter continue to be held
by the Escrow Agent, together with like Deposits from other Residents, subject
to the following terms:
7.1 Upon receipt by the Escrow Agent of written notice from
the Partnership, but in any event no less often than monthly, the
Escrow Agent shall forthwith release to the Partnership all income and
gains from investment activity;
7.2 Upon receipt by the Escrow Agent of written notice from
the Partnership, any special costs incurred and all processing fees
earned by the Partnership as set forth in the Residency Agreement shall
be distributed to the Partnership;
7.3 Upon receipt by the Escrow Agent of written notice from
the Partnership, release to the Partnership the Deposits deposited with
the Escrow Agent pursuant to this Agreement, together with any earnings
thereon; and
7.4 The Escrow Agent shall invest the funds held by it from
time to time in such obligations of the United States or its agencies
(or in the shares of a registered investment company, including those
of the Escrow Agent or its affiliates, which holds a portfolio of such
securities), or such certificates of deposit, savings accounts, or
similar savings or investment securities of the Escrow Agent as the
Partnership may direct in writing. The interest and dividends earned on
the Deposits shall be for the account of the Partnership.
8. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no implied duties or obligations shall be
inferred or otherwise imposed upon or against the Escrow Agent.
8.1 The Escrow Agent may act in reliance upon any writing or
instrument under signature which it, in good faith, believes to be
genuine, may assume the validity and accuracy of any statement or
assertion contained in any such writing or instrument, and may assume
that any person purporting to give any writing, notice, advice, or
instruction in connection with the provisions hereof has been duly
authorized to do so.
8.2 The Escrow Agent shall not be liable in any manner for the
sufficiency or correctness as to form or manner of execution or
validity of any instrument deposited with or delivered to the Escrow
Agent hereunder, nor as to the identity, authority, or right of any
person executing the same.
8.3 The duties of the Escrow Agent hereunder shall be limited
to the safekeeping of the Deposits and other money, instruments, or
other documents received by it as Escrow Agent, for disposition of the
same in accordance with the written instruction accepted by it as
Escrow Agent, and the reporting requirements specified under Section 5
hereof.
9. Except as otherwise provided herein, the Partnership hereby agrees
to indemnify the Escrow Agent and hold it harmless from any and all claims,
liabilities or losses, or any other expense, fees or charges of any character or
nature, which it may incur or with which it may be threatened by reason of its
acting as Escrow Agent under this Agreement, unless caused by its willful
misconduct or negligence; and in connection therewith, to indemnify the Escrow
Agent against any and all expenses, including attorneys' fees and the cost of
defending any action, suit, or proceeding or resisting any claim.
10. The Escrow Agent may resign or be terminated upon thirty (30) days'
written notice thereof to the other party, subject to the appointment of its
successor by the Partnership within such thirty (30) day period. If a successor
escrow agent is not appointed by the Partnership within the thirty (30) day
period, the Escrow Agent may petition the court to appoint a successor. Upon the
appointment of such successor escrow agent, the Escrow Agent agrees to delivery
to such successor escrow agent all funds and documents in its possession within
thirty (30) days from the date of notice of termination or resignation, or (5)
five business days from the date of appointment of the successor escrow agent,
whichever shall later occur.
11. In consideration of the services rendered by the Escrow Agent
hereunder, the Partnership agrees to pay to the Escrow Agent its usual and
customary fee for services as Escrow Agent, including reimbursement for any
expenses, disbursements and advances, and reasonable attorneys fees, incurred by
it in connection with the carrying out of its duties hereunder.
12. Any notices or other communications hereunder shall be in writing
and unless otherwise specifically provided, shall be deemed effective when
delivered personally or when received by mail, first class postage prepaid,
addressed as follows:
12.1 If addressed to the Escrow Agent:
The First National Bank of Maryland
Corporate Trust Department
P.O. Box 1596, Banc 101-591
Baltimore, MD 21203
Attn: Rob Brown, Corporate Trust Executive
12.2 If addressed to the Partnership:
The Chestnut Partnership
c/o Chestnut Village, Inc.
800 Second Avenue
Des Moines, IA 50309
Attn: President
13. This Agreement constitutes the entire understanding and agreement among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The Partnership
may amend this Agreement at any time upon 30 days' prior written notice thereof
to the Escrow Agent, provided, however, no amendment shall (i) diminish or
otherwise affect the rights and protections of the Escrow Agent (ii) require any
additional duties of the Escrow Agent, without its written consent.
14. This Agreement shall be construed according to the laws of the State of
Maryland.
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Admission Fee Escrow Agreement-Phase I effective as of the date first
hereinabove set forth.
THE CHESTNUT PARTNERSHIP THE FIRST NATIONAL BANK OF
MARYLAND
Blakehurst Joint Venture, by
Chestnut Village, Inc., a General Partner
By: /s/ Arthur V. Neis By: /s/ Robert D. Brown
------------------ -------------------
West Joppa Road Limited Partnership,
a General Partner
By: /s/ T.F. Mullan
---------------
The Chestnut Real Estate Partnership, by
Blakehurst Joint Venture, a General Partner
By: /s/ Arthur V. Neis
------------------
Exhibit 10.8.2
AMENDED AND RESTATED
WAIT LIST ESCROW AGREEMENT
(THE CHESTNUT PARTNERSHIP)
THIS AMENDED AND RESTATED WAIT LIST ESCROW AGREEMENT ("Agreement") is
made this 18th day of July, 1996, by and between THE CHESTNUT PARTNERSHIP, a
Maryland general partnership (the "Partnership"), and THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association (the "Escrow Agent").
WHEREAS, this Agreement amends and restates the Wait List Escrow
Agreement between the Partnership and Security Trust Company, the Previous
Escrow Agent (the "Prior Agreement") relating to the escrowing of wait list
deposits ("deposits").
WHEREAS, the Partnership and Escrow Agent wish by this Agreement to
supersede and replace the Prior Agreement.
In consideration of the mutual covenants herein set forth, the parties
agree as follows:
1. SPONSOR. The Partnership is the sponsor of a life-care
retirement community known as "Blakehurst", located in Towson,
Maryland.
2. PRIOR AGREEMENT. All deposits held by the Previous Escrow
Agent pursuant to the Prior Agreement shall become subject to
the terms of this Agreement.
3. PURPOSE OF AGREEMENT. For the purpose of protecting the
residents of Blakehurst, the parties have entered into this
Agreement setting forth the terms and provisions under which
deposits will be made with the Escrow Agent.
4. RECEIPT OF DEPOSIT. The Partnership expects to receive a deposit
from an applicant to Blakehurst ("Applicant") at the time of execution of a Wait
List Agreement. The Partnership will accept such deposit in the form of a check
from an Applicant payable to The First National Bank of Maryland, Escrow Agent,
and will deposit the same with the Escrow Agent as soon as practicable in the
ordinary course of business.
5. ESCROW ACCOUNT. The Escrow Agent shall maintain all deposits in an
escrow account (the "Escrow Account") separate and apart from any other funds of
the Partnership, identifying the name of the Applicant's deposit within the
Escrow Account. The purpose of this Agreement is to protect the Applicant by
assuring the Applicant that the deposit will be refunded or released in
accordance with the Wait List Agreement executed by the Applicant.
6. VERIFICATION OF DEPOSIT. The Partnership represents to the Escrow
Agent that it will furnish a written receipt to each Applicant with respect to
such deposits, such receipt being in the form of a copy of the fully executed
Wait List Agreement.
7. REPORTS. The Escrow Agent agrees (a) upon request of the
Partnership, to issue a statement indicating the status of the Escrow Account
maintained by the Escrow Agent pursuant to this Agreement; (b) upon request of
an Applicant through the Partnership, to issue information indicating the status
of such Applicant's deposit in the Escrow Account maintained by the Escrow Agent
pursuant to this Agreement; and (c) to furnish the Partnership with a monthly
statement indicating the amount of any disbursements form or deposits to the
Escrow Account during the monthly period covered by the statement.
8. DISBURSEMENTS. If the Escrow Agent shall receive written notice from
the Partnership of the cancellation, termination or expiration of a Wait List
Agreement, the Escrow Agent shall dispose of such deposit in the amount
specified by the Partnership and in accordance with the Partnership's written
direction, all of which is to be in accordance with the provisions of the Wait
List Agreement. The Escrow Agent shall rely solely on such direction and shall
not be responsible for verifying its correctness. Further, all rights to any
earnings on deposits held in the Escrow Account shall be released to the
Partnership within ten (10) days after the end of each month.
9. INVESTMENTS. So long as a Wait List Agreement remains in effect, the
deposit shall thereafter continue to be held by the Escrow Agent, together with
the like deposits from other Applicants, and the Escrow Agent shall invest the
funds held by it from time to time in such obligations of the United States or
its agencies ( or in the shares of a registered investment company, including
those of the Escrow Agent or its affiliates, which holds a portfolio of such
securities), or such certificates of deposit, savings accounts, or similar
savings or investment securities of the Escrow Agent, as the Partnership may
direct in writing. All interest and dividends earned thereon shall be for the
account of the Partnership and shall forthwith be released to the Partnership
upon demand.
10. GOVERNING LAW. This Agreement shall be construed according to the
laws of the State of Maryland.
11. INDEMNITY. The Partnership hereby agrees to indemnify the Escrow
Agent for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Escrow Agent,
arising out of, or in connection with, its entering into this Agreement and
carrying out its duties hereunder, including the cost and expense of defending
itself against any claim of liability in the premises.
12. TERMINATION. The Escrow Agent may resign upon thirty (30) days'
written notice to the Partnership. If a successor escrow agent is not appointed
by the Partnership within the thirty (30) day period, the Escrow Agent may
petition the Court to name a successor. Upon thirty (30) days' written notice to
the Escrow Agent, the Partnership may appoint a successor escrow agent. In
either such event, the Escrow Agent agrees to deliver to such successor escrow
agent all funds and documents in its possession. Such delivery shall take place
thirty (30) days from the date of notice.
13. FEES. The Escrow Agent is entitled to reasonable compensation,
including reimbursement for any expenses, disbursements and advances, including
reasonable attorney fees, incurred by it in connection with the carrying out of
its duties hereunder.
14. NOTICES. Any notices required by this Agreement shall be addressed
to the party to whom such notice is intended to be given by facsimile
transmission followed by notification by first class mail at the addresses
below; addresses may be changed by notice to each of the other parties.
14.1 If addressed to the Escrow Agent:
The First National Bank of Maryland
Corporate Trust Department
P.O. Box 1596, Banc 101-591
Baltimore, MD 21203
Attn: Rob Brown, Corp. Trust Executive
14.2 If addressed to the Partnership:
The Chestnut Partnership
c/o Chestnut Village, Inc.
800 Second Avenue
Des Moines, IA 50309
Attn: President
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Wait List Escrow Agreement effective as of the date first hereinabove
set forth.
THE CHESTNUT PARTNERSHIP THE FIRST NATIONAL BANK OF
MARYLAND
Blakehurst Joint Venture, by
Chestnut Village, Inc., a General Partner
By: /s/ Arthur V. Neis By: /s/ Robert D. Brown
------------------ -------------------
West Joppa Road Limited Partnership,
a General Partner
By: /s/ T.F. Mullan
---------------
The Chestnut Real Estate Partnership, by
Blakehurst Joint Venture, a General Partner
By: /s/ Arthur V. Neis
------------------
Exhibit 10.8.3
AMENDED AND RESTATED
HEALTH CENTER RESIDENT LOANS ESCROW AGREEMENT
(THE CHESTNUT PARTNERSHIP)
This AMENDED AND RESTATED HEALTH CENTER RESIDENT LOANS ESCROW AGREEMENT
("Agreement") is made effective as of July 18th, 1996, by and between THE
CHESTNUT PARTNERSHIP, a Maryland general partnership (the "Partnership"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association (the "Escrow
Agent").
This Agreement amends and restates the Health Center Resident Loans
Escrow Agreement for Blakehurst dated August 2, 1993 between the Partnership and
Maryland National Bank, the Previous Escrow Agent (the "Prior Agreement")
relating to the escrowing of resident loans. The Partnership and Escrow Agent
wish by this Agreement to supersede and replace the Prior Agreement.
RECITALS:
WHEREAS, the Partnership is the sponsor of a life-care retirement
community known as Blakehurst (the "Community") located in Towson, Maryland.
WHEREAS, this Agreement applies to all Return of Capital residency
agreements ("Residency Agreement(s)"), as amended from time to time, which may
be entered into between the Partnership and any resident of Blakehurst
("Resident"); and
WHEREAS, in order to protect a Resident of Blakehurst who has
transferred to the community's health center (the "Community Health Center") and
who has released his/her apartment for reoccupancy, the parties desire to enter
into this Agreement. This Agreement sets forth the terms under which certain
deposits will be made with the Escrow Agent for the purpose of maintaining an
escrow account (the "Escrow Account") to secure Loan (as hereinafter defined)
payments when a Resident is assigned to the Community Health Center and releases
his/her apartment for reoccupancy.
NOW, THEREFORE, in consideration of these premises and mutual promises
herein set forth, the parties agree as follows:
1. PRIOR AGREEMENT. All loans held by the Previous Escrow Agent
pursuant to the Prior Agreement shall become subject to the terms of this
Agreement.
2. LOAN. In accordance with Section 9.4 of the Residency Agreements,
the Partnership shall deposit an amount equal to the amount of the Resident's
loan (the "Loan"), upon the Resident's transfer to the Community Health Center,
release of the Resident's apartment, and reoccupancy of the apartment by a new
resident. Such deposit will be specifically identified with the Resident's Loan,
although the funds will be maintained jointly with other similar deposits held
in escrow for all residents of the Community Health Center whose apartments have
been released and reoccupied.
3. PERMITTED ENCUMBRANCES. Any deposit in the Escrow Account will be
subject only to those encumbrances ("Permitted Encumbrances") to which the
deposit was subject at the time it is deposited in the Escrow Account.
4. ESCROW ACCOUNT. The Escrow Agent shall maintain all such deposits
made to the Escrow Account separate and apart from any other funds of the
Partnership, and deposits will be specifically indentified with the Resident's
Loan. The Partnership will be entitled to all earnings on such deposits, as
provided in paragraph 7.2 of this Agreement. Earnings from such Escrow Account
will be used by the Partnership only for purposes related to the Community.
5. INVESTMENTS. The Escrow Agent shall invest all amounts held by it
from time to time in such obligations of the United States or its agencies (or
in shares of a registered investment company, including those of the Escrow
Agent or its affiliates, which holds a portfolio of such securities) or in such
certificates of deposit, savings accounts, or other savings or investment
securities as the Partnership may from time to time direct in writing.
6. REPORTS. The Escrow Agent agrees, upon the request of the
Partnership, to issue a statement indicating the status of the Escrow Account
maintained by the Escrow Agent pursuant to this Agreement. In any event, Escrow
Agent agrees to provide monthly reports to the Partnership, which shall include
a summary of all additions to and disbursements from the Escrow Account during
the current period, and which shall provide details of the investments
comprising the balance in the Escrow Account as of the end of the current
period.
7. DISBURSEMENTS. The Escrow Agent shall release any amounts then held
by it in the Escrow Account in accordance with the following terms:
7.1 DISBURSEMENT TO RESIDENT. In order to cause a disbursement
from the Escrow Account pursuant to this paragraph 7.1, the Partnership
shall deliver written notice to the Escrow Agent and shall provide a
copy of such written notice to the Resident or the Resident's estate or
trust at the same time that it is provided to the Escrow Agent. The
written notice shall contain the following: (1) a statement that the
Residency Agreement has been cancelled; (2) the date of such
cancellation; (3) the amount of the Loan; (4) the amount of setoff, if
any, for amounts owed to the Partnership by the Resident, and the basis
upon which the Partnership is owed such setoff amounts; (5) the amount
payable to the Resident or the Resident's estate or trust; (6) the
specific name of the Resident or person or entity representing the
Resident's estate or trust to whom disbursement is to be made, with
direction as to the manner of delivery of the disbursement to be
employed, which may include delivery to the Partnership for immediate
delivery to the Resident or the Resident's estate or trust; and (7) a
certificate of an officer of the Partnership that such payment does not
contravene any agreement to which the Partnership is a party or by
which it is bound. The Escrow Agent shall, on the tenth (10) business
day after receipt of such notice, disburse to the Resident or the
Resident's estate or trust, an amount equal to the amount of the Loan
less the amount of setoff, and shall disburse to the Partnership an
amount equal to the setoff, unless the Escrow Agent has received notice
in writing from the Resident or the Resident's estate or trust
disputing the amount to be disbursed. If a notice is received by the
Escrow Agent from the Resident or the Resident's estate or trust that a
dispute exists with respect to the amount to be disbursed to the
Resident or the Resident's estate or trust, and/or to the Partnership,
the Escrow Agent shall pay all amounts associated with any dispute into
any federal or state court located in Baltimore County, Maryland, to be
disbursed thereafter as the Partnership and the Resident or the
Resident's estate or trust may agree, by notice to the Escrow Agent as
signed by both parties, or as the Court may determine. The Escrow Agent
shall promptly provide the Partnership with written notice of any
disbursement pursuant to this paragraph 7.1.
7.2 DISBURSEMENTS TO PARTNERSHIP. All rights to any earnings
on funds held in the Escrow Account shall inure to the benefit of the
Partnership, and the Escrow Agent shall release to the Partnership any
earnings held in the Escrow Account within ten (10) days after the end
of each month. In accordance with Section 9.4 of the Residency
Agreements, such earnings will be used by the Partnership only for
purposes related to the Community.
7.3 ESCROW AGENT'S RECORDS. If the records of the Escrow Agent
do not conform to the records of the Partnership, the records of the
Escrow Agent shall control.
8. DUTIES. The Escrow Agent undertakes to perform only such duties as
are expressly set forth herein and no implied duties or obligations shall be
inferred or otherwise imposed upon or against the Escrow Agent. The Escrow Agent
may act in reliance upon any writing, notice (under paragraph 7 or otherwise) or
instrument under signature which it, in good faith, believes to be genuine; may
assume the validity, accuracy, and completeness of any statement or assertion
contained in any such writing, notice or instrument; and may assume that any
person purporting to give any writing, notice, advice, or instruction in
connection with the provisions hereof has been duly authorized to do so. The
Escrow Agent shall not be liable in any manner for the sufficiency or
correctness as to form or manner of execution or validity of any instrument
deposited with or delivered to the Escrow Agent hereunder, nor as to the
identity, authority, or right of any person executing the same. The duties of
the Escrow Agent hereunder shall be limited to the safekeeping of the deposits
and other money, instruments, or other documents received by it as Escrow Agent
and for its investment and for disposition of the same in accordance with this
Agreement and other written instructions accepted by the Escrow Agent from the
Partnership.
9. INDEMNITY. The Partnership hereby agrees to indemnify the Escrow
Agent and hold it harmless from any and all claims, liabilities, losses,
actions, suits, or proceedings at law or in equity, or any other expenses, fees,
or charges of any character or nature, which it may incur or with which it may
be threatened by reason of its acting as Escrow Agent under this Agreement,
unless caused by the Escrow Agent's willful misconduct or gross negligence; and
in connection therewith, to indemnify the Escrow Agent against any and all
expenses, including attorneys' fees and the cost of defending any action, suit,
or proceeding or resisting any claim.
10. TERMINATION. The Escrow Agent may resign or be terminated upon the
earlier of thirty (30) days' written notice thereof to the other party, or five
(5) business days from the date of appointment of a successor escrow agent.
Promptly upon notice of resignation of the Escrow Agent, the Partnership shall
appoint a successor Escrow Agent. The Escrow Agent shall deliver any funds in
the Escrow Account either to a successor escrow agent or, if there is any
dispute with respect thereto, or if no successor escrow agent has been
appointed, to any federal or state court in Baltimore County, Maryland. The
successor escrow agent shall also be required to have its principal place of
business in Maryland. If a successor escrow agent is not appointed within the
30-day period, the Escrow Agent may petition a court of competent jurisdiction
to name a successor. Until a successor escrow agent has been appointed, the
Escrow Agent shall be discharged of all of its duties hereunder save to assign
the funds in the Escrow Account to a successor escrow agent.
11. FEES. In consideration of the services rendered by the Escrow Agent
hereunder, the Partnership agrees to pay to the Escrow Agent its usual and
customary fees for services as Escrow Agent, including reimbursement for any
expenses, disbursements and advances, and reasonable attorneys fees, incurred by
it in connection with the carrying out of its duties hereunder. Fees for any
additional or extraordinary services may be agreed upon by the Partnership and
the Escrow Agent.
12. EMPLOYMENT OF COUNSEL. The Escrow Agent may engage counsel (who may
be counsel to the Partnership) and may rely upon counsel in connection with any
matter under this Escrow Agreement.
13. ESCROW AGENT'S LIEN. The Escrow Agent shall have a lien, with right
of payment prior to payment of any other amounts payable hereunder upon, and the
Partnership hereby grants a security interest to the Escrow Agent in, all moneys
in the Escrow Agent's possession hereunder, for all charges, advances, fees,
costs and expenses incurred by the Escrow Agent.
14. GOVERNING LAW. This Agreement shall be construed according to the
laws of the State of Maryland.
15. AMENDMENTS. The parties to the Agreement may amend this Agreement
at any time upon thirty (30) days' prior written notice thereof, provided,
however, no amendment shall (i) diminish or otherwise affect the rights and
protections of the Escrow Agent (ii) require any additional duties of the Escrow
Agent, without its written consent.
16. NOTICES. Any notices required by this Agreement shall be addressed
to the party to whom such notice is intended to be given by facsimile
transmission followed by notification by first class mail at the addresses
below; addresses may be changed by notice to each of the other parties.
16.1 If addressed to the Escrow Agent: The First National Bank of
Maryland
Corporate Trust Department
P.O. Box 1596, Banc 101-591
Baltimore, MD 21203
Attn: Rob Brown, Corp.
Trust Executive
16.2 If addressed to the Partnership: The Chestnut Partnership
c/o Chestnut Village, Inc.
800 Second Avenue
Des Moines, IA 50309
Attn: President
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Health Center Resident Loans Escrow Agreement as of the date first hereinabove
set forth.
THE CHESTNUT PARTNERSHIP THE FIRST NATIONAL BANK OF
MARYLAND
Blakehurst Joint Venture, by
Chestnut Village, Inc., a General Partner
By: /s/ Arthur V. Neis By: /s/ Robert D. Brown
------------------- -------------------
West Joppa Road Limited Partnership,
a General Partner
By: /s/ T.F. Mullan
---------------
The Chestnut Real Estate Partnership, by
Blakehurst Joint Venture, a General Partner
By: /s/ Arthur V. Neis
------------------
Exhibit 10.8.4
ADMISSION FEE
ESCROW AGREEMENT - PHASE II
(THE CHESTNUT PARTNERSHIP)
THIS ESCROW AGREEMENT is made this 24th day of April 1996, by and
between THE CHESTNUT PARTNERSHIP (the "Partnership") and THE FIRST NATIONAL BANK
OF MARYLAND, a National Banking Association (the "Escrow Agent").
WHEREAS, the Partnership is the owner of a life-care retirement
community known as "Blakehurst," located in Baltimore County, Maryland, and is a
"provider" within the meaning of s 7 of Article 70B of the Annotated Code of
Maryland.
WHEREAS, in order to comply with s 10(c) of Article 70B of the
Annotated Code of Maryland and to protect the residents of Blakehurst - Phase II
(the "Resident") the parties have entered into this Escrow Agreement setting
forth the terms and provisions under which certain deposits will be made with
the Escrow Agent.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the parties agree as follows:
1. The Partnership expects to receive a deposit of a portion of an
entrance fee from each Resident of Blakehurst - Phase II (the "Deposit") at the
time of execution of a Residency Agreement. Attached hereto as Exhibits A and B
and incorporated herein by reference are copies of the Residency Agreements
which will be entered into between the Partnership and a Resident of Blakehurst
- - Phase II. The Partnership will accept such Deposit in the form of a check from
a Resident made payable to the Escrow Agent, and will deposit the same in an
escrow account maintained by the Escrow Agent (the "Escrow Account") as soon as
practicable in the ordinary course of business.
2. The Escrow Agent shall maintain each Deposit described in Section 1
of this Agreement in the name of the Resident in the Escrow Account separate and
apart from any funds of the Partnership until the following events have
occurred: (a) the Maryland Office on Aging issues a final certificate of
registration to the Partnership for Blakehurst - Phase II; (b) construction of
Blakehurst - Phase II is completed; (c) a certificate of occupancy, or its
equivalent, has been issued for Blakehurst - Phase II by the appropriate local
Jurisdiction and (d) the appropriate licenses or certificates have been issued
for Blakehurst - Phase II by the Department of Health and Mental Hygiene or by
the Maryland Office on Aging.
3. The Partnership represents to the Escrow Agent that it will furnish
to each Resident of Blakehurst - Phase II, a written receipt of the Deposit made
by the Resident in the form of a fully executed Residency Agreement signed by
the Partnership and the Resident.
4. The Escrow Agent agrees to the following: (a) upon request of the
Partnership or the Maryland Office on Aging, to issue a statement indicating the
status of the Escrow Account maintained by the Escrow Agent pursuant to this
Escrow Agreement; (b) upon request of a Resident, to issue a statement
indicating the status of such Resident's balance in the Escrow Account
maintained by the Escrow Agent pursuant to this Escrow Agreement; and (c) to
furnish the Partnership with a monthly statement indicating the amount of any
disbursements from or deposits to the Escrow Account during the monthly period
covered by the statement.
5. If the Escrow Agent receives written notice from the Partnership of
an election by the Resident to rescind his or her obligations under the
Residency Agreement, the Escrow Agent shall return such Deposit directly to the
Resident in the amount specified by the Partnership and in accordance with the
Partnership's written instruction. The Escrow Agent shall rely solely on such
instruction and shall not be responsible for verifying its correctness.
6. If the Resident does not elect to rescind his or her obligations
under the Residency Agreement, the Deposit shall thereafter continue to be held
by the Escrow Agent, together with like Deposits from other Residents, subject
to the following terms:
(a) In the event that the Maryland Office on Aging does not
grant the Partnership a final certificate of registration within the
maximum time permitted by the Maryland Office on Aging (as may be
extended from time to time), the Escrow Agent shall return each Deposit
to the Resident in accordance with the Partnership's written
instruction.
(b) At such time as the Partnership meets the requirements for
withdrawal of Deposits, the Escrow Agent shall, upon receipt of a copy
of the written approval of withdrawal of deposits issued by the
Maryland Office on Aging, release all Deposits to the Partnership in
accordance with the Partnership's written instruction.
(c) The Escrow Agent shall invest the funds held by it from
time to time in such obligations of the United States or its agencies
(or in the shares of a registered investment company which holds a
portfolio of such securities), or such certificates of deposit, savings
accounts, or similar savings or investment securities of the Escrow
Agent as the Partnership may direct in writing. Except as set forth in
Subsection 6(d) of this Agreement, the interest and dividends earned on
the Deposits shall be for the account of the Partnership.
(d) In the event a Resident's apartment is not available for
occupancy within three (3) year's after the date of the Resident's
Residency Agreement, the Resident or the Partnership may cancel this
Agreement upon written notice to the other party. If the Escrow Agent
receives written notice from the Partnership of such cancellation, the
Escrow Agent shall return the Resident's Deposit directly to the
Resident, along with interest at the net rate earned on such Deposit,
in accordance with the Partnership's written instruction.
7. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no implied duties or obligations shall be
inferred or otherwise imposed upon or against the Escrow Agent. The Escrow Agent
may act in reliance upon any writing or instrument under signature which it, in
good faith, believes to be genuine, may assume the validity and accuracy of any
statement or assertion contained in any such writing or instrument, and may
assume that any person purporting to give any writing, notice, advice, or
instruction in connection with the provisions hereof has been duly authorized to
do so. The Escrow Agent shall not be liable in any manner for the sufficiency or
correctness as to form or manner of execution or validity of any instrument
deposited with or delivered to the Escrow Agent hereunder, nor as to the
identity, authority, or right of any person executing the same. The duties of
the Escrow Agent hereunder shall be limited to the safekeeping of the Deposits
and other money, instruments, or other documents received by it as Escrow Agent,
for disposition of the same in accordance with the written instruction accepted
by it as Escrow Agent, and the reporting requirements specified under Section 4
hereof.
8. Except as otherwise provided herein, the Partnership hereby agrees
to indemnify the Escrow Agent and hold it harmless from any and all claims,
liabilities or losses, or any other expense, fees or charges of any character or
nature, which it may incur or with which it may be threatened by reason of its
acting as Escrow Agent under this Escrow Agreement, unless caused by its willful
misconduct or negligence; and in connection therewith, to indemnify the Escrow
Agent against any and all expenses, including attorneys' fees and the cost of
defending any action, suit, or proceeding or resisting any claim.
9. The Escrow Agent may resign or be terminated upon thirty (30) days'
written notice thereof to the other party, subject to the appointment of its
successor by the Partnership within such thirty (30) day period. If a successor
escrow agent is not appointed by the Partnership within the thirty (30) day
period, the Escrow Agent may petition the court to appoint a successor. Upon the
appointment of such successor escrow agent, the Escrow Agent agrees to delivery
to such successor escrow agent all funds and documents in its possession within
thirty (30) days from the date of notice of termination or resignation, or (5)
five business days from the date of appointment of the successor escrow agent,
whichever shall later occur.
10. In consideration of the services rendered by the Escrow Agent
hereunder, the Partnership agrees to pay to the Escrow Agent the following fees:
(a) Initial review and set-up fee: $ 500.00
(b) Annual administration fee: 1,000.00
(c) Wire transfers: 15.00 each
(d) Disbursements (other than deposits 15.00 each
to the Escrow Account)
(e) Investment transactions (except for 0.00 each
investments through the Escrow Agent's
proprietary money market mutual funds)
(f) Out-of-pocket expenses Not to exceed 4% of
annual administration fee
11. Any notices or other communications hereunder shall be in writing
and unless otherwise specifically provided, shall be deemed effective when
delivered personally or when received by mail, first class postage prepaid,
addressed as follows:
(a) If addressed to the Escrow Agent:
The First National Bank of Maryland
Trust Division
P.O. Box 1596
Baltimore, MD 21203
Attn: David L. Williams, Vice President
(b) If addressed to the Partnership:
The Chestnut Partnership
c/o Chestnut Village, Inc.
800 Second Avenue
Des Moines, IA 50309
Attn: President
12. This Escrow Agreement shall be construed according to the laws of the
State of Maryland and shall be subject to the prior approval of the Maryland
Office on Aging.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement effective as of the date first hereinabove set forth.
THE CHESTNUT PARTNERSHIP THE FIRST NATIONAL BANK OF
MARYLAND
Blakehurst Joint Venture, by
Chestnut Village, Inc., a General Partner
By: /s/ Arthur V. Neis By: /s/ David L. Williams
------------------ ----------------------
DAVID L. WILLIAMS
West Joppa Road Limited Partnership,
a General Partner
By: /s/ T.F. Mullan
---------------
The Chestnut Real Estate Partnership, by
Blakehurst Joint Venture, a General Partner
By: /s/ Arthur V. Neis
------------------
Exhibit 10.13.2
AMENDMENT #2 TO DEVELOPMENT AGREEMENT
This Amendment #2 to Development Agreement ("Amendment #2") is made and
entered into as of the 30 day of October, 1996, by and between The Chestnut
Partnership (the "Owner"), Life Care Services Corporation ("LCS"), LCS
Development Corp ("LCSD") (a subsidiary of LCS), Rosedale Care, Inc. and
Continental Care, Inc.
WHEREAS the Owner and LCS entered into a Development Agreement dated
June 3, 1988 (the "Agreement") for certain enumerated services to be provided by
LCS at the retirement facility located in Baltimore, Maryland known as
"Blakehurst" (the "Project"); and
WHEREAS the Agreement was amended on December 31, 1994 ("Amendment
#1"), wherein Rosedale Care, Inc. and Continental Care, Inc. became Parties to
the Agreement for certain purposes relating to Phase II of the Project; and
WHEREAS the Parties desire to amend the Agreement as it relates to
Phase III of the Project to provide that LCSD shall provide development services
for Phase III of the Project, more specifically described as the addition of 35
apartment units over a 19-car parking garage, an enclosed swimming pool with
support facilities, 12 surface garages with 31 surface parking spaces near the
new residential wing and 27 surface parking spaces near the health center
("Phase III").
WHEREAS LCS was incorporated under the laws of the state of Missouri at
the time the Agreement was executed, and subsequently was reincorporated under
the laws of the state of Iowa, and is acknowledged by the parties to be the
successor to all rights and obligations of LCS under the Agreement, Amendment #1
and this Amendment #2.
NOW THEREFORE, the parties do hereby agree that the Agreement is hereby
amended as follows:
LCSD shall provide all necessary services as contemplated in the Agreement to
develop Phase III of the Project with the following revisions:
1. The first sentence in paragraph 5.3 of Article V is deleted and the
following is substituted therefor: "Mullan Contracting shall perform
the construction management services for the Project."
2. Paragraphs 8.1 and 8.2 of Article VIII are deleted and the following
are substituted therefor: "8.1 In consideration for the performance of
the planning and development, arranging for financing, occupancy
development, arranging for design and construction, and bookkeeping
services contemplated in Articles II, III, IV, V and VI hereof, in
connection with Phase III of the Project, the Owner agrees to pay LCSD
a development fee ("Development Fee") equal in amount to $585,000
broken into two segments, a progress fee ("Progress Fee") and a
performance fee ("Performance Fee"). As more particularly described
hereafter, the Progress Fee shall be payable based on the percent of
development activity complete and will not be at risk, and the
Performance Fee will be payable based on Project performance and will
be at risk depending on the successful delivery of the Project. The
schedule for payment for both fee segments shall be as set forth in
paragraph 8.2, following:
8.2. Subject to paragraph 8.1 above, the Progress Fee and Performance
Fee shall be earned and paid as follows:
8.2.1 PROGRESS FEE. Fifty percent (50%) of the total
Development Fee, or $292,500, shall be allocated to the
Progress Fee, which shall be earned and paid as follows:
- fifty percent (50%), or $146,250, shall be paid on the
date of the initial disbursement of the construction loan
for Phase III.
- thirty-five percent (35%), or $102,375, shall be paid
monthly during construction of Phase III, payable
commensurate with the percentage of completion of
construction of Phase III.
- fifteen percent (15%) or $43,875, shall be paid monthly
commensurate with the percentage of occupancy of Phase III
up to approximately ninety-two percent (92%) first time
closings (32 units), at which time the balance of the
Progress Fee shall be paid.
8.2.2 PERFORMANCE FEE. The Performance Fee shall be fifty
percent (50%) of the total fee, or $292,500. The Performance
Fee, however, shall be based on the total financial outcome of
the Project at completion of Phase III compared to the
financial outcome projected initially in the Base Capital Cost
Budget as defined below. To measure financial performance a
spread calculation will be utilized. The spread shall be the
difference between total Poject revenues (i.e., entrance fees,
cancellation penalties, garage fees, etc.) and total Project
costs (i.e., construction cost, interest expense, start-up
loss, etc., excluding increases or decreases to Reserves) as
identified in the Base Capital Cost Budget as adjusted by
agreement of the parties. If the spread remaining at the end
of the Project is equal to or greater than the spread
projected in the Base Capital Cost Budget at the beginning of
the Project, LCSD will earn and shall be paid the full
Performance Fee ($292,500). If the spread at the end of the
Project is less than the spread projected in the Base Capital
Cost Budget of at the beginning of the Project, LCSD will earn
a lower Performance Fee, reduced dollar for dollar, up to a
maximum of $292,500, which is the full amount of LCSD's
Performance Fee. For spread calculation purposes, if the Owner
elects to sell contracts other than 90% return of capital
("ROC") contracts, the "lost" revenue from those sales shall
not affect the calculation of the Performance Fee. The Base
Capital Cost Budget projects all sales to occur as 90% ROC
contracts.
The Performance Fee shall be earned and paid as follows:
Performance shall be measured by comparing the spread of the
capital cost budget initially approved at the start of
construction ("Base Capital Cost Budget") with the spread of
an updated budget prepared at the following Project
milestones: (i) close of financing/construction start, (ii)
construction completion/first occupancy, and (iii) achievement
of 32 first time closings. The Base Capital Cost Budget is
attached hereto as Exhibit A. From the Base Capital Cost
Budget, the initial spread calculation shall be performed as
follows:
Total Project Revenues $ 9,774,000
Less Total Project Costs Excluding Reserves $11,104,200
-----------
Initial Spread Calculation ($ 1,330,200)
At each of the three milestone comparisons, an updated spread
calculation will be performed comparing total Project revenue
to total Project cost. The updated spread calculation will
then be compared against the initial spread calculation to
determine what, if any, Performance Fees are to be paid.
If the spread calculation performed at each milestone update
meets or exceeds the initial spread calculation, the following
Performance Fees shall be earned and paid at that time:
* Milestone #1 - close of financing/construction start
- fifty percent (50%) or $146,250
* Milestone #2 - construction completion/first occupancy
- thirty-five percent (35%) or $102,375
* Milestone #3 - achievement of 32 first time closings
fifteen percent (15%) or $43,875
If the spread calculation performed at any milestone update is
less than the initial spread calculation, the Performance Fee
calculated shall be reduced dollar for dollar by that amount
up to an aggregate maximum of $292,500.
The following example calculation simulates the three
milestone spread calculations.
<TABLE>
<CAPTION>
Adjusted Base Adjusted Base
Capital Cost Capital Cost Adjusted Base
Budget Budget Capital Cost Budget
@ @ @
Base Capital Milestone #1 Milestone #2 Milestone #3
Cost Budget (50%) (35%) (15%)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Total Project Revenues 9,774,000 9,800,000 9,800,000 9,500,000
Total Project Costs less Reserves 11,104,200 11,100,000 11,300,000 11,100,000
----------- ----------- ----------- ----------
Spread Calculation ($1,330,200) ($1,300,000) ($1,500,000) ($1,600,000)
1. Calculation @ Milestone #1 - Close of Financing/Construction Start
Spread = ($1,300,000)
Since ($1,300,000) is an improvement from the initial spread of ($1,330,200), full
progress Performance Fee earned and paid at this time.
Performance Progress Fee = $292,500 x 50% = $146,250
2. Calculation @ Milestone #2 - Construction Completion/First Occupancy
Spread = ($1,500,000)
Actual Spread vs. Initial Spread Variance=($1,500,000)-($1,330,200)= ($169,800)
Net Fee Remaining for Fee Calculation = $292,500 - $169,800 = $122,700
Performance Progress Fee = $122,700 x 85% = $104,295
Net Performance Progress Fees =
$104,295 - $146,250 (fees paid previously) = ($41,955)
Therefore, LCSD to pay back $41,955 at this time.
3. Calculation @ Milestone #3 - Achievement of 32 First Time Closings
Assumptions: 4 traditional contract sales this period with lost revenue of $300,000
Spread = ($1,600,000)
Revised Spread due to traditional contracts =
($1,600,000) + $300,000 (lost traditional contract revenue) = ($1,300,000)
Since ($1,300,000) is an improvement from the initial spread of ($1,330,200),
full final Performance Fee earned = $292,500
Final Performance Fee Payment =$292,500-$104,295 (fees paid previously) =$188,205
</TABLE>
8.2.3 If the Project is aborted at any time prior to the close of
financing/construction start, LCSD will not receive any
Development Fee."
3. The last sentence of Section 8.4 as added by Amendment #1 shall not
apply to Phase III.
4. References in the Agreement to LCS shall be deemed to refer to LCSD for
all purposes with respect to Phase III except that paragraphs 2.8 and
3.4 of the Agreement shall be deemed to refer to LCS and not to LCSD,
and references to LCS in Sections 7.9, 9.2 and 9.4 (except the first
sentence) shall be deemed to refer to both LCS and LCSD.
5. Paragraph 9.11 of the Agreement is deleted and the following is
substituted therefor: "Any sums due but unpaid hereunder shall bear
interest at a rate equal to 3% per annum plus the Base Rate as amended
from time to time and charged by Norwest Bank Iowa N.A., Des Moines,
Iowa to its most credit-worthy customers, from the due date until
paid."
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Amendment #2 on the date and year first above written.
THE CHESTNUT PARTNERSHIP LCS DEVELOPMENT CORP.
By: West Joppa Road Limited By: /s/ Stan G. Thurston
Partnership, a General Partner Stan G. Thurston,
its President
By: Rosedale Care, Inc., LIFE CARE SERVICES CORPORATION
a General Partner
By: /s/ T.F. Mullan By: /s/ Stan G. Thurston
--------------- --------------------
Thomas F. Mullan, III, Stan G. Thurston,
its President its President
By: Continental Care, Inc. ROSEDALE CARE, INC.
a General Partner
By: /s/ J. A. Luetkemeyer, Jr. By: /s/ T.F. Mullan
-------------------------- ---------------
John A. Luetkemeyer, Jr.,
its President
CONTINENTAL CARE, INC.
By: /s/ J.A. Luetkemeyer, Jr.
<TABLE>
<CAPTION>
BLAKEHURST PHASE III
BASE DEVELOPMENT CAPITAL COST BUDGET
35 UNIT
PHASE III
BUDGET
---------
<S> <C>
SOURCES OF CASH:
ENTRANCE FEES 9,314,300
SURFACE GARAGE FEES 120,000
UNDERBUILDING GARAGE FEES 256,500
WORKING CAPITAL FEE 83,200
------
9,774,000
PERMANENT LOANS 1,900,000
TOTAL SOURCES OF CASH 11,674,000
USES OF CASH:
LAND 10,000
CONSTRUCTION:
GMP 7,806,500
CHANGE ORDERS (@3.0%) 223,000
-------
TOTAL CONSTRUCTION 8,029,500
DESIGN (@5% of const. cost + CM fee) 386,700
FINANCING COSTS 275,000
NET INTERIM INTEREST COSTS 743,000
OCCUPANCY DEVELOPMENT 485,000
CAPITAL ITEMS 100,000
LEGAL 40,000
TRAVEL 50,000
OTHER COSTS 50,000
CONTINGENCY 300,000
DEVELOPMENT OVERHEAD 585,000
START-UP LOSSES 50,000
------
SUBTOTAL USES OF CASH 11,104,200
RESERVES:
OPERATING RESERVES, RESTRICTED 202,000
OPERATING RESERVES, UNRESTRICTED 367,800
-------
TOTAL RESERVES 569,800
TOTAL USES OF CASH: 11,674,000
----------
NET CASH SOURCE (USE) 0
-
</TABLE>
Exhibit 10.19.2
CONSTRUCTION MANAGEMENT AGREEMENT
THIS CONSTRUCTION MANAGEMENT AGREEMENT is made this llth day of July,
1996, between THE MULLAN CONTRACTING COMPANY, a corporation organized in the
State of Maryland, hereinafter called the Contractor, and THE CHESTNUT
PARTNERSHIP, a general partnership organized in the State of Maryland,
hereinafter called the Owner.
WITNESSETH:
THAT, WHEREAS the Owner intends to develop and construct an addition to
the life-care community known as Blakehurst hereinafter called the Project, and
wishes to engage the Contractor to perform construction management services in
connection therewith.
NOW, THEREFORE, the Contractor and the Owner, for the consideration
hereinafter named, agree as follows:
ARTICLE 1
THE WORK TO BE DONE AND THE DOCUMENTS FORMING THE CONTRACT
1.1 The Contractor agrees to provide all the labor and materials to do all
things necessary for proper construction and completion of the work, hereinafter
called the Work, shown and described by the Drawings, Project Manual, and
Addenda to be prepared by D'Aleo Associates and as generally described in the
preliminary drawings as listed in Exhibit "A" attached hereto.
1.2 The said Drawings, Project Manual, and Addenda, hereinafter called the
Drawings and Project Manual, together with this Agreement, shall constitute the
Contract; the Drawings and Project Manual being as fully a part hereof as if
hereto attached or herein repeated. If anything in the Project Manual's General
Conditions is inconsistent with this Agreement, this Agreement shall govern.
Drawings, Project Manual and Addenda that constitute the basis of the Guaranteed
Maximum Cost will be listed in a revised Exhibit "A" and attached hereto.
ARTICLE 2
CONSTRUCTION MANAGEMENT METHOD OF PERFORMING WORK
2.1 Contractor shall operate as a construction manager and shall perform the
Work through the use of subcontractors. The division of Work into subcontract
bid packages shall be the responsibility of the Contractor. Contractor shall
award subcontracts to the lowest qualified bidders. The Owner shall have the
right to review all subcontract proposals, participate in value engineering for
the project, and review the Contractor's estimate for the Guaranteed Maximum
Cost.
2.2 The only exceptions to this method of performing Work shall be as follows:
2.2.1 Contractor may purchase materials directly for installation by a
subcontractor.
2.2.2 Contractor may perform work directly with his own labor forces in
the event he determines that acceptance of the lowest subcontract in a given
division would not be in the Owner's best interests, upon prior notice to and
approval by the Owner.
2.2.3 Contractor may perform general conditions and service functions,
such as hoisting, clean-up, construction of protective devices, preparation and
maintenance of access, watchmen, temporary structures, water boys and layout.
2.3 Contractor's services shall include the planning, scheduling, purchasing,
expediting, and full-time supervision of the Work. The use of subcontractors
shall in no way relieve the Contractor from responsibility for satisfactory
performance of the Work in accordance with the terms of this Agreement. The
Contractor recognizes the relationship of trust and confidence established
between him and the Owner by this Agreement. He covenants with the Owner to
furnish his best skill and judgment and to cooperate with the Architect and the
Owner in furthering the interests of the Owner. If requested by the Owner, the
Contractor shall provide in favor of the Owner standard payment and performance
bonds in a amount equal to the Contract Sum.
ARTICLE 3
CONTRACT TIME
3.1 The Work shall be substantially complete within a time frame to be mutually
determined within thirty (30) days of the date when the final plans and
specifications are completed and the Guaranteed Maximum Cost has been
established in accordance with paragraph 4.1.2. Time frame (Schedule) to be
included in Exhibit "B". The time frame will be expressed in number of days in
which the Work will be substantially complete after the Owner issues a Notice to
Proceed to the Contractor and all government permits. building permits, and
other approvals necessary to start construction are received.
ARTICLE 4
CONTRACT SUM
4.1 In consideration for the performance of the Work, the Owner agrees to pay
the Contractor, in current funds:
4.1.1 Contractor's fee which will be five percent (5%) of the estimated
cost of the Work. The fee will be converted to a lump sum at the time
that the Guaranteed Maximum Cost is established.
4.1.2 The total of the Contractor's Reimbursable Costs as defined in
Article 6 less any discounts, rebates or refunds which accrue to the
Owner pursuant to Article 7, provided that the total of such
Contractor's Reimbursable Costs less such discounts, rebates, and
refunds shall not exceed the amount mutually agreed upon by the parties
hereto which amount, as may be modified pursuant to Article 5 herein,
shall be referred to hereinafter as the Guaranteed Maximum Cost.
4.1.3 The Contractor shall establish a Guaranteed Maximum Cost for
reimbursable costs for the Owner's approval within 30 days after the
design drawings and specifications are sufficiently complete to allow
subcontractor bidding. The Guaranteed Maximum Cost may be equitably
adjusted if construction has not commenced within ninety (90) days
after the date that the Guaranteed Maximum Cost was established through
no fault of the Contractor. If the total of the Contractor's
Reimbursable Cost less discounts, rebates or refunds exceed such
Guaranteed Maximum Cost, all costs and expense in excess of said
Guaranteed Maximum Cost will be borne by the Contractor, and the Owner
shall have no obligation to pay any costs in excess thereof.
4.2 In the event the total cost of the Contractor's Reimbursable Costs (as
defined in Article 6) less discounts, rebates or refunds which accrue to the
Owner pursuant to Article 7, is less than said Guaranteed Maximum Cost (the
"savings"), the Owner shall pay to the Contractor (as an addition to the fee
provided in paragraph 4. 1. 1 above), an amount equal to twenty-five percent
(25%) of the amount by which the total savings exceeds one percent (1%) of
Guaranteed Maximum Cost. Payment of the Contractor's share of the savings shall
be made with the final payment under paragraph 9.3 below.
4.3 The total of the Fixed Fee and the Guaranteed Maximum Cost shall be the
amount referred to in the Project Manual's General Conditions as the Contract
Sum. The Contract sum will include the Allowances as directed in the Project
Manual.
4.4 In addition to the foregoing fees and reimbursements, the Owner shall pay to
the Contractor a resident improvement fee equal to ten percent (10%) of the
Contractor's Reimbursable Costs (as defined in Article 6) for all resident
improvement work, together with all Contractor's Reimbursable Costs attributable
thereto. Such sums are not considered part of the Contract sum or Guaranteed
Maximum Cost. Resident improvement work is that optional custom work selected by
the residents and paid for by the residents. The total Contractor's Reimbursable
Costs for resident improvement work (as defined in Article 6) and resident
improvement fee shall be paid to the Contractor by the Owner on a per apartment
basis within 30 days after the resident improvement work for such apartment has
been substantially completed.
4.5 The fixed fee will be paid on a monthly basis as a percentage of the
completion of the Work.
4.6 If the final construction cost, as set forth in the Owner/Developer's
capital cost budget, including the GMP, Construction Management fee and Change
Orders not in construction line item is not achieved the Contractor will return
one half percent (1/2 %) Fee to the Owner within thirty (30) days of notice.
Owner instituted scope changes with a cost of $10,000.00 or more and an
aggregate of $50,000.00 are not included in determining the final construction
cost basis for this achievement.
ARTICLE 5
CHANGES IN CONTRACT SUM
5.1 In the event that (i) the Owner or his authorized agent approves changes in
the Work pursuant to the Project Manual; (ii) there is a change in tax laws
directly affecting the cost of the Work; (iii) the Work or any portion thereof
is damaged or destroyed by fire, windstorm, or other hazard covered by insurance
and the Contractor is charged with the repair or reconstruction; or (iv) the
actual cost of subcontracted work, material or equipment covered by an allowance
varies from the amount of the allowance; then the Guaranteed Maximum Cost as set
forth in paragraph 4.1.3 above shall be increased or decreased in an amount
equal to the change in the Contractor's Reimbursable Costs as determined by the
procedures established in the Project Manual.
5.2 The Contractor's Fixed Fee shall be increased by five percent (5%) of any
increases in the Work attributable to paragraph 5.1 above.
ARTICLE 6
CONTRACTOR'S REIMBURSABLE COSTS
6.1 Subject to the limitations of paragraph 4.1.2 above, the Owner agrees to
reimburse the Contractor for all costs necessarily incurred for the proper
execution of the Work and paid directly by the Contractor, such costs to include
the following items, and to be at rates not higher than the standard paid in the
locality of the Work:
6.1.1 All wages for job site crafts and common labor for regular time,
overtime and overtime premium, together with fringe benefits as required by
union agreement or corporate policy, including, but not limited to, craft travel
time, expenses and welfare funds. In addition to the foregoing, the Contractor
shall be reimbursed at the rate of THIRTY PERCENT (30%) of wages for all
accruing payroll taxes including FICA taxes and State and Federal unemployment
contributions, and for all insurance premiums which are based on payroll,
including worker's compensation, public liability and property damage insurance.
In the event the rate of any payout tax or insurance is changed during the
course of the Work, the percentage rate set forth shall be adjusted accordingly.
6.1.2 Payroll costs for all supervisory non-manual employees assigned to
the job site on a permanent basis, including project managers, project
superintendents, assistant superintendents, project engineers, assistant project
engineers or clerical staff, if required, including salaries and wages, worker's
compensation insurance, Social Security and Medicare taxes, State and Federal
unemployment compensation insurance, vacation, employer's contribution to group
life and medical insurance and retirement plans. Personnel engaged at shops or
on the road, in expediting the work and production or transportation of
materials or equipment, shall be considered as stationed at the field office and
their salaries paid for that portion of their time spent on The Work. In lieu of
actual cost, it is agreed that payroll cost of Michael J. Pierre, Construction
Executive shall be reimbursed at a rate of EIGHTY-FIVE DOLLARS per hour
($85.00/hour); Dwight D. Magee, Construction Manager at SEVENTY DOLLARS per hour
($70.00/hour), Construction Executive's and Construction Manager's involvement
in the job beyond the stated General Conditions to be by mutual agreement
between the Contractor and the Owner. Project Managers shall be reimbursed at a
rate of ONE THOUSAND SEVEN HUNDRED THIRTY DOLLARS per week ($1,730.00/week),
project superintendents at ONE THOUSAND FIVE HUNDRED SIXTY DOLLARS per week
($1,560.00/week), assistant superintendents and project engineers at ONE
THOUSAND ONE HUNDRED SEVENTY-FIVE DOLLARS per week ($1,175.00/wek), foreman at
ONE THOUSAND DOLLARS per week ($1,000.00/week), estimators at THIRTY-SEVEN
DOLLARS AND FIFTY CENTS per hours ($37.50/hour) and project accountant at TWENTY
DOLLARS per hour ($20.00/hour). Said rates shall be adjusted for any statutory
increase in tax rates and additionally are subject to annual increases on July 1
to reflect increases in salary costs.
6.1.3 The proportion of transportation, traveling and hotel expenses of the
Contractor or of his officers or employees reasonably incurred at cost in
discharge of duties connected with this Work.
6.1.4 Subsistence for each salaried employee assigned to the job site on a
permanent basis.
6.1.5 All reimbursed expenses incurred for transportation of the work force
required for its execution.
6.1.6 Permit fees; utility connection, availability and installation fees;
royalties; damages for infringement of patents; and costs of defending suits
therefor and for deposits lost for causes other than the Contractor's
negligence.
6.1.7 Losses and expenses, not compensated by insurance or otherwise,
sustained by the Contractor in connection with the Work. Any settlement must be
approved by the Owner.
6.1.8 Minor expenses, such as telegrams, telephone service, expressage,
copies, reproductions, and similar petty cash items.
6.1.9 Materials, supplies, and equipment, including freight and storage,
required for the proper execution of the Work, which shall include all temporary
structures and their maintenance including sales and other taxes related
thereto.
6.1.10 The amounts of all subcontracts, including premiums for payment and
performance bonds required of subcontractors by the Owner or the Contractor.
6.1.11 Premiums on all bonds and insurance policies called for under the
Contract or required by government bodies having jurisdiction over the Project.
Premiums for insurance required under Paragraph 13.5 is eight percent (8%) per
thousand dollars times the contract sum.
6.1.12 The rental cost of construction equipment. When the equipment is
owned by the Contractor, rental shall be charged at the rates shown in the
current Average Rental Rates as published by the Associated Equipment Dealers,
provided that said rates are not in excess of prevailing local rental rates for
like equipment.
6.1.13 Transportation of construction equipment, including cost of loading
and unloading, cost of installation, dismantling and removal thereof if not
included in equipment rental rates, will be reimbursable to the Contractor at
actual costs. Also fuels, lubricants, spark plugs, points, condensers, fan
belts, tire repairs, and other parts requiring frequent replacement as well as
the labor cost of making minor repairs, replacement and adjustments if not
included in equipment rental rates will be reimbursed at cost. Replacement parts
other than the type mentioned above shall be at the contractor's expense in the
case of Contractor-owned equipment.
6.1.14 The cost of hand tools such as picks and shovels and the cost of
expendable items such as bits, brooms, brushes, cable clamps, cables for
chokers, chokers already made, files, padlocks, rope, wire rope, rubber gloves,
water hose, and hard hats shall be reimbursed at actual cost. The salvage value
of any such items which remain upon completion of construction shall be credited
to the Owner. Also the Contractor shall be reimbursed for the resharpening of
edge and cutting tools and for the original cost of carborundum or diamond
tipped cutting blades and wheels furnished for this Work.
6.1.15 The cost of all materials, parts, and accessories used in the
construction of forms for concrete. The salvage value of any such items which
remain upon completion of construction shall be credited to the Owner.
6.1.16 The cost of materials necessary for the proper execution of the Work
and which do not become a permanent part of the Work and which are not generally
defined as tools or contractor's equipment. Typical of such I items are wood
shoring, wood or metal bracing, and protective coverings including burlap,
canvas, tarpaulins, and salvage value of any such items which remain upon
completion of construction shall be credited to the Owner.
6.1.17 Water; temporary heat, light, and power; weather protection
(including frost protection); clean up and debris removal; temporary access;
tests; and other such general condition items required by the Contract documents
or directed by the Owner or the Architect.
6.1.18 Such other items of expense which are necessarily incurred by the
contractor in good faith and in the performance of the Work not scheduled nor
detailed herein but not specifically excluded elsewhere in this Agreement, but
only to the extent approved in advance in writing by the Owner.
ARTICLE 7
DISCOUNTS, REBATES AND REFUNDS
7.1 Provided that the Owner makes payments to the Contractor in a fashion that
allows the Contractor to take advantage of cash discounts, all cash discounts
shall accrue to the Owner. All trade discounts, rebates, refunds, and all
returns from sale of surplus material and equipment by the Contractor shall
accrue to the Owner, and the Contractor shall make provisions so that they can
be secured. All such discounts, rebates, refunds and returns from sale of
surplus materials and equipment shall be credited to the cost of performing this
Agreement for the purpose of applying the Guaranteed Maximum Cost provisions of
this Agreement as set forth in paragraph 4.1.2. above.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 Reimbursement of expenses to the Contractor shall not include any of the
following:
8.1.1 Salary of any officer of the Contractor unless engaged in expediting
the work and production or transportation of materials or equipment without
prior notice and approval except as set forth in Paragraph 6.1.2.
8.1.2 Salary of any person employed, during the execution of the Work, in
the main office or any regularly established branch office of the Contractor
unless as described in Paragraph 6.1.2.
8.1.3 Overhead, profit or general expenses of any kind, except as these may
be expressly included in Article 6.
8.1.4 Interest on capital employed either in plant or in expenditures on
the Work, except as may be expressly included in Article 6.
8.1.5 Any cost incurred due to the personal failure of the Contractor's
representatives having supervision or direction of the operation of the Work
under this Agreement as a whole, to exercise good faith or that degree of care
which they normally exercise in the conduct of the business of Contractor,
either for making good of defective work, disposal of materials wrongly
supplied, making good on damaged property, or excess cost for materials or labor
or otherwise. The Owner may withhold money required by the Contractor to cover
any such cost included by it as a part of the money required by the Contractor
to cover any such cost included by it as a part of the Contractor's Reimbursable
Costs including any previous payments by the Owner for such costs not apparent
at the time of payment.
ARTICLE 9
PAYMENTS
9.1 Based upon Applications for Payment on AIA forms G702 and G702A submitted to
the Architect by the Contractor and Certificates for Payment issued by the
Architect the Owner shall make progress payments on account of the Contract Sum
to the Contractor as provided in the Project Manual and as follows:
9.1.1 The Owner will make payment on or about the twenty fifth (25th) day
of each month, ninety percent (90%) of the proportion of the Contract Sum
properly allocable to labor, materials, and equipment incorporated in the Work
and ninety percent (90%) of the portion of the Contract Sum properly allocable
to materials and equipment suitably stored up to the last day of the previous
month, less the aggregate of previous payments in each case. Retainage will not
be withheld for those costs defined in paragraphs, 6.1.2, 6.1.3, 6.1.6, 6.1.8
and 6.1.11 and fee. Commencing with the second Application for Payment,
Contractor shall include partial mechanic lien waivers, if required by the
Owner, in conformity with Maryland law by and from each subcontractor and itself
that payment has been received for all monies due under the prior Application
for Payment. This procedure shall also apply to the final Application for
Payment and payment of any balance including retainage, if required by the
Owner. When the improvements are 50% complete all remaining payments shall be
for 100% in lieu of 90% above.
9.2 As part of Contractor's final Application for Payment, the Contractor will
adjust the Contract Sum to reflect the actual Contractor's Reimbursable Costs
and shall furnish to the Owner a certified listing of the total Contractor's
Reimbursable Costs (as defined in Article 6).
9.3 Final payment, constituting the entire unpaid balance of the Contract Sum,
shall be paid by the Owner to the Contract thirty (30) days after substantial
completion of the Work (unless otherwise stipulated in the Certificate of
Substantial Completion) provided the Work has been completed, the Contract fully
performed, and a final Certificate of Payment has been issued by the Architect.
If the Owner disputes the amount of the balance claimed by the Contractor to be
due and payable at the time of issuance of the final Certificate for Payment,
the Owner shall then pay to the Contractor retainage less any disputed amount
and the Contract shall be deemed completed and accepted, but neither the payment
nor receipt of such portion of the final payment shall be deemed a waiver of
claims of either party relating to the disputed amount. In no event shall the
Owner retain more, than the Architect determines is necessary to pay the cost of
any remaining minor items not affecting the use of the Project.
9.4 Upon mutual agreement by the Owner and Contractor, payment in full may be
made to those subcontractors whose Work is fully completed during the early
stages of the Project, or any retained amounts reduced with respect to
subcontractors at such times as the parties may mutually agree, which agreement
will not be unreasonably withheld. Agreement to any such reduction in retained
amounts will not constitute a waiver of or otherwise prejudice the Owner's right
to subsequently reinstate full retainage, as to that subcontractor, should
circumstances justify such action in the Owner's sole judgment.
ARTICLE 10
ACCOUNTING, INSPECTION, AUDIT
10.1 The Contractor shall check all materials, equipment and labor entering into
the Work and shall keep such full and detailed accounts as may be necessary for
proper financial management under this Agreement and the system shall be such as
is satisfactory to the Architect, the Owner or to an auditor appointed by the
Owner. The Architect, the Owner, the auditor and their timekeepers and clerks
shall be afforded access to the Work and to all the Contractor's books, records,
correspondence, instructions, drawings, receipts, vouchers, memoranda, etc.
relating to this Agreement, and the Contractor shall preserve all such records
for a period of three (3) years after the final payment hereunder.
ARTICLE 11
CORRECTION OF WORK
11.1 The cost of correcting defective workmanship or materials, including the
cost of uncovering and the cost of tests, shall be considered Contractor's
Reimbursable Costs whether incurred before or after final payment, except when:
11.1.1 The defective workmanship or material is the responsibility of and
is corrected by a subcontractor at the cost of the subcontractor;
11.1.2 The rejected workmanship or material is due to causes described in
paragraph 8.1.5; or
11.1.3 The total of said costs of corrective work together with all other
Contractor's Reimbursable Costs exceeds the Guaranteed Maximum Cost, in which
event the excess shall be borne by the Contractor.
ARTICLE 12
NOTICES
12.1 All notices required by this Agreement shall be in writing and delivered to
the Owner or the Contractor as listed below:
CONTRACTOR:
The Mullan Contracting Company
2330 West Joppa Road, Suite 210
Lutherville, Maryland 21093
Attn: Michael J. Pierre, President
OWNER:
The Chestnut Partnership
800 Second Avenue
Des Moines, Iowa 50309
Attn: David J. Durden
ARTICLE 13
MISCELLANEOUS
13.1 The authorized representative of the Owner who has executed this Agreement
has done so on behalf of the Owner in his representative capacity, and no
officer, director, agent or employee of the Owner shall be held to any personal
liability hereunder.
13.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at a rate equal to 1% per annum plus the reference rate
charged by the WALL STREET JOURNAL to its most credit worthy customers
(generally referred to as the prime rate of interest) as may be changed from day
to day.
13.3 Notwithstanding the adoption of a Guaranteed Maximum Cost, Owner and
Contractor agree that Owner retains the risks of uninsured property losses, and
such risks are not intended to be transferred to the Contractor.
13.4 Paragraph 13.4 not used in this Agreement.
13.5 Limits of liability of insurance required to be carried by the Contractor
under the Contract shall be as specified below:
13.5.1 Workers Compensation: statutory limits, including employer's
liability limits $1,000,000 each accident, $1,000,000 disease policy limit,
$1,000,000 disease each employee;
13.5.2 Comprehensive Public Liability including operations, premises,
products, completed operations, independent contractors, contractual, personal
injury, and broad form property damage endorsement; limits $2,000,000 bodily
injury and property damage combined;
13.5.3 Automobile Liability: including owned, hired and non-owned, limits
$1,000,000 bodily injury and property damage combined;
13.5.4 Excess Liability Umbrella policy in the amount normally carried by
the Contractor, but in any event not less than $10,000,000, to cover all items
required to be covered under paragraphs 13.5.1, 13.5.2, and 13.5.3.
13.5.5 Thirty days written cancellation notice stating a firm 30 days
written notice will be furnished to the holder of the certificate; and
13.5.6 XCU coverage (required from Subcontractors who have demolition,
excavation, shoring, underpinning, connection with existing utilities or work in
or adjacent to any buildings included in the scope of the Work) to provide
protection for explosion, collapse and underground damage exposure.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
THE CHESTNUT PARTNERSHIP
BY: BLAKEHURST JOINT VENTURE, A GENERAL PARTNER
BY: CHESTNUT VILLAGE, INC., GENERAL PARTNER
by: /s/ Stan G. Thurston Stan G. Thurston, President and Chief
----------------------------------------------------------
Executive Officer (Principal Executive Officer)
Date: Sept. 4, 1996
by: /s/ Arthur V. Neis
------------------
Arthur V. Neis (Principal Financial and Accounting Officer)
Date: Sept. 4, 1996
AND BY: THE WEST JOPPA ROAD LIMITED PARTNERSHIP, GENERAL PARTNER
By: Rosedale Care, Inc., General Partner
/s/ T.F. Mullan
---------------
Thomas F. Mullan, III, President
Date: 9/5/96
By: Continental Care, Inc., General Partner
/s/ J.A. Luetkemeyer, Jr.
-------------------------
John A. Luetkemeyer, Jr., President
Date: 9/9/96
THE MULLAN CONTRACTING COMPANY
BY: /s/ Michael J. Pierre
---------------------
Michael J. Pierre, President
Date: Sept 5, 1996
THE AMERICAN INSTITUTE OF ARCHITECTS
[LOGO]
________________________________________________________________________________
AIA DOCUMENT A201
GENERAL CONDITIONS OF THE CONTRACT
FOR CONSTRUCTION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION
WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS MODIFICATION
________________________________________________________________________________
1987 EDITION
TABLE OF ARTICLES
1. GENERAL PROVISIONS 8. TIME
2. OWNER 9. PAYMENTS AND COMPLETION
3. CONTRACTOR 10. PROTECTION OF PERSONS AND PROPERTY
4. ADMINISTRATION OF THE CONTRACT 11. INSURANCE AND BONDS
5. SUBCONTRACTORS 12. UNCOVERING AND CORRECTION OF WORK
6. CONSTRUCTION BY OWNER OR BY 13. MISCELLANEOUS PROVISIONS
SEPARATE CONTRACTORS
14. TERMINATION OR SUSPENSION OF THE
7. CHANGES IN THE WORK CONTRACT
This document has been approved and endorsed by the
Associated General Contractors of America.
Copyright 1911, 1915, 1918, 1925, 1937, 1951, 1958, 1961, 1963, 1966, 1967,
1970, 1976, (c)1987 by the American Institute of Architects 1735 New York
Avenue, N.W., Washington, D.C., 20006. Reproduction of the material herein or
substantial quotation of its provisions without written pemission of the AIA
violates the copyright laws of the United States and will be subject to legal
prosecutions.
[LOGO AIA] CAUTION: YOU SHOULD USE AN ORIGINAL AIA DOCUMENT WHICH HAS THIS
CAUTION PRINTED IN RED. AN ORIGINAL ASSURES THAT CHANGES WILL NOT BE OBSCURED AS
MAY OCCUR WHEN DOCUMENTS ARE REPRODUCED.
________________________________________________________________________________
AIA DOCUMENT A201 * GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION *
FOURTEENTH EDITION AIA(R) (C)1987 THE AMERICAN INSTITUTE OF ARCHITECTS. 1735 NEW
YORK AVENUE, N.W., WASHINGTON, D.C. 20006 A201-1987 1
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT TO
LEGAL PROSECUTION.
NOTE: A complete submission of AIA Document A201, General Conditions of the
Contract for Construction, was made in Exhibit 10.19 of the 1991 S-1 filing. All
changes to that document are noted in the succeeding documented titled
"Supplementary General Conditions of Construction Management Agreement."
SUPPLEMENTARY GENERAL CONDITIONS
OF CONSTRUCTION MANAGEMENT AGREEMENT
These Supplementary General Conditions modify, change, delete from or add to the
"General Conditions of the Contract For Construction," AIA Document A201,
Fourteenth Edition, 1987, and shall supersede the General Conditions to the
extent inconsistent or in conflict therewith. Where any Article of the General
Conditions is modified, or any Paragraph, Subparagraph or Clause thereof is
modified or deleted by these Supplementary General Conditions, the unaltered
provisions of that Article, Paragraph, Subparagraph or Clause shall remain in
effect:
Subparagraph 3.2.1, delete lines 7-15, beginning in line 7 after
the term "Contract Documents."
Subparagraph 3.18.4, add:
"Owner shall indemnify and hold harmless the contractor for
claims, etc., arising from negligent acts of the Owner for
injuries and damages of the type described in subparagraph
3.18.1 of the General Conditions, all as if said subparagraph
3.18.1 and related subparagraphs were set forth at length in
this subparagraph 3.18.4., only to the extent caused in whole
or in part by negligent acts of the Owner, anyone directly or
indirectly employed by the Owner, or anyone for whose acts
they may be liable, regardless of whether or not such claim,
damage, loss or expense caused in part by a party indemnified
hereunder."
Subparagraph 4.5.8, add as a new subparagraph:
"4.5.8 Procedural Issues. The arbitration shall be held in
Baltimore, MD. Each party shall bear its own direct costs,
including attorney's fees, but general costs of the
arbitration shall be shared by both parties equally; provided,
the arbitrator may choose to award the general costs of
arbitration against the losing party if the arbitrator
determines that the proposed resolution urged by the losing
party was not reasonable. Notwithstanding anything in the
Contract Documents to the contrary, each party shall be
required to submit its proposed resolutions of each Claim to
the arbitrator, and the arbitrator shall be required to render
a decision adopting in full either one or the other of such
proposed resolutions, and no compromises or alternative
resolutions shall be allowed or considered by the arbitrator.
Each party shall be entitled to full discovery and the
process, proceedings, practices and procedures provided for
under the Federal Rules of Civil Procedure in effect at the
time notice of demand for arbitration is filed. Either party
may request the selection of up to 3 arbitrators."
Subparagraph 4.5.9, add as a new subparagraph:
"4.5.9 Limitations on Arbitration. Notwithstanding anything in
the Contract Documents to the contrary, if the (1) Claims
involve a proposed, net aggregate payment or reimbursement in
an amount greater than $50,000, or (2) the Claims involve an
interested person or entity (including the Architect) who has
not consented to be joined in the arbitration, then
arbitration shall apply only if both parties consent to
arbitration. For this purpose an "interested person or entity"
means any person or entity if (1) in such interested person or
entity's absence, complete relief cannot be accorded among
those already parties, or (2) the interested person or entity
is so situated that the disposition of the Claim without the
joinder of such interested person or entity may leave any of
those already parties subject to a substantial risk of
incurring double, multiple or otherwise inconsistent
obligations. If both parties do not consent to arbitration for
such Claims as described herein, then all requirements,
conditions, and conditions precedent pertaining to arbitration
shall be deemed appropriately adjusted to permit either party
to pursue such Claims as otherwise permitted by the Contract
Documents or by law."
Subparagraph 5.2.1, change "promptly" to "within 10 days" in lines
7 and 11.
Subparagraph 9.3.1.2, delete in its entirety.
Subparagraph 9.7.1, change line 6 as follows:
"titled by the Architect or awarded by arbitration, or if the
Owner does not promptly furnish evidence as required by
subparagraph 2.2.1, then the Con-".
Subparagraph 10.1.1, add at the end:
"The Contractor shall have no responsibility for the
discovery, presence, handling, removal, disposal or exposure
of persons to toxic substances in any form at the site."
Subparagraph 10. 1.2, add after the phrase "asbestos or
polychlorinated biphenyl (PCB)", the phrase "or other toxic
substances", in lines 2-3, 8, 10- 11.
Subparagraph 10. 1. 3, add at the end:
"...or other toxic substances."
Subparagraph 10.1.4, delete in its entirety and substitute the
following:
"10.1.4 The Owner agrees to indemnify and hold harmless the
Contractor and its employees, officers, agents and
subcontractors (regardless of tier) from and against any and
all liabilities, losses, claims, damages, demands, judgments,
interest, penalties, fines, monetary sanctions, costs,
attorney's fees, expenses, court costs, and all other costs
and expenses (collectively "Costs") resulting from, in
connection with, or arising in any manner whatsoever out of
the toxic substances. Without limiting the generality of the
foregoing, it is agreed that such indemnification shall apply
to any Costs incurred as a result of: (a) complying with all
federal, state and local environmental health and safety
rules, laws, regulations and ordinances and/or orders,
directives and/or recommendations of any governmental entity
having jurisdiction for the enforcement of such laws, rules,
regulations and ordinances which may now or may hereafter be
in effect and be applicable to or be issued in connection with
the toxic substances; (b) performing or arranging for the
performance of medical examinations of individuals exposed to
the toxic substances, maintaining medical records for such
individuals and conducting any employee educational programs,
whether or not such tests, recordkeeping or programs are
currently required by applicable law; (c) involvement in any
suits or actions asserting public or employer liability
resulting from the toxic substances; and (d) performing the
Work, which for this purpose shall include the disposal of any
toxic substances which may have been undertaken by the
Contractor.
10.1.5 The Owner agrees to pay and/or reimburse the Contractor
for all additional costs of the Work together with any impact
costs and expenses incurred by the Contractor in the
resequencing and/or performance of the Work under the Contract
which would not have been incurred but for the toxic
substances. The Contract Sum and the Guaranteed Maximum Price,
if applicable, shall be increased by the amount of the
additional Cost of the Work to be paid and/or reimbursed to
the Contractor pursuant to this Subparagraph 10.1.5.
10.1.6 The obligations of the Owner as set forth in this
Paragraph 10.1 shall survive the termination of the Contract."
Subparagraph 11.3.1.3, delete this Paragraph and add:
"The Owner is responsible for all deductibles."
Subparagraph 12.2.1, change "or" to "as" in line 2.
END OF SUPPLEMENTARY GENERAL CONDITIONS
Exhibit 10.19.3
SUPPLEMENT TO CONSTRUCTION MANAGEMENT AGREEMENT
THIS SUPPLEMENT TO CONSTRUCTION MANAGEMENT AGREEMENT made this
30th day of October, 1996, between The Mullan Contracting Company, a corporation
organized in the State of Maryland, hereinafter called the Contractor, and The
Chestnut Partnership, a general partnership organized in the State of Maryland,
hereinafter called the Owner.
WITNESSETH:
THAT, WHEREAS the parties hereto executed a Construction
Management Agreement dated September 4, 1996, which agreement the parties hereto
desire to modify and as modified ratify and confirm.
NOW, THEREFORE, the Contractor and the Owner, for the
consideration hereinafter named, agree as follows:
1. That the Guaranteed Maximum Cost as provided for in Article 4,
Subsection 4.1.3 of the Construction Management Agreement is hereby established
as $7,803,005.
2. That Article 4, Section 4.6 is hereby deleted and made null and
void as if never contained in the Construction Management Agreement.
3. The Drawings, Project Manual and Addenda that constitute the
basis of the Guaranteed Maximum Cost are listed in Exhibit 'A" and attached
hereto.
4. The timeframe (schedule) is included in Exhibit "B" and
attached hereto.
5. Except as modified herein, the Construction Management
Agreement is hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the date and year first above written.
THE CHESTNUT PARTNERSHIP
By: Blakehurst Joint Venture, a General Partnership
By: /s/ Stan G. Thurston
--------------------
Stan G. Thurston, President and Chief Executive Officer
(Principal Executive Officer)
Date: 11-4-96
By: /s/ Arthur V. Neis
------------------
Date: 11-12-96
And by: THE WEST JOPPA ROAD LIMITED PARTNERSHIP,
General Partner
By: Rosedale Care, Inc., General Partner
By: /s/ T.F. Mullan
---------------
Thomas F. Mullan, III, President
Date: 11-4-96
By: Continental Care, Inc., General Partner
By: /s/ J.A. Luetkemeyer, Jr.
-------------------------
John A. Leutkemeyer, Jr., President
Date: 11-4-96
THE MULLAN CONTRACTING COMPANY
By: /s/ Michael J. Pierre
---------------------
Michael J. Pierre, President
Date: 10/30/96
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000882973
<NAME> Chestnut Partnership
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,394,227
<SECURITIES> 0
<RECEIVABLES> 197,444
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,316,971
<PP&E> 305,421
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,414,686
<CURRENT-LIABILITIES> 1,633,979
<BONDS> 13,655,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,414,686
<SALES> 0
<TOTAL-REVENUES> 7,580,999
<CGS> 0
<TOTAL-COSTS> 5,999,401
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,324,016)
<INCOME-PRETAX> 483,601
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 483,601
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000882974
<NAME> Chestnut Real Estate Partnership
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 48,615,206
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,615,206
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 48,615,206
<SALES> 0
<TOTAL-REVENUES> 483,601
<CGS> 0
<TOTAL-COSTS> 1,219,830
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (736,029)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (736,029)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
