EXHIBIT 10.8
MASTER LEASE AGREEMENT
BY AND BETWEEN
CMCP PROPERTIES, INC.
A TEXAS CORPORATION
AND
BLC PROPERTIES I, LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED
MAY 1, 2002
TABLE OF CONTENTS
1. Definitions................................................................................................. 1
2. Lease....................................................................................................... 1
3. Term .................................................................................................... 1
(a) Term................................................................................................ 1
(b) Renewal Terms....................................................................................... 1
4. Brookdale Rent Payments..................................................................................... 1
(a) Brookdale Rent Payments............................................................................. 1
(b) Master Rent......................................................................................... 1
(c) TEB Pool Enhancement Rent........................................................................... 1
(d) Overdue Interest.................................................................................... 1
(e) Payment without Abatement........................................................................... 1
5. Capital Additions........................................................................................... 1
(a) Capital Additions Financed by Capstead.............................................................. 1
(b) Non-Capital Additions.............................................................................. 1
(c) Capital Addition Advances.......................................................................... 1
6. Assignment, Subletting and Material Contracts.............................................................. 1
(a) Transfers Prohibited Without Consent............................................................... 1
(b) Pledge Requirement................................................................................. 1
(c) Material Contracts................................................................................. 1
7. Default; Remedies.......................................................................................... 1
(a) Default............................................................................................ 1
(b) Remedies........................................................................................... 1
8. Condemnation............................................................................................... 1
(a) Complete Taking.................................................................................... 1
(b) Partial Taking..................................................................................... 1
(c) Notices............................................................................................ 1
9. Financial and Other Statements............................................................................. 1
(a) Financial Statements............................................................................... 1
(b) Proprietary Information............................................................................ 1
(c) Record Keeping..................................................................................... 1
(d) Brookdale Rent Statements.......................................................................... 1
10. Additional Covenants of Brookdale.......................................................................... 1
11. Limitation on Liability.................................................................................... 1
12. Facility Mortgages......................................................................................... 1
(a) Existing Tax-Exempt Bonds.......................................................................... 1
(b) "B Tranche" Bonds.................................................................................. 1
(c) Additional Financing............................................................................... 1
(d) Capstead's Cooperation............................................................................. 1
(e) Payments at Final Maturity; Refinancing of Facility Mortgages...................................... 1
13. Representations and Warranties............................................................................. 1
(a) Representations of Brookdale....................................................................... 1
(b) Representations of Capstead........................................................................ 1
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14. Purchase Option.................................................................................... 1
(a) Purchase Option.................................................................................... 1
(b) Provisions Relating to the Exercise of Purchase Option as to Facilities............................ 1
(c) Provisions Relating to the Exercise of Purchase Option as to Capstead Ownership Interest........... 1
(d) Appraisal Procedure................................................................................ 1
15. Notices.................................................................................................... 1
16. No Waiver.................................................................................................. 1
17. Invalidity................................................................................................. 1
18. Counterparts............................................................................................... 1
19. Cumulative................................................................................................. 1
20. Governing Law.............................................................................................. 1
21. Successors and Assigns, Relationship....................................................................... 1
22. Entire Agreement........................................................................................... 1
23. Survival................................................................................................... 1
24. Time....................................................................................................... 1
25. Captions and Headings...................................................................................... 1
26. Waiver of Jury Trial....................................................................................... 1
27. Guaranty................................................................................................... 1
28. Joinder by Brookdale Management............................................................................ 1
29. Pre-Existing Environmental Conditions...................................................................... 1
30. Capstead Encumbrances...................................................................................... 1
EXHIBITS:
Exhibit A TEB Pool
Exhibit B Guaranty
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MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT (this "Agreement") is made this 1st day of
May 2002, by and between CMCP PROPERTIES, INC. a Texas corporation, as Master
Lessor ("Capstead"), and BLC PROPERTIES I, LLC, a Delaware limited liability
company, as Master Lessee ("Brookdale"), and is joined herein for certain
limited purposes by BROOKDALE MANAGEMENT HOLDING, LLC, a Delaware limited
liability company ("Brookdale Management").
RECITALS
A. Capstead is the owner of the beneficial interest in CMCP-Island Lake,
LLC, a Delaware limited liability company (the "Island Lake Lessor"), CMCP-
Windsong, LLC, a Delaware limited liability company (the "Windsong Lessor"),
CMCP-Roswell, LLC, a Delaware limited liability company (the "Roswell Lessor") ,
CMCP-Williamsburg, LLC, a Delaware limited liability company (the "Williamsburg
Lessor"), CMCP-Pinecastle, LLC, a Delaware limited liability company (the
"Pinecastle Lessor"), CMCP-Montrose, LLC, a Delaware limited liability company
(the "Montrose Lessor") and CMCP-Club Hill, L.P., a Texas limited partnership
(the "Club Hill Lessor"). The Island Lake Lessor, Windsong Lessor, Roswell
Lessor, Williamsburg Lessor, Pinecastle Lessor, Montrose Lessor and Club Hill
Lessor are collectively referred to herein as the "Capstead Lessors."
B. Brookdale is the owner of the beneficial interest in BLC-Island Lake,
LLC, a Delaware limited liability company (the "Island Lake Lessee"),
BLC-Windsong, LLC, a Delaware limited liability company (the "Windsong Lessee"),
BLC-Roswell, LLC, a Delaware limited liability company (the "Roswell Lessee"),
BLC-Williamsburg, LLC, a Delaware limited liability company (the "Williamsburg
Lessee"), BLC-Pinecastle, LLC, a Delaware limited liability company (the
"Pinecastle Lessee"), BLC-Montrose, LLC, a Delaware limited liability company
(the "Montrose Lessee") and BLC-Club Hill, L.P., a Delaware limited partnership.
(the "Club Hill Lessee") The Island Lake Lessee, Windsong Lessee, Roswell
Lessee, Williamsburg Lessee, Pinecastle Lessee, Montrose Lessee and Club Hill
Lessee are collectively referred to herein as the "Brookdale Lessees."
C. Each of the Capstead Lessors, as lessor, has entered into a property
lease agreement (each, a "Property Lease") with one of the Brookdale Lessees, as
lessee, for assisted living, independent living or skilled nursing facilities
currently known as Chambrel at Island Lake ("Island Lake"), Chambrel at Windsong
("Windsong"), Chambrel at Roswell ("Roswell"), Chambrel at Williamsburg
("Williamsburg"), Chambrel at Pinecastle ("Pinecastle"), Chambrel at Montrose
("Montrose"), and Chambrel at Club Hill ("Club Hill"), respectively. The Island
Lake, Windsong, Roswell, Williamsburg, Pinecastle, Montrose and Club Hill
facilities, including the land and any and all improvements thereon, are
referred to individually as a "Facility" or collectively as the "Facilities", as
the context may require.
D. Brookdale Management is the owner of the beneficial interest in each of
Brookdale Management II, LLC, a Delaware limited liability company (including
permitted assigns, "Brookdale Management II"), Brookdale Management - Akron,
LLC, a Delaware limited liability company (including permitted assigns,
"Brookdale Management Akron"), and is the direct or indirect owner of all of the
partnership interests in Brookdale Management - Texas, L.P., a Delaware limited
partnership ("Brookdale Management Texas"). The Island Lake Lessee, Roswell
Lessee, Williamsburg Lessee, and Pinecastle Lessee have entered into facility
management agreements, dated on or about the date hereof, with Brookdale
Management II to manage their respective Facilities, the Windsong Lessee and
Montrose Lessee have entered into facility management agreements with Brookdale
Management Akron to manage their respective Facilities, and the Club Hill Lessee
has entered into a facility management agreement with Brookdale Management -
Texas to manage its Facility (such agreements as may be amended from time to
time are collectively referred to hereafter as the "Facility Management
Agreements").
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E. Capstead and Brookdale desire to enter into this Master Lease
respecting various agreements concerning the Facilities, and, in connection
therewith, require various undertakings from Brookdale Management, all as more
particularly set forth herein.
In consideration of the mutual promises and agreements herein contained,
the parties agree as follows:
1. DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this paragraph shall have the meanings assigned to them in this
paragraph and include the plural as well as the singular, (ii) all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
accordance with GAAP, (iii) all references in this Agreement to designated
"paragraphs" or "subparagraphs" and other subdivisions are to the designated
paragraphs, subparagraphs and other subdivisions of this Agreement, and (iv) the
words "herein," "hereof," "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph or subparagraph or
other subdivision.
"Adjustment Factor" shall mean a fraction, the numerator of which is the
CPI for the month of March of the current Lease Year and the denominator of
which is the CPI for the month of March of the immediately preceding Lease Year;
provided that such fraction shall never be less than 1.0/1 or greater than
1.03/1.
"Affiliate" shall mean, with respect to any Person, (i) in the case of any
such Person which is a partnership, any general partner in such partnership or
any limited partner holding, directly or indirectly, fifty percent (50%) or more
of the partnership interests in such partnership; (ii) in the case of any such
Person which is a limited liability company, any member of such limited
liability company holding, directly or indirectly, fifty percent (50%) or more
of the membership interests in such company; (iii) any other Person which is a
Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or
to one or more of the Persons referred to in the preceding clauses (i) and (ii);
(iv) any other Person who is an officer, director or trustee of, or partner
holding, directly or indirectly, fifty percent (50%) or more of the partnership,
membership or stock interests in, such Person or any Person referred to in the
preceding clauses (i), (ii) and (iii); and (v) any other Person who is a member
of the Immediate Family of such Person or of any Person referred to in the
preceding clauses (i) through (iv).
"Award" shall mean all compensation, sums or other value awarded, paid or
received by virtue of a compete or partial Condemnation of the Leased Property
(after deduction of all reasonable legal fees and other reasonable costs and
expenses, including, without limitation, expert witness fees, incurred in
connection with obtaining any such award).
"B Tranche Facility Fees" shall have the meaning given to such term in the
applicable Property Leases.
"B Tranche Letter of Credit" shall mean a letter of credit issued by a
rated financial institution rated "A-1" or better by Standard and Poor's or
"P-1" by ▇▇▇▇▇'▇ Investor Services and obtained by Capstead or a Capstead
Affiliate to secure the obligations under the so-called B Tranche bonds of the
TEB Pool following the TEB Pool Refunding.
"Balloon Payment" shall mean any payment of principal due under any
Facility Mortgage in excess of that which would be required if the indebtedness
secured thereby was fully amortized over the term of such Facility Mortgage;
provided, however, if a sinking-fund or other such reserve has been
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established and is available to repay such principal indebtedness only the
amount in excess thereof shall be deemed a Balloon Payment.
"Bond Documents" shall mean any and all documents evidencing, securing or
otherwise entered into in connection with any Bonds.
"Bonds" shall mean the bonds issued in connection with any Facility
Mortgage.
"Brookdale Rent Payments" shall mean, collectively, the Master Rent, TEB
Pool Enhancement Rent and all other charges, payments and sums due hereunder.
"Business Day" shall mean any day other than Saturday, Sunday, or any
other day on which the Federal Reserve System is authorized by law or executive
action to close.
"Capital Addition" shall mean any capital improvement to any Facility
whose cost would be treated as a capital expenditure under GAAP.
"Capital Additions Cost" shall mean the cost of any Capital Addition
proposed to be made by Brookdale or any Brookdale Lessee, whether paid for by
any Brookdale Lessee or Capstead Lessor. Such cost shall include, but not be
limited to, the following: (i) the cost of construction of the Capital Addition,
including site preparation and improvement, materials, labor, supervision,
developer and administrative fees, legal fees, and costs of related design,
engineering and architectural services, the cost of any fixtures, the cost of
equipment and other personalty, the cost of construction financing (including,
but not limited to, capitalized interest) and other miscellaneous costs approved
by Capstead, which approval shall not be unreasonably withheld or delayed, (ii)
if agreed to by Capstead in writing, in advance, the cost of any land (including
all related acquisition costs incurred by any Brookdale Lessee) contiguous to
the Facility to which such additional land is to become a part for the purpose
of placing thereon a Capital Addition or any portion thereof or for providing
means of access thereto, or parking facilities therefor, including the cost of
surveying the same; (iii) the cost of insurance, real estate taxes, water and
sewage charges and other carrying charges for such Capital Addition during
construction; (iv) title insurance charges; (v) reasonable attorneys' fees and
expenses; (vi) filing, registration and recording taxes and fees; (vii)
documentary stamp or transfer taxes, and (viii) all actual and reasonable costs
and expenses of Capstead and any Capstead Lessor or Brookdale and any Brookdale
Lessee incurred in connection with such Capital Addition; provided, however,
that in no event shall the direct or indirect costs of any Brookdale employees
be deemed a Capital Additions Cost (other than construction management
agreements under the Facility Management Agreements that are arms-length and
have market terms).
"Capstead Equity", which shall be determined on a non-amortizing basis,
shall mean, for the period in question, the daily weighted average of the
aggregate amount of (i) Capstead's or the Capstead Lessors' investment in the
Facilities, which on the date of this Agreement is __________________ Dollars
($___________), plus (ii) the amount of all transaction costs paid by Capstead
or its Affiliates in connection with the acquisition, financing, leasing,
management or operation of the Facilities or as otherwise contemplated by the
agreements evidencing the same, plus (iii) on each of May 1, 2002, June 1, 2002
and July 1, 2002, an additional One Million Dollars ($1,000,000) (Three Million
Dollars ($3,000,000) in the aggregate), and (iv) such other adjustments as may
be provided for herein.
"Capstead's Minimum Amount" shall mean at any time the sum of (i) Capstead
Equity, plus (ii) the original principal balance of all Facility Mortgages
encumbering the Facilities as of the date hereof, plus (iii) the original
principal balance of any Facility Mortgage that may encumber Windsong, if and
when so effected.
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"Change in Control" shall mean the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the SEC) of 50% or more, or rights, options or warrants to acquire
50% or more, of the outstanding shares of voting stock of Brookdale or any of
the Brookdale Lessees (other than the parent of Brookdale or any of its
Affiliates in a transaction which shall not result in any release of liability
or obligation hereunder) or the merger or consolidation of Brookdale or any
Brookdale Lessee with or into any other Person or any one or more sales or
conveyances to any Person of all or substantially all of the assets of Brookdale
or the Brookdale Lessees (other than the parent of Brookdale or any of its
Affiliates in a transaction which shall not result in any release of liability
or obligation hereunder).
"Claims" shall have the meaning given to such term in Paragraph 11.
"Code" shall mean the Internal Revenue Code of 1986 and, to the extent
applicable, the Treasury Regulations promulgated thereunder, each as from time
to time amended.
"Commencement Date" shall mean the date of this Agreement.
"Condemnation" shall mean, with respect to any Facility, (i) the exercise
of any governmental power, whether by legal proceedings or otherwise, by a
Condemnor of its power of condemnation; (ii) a voluntary sale or transfer of the
Facility by any Capstead Lessor to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending; and (iii)
a taking or voluntary conveyance of all or part of the Facility, or any interest
therein, or right accruing thereto or use thereof, as the result or in
settlement of any condemnation or other eminent domain proceeding affecting any
such Facility, whether or not the same shall have actually been commenced.
"Condemnor" shall mean any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
"CPI" shall mean the Consumer Price Index for all Urban Consumers (CPI-U),
U.S. City Average, All Items Less Food and Energy (1982-1984=100) as published
by the Bureau of Labor Statistics of the U.S. Department of Labor, or if it
ceases publication, a successor index measuring the price of a comparable market
basket of consumer goods published by the United States or any agency or
department thereof.
"Current Lease Payment" shall mean the sum of (i) the Master Rent payable
hereunder and (ii) the Base Rent, as defined in each of the Property Leases,
payable in the aggregate under the Property Leases, calculated on a pro forma
basis for the succeeding twelve (12) month period after giving effect to the
event for which the Lease Coverage Ratio is being calculated. In the event Base
Rent for such period is based on a variable interest rate, it shall be assumed,
for purposes of determining the Current Lease Payment, that the average interest
rate or rates in effect under the Facility Mortgage or Mortgages for the three
(3) months prior to the date of such calculation shall remain constant for the
succeeding twelve (12) month period for which the computation is being made.
"Date of Taking" shall mean the date the Condemnor has the right to
possession of the Facility, or any portion thereof, in connection with a
Condemnation.
"Default" shall mean any event or condition that, with the giving of
notice and/or lapse of time, may ripen into an Event of Default.
"Entity" shall mean any general partnership, limited partnership, limited
liability company or partnership, corporation, joint venture, trust, business
trust, cooperative or association.
"Event of Default" shall have the meaning given to such term in Paragraph
7(a).
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"Facility Management Agreement" shall have the meaning given to such term
in the Recitals of this Agreement.
"Facility Mortgage" shall mean, with respect to any Facility, any
encumbrance securing the repayment of indebtedness (and including any
obligations in connection with credit enhancement) now or hereafter placed upon
such Facility, provided such Facility is then subject to the terms of a Property
Lease.
"Facility Mortgagee" shall mean the holder of a Facility Mortgage.
"Facility State" shall mean the state where the Facility is located.
"Fair Market Added Value" shall mean the aggregate Fair Market Value of
the Facilities (including all Capital Additions) less the aggregate Fair Market
Value of the Facilities determined as if any Capital Additions not financed by
Capstead pursuant to Paragraph 5 had not been constructed.
"Fair Market Value" shall mean the aggregate price that a willing buyer
not compelled to buy would pay a willing seller not compelled to sell for the
Facilities (inclusive of business value), (i) assuming the same is unencumbered
by this Agreement or the Property Leases, and (ii) determined by agreement
between Capstead and Brookdale or, failing agreement and upon demand by either
party, the appraisal procedures set forth in Paragraph 14(d).
"Fair Market Value Purchase Price" shall mean the positive difference
between the aggregate Fair Market Value of the Facilities and the aggregate Fair
Market Added Value of the Facilities.
"Financial Officer's Certificate" shall mean, as to any Person, a
certificate of the chief financial officer of such Person, duly authorized,
accompanying the financial statements required to be delivered by such Person
pursuant to Paragraph 9 in which such officer shall certify (i) that, to such
officer's knowledge, such statements have been properly prepared in accordance
with GAAP and are true, correct and complete in all material respects and fairly
present the consolidated financial condition of such Person at and as of the
dates thereof and the results of its and their operations for the periods
covered thereby, and (ii) that such officer has reviewed this Agreement and, to
such officer's knowledge, has no knowledge of any Event of Default hereunder.
"FNMA" shall mean ▇▇▇▇▇▇ Mae, a federally chartered and stockholder owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, 12 U.S.C. Section 1716 et. seq.
"GAAP" shall mean generally accepted accounting principles, consistently
applied, and being principally derived from promulgations of The Financial
Accounting Standards Board and The American Institute of Certified Public
Accountants, or their successors.
"Immediate Family" shall mean, with respect to any individual, such
individual's spouse, parents, brothers, sisters, children (natural or adopted),
stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law,
sisters-in-law, nephews and nieces.
"Lease Coverage Ratio" shall mean the NOI divided by the Current Lease
Payment.
"Lease Year" shall mean each twelve month period commencing on May 1
during the Term, provided the first Lease Year shall include the period of time
from the Commencement Date through May 1, 2002.
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"Legal Requirements" shall mean all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Facility or the maintenance,
construction, alteration or operation thereof, whether now or hereafter enacted
or in existence, including, without limitation, (a) all permits, licenses,
certificates of need, authorizations and regulations necessary to operate such
Facility for its intended use (as provided in the applicable Property Lease),
(b) all covenants, agreements, restrictions and encumbrances contained in any
instruments including the Bond Documents and any other Facility Mortgages at any
time in force affecting such Facility, including those (i) which may require
material repairs, modifications or alterations in or to the Facility or (ii)
with respect to which a violation thereof would in any way materially and
adversely affect the use and enjoyment thereof, and (c) all requirements of any
Third Party Payor Programs.
"Master Lease" shall mean this Agreement including the Exhibits attached
hereto, as it and they may be amended from time to time as herein provided.
"Master Rent" shall mean, (i) for each month during the period beginning
August 1, 2002 and continuing through January 31, 2003, 1.0208% of Capstead
Equity, or (ii) for each month following January 31, 2003, one and one-quarter
percent (1.25%) of Capstead Equity, calculated on the basis of a 360 day year
and the actual number of days elapsed.
"NOI" shall mean Total Revenues less Operating Expenses for the prior
three (3) full calendar months annualized by multiplying the result by four (4).
"Notice" shall mean a notice given or received in accordance with
Paragraph 16.
"Officer's Certificate" shall mean a certificate signed by an officer of
Brookdale duly authorized by the board of managers of Brookdale.
"Operating Expenses" shall mean, in aggregate, for all of the Facilities
all expenses (determined on an accrual basis in accordance with GAAP), incurred
by any of the Brookdale Lessees or any Related Party of any of them in
connection with the operation of the Facilities or any use of the Facilities on
a pro forma basis for the period in question including a 5% management fee and
an annual capital reserve equal to $500 per residential unit, provided, however,
that Debt Service (as defined in any Property Lease) shall not be included as an
Operating Expense for purposes hereof.
"Option Price" shall have the meaning set forth in Paragraph 14.
"Overdue Rate" shall mean, on any date, a per annum rate of interest equal
to the lesser of fifteen percent (15%) and the maximum rate then permitted under
applicable law, calculated from the date any payment obligation is due (except
with respect to payments which are indeterminable prior to Notice from Capstead,
in which event the Overdue Rate shall be calculated from the tenth (10th) day
following the date such Notice was received).
"Parent" shall mean, with respect to any Person, any Person which owns
directly, or indirectly through one or more Subsidiaries or Affiliated Persons,
fifty percent (50%) or more of the voting or beneficial interest in such Person.
"Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
"Property Lease" shall have the meaning given such term in the recitals
hereto, as the same may be amended from time to time.
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"Related Party" shall mean, with respect to any Person, (i) in the case of
any such Person which is a partnership, any general partner in such partnership
or any limited partner holding, directly or indirectly, ten percent (10%) or
more of the partnership interests in such partnership; (ii) in the case of any
such Person which is a limited liability company, any member of such limited
liability company holding, directly or indirectly, ten percent (10%) or more of
the membership interests in such company; (iii) any other Person which is a
Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or
to one or more of the Persons referred to in the preceding clauses (i) and (ii);
(iv) any other Person who is an officer, director or trustee of, or partner
holding, directly or indirectly, ten percent (10%) or more of the partnership,
membership or stock interests in, such Person or any Person referred to in the
preceding clauses (i), (ii) and (iii); and (v) any other Person who is a member
of the Immediate Family of such Person or of any Person referred to in the
preceding clauses (i) through (iv).
"Renewal Terms" shall have the meaning given such term in Paragraph 3(b).
"Subsidiary" shall mean, with respect to any Person, any Entity in which
such Person owns directly, or indirectly through one or more Subsidiaries, fifty
percent (50%) or more of the voting or beneficial interest.
"TEB Pool" shall have the meaning given to such term in Paragraph 12(a).
"TEB Pool Enhancement Rent" shall mean an amount equal to the difference
between (i) five and one-half percent (5.50%) of the B Tranche Letter of Credit
amount, and (ii) the aggregate B Tranche Facility Fees payable by Brookdale or
the Brookdale Lessees pursuant to the applicable Property Leases. The TEB Pool
Enhancement Rent shall be payable monthly in arrears, and shall be so determined
using one-twelfth (1/12) of the annualized B Tranche Facility Fees above.
"Term" shall mean, collectively, the Initial Term and the Renewal Terms,
to the extent properly exercised pursuant to the provisions of Paragraph 3,
unless sooner terminated pursuant to the provisions of this Agreement.
"Third Party Payor Programs" shall mean all third party payor programs in
which any Brookdale Lessee presently or in the future may participate,
including, without limitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or
Blue Shield, Managed Care Plans, other private insurance programs and employee
assistance programs.
"Third Party Payors" shall mean Medicare, Medicaid, CHAMPUS, Blue Cross
and/or Blue Shield, private insurers and any other Person which presently or in
the future maintains Third Party Payor Programs.
"Total Revenues" shall mean, in aggregate for all of the Facilities, all
revenues (determined on an accrual basis in accordance with GAAP) received by
the Brookdale Lessees or any Affiliate of any of them (without duplication) from
the operation of the Facilities or any other use of the Facilities, or any
portion thereof, including, without limitation, all resident rents and revenues
received or receivable for the use of or otherwise by reason of all units, beds
and other facilities provided, meals served, services performed, space or
facilities subleased or goods sold on the Facilities, including, without
limitation, and except as provided below, any other arrangements with third
parties relating to the possession or use of the Facilities; provided, however,
that Total Revenues shall not include: (i) allowances according to GAAP for
uncollectible accounts, including credit accounts and charity care and other
administrative discounts (other than allowance for uncollectable accounts
related to Third Party Payor reimbursements properly submitted, which shall be
deducted in determining Total Revenues), (ii) revenue from professional fees or
charges by physicians and unaffiliated providers of services, when and to the
extent such charges are paid over to such physicians or unaffiliated providers
of services, or are separately billed and not
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included in comprehensive fees; (iii) non-operating revenues such as interest
income or income from the sale of assets not sold in the ordinary course of
business; (iv) revenues attributable to services actually provided off-site or
otherwise away from a Facility, such as home health care, to persons that are
not residents of a Facility; (v) security deposits of residents of a Facility;
(vi) proceeds of any insurance coverage other than Third Party Payor Programs
and rent loss or business interruption coverage; and (vii) any Award from any
Condemnation.
"Unsuitable for its Intended Use" shall mean a state or condition of the
Facility, such that (i) following any damage or destruction involving the
Facility, such Facility cannot reasonably be expected to be restored to
substantially the same condition as existed immediately before such damage or
destruction, within eighteen (18) months following such damage or destruction or
such other period of time as to which business interruption insurance is
available to cover Rent and other costs related to such Facility following such
damage or destruction; or (ii) as the result of a partial taking by
Condemnation, such Facility or Improvements, as the case may be, cannot be
operated, in the good faith judgment of the affected Capstead Lessor and
Brookdale Lessee, on a commercially practicable basis for its intended use (as
set forth in the applicable Property Lease) taking into account, among other
relevant factors, the number of usable units, the amount of square footage or
the revenues affected by such damage or destruction or partial taking.
"Wrongful Distribution" shall mean, in the event that Brookdale Rent
Payments are due and owing and have not been made as required hereunder, the
distribution of all or any portion of Total Revenues by Brookdale or any
Brookdale Lessee to the Parent of Brookdale or any Affiliate (other than
Brookdale) thereof that results in inadequate monies being available to make the
Brookdale Rent Payments required hereunder, to the extent of any such shortfall
on a cumulative basis (it being the intent of the parties that no such
distribution to Brookdale's Parent or any Related Party thereto (other than to
Brookdale, Capstead or Capstead's Affiliates) should be made unless all
Brookdale Rent Payments due hereunder are current).
2. LEASE.
Capstead hereby grants certain lease rights contained herein to Brookdale
and Brookdale hereby grants certain lease rights contained herein to Capstead,
all as more particularly set forth herein.
3. TERM.
(a) Term. The term of this Agreement shall be coterminous with the latest
to occur of the Property Lease termination dates (including renewals), it being
acknowledged that the initial term of the Property Leases expires at midnight
April 30, 2022, unless modified or earlier terminated pursuant to the terms of
this Agreement or such Property Leases ("Initial Term").
(b) Renewal Terms. Provided there is not an existing and continuing Event
of Default under this Agreement or any of the Property Leases, and the Brookdale
Lessees or their approved successors-in-interest shall continue to be lessees of
the Facilities, Brookdale or its approved successor-in-interest shall have the
option to renew or cause to renew all, but not less than all, of the Property
Leases for two (2) additional ten (10) year periods (the "Renewal Term(s)");
provided, however, that the second ten (10) year renewal option shall be
additionally conditioned upon Brookdale's having exercised the first ten (10)
year renewal option. In the event of such exercise, Capstead and Brookdale shall
cause and direct the Capstead Lessors and the Brookdale Lessees, respectively,
to enter into such agreements as may be necessary to effect such renewals on the
same terms and conditions as provided in the respective Property Leases (except
that the Term shall be extended accordingly). Each Renewal Term shall
automatically commence as of the end of the Initial Term or the initial Renewal
Term, as applicable, unless Brookdale gives Capstead written notice of
termination not less than two hundred seventy (270)
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days prior to the expiration of the Initial Term or the expiration of the
initial Renewal Term, as applicable. As used herein, the Initial Term and the
Renewal Term(s), if exercised, shall be referred to hereinafter collectively as
the "Term".
4. BROOKDALE RENT PAYMENTS.
(a) Brookdale Rent Payments. Brookdale shall pay to Capstead (or as
Capstead may direct), in lawful money of the United States of America which
shall be legal tender for the payment of public and private debts, without
offset, abatement, demand or deduction, the Master Rent, the TEB Pool
Enhancement Rent and any other payments required hereunder during the Term
(collectively, as the context may require, the "Brookdale Rent Payments"),
except as hereinafter expressly provided. All payments to Capstead shall be made
by wire transfer of immediately available federal funds or by other means
acceptable to Capstead in its sole discretion. Payments for any partial month
shall be prorated on a per diem basis based on a 360 day year and the actual
number of days elapsed.
(b) Master Rent. The Master Rent shall be paid in arrears on the first
(1st) day of each calendar month for the immediately preceding month. Master
Rent shall be adjusted on May 1 of each Lease Year by multiplying Master Rent
for the immediately preceding Lease Year by the Adjustment Factor.
(c) TEB Pool Enhancement Rent. The TEB Pool Enhancement Rent shall be paid
in arrears on the first (1st) day of each calendar month for the immediately
preceding month.
(d) Overdue Interest. If Brookdale fails to make any payment of Master
Rent or TEB Pool Enhancement Rent on or before the date such payment is due and
payable and such amount remains unpaid for a period of five (5) Business Days,
such past due payment shall bear interest at the Overdue Rate; provided,
however, that with respect to any other sums or amounts to be paid by Brookdale
hereunder, the Overdue Rate shall apply if such amounts remain unpaid for a
period of five (5) Business Days after Notice thereof from Capstead is received
by Brookdale (calculated from the date of such receipt). The amount of any
interest due under this Paragraph 4(d) shall not be diminished by Brookdale's
making a partial payment, except in such circumstances where Brookdale provides
evidence reasonably satisfactory to Capstead that the payment rendered was
intended as a full payment, and that the shortfall was due to a good faith
mistake.
(e) Payment without Abatement. No abatement, diminution or reduction of
any payments required hereunder shall be allowed to Brookdale or any person
claiming under Brookdale, under any circumstances or for any reason whatsoever,
except to the extent herein provided.
5. CAPITAL ADDITIONS.
(a) Capital Additions Financed by Capstead. If Capstead shall, at the
request of Brookdale or any Brookdale Lessee and in Capstead's sole discretion
(except as provided in Paragraph 5(c)), elect to finance any proposed Capital
Addition, Brookdale shall provide Capstead with such information as Capstead may
from time to time request, including, without limitation, the following:
(i) Evidence that such Capital Addition will be, and upon
completion, has been, completed in compliance with all Legal Requirements;
(ii) Copies of all building, zoning and land use permits and
approvals and upon completion of such Capital Addition, a copy of the
certificate of occupancy for such Capital Addition, if required;
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(iii) Such information, certificates, licenses, permits or other
documents necessary to confirm that the applicable Brookdale Lessee will be able
to use the Capital Addition upon completion thereof in accordance with the
Facility's intended use as an assisted living, independent living or skilled
nursing facility, as applicable, including all Legal Requirements;
(iv) An Officer's Certificate and a certificate from Brookdale's or
the applicable Brookdale Lessee's architect, if available, setting forth, in
reasonable detail, the projected (or actual, if available) Capital Additions
Cost and invoices and lien waivers from the applicable Brookdale Lessee's
contractors for such work;
(v) A deed conveying to the applicable Capstead Lessor title to any
land acquired for the purpose of constructing the Capital Addition free and
clear of any liens or encumbrances, except those approved by Capstead, and, upon
completion of the Capital Addition, a final as-built survey thereof reasonably
satisfactory to Capstead;
(vi) Endorsements to any outstanding policy of title insurance
covering the applicable Facility or commitments therefor, reasonably
satisfactory in form and substance to Capstead, (A) adding any land acquired for
purposes of constructing the Capital Addition, (B) updating the same without any
additional exceptions except as reasonably approved by Capstead, and (C)
increasing the coverage thereof by an amount equal to the Capital Additions
Cost;
(vii) Copies of plans and specifications relating to such Capital
Addition and other instruments reasonably required by Capstead; and
(viii) An Officer's Certificate setting forth the Lease Coverage
Ratio following the making of the advance requested pursuant to this Paragraph
5(a).
(b) Non-Capital Additions. Nothing herein shall limit the right of any
Brookdale Lessee to make additions, modifications or improvements to the
Facilities which are not Capital Additions ("Non-Capital Additions") as provided
in any applicable Property Lease.
(c) Capital Addition Advances. Subject to Brookdale's making the first
Three Million Dollars ($3,000,000) of Capital Additions and providing evidence
satisfactory to Capstead thereof, and otherwise satisfying the conditions of
this Paragraph 5, Capstead agrees, at any time during the first three (3) Lease
Years, to advance to Brookdale, from time to time, as hereinafter provided, the
aggregate amount of up to Three Million Dollars ($3,000,000) for the purpose of
making Capital Additions to the Facilities, as generally described on Schedule I
attached hereto. The obligation of Capstead to make each advance pursuant to
this Paragraph 5(c) shall be subject to the satisfaction of the following
additional conditions:
(i) such Capital Additions shall have been generally described in
the capital budget submitted pursuant to Subparagraph 9(a)(v);
(ii) at the time of each disbursement no Event of Default shall have
occurred and be continuing;
(iii) all such advances (other than the final advance) shall be in
the amount of at least Two Hundred Fifty Thousand Dollars ($250,000);
(iv) at least ten (10) days before the date on which Brookdale
desires a disbursement to be made hereunder, Brookdale shall submit to Capstead
a written requisition and the substantiation therefor which shall include bills
and invoices with respect to the work for which reimbursement is
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sought, together with such other information with respect thereto as Capstead
may reasonably require, including, without limitation, the items identified in
Paragraph 5(a), if applicable;
(v) at least ten (10) days before the date on which Brookdale
desires a disbursement be made hereunder, Brookdale shall deliver an Officer's
Certificate stating that the Lease Coverage Ratio for all of the Facilities, in
aggregate, will be equal to at least 1.25;
(vi) Capstead's review and approval of the foregoing items, which
approval shall not be unreasonably withheld or delayed.
All such advances made pursuant to Paragraph 5(a) in respect of Capital
Additions made to the Facility, if approved by Capstead, and this Paragraph 5(c)
shall be added to Capstead Equity and the Master Rent shall be adjusted
accordingly.
6. ASSIGNMENT, SUBLETTING AND MATERIAL CONTRACTS.
(a) Transfers Prohibited Without Consent. Brookdale shall not, without the
prior written consent of Capstead, which consent shall not be unreasonably
withheld or delayed, in each instance, sell, assign or otherwise transfer its
ownership interest in the Brookdale Lessees, in whole or in part, or any rights
or interest which Brookdale may have under this Agreement. For purposes of this
Paragraph 6(a), Capstead's consent shall be deemed reasonably withheld if, in
Capstead's sole discretion reasonably exercised, the creditworthiness or
industry experience of any proposed transferee or its affiliates is not
comparable to that of Brookdale and its Affiliates. When given, the consent of
Capstead to any such transfer shall in no event be construed to relieve
Brookdale or such transferee from the obligation of obtaining the express
consent in writing of Capstead to any further transfer. Any assignment or
transfer in violation of this Paragraph 6(a) shall be voidable at Capstead's
option.
(b) Pledge Requirement. Brookdale acknowledges that, at the time of the
TEB Pool Refunding, Brookdale or any transferee, as the case may be, shall be
required to cause a pledge of the ownership interests in Brookdale or such
transferee, as applicable, to Capstead to secure its obligations under this
Agreement (the "Brookdale Pledge").
(c) Material Contracts. Prior to entering into any contract or modifying
any existing contract that materially changes the scope of services provided to
the residents of any Facility or that would otherwise require adjustment to the
Base Revenue calculation or that engages any Brookdale Related Party, Brookdale
shall obtain Capstead's consent, which consent shall not be unreasonably
withheld or delayed
7. DEFAULT; REMEDIES.
(a) Default. Upon the occurrence of any one or more of the following
events ("Event of Default"), Brookdale shall have the affirmative obligation to
notify Capstead as soon as it knows of any Event of Default, and Capstead shall
have the right to exercise any rights or remedies available in this Agreement,
at law or in equity. Events of Default shall be:
(i) Any default by any of the Brookdale Lessees under the terms of
their respective Property Leases with the Capstead Lessors, and the continuation
of such default beyond the applicable cure period therefor (as used herein,
"continuation" or "continuing", as the context may require);
(ii) Brookdale's failure to pay when due hereunder any of the
Brookdale Rent Payments (whether due to a Wrongful Distribution or otherwise)
and such failure is not cured within five (5) Business Days;
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(iii) Brookdale's failure to perform any other of the terms,
covenants or conditions contained in this Agreement if not remedied within
thirty (30) days after receipt of Notice thereof, or, if such default cannot
reasonably be remedied within such period, Brookdale does not within thirty (30)
days after Notice thereof commence such act or acts as shall be necessary to
remedy the default and shall not thereafter diligently complete such act or acts
within a reasonable time, provided, however, in no event shall such cure period
extend beyond one hundred eighty (180) days after Notice thereof;
(iv) if Brookdale becomes bankrupt or insolvent, or files any debtor
proceedings, or files pursuant to any statute a petition in bankruptcy or
insolvency or for reorganization, or files a petition for the appointment of a
receiver or trustee for all or substantially all of its assets, and such
petition or appointment shall not have been set aside within ninety (90) days
from the date of such petition or appointment, or if any of the foregoing are
filed against Brookdale, or if Brookdale makes an assignment for the benefit of
creditors or shall admit in writing its inability to pay its debts generally as
they become due, or if Brookdale's interest in all or portion of the Total
Revenues is attached, seized or made subject to any other judicial seizure and
such seizure or attachment is not discharged within ninety (90) days;
(v) if Brookdale is liquidated or dissolved, or begins proceedings
toward such liquidation or dissolution, or, in any manner, permits the sale or
divestiture of substantially all of its assets;
(vi) other than required by Paragraph 6(a) if a Change of Control
occurs with regard to Brookdale or the ownership interest of Brookdale in the
Brookdale Lessees is voluntarily or involuntarily transferred, assigned,
conveyed, levied upon or attached in violation of the terms of this Agreement,
unless Brookdale is contesting such lien or attachment in good faith in
accordance with Paragraph 11 ("Permitted Contests") hereof;
(vii) if any Person (other than any Person who as of the date
hereof, directly or indirectly has an ownership interest in Brookdale) acquires
more than 9.8% of the outstanding ownership interests in Brookdale, which, in
Capstead's sole determination, would adversely affect the status of Capstead or
its Parent as a real estate investment trust under the applicable provisions of
the Code; or
(viii) at any time following the TEB Pool Refunding, the Facilities
fail to maintain a Lease Coverage Ratio for any Lease Year of at least 1.10x on
an aggregate basis.
(b) Remedies. If any of the Events of Default hereinabove specified shall
occur and be continuing, Capstead shall have and may exercise any one or more of
the following rights and remedies, exclusive of any remedies that may be
available to any of the Capstead Lessors if such Event of Default is also an
event of default under the applicable Property Lease:
(i) Capstead may recover immediately from Brookdale any and all
Brookdale Rent Payments and other sums and damages due or in existence at the
time of such termination, including, without limitation, all Master Rents, TEB
Pool Enhancement Rents and other sums, charges, payments, costs and expenses
agreed and/or required to be paid by Brookdale to Capstead hereunder with
interest thereon at the Overdue Rate provided herein;
(ii) Capstead may terminate any Facility Management Agreement with
Brookdale Management II , Brookdale Management Akron or Brookdale Management
Texas;
(iii) Capstead may, by written notice thereof to Brookdale,
terminate Brookdale's option to renew the Property Leases for any or all of the
Renewal Terms;
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(iv) Capstead may, without causing any of the Capstead Lessors to
re-enter, retake or resume possession of the Facility, ▇▇▇ for all Brookdale
Rent Payments and all other sums, charges, payments, costs and expenses due from
Brookdale to Capstead hereunder either: (A) as they become due under this
Agreement, taking into account that Brookdale's right and option to pay the
Brookdale Rent Payments hereunder on a monthly basis in any particular Lease
Year is conditioned upon the absence of an Event of Default under this
Agreement; or (B) at Capstead's option, accelerate the maturity and due date of
the whole or any part of the Brookdale Rent Payments for the entire
then-remaining unexpired balance of the Initial Term or the applicable Renewal
Term, as the case may be (reduced to its present value, applying an interest
rate of seven percent (7%)), less the fair rental value of the Facilities
reduced to its present value, as well as all other sums, charges, payments,
costs and expenses required to be paid by Brookdale to Capstead hereunder,
including, without limitation, damages for breach or default of Brookdale's
obligations hereunder in existence at the time of such acceleration, such that
all sums due and payable under this Agreement shall, following such
acceleration, be treated as being and, in fact, be due and payable in advance as
of the date of such acceleration. Capstead may then proceed to recover and
collect all such unpaid Brookdale Rent Payments and other sums so sued for from
Brookdale by distress, levy, execution or otherwise.
(v) Capstead may pursue its remedies under the Brookdale Pledge
pursuant to which the equity interests of Brookdale or its transferee are
pledged as provided in Paragraph 6.
In addition to the remedies hereinabove specified and enumerated, Capstead
shall have and may exercise such other rights and remedies as are available at
law or in equity, and the mention in this Agreement of any particular remedy
shall not preclude Capstead from having or exercising any other remedy at law or
in equity. Nothing herein contained shall be construed as precluding Capstead
from having or exercising such lawful remedies as may be and become necessary in
order to preserve its rights hereunder, even before the expiration of any notice
periods provided for in this Agreement, if under the particular circumstances
then existing the allowance of such notice periods will prejudice or will
endanger the rights of Capstead in this Agreement and in its ownership interest
the Facility.
8. CONDEMNATION.
(a) Complete Taking. If (i) the whole of the any Facility shall be taken
by Condemnation or (ii) a Condemnation of less than the whole of any Facility
renders such Facility Unsuitable for its intended use as provided in the
applicable Property Lease, then, subject to the provisions of any Property Lease
and related Facility Mortgage, this Agreement shall be deemed modified so as to
exclude such Facility as of the date that title shall be taken, and all
Brookdale Rent Payments due hereunder shall be adjusted accordingly. The amount
of any Award received by the related Capstead Lessor as compensation for any
Condemnation shall, to the extent such Award is greater than the outstanding
balance of the applicable Facility Mortgage, be applied to reduce Capstead
Equity.
(b) Partial Taking. If any part of a Facility shall be taken by
Condemnation, such that the Facility may still be used for its intended use as
provided in the applicable Property Lease, this Agreement shall, subject to the
provisions of the applicable Property Lease and any Facility Mortgage, not
terminate or be terminated and the Master Rent to be paid by Brookdale after
such Condemnation shall be adjusted by reducing Capstead Equity by the amount of
the Award received and retained by the related Capstead Lessor.
(c) Notices. Each of Capstead and Brookdale further covenants and agrees
to give the other immediate notice of the actual or threatened commencement of
any Condemnation proceedings and to deliver to the other copies of any and all
papers served in connection with any such proceedings.
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9. FINANCIAL AND OTHER STATEMENTS. Brookdale shall furnish the following
statements to Capstead during the Term:
(a) Financial Statements.
(i) within twenty (20) days after each of the first three quarters
of any Lease Year, the most recent unaudited financial statements of Brookdale,
in each case accompanied by the Financial Officer's Certificate;
(ii) within twenty (20) days after the end of each Lease Year, the
most recent financial statements of Brookdale, in each case accompanied by a
Financial Officer's Certificate;
(iii) within fifteen (15) days after the end of each calendar month,
an unaudited statement of income, including occupancy percentages and payor mix
for the Facilities on an aggregate basis, accompanied by a Financial Officer's
Certificate;
(iv) promptly, upon Notice from Capstead, such other information
concerning the business, financial condition and affairs of Brookdale and any
Brookdale Lessees as Capstead may reasonably request from time to time;
(v) thirty (30) days prior to the first day of each Lease Year for
the first three (3) Lease Years, a capital budget for such Lease Year describing
in reasonable detail all anticipated Capital Additions to be made each Facility,
together with a description of the source of funds therefor;
(vi) within twenty (20) days following the end of the applicable
Lease Year, Brookdale shall deliver to Capstead, an Officer's Certificate
setting forth the Total Revenues for such preceding Lease Year; and
(vii) other financial statements required to be delivered in
connection with any ▇▇▇▇▇▇ ▇▇▇ credit enhancement for any Facility as
applicable.
(b) Proprietary Information. Any proprietary information obtained by the
parties hereunder pursuant to the provisions of this Agreement shall be treated
as confidential, except that such information may be used, subject to the
appropriate confidentiality safeguards, in any litigation between the parties or
in connection with other Legal Requirements or as otherwise required by
securities or other laws. The obligations of Brookdale and Capstead contained in
this Paragraph 9(a) shall survive the expiration or earlier termination of this
Agreement; and
(c) Record Keeping. Brookdale shall utilize, or cause the Brookdale
Lessees to utilize, an accounting system for the Facilities in accordance with
its usual and customary practices and in accordance with GAAP, which will
accurately record all Total Revenues, and Brookdale or the Brookdale Lessees
shall retain, for at least five (5) years after the expiration of each Lease
Year, the accounting books and records supporting the determination of Total
Revenues for such Lease Year. Capstead, at its own expense except as provided
herein below, shall have the right from time to time by its accountants or
representatives to audit the information set forth in the Officer's Certificate
and, in connection with such audits, to examine Brookdale or any Brookdale
Lessee's books and records (upon reasonable notice during customary business
hours) with respect thereto (including supporting data and sales and excise tax
returns) subject to any prohibitions or limitations on disclosure of any such
data under applicable law or regulations, including such limitations as may be
necessary to preserve the confidentiality of the facility-patient relationship
and the physician-patient privilege and/or other similar privilege or
confidentiality obligations. If any such audit discloses that the Total Revenues
actually received by Brookdale or the Brookdale Lessees for any Lease Year
exceed those reported by Brookdale or the
14
Brookdale Lessees by more than five percent (5%), Brookdale shall pay the
reasonable cost of such audit and examination.
(d) Brookdale Rent Statements. Together with each payment of the Master
Rent and TEB Pool Enhancement Rent, Brookdale shall deliver an Officer's
Certificate setting forth the computations of each component of Master Rent and
TEB Pool Enhancement Rent due for the applicable period.
10. ADDITIONAL COVENANTS OF BROOKDALE. Brookdale shall not create, incur, assume
or guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any indebtedness, other than debts incurred in the ordinary
course of business (but in no event greater than $250,000), without Capstead's
prior written consent, which consent shall not be unreasonably withheld or
delayed.
11. LIMITATION ON LIABILITY. If Brookdale is awarded a money judgment against
Capstead, then Brookdale's sole recourse for satisfaction of such judgment shall
be limited to execution against Capstead's ownership interest in the Capstead
Lessors. In no event shall any trustee, stockholder, shareholder, member,
manager, partner, employee, officer or beneficiary of Capstead be personally
liable for the obligations of Capstead or any Capstead Lessor hereunder. Except
to the extent provided in the terms of any Parent guaranty or indemnity, in no
event shall any trustee, shareholder, member, guarantor, partner, employee,
officer or beneficiary of Brookdale be personally liable for any of the
obligations of Brookdale hereunder.
12. FACILITY MORTGAGES.
(a) Existing Tax-Exempt Bonds. Certain of the Facilities described on
Exhibit A attached hereto and made a part hereof are encumbered by mortgages
securing tax-exempt bonds (the "TEB Pool"). Brookdale and the applicable
Brookdale Lessees for such Facilities shall use commercially reasonable efforts
to arrange for a refunding of the TEB Pool on terms and conditions reasonably
acceptable to Capstead and the Capstead Lessors (the "TEB Pool Refunding") as
soon as practicable after six (6) months following the Commencement Date and
prior to the end of the second (2nd) Lease Year. Prior to the TEB Pool
Refunding, Capstead shall provide all required collateral to the holders of the
TEB Pool as may be required by the holders thereof. Any such collateral
deposited or paid by Capstead shall be included in Capstead Equity. Upon the TEB
Pool Refunding, such collateral shall be returned to Capstead in reduction of
Capstead Equity and the Master Rent shall be adjusted accordingly. Brookdale
hereby agrees to indemnify Capstead for any loss, cost, liability or expense
incurred in connection with any examination by the Internal Revenue Service
("IRS") of the underlying TEB Pool Bonds and related documentation associated
with the tax-exempt status of the TEB Pool Bonds, as well as for any loss, cost,
liability or expense (including penalties and interest) resulting, directly or
indirectly, from a conclusive IRS determination that the TEB Pool Bonds are
taxable. Any such loss, cost, liability or expense not paid directly or
reimbursed by Brookdale or otherwise incurred by Capstead shall be added to
Capstead Equity, and Master Rent shall be adjusted accordingly as of the date of
such payment. Brookdale shall have the right at its sole cost and expense to
contest the validity of any such IRS determination by appropriate legal
proceedings, conducted in good faith and with due diligence, subject generally
to the assurances required to be provided by Tenant to Landlord pursuant to the
"Permitted Contests" section of the applicable Property Lease.
15
(b) "B Tranche" Bonds. Provided there is no existing and continuing Event
of Default, Capstead shall provide credit enhancement for the marketing of
so-called "B Tranche" bonds in connection with the TEB Pool Refunding in an
amount equal to the lesser of (i) the positive difference between (A) Seventy
Two Million Dollars ($72,000,000) and (B) the amount of FNMA credit enhanced or
so-called "A Tranche" Bonds issued or (ii) Twelve Million Dollars ($12,000,000).
Such B Tranche credit enhancement shall be effected by Capstead or one of its
Affiliates acting as obligor with respect to the B Tranche Letter of Credit. If
the aggregate proceeds of TEB Pool Refunding are not sufficient to refund the
existing TEB Pool, Capstead shall pay such additional sums necessary to refund
the existing TEB Pool and the amount thereof shall be added to Capstead Equity
and the Master Rent due under this Agreement shall be adjusted accordingly.
(c) Additional Financing. At any time during the first three (3) Lease
Years, provided (i) there is no existing and continuing Event of Default, and
(ii) the Lease Coverage Ratio is at least 1.25, Brookdale shall have the right
to arrange for a Facility Mortgage to be placed on the Windsong Facility. Such
financing shall be on terms and conditions reasonably acceptable to Capstead.
The proceeds of any such financing shall be paid to Capstead in reduction of
Capstead Equity and the Master Rent shall be adjusted accordingly as of the date
of any such financing.
(d) Capstead's Cooperation. In connection with the TEB Pool Refunding or
any effort to maintain the amount and tax-exempt status of the Bonds, or any
additional financing described in Paragraph 12(c), Capstead and the Capstead
Lessors shall cooperate with Brookdale and the Brookdale Lessees in connection
therewith, including, without limitation, (i) executing loan commitments, (ii)
delivering financial statements and information and (iii) executing loan and
other documents, including mortgages and/or deeds of trust encumbering the
applicable Facilities; provided the terms thereof shall be commercially
reasonable and not, in Capstead's sole discretion, unduly restrict Capstead's
ability to conduct its business consistent with past practices or pursuant to
stated objectives; and, provided further, that such terms be non-recourse to
Capstead, the Capstead Lessors and their Affiliates (other than normal and
customary non-recourse guaranties). All costs and expenses of the TEB Pool
Refunding and any such additional financing including, without limitation, loan
commitment fees, letter of credit fees, reasonable attorneys' fees and expenses
(of lender, Brookdale and Capstead), rating agency fees, title insurance
premiums, survey costs and mortgage or documentary taxes or stamps, shall be
paid by Capstead, subject to reimbursement from the proceeds of the TEB Pool
Refunding or such additional financing, as the case may be, and Capstead Equity
shall be adjusted accordingly.
(e) Payments at Final Maturity; Refinancing of Facility Mortgages. Upon
the final maturity of any Facility Mortgage resulting in a Balloon Payment of
principal, Capstead shall be obligated to pay the amount necessary to retire
such indebtedness, and Debt Service shall be adjusted in accordance with the
provisions of the applicable Property Lease. Provided no Event of Default has
occurred and is continuing, the mutual consent of Capstead and Brookdale shall
be required to refinance any Facility Mortgage at any time other than final
maturity or the three (3) month period prior thereto. In the event that
Capstead, with the consent of Brookdale, grants a new Facility Mortgage in
connection with a refinancing thereof (other than a payment at final maturity),
the Base Rent under the applicable Property Lease shall be adjusted on the basis
of the principal amount of the refinanced Facility Mortgage on its maturity
date, a twenty-five (25) year amortization period commencing on the maturity
date of the refinanced Facility Mortgage (so long as quotations therefor are
commercially available, and, if not, the longest amortization period under 25
years that is commercially available shall be used) and the stated interest rate
on the new Facility Mortgage; provided, that, if the principal amount of the new
Facility Mortgage exceeds the principal amount of the Facility Mortgage being
retired, then Capstead and Brookdale shall jointly obtain a quote from a
reputable mortgage lender in the business of making first mortgage loans on
similar facilities in the area of the Facility being refinanced for a first
mortgage loan in a principal amount equal to the principal amount of the old
Facility Mortgage on the maturity date, and the interest rate used in adjusting
Base Rent under the applicable Property Lease shall be the lesser of the
16
actual interest rate under the new Facility Mortgage or the quoted interest rate
for the loan at a lesser principal amount. All proceeds from any refinancing of
a Facility Mortgage pursuant to this Paragraph 12 shall belong to Capstead and
an adjustment shall be made to the Master Rent and Capstead Equity on account
thereof. In the event Capstead pays the principal amount of the Facility
Mortgage with its own funds (other than a payment at Final Maturity), then
either (i) the Master Rent shall be adjusted by adding such amount to Capstead's
Equity or (ii) the Base Rent under the applicable Property Lease shall be
adjusted by assuming a Debt Service (as defined in the applicable Property
Lease) based on the repaid principal balance of the Facility Mortgage, a
twenty-five (25) year amortization (so long as quotations therefor are
commercially available, and, if not, the longest amortization period under 25
years that is commercially available shall be used) and an interest rate based
on a quote from a reputable mortgage lender in the manner provided above,
whichever is less. If, at any time, the Base Rent payable under a Property Lease
is less than Debt Service (as defined in such Property Lease) on account of the
adjustments to be made as provided above, Capstead and Brookdale shall cause the
applicable Capstead Lessor and Brookdale Lessee, respectively, to enter into an
amendment to such Property Lease reflecting a Base Rent as herein determined.
13. REPRESENTATIONS AND WARRANTIES.
(a) Representations of Brookdale. To induce Capstead to enter into this
Agreement, Brookdale represents and warrants to Capstead as follows:
(i) Status and Authority of Brookdale. Brookdale is a limited
liability company duly organized, validly existing and in corporate good
standing under the laws of the State of Delaware. Brookdale has all requisite
power and authority to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. Brookdale has
duly qualified to transact business in each jurisdiction in which the nature of
the business conducted by it requires such qualification.
(ii) Action of Brookdale. Brookdale has taken all necessary action
to authorize the execution, delivery and performance of this Agreement, and this
Agreement constitutes the valid and binding obligation and agreement of
Brookdale, enforceable against Brookdale in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors.
(iii) No Violations of Agreements. Neither the execution, delivery
or performance of this Agreement by Brookdale, nor compliance with the terms and
provisions hereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in any
breach of the terms, conditions or provisions of, or conflict with or constitute
a default under, or result in the creation of any lien, charge or encumbrance
upon any Facility or any property or asset of Brookdale pursuant to the terms of
any indenture, mortgage, deed of trust, note, evidence of indebtedness or any
other material agreement or instrument by which Brookdale is bound.
(iv) Litigation. Brookdale has received no written notice and, to
Brookdale's knowledge, no action or proceeding is pending or threatened which
questions the validity of this Agreement.
(b) Representations of Capstead To induce Brookdale to enter into this
Agreement, Capstead represents and warrants to Brookdale as follows:
(i) Status and Authority of Capstead. Capstead is a duly organized,
validly existing limited liability company and in good standing under the laws
of the State of Delaware, and has all requisite power and authority under the
laws of such state to enter into and perform its obligations under
17
this Agreement and to consummate the transactions contemplated hereby. Capstead
has duly qualified and is in good standing in each jurisdiction in which the
nature of the business conducted by it required such qualification.
(ii) Action of Capstead. Capstead has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and upon
the execution and delivery of this Agreement by Capstead constitutes the valid
and binding obligation and agreement of Capstead, enforceable against Capstead
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors.
(iii) No Violations of Agreements. Neither the execution, delivery
or performance of this Agreement by Capstead, nor compliance with the terms and
provisions hereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in any
creation of any lien, charge or encumbrance upon any Facility or any of the
property or asset of Capstead pursuant to the terms of any indenture, mortgage,
deed of trust, note, evidence of indebtedness or any other material agreement or
instrument by which Capstead is bound
(iv) Litigation. No investigation, action or proceeding is pending
and, to Capstead's knowledge, no action or proceeding is pending or threatened
which questions the validity of this Agreement or any action taken or to be
taken pursuant hereto.
14. PURCHASE OPTION.
(a) Purchase Option. Subject to (i) the rights of any Facility Mortgagee
to consent to or otherwise approve any such purchase and (ii) there not being an
Event of Default that has occurred and is continuing hereunder, at any time
after the end of the fifth (5th) Lease Year, Brookdale shall have the option,
exercisable by giving Capstead an irrevocable written Notice (the "Purchase
Notice") of Brookdale's election to exercise such option, to purchase all, and
not less than all, of the Facilities or the ownership interest of Capstead
("Capstead Ownership Interest") on the date specified in such Purchase Notice at
a price equal to the greater of (A) the Fair Market Value Purchase Price or (B)
Capstead's Minimum Amount (the "Option Price"). Brookdale shall deliver the
Purchase Notice to Capstead not less than one hundred twenty (120) days prior to
date specified as the Closing Date in the Purchase Notice. If Brookdale
exercises its option to purchase the Facilities or Capstead Ownership Interest
pursuant to this Paragraph 14(a) (the "Purchase Option"), Capstead shall
transfer to Brookdale or its designee all of the Capstead Lessors' right, title
and interest in and to the Facilities or the Capstead Ownership Interest on the
date specified in the Purchase Notice upon receipt of the Option Price in
accordance with Paragraph 14(b). Except for the conditions precedent to the
exercise of the Purchase Option set forth in this Paragraph 14, the provisions
hereof shall not be construed as limiting Brookdale's right to retain the
Purchase Option in connection with the transfer of its interest hereunder or
under the Property Leases pursuant to Paragraph 6.
(b) Provisions Relating to the Exercise of Purchase Option as to
Facilities. In connection with Brookdale's exercise of its Purchase Option to
purchase the Facilities, upon the tender by Brookdale of the Option Price:
(i) The Capstead Lessors shall execute and deliver to Brookdale (or
to the Brookdale's designee) at Brookdale's cost and expense a special warranty
deed with respect to the Facilities, a ▇▇▇▇ of sale with respect to any Personal
Property (as defined in the Property Leases) and an assignment of the Capstead
Lessors' entire interest in the Facilities, in each case in recordable form in
the relevant jurisdiction, but with no representation or warranty of any kind by
any Capstead Lessor except as to the absence of any Liens attributable to any
Capstead Lessor;
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(ii) The Facilities shall be conveyed to Brookdale, the Brookdale
Lessees or their nominees "AS IS" and in their then present physical condition;
(iii) Capstead and the Capstead Lessors shall execute and deliver to
Brookdale and the Brookdale Lessees or their nominees and Brookdale's title
insurance company an affidavit as to the absence of liens attributable to the
Capstead Lessors;
(iv) Capstead shall execute such other documents reasonably
requested by Brookdale, the Brookdale Lessees or their nominees or otherwise
required under local law, to effect a transfer of the Facilities and title
thereto; and
(v) Should Brookdale assume any Facility Mortgage in connection with
the purchase of the Facilities, Brookdale shall receive a credit against the
Option Price in an amount equal to (a) the outstanding principal balance of the
Facility Mortgage less (b) any principal reserve or sinking fund held by the
Facility Mortgagee for application to future principal payments under such
Facility Mortgage and Capstead or the applicable Capstead Lessor(s) shall assign
all rights and interests in and to any such principal reserve or sinking fund.
In the event Brookdale does not assume any Facility Mortgage, all remaining
reserves, escrows or sinking funds held by the applicable Facility Mortgagee
shall be Capstead's or the applicable Capstead Lessor's.
(vi) No other prorations or adjustments shall be made and all costs
and expenses incurred in connection therewith shall be borne by Brookdale,
provided that Capstead shall assign or cause to be assigned without adjustment
to the Option Price any real estate tax, insurance or capital expenditures
impounds, escrows or reserves held by Capstead, any Capstead Lessors or Facility
Mortgagee.
(c) Provisions Relating to the Exercise of Purchase Option as to Capstead
Ownership Interest. In connection with Brookdale's exercise of its Purchase
Option to purchase the Capstead Ownership Interest, upon the tender by Brookdale
of the Option Price:
(i) The parties authorized to transfer the Capstead Ownership
Interest shall execute and deliver or cause to be executed and delivered at
Brookdale's cost and expense such instruments as may be necessary to affect the
transfer the Capstead Ownership Interest, but with no representations and
warranties of any kind by Capstead except as to known liabilities or the absence
of liens attributable to any Capstead Lessor; and
(ii) Capstead shall otherwise execute and deliver at Brookdale's
expense, such documents reasonably requested by Brookdale, the Brookdale Lessees
or their nominees to facilitate the transfer of the Capstead Ownership Interest.
(d) Appraisal Procedure. In the event that it becomes necessary to
determine the Fair Market Value or Fair Market Added Value of any Facility for
any purpose of this Agreement and the parties cannot agree thereon, such Fair
Market Value shall be determined upon the written demand of either party in
accordance with the following procedure.
The party requesting an appraisal, by Notice given within thirty (30) days
after the date of the event that requires or permits such procedure, shall
propose and unilaterally approve an appraiser licensed to perform MAI appraisals
and experienced in the valuation of assisted living, independent living or
skilled nursing facilities (a "Qualified Appraiser"). The other party, by Notice
given within fifteen (15) days after receipt of such Notice appointing the first
Qualified Appraiser, may appoint a second Qualified Appraiser. If the other
party fails to appoint the second Qualified Appraiser within
19
such fifteen (15) day period, such party shall have waived its right to appoint
a Qualified Appraiser, and the first Qualified Appraiser shall make the sole
determination of the Fair Market Value.
The selected Qualified Appraiser or Appraisers shall thereupon determine
the Fair Market Value. Each such Qualified Appraiser shall, within thirty (30)
days following his appointment, submit his appraisal of fair market value to
each of Capstead and Brookdale in writing, and if the fair market values set
forth in such appraisals vary by five percent (5%) or less of the greater value,
the Fair Market Value shall be determined by calculating the average of the two
fair market values determined by the two appraisers.
If the fair market values set forth in the two appraisals vary by more
than five percent (5%) of the greater of the two values, the two Qualified
Appraisers shall select a third Qualified Appraiser within an additional fifteen
(15) days following the submittal of the last appraisal. If the two appraisers
are unable to agree upon the appointment of a third appraiser within such
fifteen (15) day period, either party may, upon written notice to the other,
request that such appointment be made by the then President (or equivalent
officer) of the Chapter of the American Institute of Real Estate Appraisers in
the Facility State , or his or her designee or, if there is no such organization
or if such individual declines to make such appointment, by any state or Federal
court of competent jurisdiction for the Facility State.
Within twenty (20) days following his selection, the third appraiser shall
review the two (2) appraisals and select the appraisal that he determines most
clearly reflects the fair market value. The selected fair market value shall
then be the Fair Market Value.
In connection with the appraisal process, Brookdale shall provide the
appraisers full access during normal business hours to examine the Facilities,
the books, records and files of Brookdale and the Brookdale Lessees and all
agreements, leases and other operating agreements relating to the Facilities.
The costs of each party's appraisal shall be borne by the selecting party and
the cost of the third appraisal shall be shared equally. Upon determining such
value, the appraisers shall promptly notify Capstead and Brookdale in writing of
such determination. The determination of the Qualified Appraisers made in
accordance with the foregoing provisions shall be final and binding upon the
parties, such determination may be entered as an award in arbitration in a court
of competent jurisdiction, and judgment thereon may be entered.
15. NOTICES. All notices, approvals, requests, consents and other communications
("Notices") given pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given (i) when actually received if either (A) hand
delivered or (B) sent by facsimile transmission; (ii) two (2) days after the
same was deposited in a regularly maintained receptacle for the deposit of
United States mail, sent by registered or certified mail, postage and charges
prepaid; or (iii) the next Business Day if sent via a national overnight
delivery service, addressed as follows or at such other address as either party
may specify from time to time by Notice to the other party at least five (5)
days prior Notice of the changed address:
If to Brookdale: BLC Properties I, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
20
with a copy to: Brookdale Living Communities, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, MacKay & ▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Capstead: CMCP Properties, Inc.
c/o Capstead Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
16. NO WAIVER. No course of dealing between Capstead and Brookdale, or any delay
or omission of Capstead or Brookdale to insist upon a strict performance of any
term or condition of this Agreement shall be deemed a waiver of any right or
remedy that such party may have, and shall not be deemed a waiver of any
subsequent breach of such term or condition.
17. INVALIDITY. If any provision of this Agreement shall be declared invalid or
unenforceable, the remainder of this Agreement shall continue in full force and
effect.
18. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, which taken together shall be deemed one (1) original.
19. CUMULATIVE. All rights and remedies of Capstead and Brookdale herein shall
be cumulative and none shall be exclusive of any other or of any rights and
remedies allowed by law.
20. GOVERNING LAW Except as to matters regarding the internal affairs of
Capstead and issues of or limitations on any personal liability of the members
or mangers of Capstead for obligations of Capstead, as to which the laws of the
State of Delaware shall govern, this Agreement shall be interpreted, construed,
applied and enforced in accordance with the laws of the State of Texas
applicable to contracts between residents of Texas which are to be performed
entirely within Texas, regardless of (i) where this Agreement is executed or
delivered; or (ii) where any payment or other performance required by this
Agreement is made or required to be made; or (iii) where any breach of any
provision of this Agreement
21
occurs, or any cause of action otherwise accrues; or (iv) where any action or
other proceeding is instituted or pending; or (v) the nationality, citizenship,
domicile, principle place of business, or jurisdiction of organization or
domestication of any party; or (vi) whether the laws of the forum jurisdiction
otherwise would apply to the laws of a jurisdiction other than the State of
Texas; or (vii) any combination of the foregoing. Notwithstanding the foregoing,
the laws of the Facility State shall apply to the perfection and priority of
liens upon and the disposition of and the exercise of any remedies by Capstead
under this Agreement with respect to any Facility.
21. SUCCESSORS AND ASSIGNS, RELATIONSHIP. The covenants, terms, conditions,
provisions, and undertakings in this Agreement shall extend to and be binding
upon the permitted successors, and assigns of the respective parties hereto, and
shall be construed as covenants running with the land. This Agreement does not
create a partnership, joint venture, or other type of ownership inconsistent
with the Agreement, and neither Capstead or Brookdale shall make any
representation to the contrary.
22. ENTIRE AGREEMENT. This Agreement, together with any exhibits attached
hereto, contains the entire agreement and understanding between the parties with
respect to the subject matter hereof. There are no oral understandings, terms,
or conditions, and neither party has relied upon any representation, express or
implied, with respect to the subject matter hereof not contained in this
Agreement. All prior understandings, terms, or conditions with respect to the
subject matter hereof are deemed merged in this Agreement. This Agreement cannot
be changed or supplemented orally, but may be modified or amended only by a
written instrument executed by the parties. Any disputes regarding the
interpretation of any portion of this Agreement shall not be presumptively
construed against the drafting party.
23. SURVIVAL. Brookdale's indemnity obligations herein shall survive termination
of this Agreement.
24. TIME. Time is of the essence in every particular of this Agreement,
including, without limitation, obligations for the payment of money.
25. CAPTIONS AND HEADINGS. The captions and headings in this Agreement have been
inserted herein only as a matter of convenience and for reference and in no way
define, limit or describe the scope or intent of, or otherwise affect, the
provisions of this Agreement.
26. WAIVER OF JURY TRIAL. TO THE EXTENT ALLOWED BY APPLICABLE LAW, BROOKDALE AND
CAPSTEAD HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER
OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS MAY HAVE
TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO CAPSTEAD'S ENTERING INTO THIS AGREEMENT.
27. GUARANTY. At the time of Brookdale's execution of this Agreement, Brookdale
shall obtain the execution of the guaranty agreement in the form of Exhibit B
attached hereto ("Guaranty") by its Parent, Brookdale Living Communities, Inc.
As a condition to Brookdale's exercise of a Renewal Term and accompanying notice
of such exercise, Brookdale shall deliver to Capstead a reaffirmation of the
Guaranty executed by its Parent.
28. JOINDER BY BROOKDALE MANAGEMENT. Brookdale Management has joined into this
Agreement for the limited purposes of (i) acknowledging that in each of the
Facility Management Agreements, Capstead and Brookdale are intended third party
beneficiaries of such Facility Management Agreements; (ii) acknowledging and
hereby granting to Capstead the right to terminate any or all of the Facility
22
Management Agreements upon the occurrence and during the continuation of any
Event of Default as set forth in this Agreement; and (iii) acknowledging and
authorizing, to the extent required by law, that payments due Brookdale
Management II, Brookdale Management Akron and Brookdale Management Texas under
the Facility Management Agreements are hereby subordinated to the Brookdale Rent
Payments or any other payments required hereunder, and that any amounts paid to
Brookdale Management following and during the continuance of an Event of Default
under this Agreement shall be paid to Capstead upon demand therefor, without
limitation. All payments made by Brookdale or its Affiliates to Brookdale
Management shall be deemed made in trust, to be retained by Brookdale Management
and released from trust for any period in question only upon payment of all
amounts due Capstead hereunder for the same period.
29. PRE-EXISTING ENVIRONMENTAL CONDITIONS. If remediation of Pre-existing
Conditions, as defined in the applicable Property Lease, is necessary, then any
amounts spent by Capstead or any Capstead Lessor in connection therewith, as
provided in such Property Lease, shall be added to Capstead Equity, and Master
Rent shall be adjusted accordingly as of the date of such payments.
30. CAPSTEAD ENCUMBRANCES. Except as agreed by Capstead and Brookdale, Capstead
shall not directly or indirectly create or otherwise cause to exist any lien or
encumbrance upon its ownership interest in either Capstead or the Capstead
Lessors, whether to secure any borrowing or other means of financing or
refinancing, provided, however, that Capstead may further encumber such
ownership interest without Brookdale's consent provided the costs and debt
service resulting from such lien or encumbrance shall not be included in
Brookdale Rent Payments hereunder or in Base Rent under any applicable Property
Lease.
23
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement the
day and year first above written.
CAPSTEAD: BROOKDALE:
CMCP PROPERTIES, INC., BLC PROPERTIES I, LLC,
a Delaware corporation a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
_________________________________ ________________________________
Its: ________________________________ Its: Vice President
_______________________________
BROOKDALE MANAGEMENT:
BROOKDALE MANAGEMENT HOLDING, LLC,
a Delaware limited liability company
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
____________________________
Its: Vice President
____________________________
EXHIBIT A
TEB POOL FACILITIES
1. ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. Chambrel at Pinecastle, Ocala, Florida
EXHIBIT B
GUARANTY
