Turnkey Construction Contract

TURNKEY CONSTRUCTION CONTRACT


Between


CAREPLEX OF CRAGGANMORE, INC.


and


THE CRAGGANMORE ASSOCIATES LIMITED PARTNERSHIP


TURNKEY CONSTRUCTION CONTRACT


This Agreement is by and between CAREPLEX OF CRAGGANMORE, INC., a Delaware corporation, with an office at 197 First Avenue, Needham, Massachusetts 02194 (the "Contractor"), and THE CRAGGANMORE ASSOCIATES LIMITED PARTNERSHIP, a Connecticut Limited Partnership, with an office at 197 First Avenue, Needham, Massachusetts 02197, (the "Owner") and is entered into for the purpose of reducing to a formal writing all of their understandings with respect to the construction of a proposed assisted living facility to be comprised of 84 to 96 units ("Facility") to be located at 58 Mulberry Street, Southington, Connecticut (the "Premises").


In consideration of the undertakings of each of the parties to the other:


IT IS AGREED:


ARTICLE I


Representations


The parties make each of the following material representations:


Section 1.1 - Title to Premises. Prior to April 30, 1996, the Owner (or its nominee) shall own good, record and marketable title in fee simple to the Premises consisting of approximately thirteen and eight-tenths (13.8) acres of land as more fully described in Exhibit "A". Exhibit "A" and each of the other Exhibits referred to in this Agreement shall be incorporated into this Agreement by such reference as if fully set forth in this Agreement. The Premises shall be free and clear of any and all encumbrances which would impair the construction or operation of the Facility except as set forth on Exhibit "A-1", in the Contractor's sole and absolute discretion, and free of any hazardous wastes or materials except as set forth on Exhibit "A-2".


Section 1.2 - Encumbrances.


(a) Owner and Contractor acknowledge that the Premises may be subject to
easements, assessments, conditions, contracts, rights, claims,
encroachments, restrictions and other encumbrances as would be
disclosed on a title report (the "Existing Encumbrances"), to physical
conditions which would be disclosed by a survey of the Premises and to
those easements, conditions, contracts, rights, licenses,
encroachments, restrictions and other


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encumbrances resulting from Contractor securing regulatory,
development and construction approvals for the Facility and
attendant site improvements. Owner and Contractor each represents to
the other that it has reviewed or shall review prior to its purchase
of the Premises the boundary survey and the topographical survey of
the Premises and has made, or shall make prior to its purchase of the
Premises a careful physical inspection of the Premises to satisfy it
as to the site characteristics and attributes in all respects. The
Owner agrees to accept the Facility subject to the Existing
Encumbrances, the mortgages described herein, to the physical
conditions which exist and as such conditions may change during the
course of construction and to those easements, conditions, contracts,
rights, licenses, encroachments, restrictions and other encumbrances
resulting from Owner securing regulatory, development and construction
approvals for the Facility and attendant site improvements, provided
that the same do not interfere with the Owner's operation of the
Facility.


(b) Concurrently with the execution of this Agreement, Owner shall provide
Contractor with copies of all engineering, architectural and any other
plans, studies and surveys, title reports, environmental assessments,
appraisals and other information regarding the Premises or the
Facility which are in Owner's possession, custody or control.


(c) The Owner represents that to the best of its knowledge the Premises
have only the apparent site and off-site conditions and problems, if
any, as set forth on Exhibit "B" which require the implementation of
the measures if any, as set forth on Exhibit "B"


(d) Commencing on the date Contractor elects to commence construction in
accordance with this Agreement, Owner shall provide Contractor with
full possession and complete control of the Premises for purposes of
performing Contractor's obligations hereunder.


Section 1.3 - Permits and Approvals.


(a) Contractor represents that it shall use its reasonable best efforts to
obtain, prior to the date of the Closing, all state, federal, county
and municipal land use approvals and permits, licenses, easements, and
sewer agreements which may be needed in order to permit the
construction and operation of the Facility on the Premises (the
"Approvals"). Contractor covenants to


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diligently use its reasonable best efforts to obtain all of the
Approvals in an expeditious manner. In the event the Contractor is
unable to obtain the Approvals, the Contractor shall have no liability
whatsoever to the Owner, or any other party and at the Owner's or the
Contractor's option, this Agreement shall be terminated without
recourse to any party thereto at law or in equity.


(b) For the sole purpose of permitting Contractor to construct the
Facility, the Owner grants to the Contractor, to the extent required
by Contractor in order that the purpose of this Agreement be
effectuated, the rights under the Approvals and any other grants of
rights, permits, approvals, or licenses, which may be necessary to
complete the performance of the Contractor's obligations hereunder;
provided, however that no transfer or assignment of any of the
foregoing shall occur which is prohibited by applicable law or the
respective terms thereof.


Section 1.4 - Documentation. The Owner shall provide or obtain construction and permanent financing for the Premises, the Facility and the Personal Property (as defined herein) ("Project Loan") which shall be sufficient, together with the Owner's equity contributions (which shall in no event exceed ten percent (10%) of the Contract Price), to pay the full amount of the Contract Price (as defined herein). The Owner covenants that it will provide fully and in a timely fashion all reasonable documentation required by Owner's lender in connection with the Project Loan. Such documentation includes, but is not limited to, all zoning and plan approvals; all utility letters indicating positive availability of service; inventory of concessions made to any or all municipal bodies; site plan; title binders, and all other regulatory body approvals. Owner also covenants that it will, in a timely manner, provide whatever financial or other information Owner's lender might reasonably require in connection with Contractor's applications for financing for the construction of the Facility and as required by such lender in connection with the Project Loan. Owner will use its reasonable best efforts to pursue its application for construction and permanent financing for the Facility.


Section 1.5 - Other Agreements. The Owner and the Contractor each represents to the other that neither entering into this Agreement nor performing its respective obligations hereunder will violate any other agreements or documents by which it may be bound.


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Section 1.6 - Utility Services. Owner represents that, to the best of its knowledge, all utility services required to construct and operate the Facility (including public water, sewer and electricity) are currently available to the Premises in the capacities required to operate the Facility. No work need be performed by or on behalf of Contractor to make such utilities available to the Premises for the construction or operation of the Facility, other than connecting the Facility's waste disposal line to the public sanitary sewer line. Owner represents, warrants and covenants that the public sanitary sewer line is available for hook-up no more than one hundred (100) feet from the boundary line of the Premises. Copies of letters from the providers of such utility services confirming such availability are annexed hereto as Exhibit "C".


Section 1.7 - Good Standing of Contractor. Contractor represents that it is duly organized, validly existing and in good standing under the laws of the State of Delaware. Contractor represents that it is empowered and authorized to execute, deliver and perform its obligations under this Agreement, and, upon such execution and delivery and subject to the conditions subsequent set forth in Section 5.1, this Agreement shall be valid, binding and legal obligation of the Contractor, enforceable in accordance with its terms and duly authorized by a vote of its Board of Directors in compliance with its certificate of incorporation and bylaws and all applicable laws of the State of Delaware.


Section 1.8 - Good Standing of Owner. Owner represent that it is duly organized and validly existing under the laws of the State of Connecticut. Owner represents that it is empowered and authorized to execute, deliver and perform its obligations under this Agreement, and, upon such execution and delivery and subject to the satisfaction of the conditions subsequent set forth in Section 5.1, this Agreement shall be valid, binding and legal obligation of the Owner, enforceable in accordance with its terms and duly authorized by a vote of its General Partner in compliance with its Limited Partnership Agreement and all applicable laws of the State of Connecticut.


ARTICLE II


Construction of the Facility


Section 2.1 - Control of Construction. Subject to the express provisions contained herein, it is the intention of this Agreement that Contractor shall have sole, complete and absolute authority and discretion to decide any and all issues pertaining to the construction of the Facility, including, without limitation, the expenditure of funds, the incurring of costs and


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all of the other matters referred to herein; so long as the same are in compliance with the Approvals and all applicable laws.


Section 2.2 - Architectural Services. As a condition precedent to this Agreement, the Contractor shall have reviewed, approved and adopted all drawings and plans for the Facility prepared by Michael Herlands (the "Architect") ("Basic Plans"). A true, accurate and complete copy of the Basic Plans is attached hereto as Exhibit "D". The parties acknowledge that the Architect has or will be retained by the Contractor. The Contractor will be responsible for payment of the architectural fees due to the Architect, pursuant to the contract with respect to the Facility dated July 24, 1995 as amended (said contracts and amendments herein collectively, the "Architectural Contract"). The Owner represents and warrants to the Contractor that a true, accurate and complete copy of the Architectural Contract is attached hereto as Exhibit "E". The Contractor shall not be responsible to the Owner, or any other party for any errors, omissions, breaches or failures thereof, or any damages resulting from the acts or omissions of the Architect. At the Contractor's option, the Owner shall assign to the Contractor all of its right, title and interest in the Architectural Contract and any and all architectural, engineering and other contracts with respect to the Facility free of any claims other than outstanding amounts owed under the Architectural Contract. In no event shall the Contractor be obligated to assume any of said contracts.


Section 2.3 - Other professionals and Limited Assumed Obligations. The Owner represents that it has not engaged any architects or any engineers, lawyers, consultants, accountants, or other professionals with respect to the Facility other than the Architect which Owner shall be obligated to pay. The Owner neither assumes nor shall be obliged for any debts, liabilities or obligations of Owner or related to the Premises or the Facility other than payments due to the Architect under the Architectural Contract.


Section 2.4 - Plans and Specifications. The Contractor shall direct Architect to prepare as promptly as possible, but, in any event, within thirty (30) days after the execution of this Agreement, final plans, specifications and a site plan (the "Final Plans") based on the Basic Plans. Such Final Plans shall include without limitation the details set forth on Exhibit "D".


Section 2.5 - Construction. The Contractor shall construct the Facility substantially in accordance with the Final Plans, subject to field changes and minor design changes. All work shall be done in a good and workmanlike manner and in accordance with the Executive Office of Health and Human Services Standards, the Approvals, if any, and all applicable laws. The structure


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shall be designed as an assisted living facility to be licensed for the bed complement described above and shall be constructed in accordance with the requirements in effect on the date of this Agreement of federal, state and local governmental agencies having jurisdiction of the Facility, including Life Safety Code requirements imposed by the Federal Department of Health and Human Services.


Section 2.6 - Personal Property.


(a) Exhibit "F" contains a representative list of the kinds of personal
property needed for the Facility (the "Personal Property"). Contractor
will furnish the specific items of Personal Property required for the
Facility, within the FFE Allowance. The allowance for the Personal
Property is Four Hundred Eighty-Seven Thousand dollars ($487,O00),
(the "FFE Allowance"), which FFE allowance shall be included in the
Contract Price (as defined below).


(b) In the event that the cost of the Personal Property furnished pursuant
to subsection (a) above shall exceed the FFE Allowance any such excess
shall be an increase adjustment to the Contract Price.


(c) In order to reduce the risk that the Personal Property will be
delivered prior to the Closing contemplated herein, Owner covenants
that it shall select such Personal Property as soon as practicable but
not later than approximately six (6) months prior to the estimated
date of Physical Completion.


Section 2.7 - Changes. Owner agrees that the Contractor shall also have the right to make changes in the Final Plans and in the Personal Property if required by any federal, state or local governmental authority having jurisdiction or if required due to the unavailability of any construction material or Personal Property. Owner shall be notified of any such changes or substitutions in the Personal Property but Contractor shall have final authority to make all decisions with respect to such changes; provided that such changes result in construction, space, desig ...