SALE CONTRACT
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THIS SALE CONTRACT (this "CONTRACT") is made and entered into as of the 4th
day of April, 2002, by and between (i) INTEGRATED LIVING COMMUNITIES OF
ALEXANDRIA, L.L.C., INTEGRATED LIVING COMMUNITIES OF LAKE XXXXXXX, L.L.C.,
INTEGRATED LIVING COMMUNITIES OF LAFAYETTE, L.L.C., INTEGRATED LIVING
COMMUNITIES OF XXXXXXXXX, X.X., INTEGRATED LIVING COMMUNITIES OF OAKWELL, L.P.,
INTEGRATED LIVING COMMUNITIES OF SAN ANTONIO, L.P., AND INTEGRATED LIVING
COMMUNITIES OF XXXXXXXX, X.X. (each a "SELLER" and collectively, the "SELLERS"),
and (ii) EMERITUS CORPORATION ("BUYER").
RECITALS:
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A. Each of the Sellers is a tenant under a lease described on Exhibit A
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attached hereto and made a part hereof (collectively, the "FACILITY LEASES")
pursuant to which each Seller leases an assisted living facility and appurtenant
improvements, fixtures, and personal property (collectively, the "REAL
PROPERTY") and each of the Sellers owns the Personal Property (as defined in the
Exhibit Recitals attached hereto and made a part hereof) at the Real Property
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(the Real Property, together with the Personal Property, is referred to herein
individually as a "FACILITY" and collectively as the "FACILITIES").
X. Xxxxxxx desire to sell, convey, assign and transfer and Buyer desires to
purchase, assume and acquire Sellers' interest in the Facility Leases and the
Facilities pursuant and subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. PURCHASE AND SALE. Subject to the provisions of this Contract, Sellers
agree to sell, convey, assign and transfer and Buyer agrees to purchase, assume
and acquire Sellers' interest in the Facility Leases and the Facilities. The
term "BUYER" as used herein shall include any designee of Buyer.
2. PURCHASE PRICE AND XXXXXXX MONEY. The purchase price ("PURCHASE PRICE")
shall be Ten Dollars ($10.00). The Purchase Price takes into account that Buyer
will (i) assume Sellers' interests in the Facility Leases and (ii) arrange for a
credit entity satisfactory to each of the respective Landlords (hereinafter
defined) to replace Integrated Living Communities, L.L.C. ("ILC") as the
guarantor under each of the Facility Leases. Notwithstanding the immediately
preceding sentence, there shall be no reduction to the Purchase Price in the
event that fewer than all of the Facilities are transferred to Buyer at closing
hereunder provided, however, that in the event that certain Facilities are
closed on at an initial Closing Date and the remainder are closed on at a later
Closing Date, if at all, in accordance with the provisions of Section 12(c), the
Purchase Price shall be prorated and such prorated portion of the Purchase Price
shall be paid by Buyer at each closing. Simultaneously with, or prior to, its
execution of this Contract, Buyer shall pay to the Escrow Agent (as defined in
Section 6(a)) the sum of Eighty-seven Thousand Five Hundred Dollars ($87,500) as
the xxxxxxx money deposit (the "XXXXXXX MONEY"). The Xxxxxxx Money shall be
held in escrow pending closing. Buyer may, at its option, direct Escrow Agent
to invest the Xxxxxxx Money in a federally-insured interest-bearing account
designated by Buyer and approved by Seller. All interest which has accrued on
the Xxxxxxx Money shall be paid to Buyer, except that if closing is not
consummated, interest on the Xxxxxxx Money shall be paid to the party entitled
to the Xxxxxxx Money pursuant to the terms hereof. The Xxxxxxx Money shall be
applied to the Purchase Price (with the balance of the Xxxxxxx Money returned to
Buyer) or otherwise paid to Sellers and/or Buyer as provided for herein.
3. FACILITY LEASES ASSUMPTION.
(a) Buyer acknowledges that it may not assume the Facility Leases without
the consent of Healthcare Realty Trust ("HRT"), with respect to the Facility
Leases described on Exhibit A under which HRT is identified as the landlord, and
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Health Care Property Investors, Inc. ("HCPI"), with respect to the Facility
Leases described on Exhibit A under which HCPI is identified as the landlord
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(HRT and HCPI, collectively, the "LANDLORDS"). It is the parties' expectation
that prior to closing, the parties will obtain the consent of the Landlords for
(i) Buyer's assumption of the Facility Leases by means of substituting Buyer as
the tenant under the Facility Leases (ii) to the extent that Emeritus
Corporation is not the assignee, the substitution of Buyer or another credit
entity acceptable to Landlords as the guarantor under each Facility Lease and
(iii) the release of each Seller and ILC from any liability or obligation
arising under the Facility Leases and their respective guarantees from and after
the Closing Date (the "REQUIRED CONSENTS"). During the Feasibility Period (as
defined below) and thereafter, if necessary, the parties will cooperate in good
faith to obtain the Required Consents and an estoppel certificate from each
Landlord, providing that, to each Landlord's knowledge, neither the applicable
Landlord nor the applicable Sellers, as tenants, thereunder are currently in
default under the applicable Facility Leases or, to the extent that a Seller is
in default thereunder, specifying the default and whether the Landlord will
recognize such default as being cured by closing hereunder (the "ESTOPPEL
CERTIFICATES"). The Estoppel Certificates may be included within the Required
Consents. Notwithstanding any language to the contrary herein, Buyer shall
satisfy itself prior to April 15, 2002 that the Landlords will permit any
modifications to the Facility Leases, e.g., waiver of radius restrictions, as
well as any other Facility Leases modifications which are required by Buyer.
Buyer will promptly (and in any event, within three (3) Business Days from the
receipt of a request) provide Sellers and Landlords with all information
reasonably requested by Landlords to make a decision as to whether to approve
the aforementioned assumption, substitution and release. Buyer shall use its
commercially reasonable efforts to assist Sellers and ILC in obtaining their
release from liability under the Facility Leases and their respective
guarantees. Except as provided in the following sentence, Buyer shall comply
with all commercially reasonable conditions precedent to the effectiveness of
the Required Consents, including, without limitation, assuming ILC's guaranty
obligations under the Facility Leases. Provided that the Required Consents are
obtained, Sellers shall pay at closing to Landlords an assumption fee, if any,
acceptable to each Landlord and Sellers, together with all of Landlords' other
out-of-pocket costs and expenses in connection with the assumption, substitution
and release.
(b) Notwithstanding anything herein to the contrary, if a Landlord does not
grant the Required Consent with respect to any of the Real Property by the
Closing Date, then Sellers, in lieu of the transaction terminating for failure
to satisfy a condition precedent to closing pursuant to Section 12, shall have
the right to withdraw each Facility for which a Required Consent was not
obtained from the transaction, whereupon the definition of the term "FACILITIES"
shall be amended to delete the withdrawn Facility, and, subject to satisfaction
of the other conditions precedent to closing, the parties shall proceed to
closing on the Facilities for which the Required Consents were obtained.
4. SELLERS' FUNDING OF OPERATING LOSSES.
(a) Buyer acknowledges that the Facilities are currently operating at a loss
in the aggregate and may continue to do so. To induce Buyer to acquire
Sellers' interests in the Facilities, each Seller has agreed to fund operating
losses (calculated in accordance with generally accepted accounting principals
("GAAP") and including, as facility expenses, rent under the Facility Leases and
a management fee in the amount of five percent (5%) of Gross Revenues
(hereinafter defined)(the "OPERATING LOSSES"), up to the amounts and under the
terms, conditions and limitations specified on Exhibit B (the "OPERATING LOSS
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CAPS"). The term "GROSS REVENUES" means, with respect to each Facility, all
revenues generated by the operation of the Facility, but shall not include
proceeds from the sale of the Facility or the Facility's equipment. Subject to
the provisions of Section 4(d), the Operating Loss Caps are calculated on an
aggregate basis across all Facilities closed on by Buyer and there is, as stated
on Exhibit B, (i) an Operating Loss Cap applicable to the first 365-day period
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following the Closing Date ("FIRST 365-DAY PERIOD"), (ii) an Operating Loss Cap
applicable to the 366-day period (2004 being a leap year) following the first
anniversary of the Closing Date ("SECOND 365-DAY PERIOD," and together with the
First 365-Day Period, the "365-DAY PERIODS"), and (iii) an aggregate Operating
Loss Cap comprising the maximum aggregate Operating Losses which Sellers are
liable for hereunder. All Operating Losses shall be calculated monthly as
described below and shall be calculated on an aggregate basis across all
Facilities closed on by Buyer notwithstanding that Sellers' funding obligations
have been calculated for internal accounting purposes on a several basis.
Notwithstanding any language to the contrary herein, Sellers' liability for the
Operating Losses, subject to the Operating Loss Caps, shall be joint and
several. No Operating Losses shall be funded in respect of any period after the
end of the Second 365-Day Period.
(b) To calculate the amount of Operating Losses required to be funded by
Sellers under this Contract, Buyer shall provide Sellers with a monthly report
("MONTHLY REPORT") in the form set forth on Schedule 4(b) setting forth the
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income and expenses separately for each Facility, together with (i) the current
month's profit or loss for each Facility and for the aggregate of all
Facilities, (ii) the year to date profit or loss for each Facility and for the
aggregate of all Facilities, (iii) the aggregate funding that has been made
under this Section 4, and (iv) the amount remaining in each Operating Loss
Account (as hereinafter defined). The information contained in the report shall
be determined in accordance with GAAP. Sellers shall have the right to audit
Buyer's Monthly Reports at Sellers' sole cost and expense upon reasonable notice
and during normal business hours. In the event that a Monthly Reimbursement is
not paid to Buyer when due under this Section 4, Sellers shall pay interest at
the rate of twelve percent (12%) per annum on any amounts not paid when due.
Within thirty (30) days after Sellers receive the Monthly Report for a month
ending during a 365-Day Period, Sellers shall fund to Buyer in the form of a
reimbursement check paid to the order of Buyer an amount determined by
subsections (c) and (d) below (each, a "MONTHLY REIMBURSEMENT"). In determining
the aggregate Operating Losses for all Facilities for any period below, the
aggregate Operating Losses of all Facilities with Operating Losses during the
period shall be netted against the aggregate operating profit of all Facilities
with an operating profit during the period.
(c) The terms of this subsection (c) shall apply in the event that there is
only one closing under this Contract. To determine the amount of each Monthly
Reimbursement, Buyer and Sellers shall establish two ledger accounts (each, an
"OPERATING LOSS ACCOUNT"), one for the First 365-Day Period (the "FIRST
OPERATING LOSS ACCOUNT") and one for the Second 365-Day Period (the "SECOND
OPERATING LOSS ACCOUNT"). The First Operating Loss Account shall be credited at
the closing with the aggregate of First Year Operating Loss Caps set forth in
Exhibit B in respect of each of the Facilities acquired by Buyer at the closing
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(the term "FACILITIES", as used in this Section 4, shall mean those Facilities
acquired by Buyer at closing). The First Operating Loss Account shall be
debited with each amount funded under this subsection by Sellers in respect of
each period during the First 365-Day Period. The Second Operating Loss Account
shall be credited at the closing with the aggregate of Second Year Operating
Loss Caps set forth in Exhibit B in respect of each of the Facilities. The
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Second Operating Loss Account shall be debited with each amount funded under
this subsection by Sellers in respect of each period during the Second 365-Day
Period. The amount of each Operating Loss Account shall never be less than
zero. The amount of each Monthly Reimbursement in respect of each month during
the First 365-Day Period shall equal the least of the following amounts: (i)
the aggregate Operating Losses for all Facilities for the month to which the
Monthly Report relates, (ii) the aggregate Operating Losses for all Facilities
from the commencement of the First 365-Day Period to the end of the month to
which the Monthly Report relates, less any amount previously debited from the
First Operating Loss Account or (iii) the balance in the First Operating Loss
Account. The amount of each Monthly Reimbursement in respect of each month
during the Second 365-Day Period shall equal the least of the following amounts:
(i) the aggregate Operating Losses for all Facilities for the month to which the
Monthly Report relates, (ii) the aggregate Operating Losses for all Facilities
from the commencement of the Second 365-Day Period to the end of the month to
which the Monthly Report relates, less any amount previously debited from the
Second Operating Loss Account or (iii) the balance in the Second Operating Loss
Account.
(d) The terms of this subsection (d) shall apply in the event there are two
closings under this Contract, in accordance with Section 12(c). The Facilities
acquired at the first closing shall be referred to as the "INITIAL FACILITIES."
The Facilities acquired at the second closing shall be referred to as the
"SUBSEQUENT FACILITIES." The term "FIRST 365-DAY PERIOD" shall mean, with
respect to the Initial Facilities, the 365-day period following the first
Closing Date and, with respect to the Subsequent Facilities, the 365-day period
following the second Closing Date. The term "SECOND 365-DAY PERIOD" shall mean,
with respect to the Initial Facilities, the 366-day period following the first
anniversary of the first Closing Date and, with respect to the Subsequent
Facilities, the 366-day period following the first anniversary of the second
Closing Date. To determine the amount of each Monthly Reimbursement, Buyer and
Sellers shall establish two ledger accounts (each, an "OPERATING LOSS ACCOUNT"),
one for the First-365-Day Period (the "FIRST OPERATING LOSS ACCOUNT") and one
for the Second 365-Day Period (the "SECOND OPERATING LOSS ACCOUNT"). The First
Operating Loss Account shall be credited at the first closing with the aggregate
of First Year Operating Loss Caps set forth in Exhibit B in respect of each of
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Initial Facilities, and shall be credited at the second closing with the
aggregate of First Year Operating Loss Caps set forth in Exhibit B in respect of
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each of the Subsequent Facilities. The First Operating Loss Account shall be
debited with each amount funded under this subsection by Sellers under
subsections (1), (2) and (3)(i). The Second Operating Loss Account shall be
credited at the first closing with the aggregate of Second Year Operating Loss
Caps set forth in Exhibit B in respect of each of Initial Facilities, and shall
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be credited at the second closing with the aggregate of Second Year Operating
Loss Caps set forth in Exhibit B in respect of each of the Subsequent
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Facilities. The Second Operating Loss Account shall be debited with each amount
funded under subsections (3)(ii), (4) and (5) below. The amount of each
Operating Loss Account shall never be less than zero. The amount of each
Monthly Reimbursement shall equal:
(1) During the period in respect of any month ending between
the dates of the first closing and the second closing, the least of: (i) the
aggregate Operating Losses for the Initial Facilities for the month to which the
Monthly Report relates, (ii) the aggregate Operating Losses for the Initial
Facilities from the commencement of the First 365-Day Period to the end of the
month to which the Monthly Report relates, less any amount previously debited
from the First Operating Loss Account or (iii) the balance in the First
Operating Loss Account.
(2) During the period in respect of any month ending between
the date of the second closing and the end of the First 365-Day Period for the
Initial Facilities, the least of (i) the aggregate Operating Losses for the
Initial Facilities and the Subsequent Facilities for the month to which the
Monthly Report relates, (ii) the aggregate Operating Losses for the Initial
Facilities from the commencement of its First 365-Day Period to the end of the
month to which the Monthly Report relates and for the Subsequent Facilities from
the commencement of its First 365-Day Period to the end of the month to which
the Monthly Report relates, less any amount previously debited from the First
Operating Loss Account or (iii) the balance in the First Operating Loss Account.
(3) During the period in respect of any month ending between
the commencement of the Second 365-Day Period for the Initial Facilities but
before the commencement of the Second 365-Day Period for the Subsequent
Facilities, the sum of (i) the least of (x) the aggregate Operating Losses
allocable to the Subsequent Facilities for the month to which the Monthly Report
relates, (y) the aggregate Operating Losses for the Initial Facilities from the
commencement of its First 365-Day Period to the end of its First 365-Day Period
and for the Subsequent Facilities from the commencement of its First 365-Day
Period to the end of the month to which the Monthly Report relates, less any
amount previously debited from the First Operating Loss Account or (z) the
balance in the First Operating Loss Account and (ii) the least of (x) the
aggregate Operating Losses allocable to the Initial Facilities for the month to
which the Monthly Report relates, (y) the aggregate Operating Losses for the
Initial Facilities from the commencement of its Second 365-Day Period to the end
of the month to which the Monthly Report relates, less any amount previously
debited from the Second Operating Loss Account or (z) the balance in the Second
Operating Loss Account.
(4) During the period in respect of any month ending between
the date of the commencement of the Second 365-Day Period for the Subsequent
Facilities and the end of the Second 365-Day Period for the Initial Facilities,
the least of (i) the aggregate Operating Losses for the Initial Facilities and
the Subsequent Facilities for the month to which the Monthly Report relates,
(ii) the aggregate Operating Losses for the Initial Facilities from the
commencement of its Second 365-Day Period to the end of the month to which the
Monthly Report relates and for the Subsequent Facilities from the commencement
of its Second 365-Day Period to the end of the month to which the Monthly Report
relates, less any amount previously debited from the Second Operating Loss
Account or (iii) the balance in the Second Operating Loss Account.
(5) For any month ending after the second anniversary of the
first closing, the least of: (i) the aggregate Operating Losses for the
Subsequent Facilities for the month to which the Monthly Report relates, (ii)
the aggregate Operating Losses for the Initial Facilities from the commencement
of its Second 365-Day Period to the end of its Second 365-Day Period and for the
Subsequent Facilities from the commencement of its Second 365-Day Period to the
end of the month to which the Monthly Report relates, less amounts previously
debited from the Second Operating Loss Account or (iii) the balance in the
Second Operating Loss Account.
(e) Schedule 4(e) contains an illustration of the operation of this Section.
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(f) Horizon Bay Management, L.L.C. ("HBM") shall execute at closing a
guaranty substantially in the form of Exhibit I, guaranteeing payment of
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Sellers' obligation to fund Operating Losses, provided that in no event shall
HBM and Sellers, collectively, be obligated to fund Operating Losses of more
than the aggregate Operating Loss Cap.
(g) Notwithstanding anything to the contrary in this Section 4, the maximum
aggregate liability of Sellers under this Section 4 and HBM under the guaranty
described in subsection (f) shall not exceed $3,058,000.
5. EFFECTIVE DATE. The effective date of this Contract ("EFFECTIVE DATE")
shall be the later of the date that this Contract is executed by Seller or
Buyer, which is the date set forth in the preamble to this Contract.
6. CLOSING:
(a) Closing Date and Escrow. Subject to the provisions of Section 12(c)
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hereof, on May 1, 2002 (the "CLOSING DATE"), Sellers and Buyer are required and
agree to make full settlement in accordance with the provisions of this
Contract. The Assignments and Assumptions of Facility Leases and Release
Agreements (as described in Section 6(b)(i)) and all other closing documents
shall be executed and delivered in escrow to the Escrow Agent by each party
required to execute such documents. On the morning of the Closing Date, Sellers
shall effect a wire transfer of federal funds to the Escrow Agent's escrow
account in an amount equal to the sum of (i) the assumption fees, costs and
expenses (if any) to be paid by Sellers pursuant to Section 3; and (ii) the
amount (if any) of the other costs, expenses and adjustments payable by Sellers
under this Contract. After the Escrow Agent's receipt of the wire transfer of
funds and immediately following the satisfaction (or waiver under Section 12
hereof) of the conditions precedent to closing set forth in Section 12 hereof
the Escrow Agent shall (i) disburse to Sellers the Purchase Price, (ii) disburse
to Buyer an amount equal to the Xxxxxxx Money and interest accrued thereon
reduced by the Purchase Price and any costs, expenses and adjustments payable by
Buyer under this Contract, (iii) deliver to Buyer all other documents and
instruments received by it which, in accordance with the terms of this Contract
or any separate escrow instructions prepared by Buyer, are to be delivered by
Sellers to Buyer on the Closing Date, and (iv) deliver to Sellers all other
documents and instruments received by it which, in accordance with the terms of
this Contract or any separate escrow instructions prepared by Sellers, are to be
delivered by Buyer to Sellers on the Closing Date. For purposes of this
Contract, the term "ESCROW AGENT" shall mean Title Network, Ltd., 0000 Xxxxxxx
Xxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxx 00000 (Attention: Xx. Xxx Xxxxx (telephone
number: (000)000-0000), fax number: (000)000-0000)).
(b) Seller's Deliveries: On the Closing Date, Sellers shall deliver to
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Buyer (through the Escrow Agent) the following:
(i) an Assignment and Assumption of Facility Lease and Release Agreement,
one for each Facility Lease, in the form of Exhibit C or such other form(s) as
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may be required by Landlords which satisfies the conditions of the Required
Consents and is reasonably acceptable to Sellers and Buyer, duly executed by
each respective Seller, conveying the Real Property to Buyer;
(ii) an Assignment and Assumption of Occupancy Agreements, one for each
Facility, in the form of Exhibit D, duly executed by each respective Seller,
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conveying the Occupancy Agreements to Buyer;
(iii) an Assignment of Licenses, Intangibles (including Trade Name) and
Warranties, one for each Facility, in the form of Exhibit E, duly executed by
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each respective Seller, conveying the Assignable Licenses, the Trade Names and
other intangibles and warranties to Buyer;
(iv) an Assignment and Assumption of Operating Contracts, one for each
Facility, in the form of Exhibit F, duly executed by each respective Seller,
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conveying the Assumed Operating Contracts (as defined below) to Buyer;
(v) a Xxxx of Sale, one for each Facility, in the form of Exhibit G, duly
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executed by each respective Seller, conveying the Tangible Personal Property to
Buyer;
(vi) letters duly executed by each respective Seller, advising each of the
residents and tenants under the Occupancy Agreements of the change in operation
of the Facilities;
(vii) a schedule of all security deposits which have been deposited by the
residents and tenants under the Occupancy Agreements, in accordance with Section
6(d)(iv);
(viii) a copy of each Assumed Operating Contract, all warranties, and
Assignable Licenses, each to the extent to be assumed by Buyer hereunder and in
Sellers' possession;
(ix) a certification, one from each Seller, as to its non-foreign status
which complies with the provisions of Section 1445(b)(2) of the Internal Revenue
Code of 1986, as amended, duly executed by each respective Seller;
(x) to the extent permitted by law, all resident, tenant and employee (only
for employees who will be hired by Buyer) files which are in Sellers'
possession;
(xi) a closing statement between Sellers and Buyer, duly executed by
Sellers, setting forth the prorations and adjustments to the Purchase Price
respecting the Facilities to be made pursuant to Section 6(d);
(xii) evidence of the termination, effective as of the Closing Date, of each
Facility's Management Agreement with HBM;
(xiii) a Guaranty of Operating Losses, in the form of Exhibit I, duly
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executed by HBM; and
(xiv) a Guaranty of Representations and Warranties, in the form of Exhibit
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J, duly executed by HBM.
(c) Buyer's Deliveries. On the Closing Date, Buyer shall pay the Purchase
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Price and shall deliver to Sellers the following:
(i) a closing statement between Sellers and Buyer, duly executed by Buyer,
setting forth the prorations and adjustments to the Purchase Price respecting
the Facilities to be made pursuant to Section 6(d);
(ii) an Assignment and Assumption of Facility Lease and Release Agreement,
one for each Facility Lease, in the form of Exhibit C or such other form(s) as
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may be required by Landlords which satisfies the conditions of the Required
Consents and is reasonably acceptable to Sellers and Buyer, duly executed by
Buyer, assuming the Real Property;
(iii) an Assignment and Assumption of Occupancy Agreement, one for each
Facility, in the form of Exhibit D, duly executed by Buyer, assuming the
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Occupancy Agreements;
(iv) to the extent required by either or both Landlords, with respect to
each applicable Facility, a guaranty duly executed by Buyer or other credit
entity acceptable to Landlords of each applicable Facility Lease, in
substantially the form of guaranty originally executed by ILC; and
(v) an Assignment and Assumption of Operating Contracts, one for each
Facility, in the form of Exhibit F, duly executed by Buyer, assuming the Assumed
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Operating Contracts.
(d) Adjustments. The following items of expense shall be adjusted as of
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11:59 p.m. on the day immediately preceding the Closing Date:
(i) Real estate and other municipal and local assessments with respect to
the Real Property. If the Closing Date shall occur before the tax rate or
assessment is fixed for the tax year in which the Closing Date occurs, the
apportionment of taxes shall be upon the basis of the tax rate or assessment for
the preceding year applied to the latest assessed valuation and Sellers and
Buyer shall readjust real estate taxes promptly upon the fixing of the tax rate
or assessment for the tax year in which the Closing Date occurs;
(ii) Fuel, water and sewer service charges, and charges for gas, electricity
and all other public utilities servicing the Facilities;
(iii) The rent payable by residents and tenants under the Occupancy
Agreements shall be adjusted, and any such rent prepaid to Sellers (including
all or a pro rata portion, as applicable, of the rent paid for the month in
which the closing occurs) shall be paid to Buyer at closing. Rent which is due
but uncollected as of the Closing Date shall not be adjusted and Sellers shall
retain their right, title and interest in and to all unpaid accounts receivable
with respect to the Facilities which relate to the period prior to the Closing
Date. Any rents collected from a resident or tenant after the Closing Date who
owes delinquent rent as of the Closing Date shall be applied (x) first, to then
current rents accruing after the Closing Date, (y) second, to delinquent rents
payable after the Closing Date and (z) finally, to delinquent rents payable
prior to the Closing Date. Notwithstanding the immediately preceding sentence,
Buyer shall honor any request from a resident or tenant to apply rent to a
particular delinquency. Buyer shall promptly remit delinquent rent to which
Sellers are entitled hereunder to Sellers, but in any event, within five (5)
Business Days after receipt (provided that if a resident or tenant includes in a
single payment rent to which both Sellers and Buyer are entitled, Buyer shall
have up to forty-five (45) days to remit the required rent). After the closing,
Buyer shall cooperate with Sellers' efforts to collect Sellers' accounts
receivable by providing Sellers access, upon reasonable prior notice and during
normal business hours, to documents and other information reasonably requested
by Seller. Nothing herein shall be deemed to limit in any way Sellers' rights
and remedies to recover accounts receivable due and owing to Sellers under the
terms of this Contract, including, without limitation, instigating litigation,
provided that such litigation shall not result in the eviction of any Facility
residents or tenants;
(iv) Sellers shall deliver to Buyer on the Closing Date a schedule of all
security deposits which have been deposited by residents and tenants under, and
not previously applied in accordance with, the Occupancy Agreements. All
security deposits required to be held by Sellers under the Occupancy Agreements
and not applied by Sellers prior to closing in accordance with the Occupancy
Agreements, shall be transferred and delivered to Buyer on the Closing Date;
(v) All charges payable with respect to the Assumed Operating Contracts to
be assumed by Buyer hereunder. In addition, if Buyer shall have requested,
Sellers shall exercise any right they may have to purchase any equipment located
at the Facilities that is subject to an equipment Operating Contract, in which
case Buyer shall credit the applicable Seller(s) with such purchase price and
such equipment shall be included as part of the Tangible Personal Property;
(vi) Sellers shall be entitled to keep any xxxxx cash maintained at the
Facilities and Buyer shall replace such xxxxx cash with such xxxxx cash as it
deems reasonably necessary or useful for the continued operation of the
Facilities;
(vii) The rent payable under the Facility Leases shall be adjusted such that
Sellers shall be responsible for all such rent for the period prior to the
Closing Date and Buyer shall be responsible for all such rent for the period
from and after the Closing Date;
(viii) Buyer shall use its commercially reasonable efforts to cause HCPI to
delete its requirement under the HCPI Facility Leases that the tenants
thereunder post letters of credit as security deposits (there are no security
deposits under the HRT Facility Leases). If and to the extent HCPI shall not
agree to delete its letters of credit requirement, Sellers shall maintain their
existing letters of credit under the HCPI Facility Leases for a period not to
exceed two (2) years from the Closing Date on which Buyer closed on the
Facilities leased from HCPI. During such two (2) year period, Buyer shall
arrange, to the extent required by HCPI, to post acceptable replacement letters
of credit; and
(ix) If any of the items described in this Section 6(d) cannot be
apportioned at the closing because of the unavailability of information with
respect to the amounts which are to be apportioned or otherwise, or are
incorrectly apportioned at closing or subsequent thereto, such items shall be
apportioned or reapportioned, as the case may be, as soon as practicable after
the Closing Date or the date such error is discovered, as applicable. This
Section 6(d) shall survive the Closing Date for twelve (12) months.
(e) Employees.
---------
(i) Not later than ten (10) Business Days after the Effective Date, Sellers
shall deliver to Buyer a schedule including the following information as of a
date which is not more than fifteen (15) days prior to the delivery date of such
schedule: (i) the name of all Facilities-based employees, and (ii) their
positions, rates of pay and original hire dates. Sellers shall update the
schedule described in the immediately preceding sentence on or about three (3)
Business Days prior to the Closing Date and promptly shall notify Buyer of any
material changes in such schedule. Sellers will terminate the employment of
each of the Facility Employees (as defined below) as of the Closing Date.
(ii) Buyer agrees its acquisition of the Facilities shall be structured in
such a manner that Sellers shall not be required to give any Facilities-based
employees notification under the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. 2101, et seq. To this end, on or before the Closing Date,
Buyer shall offer to hire, on a probationary basis, at least seventy-five (75%)
percent of Sellers' employees who are employed at each Facility as of the
Closing Date (the "FACILITY EMPLOYEES"). Any such offer of employment to a
Facility Employee by Buyer shall be to perform comparable services, in such
position as is comparable to the position such Facility Employee held with any
Seller as of the closing, provided that Buyer may offer compensation to such
Facility Employees at levels commensurate with compensation levels paid to other
employees of Buyer holding comparable positions, and provided further that
any change in compensation levels does not result in any constructive discharge
of any such Facility Employee. Sellers shall have the right (but not the
obligation) to employ or offer to employ any Facility Employee who declines
Buyer's offer of employment.
(iii) Buyer shall hire at the closing, on a probationary basis, each
Facility Employee who elects to accept employment with Buyer in accordance with
the terms of Section 6(e)(ii), above (all of such employees who accept
employment with Buyer being herein called the "HIRED EMPLOYEES").
(iv) Sellers shall pay to each Facility Employee, on that date which, but
for the closing, would have been the next regularly scheduled payroll date for
such employee following the closing or sooner if required by law, an amount
equal to any and all salary or benefits earned and accrued by such employee, as
of the Closing Date in accordance with Sellers' policies.
(v) Nothing in this Section 6(e) shall create any rights in favor of any
person not a party hereto, including the Facility Employees, or constitute an
employment agreement or condition of employment for any employee of Sellers or
any affiliate of Seller.
(f) Insurance. As of the Closing Date, Buyer is solely responsible for
---------
obtaining, and the cost and expense of, all insurance related to the Facilities,
including, without limitation, such insurance as may be required by
Landlords.
7. REPRESENTATIONS AND WARRANTIES.
(a) Representations of Seller. Each Seller, only with respect to itself and
-------------------------
the Facility which it leases and the Personal Property it owns, represents
and warrants to Buyer that:
(i) Organization and Authorization. Each Seller is an entity duly organized
------------------------------
and in good standing in the state of its organization and is duly qualified
to do business and in good standing in the state in which the Facility it leases
is situated. The individual(s) executing this Contract on behalf of Sellers is
duly authorized to execute this Contract on behalf of Sellers. The execution
and delivery of this Contract and the performance of all obligations of Sellers
hereunder have been duly authorized by all entity action of Sellers.
(ii) No Conflicting Agreements. The transfer and delivery by Sellers of the
-------------------------
Facilities to Buyer as provided hereunder and the performance by Sellers of
their obligations under this Contract will not conflict with or result in the
breach of any of the terms of any agreement or instrument to which Sellers are a
party.
(iii) FIRPTA. Sellers are not a "foreign person" within the meaning of the
------
United States tax laws and to which reference is made in Internal Revenue Code
Section 1445(b)(2).
(iv) No Consents. With the exception of the Required Consents, Sellers are
------------
not aware of any consents required for the performance of Sellers' obligations
hereunder.
(v) Condemnation. As of the Effective Date, Sellers have not received any
------------
written notice of any pending or threatened condemnation of all or any portion
of the Facilities.
(vi) Litigation. Sellers have not received written notice of any litigation
----------
that is pending or threatened with respect to the Facilities, except (A)
litigation fully covered by insurance policies (subject to customary
deductibles); or (B) litigation set forth in Schedule 7(a)(vi).
------------------
(vii) Bankruptcy. Sellers have neither filed nor been the subject of any
----------
filing of a petition under the federal bankruptcy law or any federal or state
insolvency laws or laws for consumption of indebtedness or for the
reorganization of debtors.
(viii) Operating Statements. The Operating Statements, as defined below,
---------------------
are the operating statements used in Sellers' ordinary course of business and,
to Sellers' knowledge, are in accordance with the books and records of Seller.
The Operating Statements do not materially misstate the Facilities' income and
expenses for the applicable periods set forth therein.
(ix) Structural. To Sellers' knowledge, Sellers do not have any structural
----------
reports respecting the Facilities in their possession or control.
(x) Compliance with Laws; Environmental. To Sellers' knowledge, as of the
-------------------------------------
Effective Date, Sellers have not received any notice (whether written or oral)
from any governmental authority that all or any portion of any Facility is in
material violation of any applicable building codes or any applicable
environmental law (relating to clean-up or abatement), zoning law or land use
law relating to any Facility, which material violation has not been cured or
remedied in accordance with applicable law prior to the Effective Date.
(xi) Operating Contracts. Attached hereto as Schedule 7(a)(xi) is a
-------------------- ------------------
schedule of all of the current service, maintenance and equipment contracts and
leases related to the operation of the Facilities, excluding Sellers' management
agreements with HBM (which shall be terminated as of the Closing Date), of which
Sellers have knowledge. Except for equipment leased from Landlords under the
Facility Leases and any Operating Contracts on Schedule 7(a)(xi) described
-----------------
specifically as an equipment lease, there is, to Sellers' knowledge, no leased
equipment at the Facilities.
(xii) Occupancy Agreements. All of the tenants or residents at the
---------------------
Facilities occupy their respective premises under Occupancy Agreements which are
substantially in the form provided to Buyer under the provisions of Section
8(d)(ii) hereof. The security deposit schedule to be provided to Buyer by
Sellers under Section 6(b)(vii) hereof is materially accurate. There are no
"life care" provisions in any Occupancy Agreement. No Facility participates in
any "third party payor" program.
(xiii) Unions. No Seller is a party to any contract or agreement with any
------
labor union nor do Sellers have any knowledge of union organizing activities at
the Facilities.
(xiv) Facility Leases. Sellers are the respective tenants under the
----------------
Facility Leases. To Sellers' knowledge, neither Landlord is in default of its
obligations under the Facility Leases. No Seller is in monetary default under a
Facility Lease and no Seller has received a written notice of default from a
Landlord under its Facility Lease (except that HRT has notified Sellers which
are the tenants under the HRT Facility Leases that the Facilities fail to meet
certain financial coverage ratios set forth in the HRT Facility Leases).
Except as expressly set forth in this Contract, it is understood and agreed
that Sellers are not making and have not at any time made any warranties or
representations of any kind or character, express or implied with respect to the
Facilities, including any warranties or representations as to habitability,
merchantability, or fitness for a particular purpose or any other matter or
thing regarding the Facilities. Except as expressly set forth in this Contract,
Buyer acknowledges and agrees that upon closing, Seller shall sell, convey to
assign and transfer to Buyer, and Buyer shall accept Sellers' interest in the
Facility Leases and the Facilities "as is, where is, with all faults." Except
as expressly set forth in this Contract, Buyer shall rely solely on its own
investigation with respect to the Facilities, including the Facilities'
physical, environmental or economic condition, compliance or lack thereof with
any law. Except as expressly set forth in this Contract, in addition to, and
not by way of limitation of, the sale of the Facilities on an AS IS CONDITION
WITH ALL FAULTS basis under this Contract, Buyer acknowledges that Sellers make
no representations or warranties whatsoever to Buyer regarding the: (i) physical
condition of the Facilities; or (ii) presence or absence of hazardous or toxic
materials or chemicals in, at, or under the Facilities.
References in this Contract to the "KNOWLEDGE" of Sellers shall refer only to
the actual knowledge (as opposed to constructive, deemed or imputed knowledge)
of the Designated Employees (as hereinafter defined) after reasonable inquiry
has been made of the appropriate regional and/or Facility personnel, and shall
not be construed, by imputation or otherwise, to refer to the knowledge of
Sellers, or any affiliate of Sellers, to any property manager, or to any other
trustee, officer, agent, manager, representative or employee of Sellers or any
affiliate thereof or to impose upon such Designated Employees any duty to
investigate the matter to which such actual knowledge, or the absence thereof,
pertains other than the duty of inquiry described herein. As used herein, the
term "DESIGNATED EMPLOYEES" shall refer to Thilo D. Best (President and C.E.O.),
Xxx X. XxXxxx (Senior V.P. and C.F.O.), Xxxx Xxxxxxxx (Senior V.P. of Assisted
Living), and Xxx Xxxxxxxx (Regional V.P. of Operations - South).
(b) Buyer's Independent Investigations. Buyer acknowledges that it is being
----------------------------------
given the full opportunity to inspect and investigate each and every aspect
of the Facilities during the Feasibility Period, either independently or through
agents, representatives or experts of Buyer's choosing, as Buyer considers
necessary or appropriate, and, if applicable, its failure to give the
Termination Notice (as defined in Section 8(c)) will conclusively evidence
Buyer's complete satisfaction with such independent investigation subject to the
specific sections of this Contract described below. Buyer has sufficient
knowledge and experience in financial and business matters to enable it to
evaluate the merits and risks of acquiring Sellers' interest in the Facilities.
Such independent investigation by Buyer includes, without limitation:
(i) the physical condition of the Real Property, including, without
limitation, the interior, the exterior, the square footage of each tenant space
therein, the structure, the roof, the paving, the utilities, and all other
physical and functional aspects of the Real Property, including the presence or
absence of Hazardous Materials. "HAZARDOUS MATERIALS" shall mean materials,
wastes or substances that are (A) included within the definition of any one or
more of the terms "hazardous substances," "hazardous materials," "toxic
substances," "toxic pollutants," and "hazardous waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. 9601, et seq.), the Resource Conservation and Recovery Act of 1976 (42
U.S.C. 6901, et seq.), the Clean Water Act (33 U.S.C. 1251, et seq.), the
Safe Drinking Water Act (14 U.S.C. 1401, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. 1801, et seq.), and the regulations promulgated
pursuant to such laws; (B) regulated or classified as hazardous or toxic, under
federal, state or local environmental laws or regulations; (C) petroleum; (D)
asbestos or asbestos-containing materials; (E) polychlorinated biphenyls; (F)
flammable explosives; or (G) radioactive materials;
(ii) contracts, operating leases, and any other documents or agreements of
significance affecting the Facilities;
(iii) Occupancy Agreements with respect to the Facilities and all matters in
connection therewith, including, without limitation, the ability of the
residents and tenants thereto to pay the rent;
(iv) all matters relating to the income and operating or capital expenses of
the Facilities and all other financial matters;
(v) the Facility Leases; and
(vi) all other matters of significance affecting, or otherwise deemed
relevant by Buyer with respect to, the Facilities.
(c) Release. Without limiting the provisions of this Section 7, Buyer
-------
waives its right to recover from, and forever releases and discharges, and
covenants not to xxx, Sellers, Sellers' affiliates, Sellers' asset manager, the
partners, trustees, shareholders, controlling persons, directors, officers,
attorneys, employees and agents of each of them, and their respective heirs,
successors, personal representatives and assigns (each a "SELLER PARTY", and
collectively, the "SELLER PARTIES") with respect to any and all claims, whether
direct or indirect, known or unknown, foreseen or unforeseen, that may arise on
account of or in any way be connected with the Facilities including, without
limitation, the physical, environmental and structural condition of the related
Real Property or any law or regulation applicable thereto, including, without
limitation, any claim or matter relating to the use, presence, discharge or
release of Hazardous Materials on, under, in, above or about the Real Property;
provided, however, that the foregoing shall not restrict Buyer from
interpleading Sellers in any action filed by a third party against Buyer
relating to Sellers' ownership and operation of the Facilities prior to closing
and Buyer does not waive its rights, if any, to recover from, and does not
release or discharge or covenant not to xxx Xxxxxxx for (i) any act that is
found by a court of competent jurisdiction to constitute fraud, (ii) any breach
of Sellers' representations or warranties set forth in Section 7(a), subject to
the limitations and conditions provided in this Contract, (iii) any breach of
Sellers' obligations set forth in this Contract that expressly survive closing,
(iv) any matter which is the subject of an indemnity from a Seller in a Closing
Document (hereinafter defined), subject to the limitations and conditions
provided in this Contract and such Closing Document, or (v) any breach by
Sellers of Section 4 hereof.
(d) Waiver by Buyer. If Buyer, with knowledge of (i) a default in any of
-----------------
the covenants, agreements or obligations to be performed by Sellers under this
Contract and/or (ii) any breach of or inaccuracy in any representation or
warranty of Sellers made in this Contract nonetheless elects to proceed to
closing, then, upon the consummation of the closing, Buyer shall be deemed to
have waived any such default and/or breach or inaccuracy and shall have no claim
against Sellers with respect thereto.
(e) Buyer's Representations. Buyer represents to Sellers that:
------------------------
(i) Organization and Authorization. Buyer is an entity duly organized and
--------------------------------
in good standing in the state of its organization and is or prior to closing
will be duly qualified to do business and in good standing in the states in
which the Facilities are situated. The individual executing this Contract on
behalf of Buyer is duly authorized to execute this Contract on behalf of Buyer.
The execution and delivery of this Contract and the performance of all
obligations of Buyer hereunder have been duly authorized by all entity action of
Buyer.
(ii) No Conflicting Agreements. The acquisition of the Facilities by Buyer
--------------------------
as provided hereunder and the performance by Buyer of its obligations under this
Contract will not conflict with or result in the breach of any of the terms of
any agreement or instrument to which Buyer is a party.
(f) Waiver by Sellers. If Sellers, with knowledge of (i) a default in any
-------------------
of the covenants, agreements or obligations to be performed by Buyer under this
Contract and/or (ii) any breach of or inaccuracy in any representation or
warranty of Buyer made in this Contract nonetheless elects to proceed to
closing, then, upon the consummation of the closing, Sellers shall be deemed to
have waived any such default and/or breach or inaccuracy and shall have no claim
against Buyer with respect thereto.
(g) No Unintended Assumption of Liabilities. Except as expressly provided
-----------------------------------------
in this Contract or in any Closing Document, Buyer is not assuming any of the
liabilities or obligations of, or claims against, Sellers of any kind or
character. The only transactions contemplated by this Contract are the sale and
purchase of Sellers' interests in the Facilities. Sellers are not selling a
business. The parties intend that Buyer shall not be deemed to be a successor
of Sellers with respect to any of Sellers' liabilities or obligations to third
parties arising before the Closing Date.
8. BUYER'S INSPECTIONS AND FEASIBILITY PERIOD.
(a) Buyer's Access. During the Feasibility Period and prior to the TSZ
---------------
Objection Date (hereinafter defined), Sellers shall give to Buyer and its
officers, directors, employees, agents, advisors, or representatives
("REPRESENTATIVES"), complete access to the Facilities during normal business
hours and after reasonable prior notice, for the purpose of performing any
reasonable tests and investigations, including, without limitation,
non-intrusive environmental and property condition tests and studies (intrusive
environmental testing shall require Sellers' consent). Sellers shall have the
right to accompany Buyer and/or its Representatives during any Buyer
investigation or testing. Buyer shall repair any damage to the Facilities
caused by any entry upon the Facilities by Buyer or its Representatives.
Notwithstanding any other provision of this Contract, the preceding sentence
shall survive the termination of this Contract for any reason and Buyer shall
not be relieved of its obligations under the preceding sentence by reason of any
termination of this Contract.
(b) Buyer's Indemnity. Buyer agrees to: (i) indemnify, defend, and hold
------------------
Sellers, and any partner, officer, director, employee, agent or attorney of
Sellers, and any other party related in any way to any of the foregoing, free
and harmless from and against any and all costs, loss, damages and expenses, of
any kind or nature whatsoever (including attorneys' fees and costs) arising out
of or resulting from the entry and/or the conduct of activities upon the
Facilities by Buyer or its Representatives and their employees, agents,
representatives, contractors, subcontractors or attorneys at the Facilities or
any breach of this Section 8, whether arising prior to or after the Effective
Date; and (ii) deliver promptly to Sellers copies of all third party reports
commissioned by or on behalf of Buyer which set forth the results of tests,
studies and inspections of the Facilities. Notwithstanding any provisions of
this Contract, the preceding sentence shall survive the expiration or
termination of this Contract.
(c) Feasibility Period. If, during the period between February 4, 2002, and
------------------
11:59 p.m. Eastern Standard Time on the Effective Date (such period is
hereinafter referred to as the "FEASIBILITY PERIOD"), Buyer gives Sellers
written notification (the "TERMINATION NOTICE") that Buyer elects not to
consummate the purchase of the Sellers' interests in the Facility Leases and the
Facilities, this Contract shall terminate, the Xxxxxxx Money and the interest
thereon shall be returned to Buyer, and, except as otherwise provided in the
last sentence of Section 8(a) or 8(b), neither party shall have any further
liability to the other under this Contract. Buyer shall have the absolute
right, in its sole discretion, to determine whether to give the Termination
Notice. If Buyer elects not to give the Termination Notice prior to the
expiration of the Feasibility Period, this Contract shall remain in full force
and effect in accordance with, and subject to, its terms. In the event that
Buyer does not give the Termination Notice, Forty-three Thousand Seven Hundred
Fifty Dollars ($43,750) of the Xxxxxxx Money shall become non-refundable, except
under the circumstances described in Sections 13 (Risk of Loss), 17
(Condemnation), and 31 (License Review Period), and shall be credited against
the Purchase Price (as it may be adjusted and prorated herein (with any balance
returned to Buyer)) on the Closing Date or shall be paid to Sellers upon any
subsequent termination of this Contract in accordance with its terms (subject to
any express provisions of this Contract to the contrary).
(d) Due Diligence Deliveries. Buyer acknowledges receipt prior to the
--------------------------
Effective Date of the following Delivered Materials, each of which Buyer will
have, prior to the end of the Feasibility Period, reviewed and approved (if and
to the extent it does not give the Termination Notice):
(i) a true and correct copy of each Facility Lease;
(ii) Facilities' form of Occupancy Agreement;
(iii) Facilities' most recent real property tax statements;
(iv) Facilities' governmental licenses and permits;
(v) Facilities' historical occupancy data for calendar years 1999-2001;
(vi) Facilities' marketing materials, including brochures;
(vii) Facilities' operations organizational structure; and
(viii) Facilities' statements of income and expenses of the Facilities for
calendar years 1999 through 2001 (the "OPERATING STATEMENTS").
(e) Pursuit of Licenses. It shall be a condition precedent to Sellers' and
--------------------
Buyer's obligation to close that Buyer shall have received all licenses and
governmental approvals necessary to operate the Facilities. Buyer shall use its
commercially reasonable efforts to obtain all such licenses and permits as
of the earliest possible date but in any event, not later than immediately prior
to closing. To this end, Buyer shall submit complete license applications by
not later than one (1) Business Day after receiving letter(s) from Sellers
authorizing such license applications. Buyer shall provide Sellers with a copy
of the license applications and all correspondence with governmental authorities
regarding the license applications. Sellers shall cooperate, at no cost to
Sellers, with Buyer's efforts to obtain the required licenses and permits.
(f) "All or Nothing" Transaction. The purchase of the Sellers' interests in
----------------------------
the Facility Leases and the Facilities by Buyer is intended by both parties to
be an "all or nothing" transaction. Subject to Sections 3(b) (Facility Leases
Assumption), 12(c) (Failure of Conditions Precedent), 13 (Risk of Loss) and 17
(Condemnation), Buyer shall either acquire Sellers' interest in all of the
Facility Leases and Facilities or none of them even if Buyer only desires to
acquire Sellers' interest in certain of the Facility Leases and Facilities after
completing its due diligence or if the conditions precedent to closing are
satisfied with respect to certain Facilities but not others.
(g) Operating Contracts. Sellers agree to deliver to Buyer on or prior to
--------------------
the Effective Date copies of the Operating Contracts. Prior to closing, Buyer
shall designate those Operating Contracts which Buyer elects to assume (each of
which shall constitute an "ASSUMED OPERATING CONTRACT") and all other Operating
Contracts shall be terminated by Sellers as of the earliest termination date
possible, provided that Buyer shall be responsible for payment of all fees due
for the period after closing through the termination date of the Operating
Contract if Buyer receives the benefit of services under such terminated
Operating Contract (otherwise Sellers shall be responsible for payment of all
such fees). Payment of all termination fees associated therewith shall be the
obligation of Sellers.
9. INTERIM OPERATION OF THE PROPERTIES.
(a) General Operation. Except as otherwise contemplated or permitted by
------------------
this Contract or approved by Buyer in writing, from the Effective Date to the
Closing Date, Sellers agree that they will operate, maintain, repair, license,
and lease the Facilities in the ordinary course, on an arm's length basis and
consistent with Sellers' past practices and will not dispose of or encumber any
Facility, except for dispositions of personal property in the ordinary course of
business which is promptly replaced with like-kind property, or as
otherwise permitted by this Contract. Without limiting the foregoing, Sellers
shall, in the ordinary course, file all renewal applications for Facility
licenses on a timely basis, enforce the Occupancy Agreements in all material
respects, perform in all material respects all of licensors' or landlords'
obligations under the Occupancy Agreements (other than Occupancy Agreements that
are in the process of being terminated due to a resident's or tenant's default
thereunder), pay all costs and expenses of the Facilities which are Sellers'
responsibility to pay, and perform all material obligations under the Facility
Leases. Sellers shall promptly provide Buyer during the pendency of this
Contract with a copy of any renewal application for Facility licenses and any
final Facility surveys.
(b) Contracts. Sellers agree that, without Buyer's prior written consent
---------
(such consent not to be unreasonably withheld, conditioned or delayed), Sellers
will not enter into any Operating Contract affecting the Facilities if such
Operating Contract cannot be terminated on thirty (30) days' notice or less
without penalty.
(c) Maintenance. Between the Effective Date and the Closing Date, Sellers
-----------
shall (i) maintain the Facilities in substantially the same manner as prior
hereto pursuant to Sellers' normal course of business, subject to reasonable
wear and tear and further subject to the occurrence of any damage or destruction
to the Real Property by casualty or other causes or events beyond the control of
Sellers; provided, however, that Sellers' maintenance obligations under this
subsection shall not include any obligation to make capital expenditures not
incurred in Sellers' normal course of business or any other expenditures not
incurred in Sellers' normal course of business unless required to comply with
the terms of the Facility Leases; (ii) continue to maintain its existing
insurance coverage; and (iii) not grant any voluntary liens or encumbrances
affecting the Facilities.
10. TITLE. Sellers do not make any representations, warranties or covenants
concerning title to the Real Property except that (i) Sellers are the
respective tenants under the Facility Leases and (ii) after the Effective Date,
Sellers shall not execute any deed, easement, restriction, covenant or other
matter affecting title to the Real Property (other than Occupancy Agreements)
unless Buyer has received a copy thereof and has expressly approved the same in
writing (such approval will not be unreasonably withheld, conditioned or
delayed). Prior to April 29, 2002 (the "TSZ OBJECTION DATE"), Buyer shall have
the right, but not the obligation, to, at its sole cost and expense, (i) obtain
from any nationally recognized title insurance company (the "TITLE COMPANY")
leasehold title insurance commitments for the Facilities (the "TITLE
COMMITMENTS"), (ii) land surveys for the Facilities ("SURVEYS") and (iii) zoning
letters from the municipalities in which the Facilities are located stating the
zoning designation of the area in which each Facility is located ("ZONING
LETTERS"). On or prior to the TSZ Objection Date, Buyer may provide Sellers
with a written notice stating any specific matters (each, a "DISAPPROVED
MATTER") in the Title Commitments' exceptions, Surveys, or Zoning Letters which
are unacceptable to Buyer. Sellers shall have no obligation hereunder to cure
any Disapproved Matter and any failure of Sellers to respond to Buyer's notice
shall be deemed an election not to cure a Disapproved Matter. Within one (1)
Business Day of its receipt of Buyer's notice, Sellers shall notify Buyer in
writing of any Disapproved Matters which Sellers are unwilling or unable to
cause to be removed or insured against prior to or at closing, and with respect
to such Disapproved Matters, Buyer shall then elect within one (1) Business Day
of its receipt of Sellers' notice (or deemed receipt) (a) to terminate this
Contract and to receive a refund of one-half of the Xxxxxxx Money (the remaining
one-half of the Xxxxxxx Money to be delivered to Sellers) or (b) to waive its
disapproval of such Disapproved Matters and, subject to the terms of this
Contract, to proceed to closing hereunder. Buyer's failure to respond to
Sellers' notice shall be deemed an election to terminate this Contract under
clause (a) of the immediately preceding sentence. If Sellers shall fail to cure
any Disapproved Matter prior to the Closing Date which it notified Buyer it
would cure and Buyer is unwilling to acquire Sellers' interests in the
Facilities subject thereto, Buyer shall have the right to terminate this
Contract and to receive the return of one-half of the Xxxxxxx Money (the
remaining one-half of the Xxxxxxx Money to be delivered to Sellers).
11. COSTS. Buyer shall pay the cost of all premiums and charges in
connection with any title insurance issued to Buyer, the cost of preparing any
Facility land survey, one-half of all escrow charges due to the Escrow Agent and
all costs of Buyer's due diligence, including fees due its consultants. Sellers
shall pay one-half of all escrow charges due to the Escrow Agent and any
assumption fees and costs described in Section 3. Each party shall pay the fees
and costs of its own counsel.
12. CONDITIONS PRECEDENT TO CLOSING.
(a) Conditions to Buyer's Obligations. The obligations of Buyer to purchase
---------------------------------
Sellers' interests in the Facility Leases and the Facilities from Sellers
and to perform the other covenants and obligations to be performed by Buyer on
the Closing Date shall be subject to the following conditions (all or any of
which may be waived in writing, in whole or in part, by Buyer):
(i) Representations and Warranties True. The representations and warranties
-----------------------------------
made by Sellers under this Contract shall be true and correct in all
material respects on the Effective Date and shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if such representations and warranties had been made on and as of the Closing
Date.
(ii) Sellers' Performance. Sellers shall have performed all covenants,
---------------------
agreements and delivered all documents required by this Contract to be performed
or delivered by them on or before the Closing Date.
(iii) Required Consents. Subject to the provisions of Section 3, on or
------------------
prior to the Closing Date, the Required Consents shall have been obtained (which
may be evidenced by Landlords' execution of each Assignment and Assumption of
Facility Lease and Release Agreement), upon commercially reasonable terms and
conditions; provided that Landlords requiring Emeritus Corporation to assume the
same guaranty obligations as ILC shall be deemed to be commercially reasonable,
but Landlords requiring Emeritus Corporation to pay any lease assumption or
other fees or to undertake greater obligations than those reflected in the
Facility Leases shall not be deemed to be commercially reasonable.
(iv) Licenses. Buyer shall have received all licenses and governmental
--------
approvals necessary to operate the Facilities and all such licenses shall be on
terms and conditions reasonably acceptable to Buyer (it being agreed that
Buyer's receipt of the same licenses currently held by Sellers on terms and
conditions substantially similar to the terms and conditions under which Sellers
hold such licenses (except that Buyer's license may include any customary
conditions subsequent imposed in connection with any transfer of ownership, such
as a post-closing survey) is deemed reasonably acceptable to Buyer).
(b) Conditions to Sellers' Obligations. The obligations of Sellers to sell
-----------------------------------
their interests in the Facility Leases and the Facilities to Buyer and to
perform the other covenants and obligations to be performed by Sellers on the
Closing Date shall be subject to the following conditions (all or any of which
may be waived in writing, in whole or in part, by Sellers):
(i) Representations and Warranties True. The representations and warranties
-----------------------------------
made by Buyer under this Contract shall be true and correct in all material
respects on the Effective Date and shall be true and correct in all respects on
and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date.
(ii) Buyer's Performance. Buyer shall have performed all covenants,
--------------------
agreements and delivered all documents required by this Contract to be performed
or delivered by it on or before the Closing Date.
(iii) Licenses. Buyer shall have received all licenses and governmental
--------
approvals necessary to operate the Facilities and all such licenses shall be on
terms and conditions reasonably acceptable to Buyer (it being agreed that
Buyer's receipt of the same licenses currently held by Sellers on terms and
conditions substantially similar to the terms and conditions under which Sellers
hold such licenses (except that Buyer's license may include any customary
conditions subsequent imposed in connection with any transfer of ownership, such
as a post-closing survey) is deemed reasonably acceptable to Buyer).
(iv) Required Consents. Subject to the provisions of Section 3, on or prior
-----------------
to the Closing Date, the Required Consents shall have been obtained (which may
be evidenced by Landlords' execution of each Assignment and Assumption of
Facility Lease and Release Agreement), including, without limitation, the
release of Sellers and ILC from liability under the Facility Leases as of the
Closing Date.
(c) Failure of Conditions Precedent. Subject to the terms of the next
----------------------------------
sentence, in the event that all conditions precedent for closing as specified in
Section 12(a) and (b) above are not fulfilled on the Closing Date (as the
same may be extended by written agreement of Sellers and Buyer), the Escrow
Agent shall return all of Buyer's funds to Buyer and all documents to the party
that has delivered such documents to the Escrow Agent, except that the Xxxxxxx
Money shall be distributed to the party entitled to receive the Xxxxxxx Money in
accordance with the provisions of this Contract. In the event that the
conditions precedent in Sections 12(a)(iv) and 12 (b)(iii) (the "LICENSE
CONDITION") are not satisfied on the Closing Date, Seller or Buyer may elect to
extend the Closing Date for a reasonable period of time, provided that in no
event shall the Closing Date be extended in the aggregate more than thirty (30)
days, but, subject to the terms of the next sentence, only for those Facilities
for which the License Condition was not satisfied. Closing of the transaction
provided for herein for which the License Condition was satisfied shall proceed
on the initially scheduled Closing Date, except that in no event shall closings
on Facilities leased from the same Landlord occur on different Closing Dates.
Accordingly, if the License Condition is satisfied with respect to certain
Facilities leased from a single Landlord, but not others, the Closing Date shall
be extended (up to the maximum time period specified above) for all Facilities
leased from that Landlord. If the closing of the transaction provided for
herein occurs on different dates, then the term "Closing Date," as used
elsewhere in this Contract (including, without limitation, Section 25
(Limitations on Claims; Survival)), shall mean with respect to the Facilities
for which the License Condition was satisfied and closing occurred on the
initially scheduled Closing Date, the initial Closing Date and shall mean with
respect to the balance of the Facilities, the date on which Sellers' interest in
those remaining Facilities was acquired by Buyer.
13. RISK OF LOSS. If, prior to the Closing Date, any Facility is damaged by
fire or by any other cause whatsoever, Sellers shall promptly give Buyer
written notice of such damage.
(a) If such damage affects more than one of the Facilities and the cost of
repairing such damage is not in excess of One Million Dollars ($1,000,000) in
the aggregate at the time of such casualty (as determined by Sellers'
independent insurer), then (a) Buyer shall receive at the closing, to the extent
such sums have not been expended on repair work with the reasonable
approval of Buyer (except for emergency repairs, for which no approval shall be
required), the amount of the deductible, plus the amount necessary to repair any
uninsured loss, plus an assignment of all insurance proceeds payable (but not
yet paid) as a result of such loss, plus all insurance proceeds received by
Sellers as a result of such casualty loss; (b) this Contract shall continue in
full force and effect with no reduction in the Purchase Price and (c) Sellers
shall have no obligation to repair such damage. Notwithstanding any language to
the contrary herein, if the cost to repair such damage is less than One Million
Dollars ($1,000,000) in the aggregate at the time of such casualty (as
determined by Sellers' independent insurer), neither party has any right to
terminate the Contract as a result of such damage except as provided in Section
13(c).
(b) If such damage affects more than one of the Facilities and the cost of
repairing damage from such casualty is equal to or greater than One Million
Dollars ($1,000,000) in the aggregate at the time of such casualty (as
determined by Sellers' independent insurer), then Buyer shall have the right,
for a period of ten (10) days from the date of notice of the amount of damage
caused by the casualty, to terminate this Contract by giving written notice of
termination to Sellers within such period and the Closing Date shall be extended
if necessary to allow Buyer to have this full ten (10) day review period. Upon
such termination, the entire Xxxxxxx Money shall be returned to Buyer and the
parties hereto shall be released of any further liability hereunder except as
otherwise provided herein. If Buyer fails to notify Sellers within such period
of Buyer's exercise of its right to terminate this Contract, then Buyer shall
proceed to closing subject to the terms and conditions hereof and, to the extent
such sums have not been expended on repair work with the reasonable approval of
Buyer (except for emergency repairs, for which no approval shall be required),
all insurance proceeds received by Sellers as a result of such casualty loss,
plus the amount of the deductible, plus the amount of any uninsured loss shall
be paid to Buyer at the closing. To the extent such proceeds have not yet been
received by Sellers, then Sellers' rights to such proceeds shall be assigned to
Buyer at the closing upon payment of the full Purchase Price to Sellers by Buyer
and Sellers shall have no obligation to repair such damage.
(c) Notwithstanding Sections 13(a) and 13(b), if the cost of repairing
damage from a casualty to any Facility is equal to or greater than Two Hundred
Fifty Thousand Dollars ($250,000), Buyer shall elect, within five (5) days after
the date of notice of the amount of damage caused by the casualty but, in any
event, prior to the Closing Date, to (i) proceed to closing in accordance with
Section 13(a) or (ii) exclude Sellers' rights in such individual parcel of Real
Property from the Sellers' interests in the Facility Leases and the Facilities
to be purchased at closing. If Buyer elects to exclude Sellers' rights in such
individual parcel of Real Property, Sellers, within five (5) days after Buyer's
election, can either terminate this Contract or agree to exclude such individual
parcel of Real Property. If Sellers fail to make an election by providing a
written notice to Buyer within such five (5) day period, then Sellers shall be
deemed to have agreed to exclude Sellers' rights in such parcel. If Sellers
elect to terminate this Contract, Sellers shall send a written notice to Buyer
of such election and Buyer shall have five (5) days from receipt of such notice
to rescind its election to exclude Sellers' rights in such parcel. If Sellers
elect to terminate and Buyer fails to rescind its election, the entire Xxxxxxx
Money shall be returned to Buyer and the parties hereto shall be released from
any further liability hereunder except as otherwise provided herein. If Sellers
agree to exclude such Sellers' rights in individual parcel of Real Property, the
term "Facilities" shall be amended so as to exclude such Sellers' rights in
individual parcel of Real Property and Sellers shall have all right to the
insurance proceeds with respect to such excluded parcel of Real Property. The
Purchase Price shall not be adjusted as a result of the exclusion of Sellers'
rights in the affected parcel of Real Property.
14. SELLERS' FAILURE TO PERFORM. If all of the conditions to Sellers'
obligation to close have been satisfied or waived but Sellers fail to perform
under this Contract when obligated to do so, Buyer may either: (a) enforce
specific performance hereof or (b) terminate this Contract and receive the
Xxxxxxx Money and, in the event of such termination, Buyer and Sellers shall be
relieved of all obligations and liabilities under this Contract (except as
otherwise provided in this Contract). If Buyer elects subsection (a) from the
previous sentence, the parties shall continue this Contract pending Buyer's
action for specific performance, in which latter event Buyer, as a condition to
such action, shall not accept return of the Xxxxxxx Money.
15. BUYER'S FAILURE TO PERFORM. If all of the conditions to Buyer's
obligation to close have been satisfied or waived but Buyer fails to perform
this Contract when obligated to do so, the entire amount of the Xxxxxxx Money
shall be paid to and retained by Sellers as fixed, agreed and liquidated
damages, and as Sellers' exclusive remedy for such failure to perform, and
Sellers and Buyer shall be relieved from all liabilities and obligations under
this Contract (except as otherwise provided in this Contract).
16. ATTORNEYS' FEES; COSTS. In connection with any litigation arising out
of this Contract, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs at both the trial and appellate levels.
17. CONDEMNATION. In the event of the institution, prior to closing of any
proceedings, judicial, administrative or otherwise, which relate to a taking or
proposed taking of any portion of any Real Property by eminent domain, Sellers
shall immediately notify Buyer thereof. In the event of any such taking or
proposed taking which relates to more than five percent (5%) of the land area of
any Real Property, Buyer may at its option within ten (10) days of its receipt
of the notice exclude Sellers' rights in such individual parcel of Real Property
from the Sellers' interests in the Facility Leases and the Facilities to be
purchased at closing, or Buyer shall have the right to appear and defend such
condemnation proceedings, and in the event the closing occurs, any award in
condemnation shall, at Buyer's election, become the property of Buyer. If Buyer
excludes such individual parcel of Real Property from the transaction, the term
"Facilities" shall be amended so as to exclude such individual parcel of Real
Property and Sellers shall have all right to the condemnation proceeds with
respect to such excluded parcel of Real Property. The Purchase Price shall not
be adjusted as a result of the exclusion of the affected parcel of Real
Property.
18. BROKERS AND AGENTS. Each of the parties represents to the other that it
has not retained or used the services of a broker or agent in connection with
this transaction. Each party agrees to indemnify and hold the other harmless
from any claims of brokers or agents for fees or commissions arising out of this
transaction attributable to a breach by such party of its representations under
this Section.
19. NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and delivered by a nationally recognized overnight courier service
providing a receipt (such as Federal Express), by hand or by facsimile addressed
as follows: (i) if to Buyer: Emeritus Corporation, Attention: Xxxxxx X. Xxxx,
Chairman and CEO, 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, Tel. No.
000-000-0000, Fax No. 000-000-0000, with a copy to Xxxxx X. Xxxxxxxxx, Esquire,
The Xxxxxxxxx Group PLLC, 0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxx XX 00000,
Tel. No. 000-000-0000, Fax No. 000-000-0000; if to Seller, c/o Horizon Bay
Management, L.L.C., Attention: Thilo D. Best, President and CEO, 000 X. Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Tel. No. 000-000-0000, Fax No.
000-000-0000, with a copy to Whitehall Street Real Estate Limited Partnership
VII, Attention: Chief Financial Officer, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, and with a copy to Xxxxxxx X. Xxxxx, Esquire, Arent Fox Xxxxxxx
Xxxxxxx & Xxxx, PLLC, 0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000-0000, Tel. No. 000-000-0000; Fax No. 000-000-0000, or at any other address
designated by either party by notice to the other party pursuant to this Section
19. Notices shall be deemed given when received or when receipt is refused by
the party to whom it is addressed, if delivered by overnight courier service or
by hand or on the date the automatic acknowledgment indicates delivery was made
to the party to whom it is addressed, if sent by facsimile.
20. ENTIRE AGREEMENT. This Contract shall constitute the entire agreement
between the parties, and no prior verbal or written agreement of understanding
shall survive the execution of this Contract. In the event of any amendment or
modification of this Contract, the amendment or modification shall be in writing
signed by all the parties, or their agents, in order to be binding upon the
parties. This Contract, or a memorandum thereof, shall not be recorded among
the land records.
21. FURTHER ASSURANCES. Sellers agree that they will, at any time and from
time to time after the Closing Date, upon request of and at the sole cost and
expense of Buyer, do, execute, acknowledge and deliver, or will cause to be
done, executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances and assurances as may reasonably be required
for the assigning, transferring, granting, assuring and confirming to Buyer, or
for aiding and assisting in collecting and reducing to possession, any or all of
the assets or property being sold to Buyer pursuant to this Contract, provided
that the same do not impose any liability on Sellers beyond that provided in
this Contract or any document required to be executed by Sellers pursuant to
this Contract (other than under this Section).
22. WAIVER OF JURY TRIAL. The parties hereto waive trial by jury in any
action, proceeding or counterclaim brought by any party against any other party
on any matter arising out of or in any way connected with this Contract.
23. BENEFIT AND BURDEN; LIABILITY. This Contract shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Buyer shall not assign its rights under this Contract
without Sellers' prior written consent but Buyer shall have the right, without
Sellers' consent but with notice to Sellers, to designate any subsidiary to
assume the Facility Leases and to take title to the Personal Property. Except
as otherwise provided in Section 4, each Seller's liability under this Contract
shall be several (i.e., each Seller shall be liable only for its own
representations, warranties and covenants (each of which is given only with
respect to the Facility it operates)).
24. APPLICABLE LAW. This Contract shall be governed by and interpreted in
accordance with the laws of the State of Texas.
25. LIMITATIONS ON CLAIMS; SURVIVAL.
(a) Limitations on Buyer's Claims. Notwithstanding any provision to the
--------------------------------
contrary herein or in any document or instrument executed by Sellers and
delivered to Buyer or its designee at or in connection with the closing
(collectively, "CLOSING DOCUMENTS"), Sellers shall have no liability whatsoever
with respect to any suits, actions, proceedings, investigations demands, claims,
liabilities, fines, penalties, liens, judgments, losses, injuries, damages,
expenses or costs, including without limitation, attorneys' and experts' fees
and costs and investigation and remediation costs (collectively, "CLAIMS") under
any of the representations and warranties and indemnities contained in this
Contract or in any Closing Document, except to the extent that the aggregate
amount of all Claims for breach of Sellers' representations and warranties and
indemnities exceeds $25,000 (the "THRESHOLD AMOUNT") (but if such Claim is valid
and is finally determined (or settled) to be in excess of the Threshold Amount,
then Sellers' liability shall extend to the "first dollar" of Buyer's Claim(s));
provided, however, notwithstanding any provision to the contrary herein or in
any Closing Document, the total liability of Sellers for any or all Claims with
respect to the Facilities shall not exceed Three Hundred Seventy-five Thousand
Dollars ($375,000) (the "CAP AMOUNT"). Further, notwithstanding any provision
to the contrary herein or in any Closing Document, Sellers shall have no
liability with respect to any Claim under any of the representations and
warranties and indemnities contained in this Contract or in any Closing
Document, which Claim relates to or arises in connection with (1) any Hazardous
Materials (except solely to the extent that Sellers have breached their
representation in Section 7(a)), (2) the physical condition of any Facility
(except solely to the extent that Sellers have breached their representation in
Section 7(a)) or (3) any other matter not expressly set forth in Sellers'
representations and warranties set forth in Section 7(a) or their indemnities in
any Closing Document. Buyer shall not make any Claim or deliver any Claim
Notice unless in good faith, it believes the Claim would exceed the Threshold
Amount as set forth above.
(b) Survival of Buyer's Claims. Except as otherwise specifically set forth
---------------------------
in this Contract, the representations and warranties and indemnities of Sellers
contained herein or in any Closing Document shall survive only until the date
which is twelve (12) months after the Closing Date (the "SURVIVAL DATE"). Any
Claim that Buyer may have any time against Sellers for breach of any such
representation, warranty or indemnity, whether known or unknown, with respect to
which a Claim Notice has not been delivered to Sellers on or prior to the
--------
Survival Date, shall not be valid or effective. For the avoidance of doubt, on
the Survival Date, Sellers shall be fully discharged and released (without the
need for separate releases or other documentation) from any liability or
obligation to the Buyer, Buyer's designee and/or their successors and assigns
with respect to any Claims or any other matter relating to this Contract, any
Closing Document or the Facilities, except solely for those matters that are
then the subject of the pending Claim Notice delivered by Buyer to Sellers.
(c) Limitations on Sellers' Claims. Notwithstanding any provision to the
---------------------------------
contrary herein or in any document or instrument executed by Buyer and delivered
to Sellers at or in connection with the closing (collectively, "BUYER CLOSING
DOCUMENTS"), Buyer shall have no liability whatsoever with respect to any Claims
under any of the representations and warranties and indemnities contained in
this Contract or in any Buyer Closing Document, except to the extent that the
aggregate amount of all Claims for breach of Buyer's representations and
warranties and indemnities exceeds the Threshold Amount (but if such Claim is
valid and is finally determined (or settled) to be in excess of the Threshold
Amount, then Buyer's liability shall extend to the "first dollar" of Sellers'
Claim(s)); provided, however, notwithstanding any provision to the contrary
herein or in any Buyer Closing Document, the total liability of Buyer for any or
all Claims with respect to the Facilities shall not exceed the Cap Amount.
Further, notwithstanding any provision to the contrary herein or in any Buyer
Closing Document, Buyer shall have no liability with respect to any Claim under
any of the representations and warranties and indemnities contained in this
Contract or in any Buyer Closing Document, which Claim relates to or arises in
connection with (1) any Hazardous Materials, (2) the physical condition of any
Facility or (3) any other matter not expressly set forth in Buyer's
representations and warranties set forth in Section 7(b) or its indemnities in
any Buyer Closing Document. Sellers shall not make any Claim or deliver any
Claim Notice unless in good faith, a Seller believes the Claim would exceed the
Threshold Amount as set forth above.
(d) Survival of Sellers' Claims. Except as otherwise specifically set forth
---------------------------
in this Contract, the representations and warranties and indemnities of Buyer
contained herein or in any Buyer Closing Document shall survive only until the
Survival Date. Any Claim that Sellers may have any time against Buyer for breach
of any such representation, warranty or indemnity, whether known or unknown,
with respect to which a Claim Notice has not been delivered to Buyer on or prior
-------
to the Survival Date, shall not be valid or effective. For the avoidance of
doubt, on the Survival Date, Buyer shall be fully discharged and released
(without the need for separate releases or other documentation) from any
liability or obligation to the Sellers, Sellers' designee(s) and/or their
successors and assigns with respect to any Claims or any other matter relating
to this Contract, any Buyer Closing Document or the Facilities, except solely
for those matters that are then the subject of the pending Claim Notice
delivered by Sellers to Buyer.
(e) HBM Guaranty. HBM shall execute at closing a Guaranty substantially in
-------------
the form of Exhibit J, guaranteeing Sellers' obligation to pay to Buyer damages
---------
due under this Contract arising from a breach of Sellers' representations and
warranties set forth in Section 7(a) of the Contract, provided that HBM shall
only be liable under such Guaranty to the extent that Sellers would be liable
under the provisions of this Section 25 and in no event shall HBM's maximum
amount of liability under the Guaranty exceed the Cap Amount. Furthermore, to
the extent Buyer collects from Sellers under a Claim the Cap Amount, HBM shall
have no further liability under such Guaranty.
(f) Closing Survival and Section Applicability. This Section 25 shall
----------------------------------------------
survive closing. The limitations on Claims (including, without limitation, the
Threshold Amount and the Cap Amount) and all other aspects of this Section 25
shall be inapplicable to the provisions of Section 4 (Sellers' Funding of
Operating Losses) and Section 6(d) (Adjustments). Nothing in this Section 25
shall restrict Buyer from interpleading Sellers in any action filed by a third
party against Buyer relating to Sellers' ownership and operation of the
Facilities prior to closing.
26. TIME OF THE ESSENCE. All times, wherever specified herein for the
performance by Sellers or Buyer of their respective obligations hereunder, are
of the essence of this Contract. Notwithstanding the foregoing, any time period
provided for herein which shall end on a Saturday, Sunday, or legal holiday
shall extend to the next Business Day. For purposes of this Contract, the term
"BUSINESS DAY" shall mean those days of the week which are not a Saturday,
Sunday or any other federal or state holiday in which the banks in Chicago are
not open for business.
27. COUNTERPARTS. This Contract may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single agreement binding on the parties hereto.
28. DRAFTS NOT AN OFFER TO ENTER INTO A LEGALLY BINDING CONTRACT. The
parties hereto agree that the submission of a draft of this Contract by one
party to another is not intended by either party to be an offer to enter into a
legally binding contract with respect to the purchase and sale of the Facilities
pursuant to the terms of this Contract. The parties shall be legally bound with
respect to the purchase and sale of the Facilities pursuant to the terms of this
Contract only if and when the parties have been able to negotiate all of the
terms and provisions of this Contract in a manner acceptable to each of the
parties in their respective sole discretion, including, without limitation, all
of the Exhibits and Schedules hereto, and each of Sellers and Buyer have fully
executed and delivered to each other a counterpart of this Contract, including,
without limitation, all Exhibits and Schedules hereto.
29. CONFIDENTIALITY, DISCLOSURE AND PRESS RELEASES.
(a) Confidentiality Agreement. As a condition to Sellers' agreement to
--------------------------
furnish and/or disclose Confidential Information (as defined in the
confidentiality agreement attached hereto as Exhibit H) to Buyer and its
----------
Representatives for review and inspection, Buyer hereby agrees to be bound by
the confidentiality agreement in the form attached hereto as Exhibit H.
---------
(b) Disclosure. Notwithstanding any language in this Contract to the
----------
contrary, in no event shall Buyer contact any Facilities-based employees or
otherwise disclose the transactions contemplated by this Contract to any
Facilities-based employees until the later of (i) the Effective Date or (ii)
Buyer's issuance of the Press Release (hereinafter defined).
(c) Press Release. Sellers and Buyer hereby covenant that (i) prior to the
--------------
closing, they shall not issue any press release or public statement (a "PRESS
RELEASE") with respect to the transactions contemplated by this Contract without
the prior consent of all parties to this Contract, except to the extent required
by law or the regulations of the Securities and Exchange Commission, and (ii)
after the closing, any Press Release issued by Sellers or Buyer shall be subject
to the review and approval of all such parties (which approval shall not be
unreasonably withheld). If Sellers or Buyer are required by law to issue a
Press Release, such party shall, at least two (2) Business Days prior to the
issuance of the same, deliver a copy of the proposed Press Release to the other
party for its review. Notwithstanding any language to the contrary herein,
Buyer covenants to issue a Press Release two (2) Business Days after expiration
of the Feasibility Period or such later date as may be mutually agreed by
Sellers and Buyer, which Press Release shall be subject to Sellers' review and
approval (which approval will not be unreasonably withheld and may not be
withheld with respect to any provision of the Press Release which is required by
law or the regulations of the Securities and Exchange Commission).
30. ESCROW.
(a) Interpleader. In the event of a dispute concerning the disposition of
------------
the Xxxxxxx Money, the Escrow Agent shall have the right at any time to deposit
any cash funds held by it under this Contract with the clerk of the court having
jurisdiction. The Escrow Agent shall give written notice of such deposit
to Sellers and Buyer. Upon such deposit, the Escrow Agent shall be relieved and
discharged of all further obligations and responsibilities hereunder.
(b) Escrow Agent as Stakeholder. The parties acknowledge that the Escrow
------------------------------
Agent is acting solely as a stakeholder at their request and for their
convenience. Sellers and Buyer shall jointly and severally indemnify and hold
the Escrow Agent harmless from and against all costs, claims, and expenses,
including reasonable attorneys' fees, incurred in connection with the
performance of the Escrow Agent's duties hereunder, except with respect to
actions or omissions taken or suffered by the Escrow Agent in bad faith, in
willful disregard of this Contract or involving gross negligence on the part of
the Escrow Agent.
31. LICENSE REVIEW PERIOD. Buyer may at any time on or prior to the date
which is five (5) Business Days after the Effective Date deliver to Sellers
written notice that it is terminating this transaction because it is
dissatisfied with the Facilities' existing licenses or with the licenses or
license conditions it expects to have imposed on it in connection with its
licenses. Upon Buyer delivering a termination notice under the preceding
sentence, this Contract shall terminate, the Xxxxxxx Money and the interest
thereon shall be returned to Buyer, and, except as otherwise provided in the
last sentence of Section 8(a) or 8(b), neither party shall have any further
liability to the other under this Contract.
[Remainder of page intentionally left blank.]
X-0
X-0
IN WITNESS WHEREOF, the undersigned parties have executed this Contract as
of the day and year first above stated.
SELLERS:
-------
INTEGRATED LIVING COMMUNITIES OF ALEXANDRIA, L.L.C.
By: /s/ Thilo D. Best
Thilo D. Best
President and Chief Executive Officer
INTEGRATED LIVING COMMUNITIES OF LAKE XXXXXXX, L.L.C.
By: /s/ Thilo D. Best
Thilo D. Best
President and Chief Executive Officer
INTEGRATED LIVING COMMUNITIES OF LAFAYETTE, L.L.C.
By: /s/ Thilo D. Best
Thilo D. Best
President and Chief Executive Officer
INTEGRATED LIVING COMMUNITIES
OF XXXXXXXXX, X.X.
By: ILC of Xxxxxxxxx Gen-Par, L.L.C.
General Partner
By:/s/ Thilo D. Best
Thilo D. Best
President and Chief Executive Officer
[signatures continue on next page]
INTEGRATED LIVING COMMUNITIES
OF OAKWELL, L.P.
By: ILC of Oakwell Gen-Par, L.L.C.
General Partner
By: /s/ Thilo D. Best
Thilo D. Best
President and Chief Executive
Officer
INTEGRATED LIVING COMMUNITIES
OF SAN ANTONIO, L.P.
By: ILC of San Antonio Gen-Par, L.L.C.
General Partner
By: s/ Thilo D. Best
Thilo D. Best
President and Chief Executive
Officer
INTEGRATED LIVING COMMUNITIES
OF XXXXXXXX, X.X.
By: ILC of McKinney Gen-Par, L.L.C.
General Partner
By: /s/ Thilo D. Best
Thilo D. Best
President and Chief Executive
Officer
[signatures continue on next page]
HBM is executing this Contract for the sole purpose of agreeing to be bound by
the provisions of Sections 4(f) and 25(e).
HBM:
---
HORIZON BAY MANAGEMENT, L.L.C.
By: /s/ Thilo D. Best
Thilo D. Best
President and Chief Executive Officer
BUYER:
-----
EMERITUS CORPORATION
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
Chairman and Chief Executive Officer
The undersigned Escrow Agent executes this Contract solely for the purpose of
evidencing its agreement to perform its obligations, as set forth in this
Contract, it being understood and agreed that Escrow Agent shall have absolutely
no liability for the performance by Sellers or Buyer of their obligations under
this Contract.
TITLE NETWORK, LTD.
By:
Name:
Title:
I-4
LIST OF EXHIBITS
----------------
Exhibit Recitals Definition of Personal Property
-----------------
Exhibit A Description of Facility Leases and Real Property
----------
Exhibit B Sellers' Operating Loss Funding Obligations
----------
Exhibit C Form of Assignment and Assumption of Facility Lease and Release
----------
Agreement
--
Exhibit D Form of Assignment and Assumption of Occupancy Agreements
----------
Exhibit E Form of Assignment of Licenses, Intangibles (including Trade Name)
---------
and Warranties
Exhibit F Form of Assignment and Assumption of Operating Contracts
----------
Exhibit G Form of Xxxx of Sale
----------
Exhibit H Form of Confidentiality Agreement
----------
Exhibit I Form of HBM's Guaranty of Operating Losses
----------
Exhibit J Form of HBM's Guaranty of Representations and Warranties
----------
LIST OF SCHEDULES
-----------------
Schedule 4(b) Form of Operating Loss Report
--------------
Schedule 4(e) Examples of Operating Loss Calculations
--------------
Schedule 7(a)(vi) Litigation
------------------
Schedule 7(a)(xi) Operating Contracts
------------------
I-4
EXHIBIT RECITALS
----------------
"PERSONAL PROPERTY" is comprised of the following (expressly excluding operating
procedures manuals, corporate systems (such as accounting or cash management
systems), accounts receivable, tax refunds, goodwill, the trade name "Xxxxxxxx
Place at Lincoln Square" and all other trade names (other than the Trade Names),
trademarks and service marks, trade secrets and proprietary information and
know-how and forms, including accounting and other proprietary software, and
equipment):
(i) all resident occupancy agreements and commercial tenant lease or
other occupancy agreements relating to Sellers' respective Real Property
(collectively, the "OCCUPANCY AGREEMENTS");
(ii) to the extent assignable, any and all licenses, authorizations,
permits and approvals issued by any governmental authority and relating to the
operation of Sellers' respective Real Property (collectively, the "ASSIGNABLE
LICENSES");
(iii) all furniture, furnishings, equipment, inventory supplies and
vehicles owned by Sellers and relating to such Sellers' respective Real Property
(collectively, the "TANGIBLE PERSONAL PROPERTY");
(iv) all service, maintenance, and equipment contracts and leases under
which a Seller is vendee or lessee (excluding each Seller's Management Agreement
with Horizon Bay Management, L.L.C.) which shall be terminated at closing which
relates to such Seller's respective Real Property (collectively, the "OPERATING
CONTRACTS"); and
(v) all rights to the trade names "Xxxxxxxx Place at Alexandria," "Xxxxxxxx
Place at Lake Xxxxxxx," "Xxxxxxxx Place at Lafayette," "Xxxxxxxx Place of
Xxxxxxxxx," "Xxxxxxxx Place at Oakwell Farms," "Xxxxxxxx Place at The Medical
Center," and "Xxxxxxxx Place at Stonebridge" (collectively, the "TRADE NAMES")
------
A-2
A-1
NAME AND ADDRESS OF FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FACILITY CURRENT TENANT LANDLORD/TENANT LEASE LEASE EXECUTION DATE
-----------------------------------------------------------------------------------------------------------------------------------
----------------------- --------------------- --------------------
Xxxxxxxx Place at Alexandria Integrated Living Communities of Alexandria, L.L.C. Health Care Property Investors, Inc., as L
000 Xxxxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
Xxxxxxxx Place at Lake Xxxxxxx Integrated Living Communities of Lake Xxxxxxx, L.L.C. Health Care Property Investors, Inc.,
0000 Xxxxxxx Xxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Xxxxxxxx Place at Lafayette Integrated Living Communities of Lafayette, L.L.C. Health Care Property Investors, Inc., as Les
000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxxx Place of Henderson Integrated Living Communities of Xxxxxxxxx, X.X. Healthcare Realty Trust, formerly Capstone Cap
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxxxx Place at Oakwell Integrated Living Communities of Oakwell, L.P. Healthcare Realty Trust, formerly Capstone Capital
Farms
0000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxxxx Place at The Medical Integrated Living Communities of San Antonio, L.P. Healthcare Realty Trust, formerly Capstone
Center
0000 Xxxxx Xxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxxxx Place at Stonebridge Integrated Living Communities of XxXxxxxx, X.X. Healthcare Realty Trust, formerly Capstone Ca
0000 X. Xxxxxxxxxxx Xxxxx
XxXxxxxx, XX 00000
Note: All Lessees were converted from corporations to limited liability
--------------------------------------------------------------------------------
companies or limited partnerships as noted in the Facility Current Tenant
--------------------------------------------------------------------------------
column.
-------
B-4
B-1
EXHIBIT B
---------
SELLER'S OPERATING LOSS FUNDING OBLIGATIONS
-------------------------------------------
ANNUAL NET LOSS
LANDLORD . . . . . COMMUNITY FIRST YEAR OPERATING LOSS CAPS SECOND YEAR OPERATING LOSS CAPS
HCPI . . . . . . . Xxxxxxxx Place at Lafayette $ ( 202,000) $ ( 5,000)
HCPI . . . . . . . Kingsley Lake Xxxxxxx ( 239,000) ( 85,000)
HCPI . . . . . . . Xxxxxxxx Place at Alexandria ( 468,000) (226,000)
HCPI SUBTOTAL. . . ( 909,000) (316,000) (1,225,000)
HRT. . . . . . . . Medical Center ( 323,000) (127,000)
HRT. . . . . . . . Xxxxxxxx Place at Oakwell Farms ( 267,000) ( 60,000)
HRT. . . . . . . . Xxxxxxxx Place of Stonebridge Ranch ( 199,000) ( 6,000)
HRT. . . . . . . . Xxxxxxxx Place of Xxxxxxxxx ( 540,000) ( 311,000)
HRT SUBTOTAL . . . (1,329,000) ( 504,000) (1,833,000)
OPERATING LOSS CAP $ (2,238,000) $ ( 820,000) $ (3,058,000)
LANDLORD . . . . . AGGREGATE OPERATING CAP
HCPI . . . . . . . $ (207,000)
HCPI . . . . . . . (324,000)
HCPI . . . . . . . (694,000)
HCPI SUBTOTAL
HRT. . . . . . . . (450,000)
HRT. . . . . . . . (327,000)
HRT. . . . . . . . (205,000)
HRT. . . . . . . . (851,000)
HRT SUBTOTAL
OPERATING LOSS CAP
In no event shall Buyer be entitled to receive more than the applicable
--------------------------------------------------------------------------------
Operating Loss Cap amount with respect to either the first 365-day period
--------------------------------------------------------------------------------
following the Closing Date ($2,238,000) or the 366-day period following the
--------------------------------------------------------------------------------
first anniversary of the Closing Date ($820,000), or more than $3,058,000 in
--------------------------------------------------------------------------------
Operating Losses in the aggregate under this Contract. The Operating Loss Caps
--------------------------------------------------------------------------------
include, as facility expenses, rent under the Facility Leases and a management
--------------------------------------------------------------------------------
fee in the amount of five percent (5%) of Gross Revenues.
-------------------------------------------------------------------
------
C-4
---
C-1
---
EXHIBIT C
---------
FORM OF ASSIGNMENT AND ASSUMPTION
---------------------------------
OF FACILITY LEASE AND RELEASE AGREEMENT
---------------------------------------
This ASSIGNMENT AND ASSUMPTION OF FACILITY LEASE AND RELEASE AGREEMENT
(this "AGREEMENT") is made as of this ___ day of __________, 2002 (the
"EFFECTIVE DATE"), by and between [INTEGRATED LIVING COMMUNITIES OF
____________], a ________________ ("ASSIGNOR"), [EMERITUS CORPORATION OR ITS
DESIGNEE], a _____________________ ("ASSIGNEE"), and [HEALTH CARE PROPERTY
INVESTORS, INC.] OR [HEALTHCARE REALTY TRUST], a ______________ ("LANDLORD").
RECITALS
--------
Pursuant to that certain [LEASE OR LEASE AGREEMENT], dated as of _________ ____,
__________ (the "LEASE"), between Landlord and Integrated Living Communities of
, Inc. ("ORIGINAL TENANT") of the real property, improvements and personal
property constituting [NAME OF FACILITY] (the "FACILITY"), situated at [ADDRESS
OF FACILITY], Landlord leased the Facility to Original Tenant.
Integrated Living Communities, Inc., a Delaware corporation ("ORIGINAL
GUARANTOR"), guaranteed certain payments and obligations of Assignor under the
Lease (the "GUARANTY") pursuant to either (i) a Guaranty of Obligations of or
about even date with the Lease or (ii) pursuant to a Guaranty within the body of
the Lease.
Assignor is the successor to Original Tenant and Integrated Living Communities,
L.L.C., a Delaware limited liability company ("ILC") is the successor to
Original Guarantor. Accordingly, Assignor is the "TENANT" as defined in the
Lease and ILC is the "GUARANTOR" as defined in the Guaranty.
Landlord, Assignor, and Assignee desire that the Assignor assign the Lease to
Assignee under the terms and conditions described herein and that the Assignor
and ILC shall be released from liability under the Lease under the terms and
conditions described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord, Assignor, and Assignee
hereby agree as follows:
1. Recitals. The Recitals set forth above are hereby incorporated by
--------
reference as if set forth herein in their entirety.
2. Defined Terms. Any capitalized terms not otherwise defined in this
--------------
Agreement will have the meaning set forth in the Lease.
3. Assignment of Lease. As of the Effective Date, Assignor hereby transfers
-------------------
and assigns to Assignee all of its right, title, and interest in and to the
Lease and the Facility demised thereunder.
4. Assumption of Lease. As of the Effective Date, Assignee hereby accepts
---------------------
the foregoing assignment and agrees, for the benefit of Assignor and Landlord,
to assume and be responsible for the payment of the rent and other charges
payable by Assignor as tenant under the Lease from and after the Effective Date,
and to keep, perform and observe all of the other terms, covenants, provisions
and conditions to be kept, performed or observed by Assignor as tenant under the
Lease from and after the Effective Date.
5. Landlord's Consent. Landlord consents to the foregoing assignment and
-------------------
agrees to amend the Lease as of the Effective Date in the manner set forth in
Exhibit A attached hereto and made a part hereof. Assignee agrees and
--------
acknowledges that the assignment made hereby shall not relieve Assignee from the
-------
obligation to obtain the prior written consent of Landlord to any further
assignment of the Lease or to any subletting of the Facility to the extent
Landlord's consent is required under the terms and conditions of the Lease.
6. No Further Liability. As of the Effective Date, Landlord accepts the
----------------------
liability of Assignee in lieu of such liability of Assignor under the Lease and
thereby releases Assignor of any liability or obligations under the Lease
(including, without limitation, payment of rent and other charges payable on or
after the Effective Date) except for any obligations that have accrued under the
Lease prior to the Effective Date or which by their terms would survive
termination of the Lease. As of the Effective Date, Assignee and Landlord agree
that each of them shall be bound by the terms, conditions and limitations of the
Lease as if Assignee was named in the Lease in place of Assignor as a party
thereto.
[TO BE USED WHERE LANDLORD DOES NOT REQUIRE SEPARATE GUARANTOR IN ADDITION TO
--------
ASSIGNEE:
7. NO FURTHER LIABILITY - ILC. AS OF THE EFFECTIVE DATE, LANDLORD RELEASES
---------------------------
ILC FROM ANY LIABILITY, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN
OR UNFORESEEN, THAT MAY ARISE FROM OR IN ANY WAY BE CONNECTED WITH THE LEASE
(INCLUDING, WITHOUT LIMITATION, THE GUARANTY OF PAYMENT OF RENT AND OTHER
CHARGES PAYABLE ON OR AFTER THE EFFECTIVE DATE) EXCEPT FOR ANY OBLIGATIONS THAT
HAVE ACCRUED UNDER THE LEASE OR THE GUARANTY PRIOR TO THE EFFECTIVE DATE.]
[TO BE USED WHERE LANDLORD DOES REQUIRE SEPARATE GUARANTOR:
----
NO FURTHER LIABILITY - ILC. AS OF THE EFFECTIVE DATE, LANDLORD ACCEPTS
-----------------------------
THE LIABILITY OF __________________, A ______________ ("NEW GUARANTOR") IN LIEU
OF THE LIABILITY OF ILC UNDER THE LEASE AND THEREBY RELEASES ILC FROM ANY
LIABILITY, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN,
THAT MAY ARISE FROM OR IN ANY WAY BE CONNECTED WITH THE LEASE (INCLUDING,
WITHOUT LIMITATION, THE GUARANTY OF PAYMENT OF RENT AND OTHER CHARGES PAYABLE ON
OR AFTER THE EFFECTIVE DATE) EXCEPT FOR ANY OBLIGATIONS THAT HAVE ACCRUED UNDER
THE LEASE OR THE GUARANTY PRIOR TO THE EFFECTIVE DATE. AS OF THE EFFECTIVE
DATE, NEW GUARANTOR AND LANDLORD AGREE THAT EACH OF THEM SHALL BE BOUND BY THE
TERMS, CONDITIONS AND LIMITATIONS OF THE LEASE AS IF NEW GUARANTOR WAS NAMED IN
THE GUARANTY IN PLACE OF ILC AS A PARTY THERETO.]
8. Survival of Terms. The terms and provisions of this Agreement shall
-------------------
survive termination of the Lease.
9. Successors and Assigns. This Agreement shall be binding upon and inure
------------------------
to the benefit of the parties hereto and their respective successors and
permitted assigns.
10. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which, taken together, shall
constitute one and the same instrument.
11. Complete Agreement. This Agreement contains the entire integrated
-------------------
agreement between the parties respecting the subject matter of this Agreement
and supersedes all prior understandings and agreements, whether oral or in
writing, between the parties respecting the subject matter of this Agreement.
12. Applicable Law. This Agreement shall be governed by the applicable laws
--------------
of the state of location of the Facility.
13. Attorneys' Fees; Costs. In connection with any litigation arising out
------------------------
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs at both the trial and appellate levels.
[SIGNATURES FOLLOW ON NEXT PAGE]
IN WITNESS WHEREOF, Assignor, Assignee and Landlord have executed this
Agreement under seal as of the date first written above.
ASSIGNOR:
--------
[INTEGRATED LIVING COMMUNITIES OF _____],
a _______________
By: (SEAL)
Name:
Title:
ASSIGNEE:
--------
[EMERITUS ________________],
a _______________
By: (SEAL)
Name:
Title:
LANDLORD:
--------
[HEALTH CARE PROPERTY INVESTORS, INC.] OR
[HEALTHCARE REALTY TRUST],
a _____________________
By: (SEAL)
Name:
Title:
ACKNOWLEDGED AND CONFIRMED BY ILC:
-------------------------------------
INTEGRATED LIVING COMMUNITIES, L.L.C.,
a Delaware limited liability company
By:
Name:
Title:
X-0
X-0
EXHIBIT D
---------
FORM OF ASSIGNMENT AND ASSUMPTION
---------------------------------
OF OCCUPANCY AGREEMENTS
-----------------------
THIS ASSIGNMENT AND ASSUMPTION OF OCCUPANCY AGREEMENTS (this "ASSIGNMENT")
is entered into on this ___ day of __________ 2002, between (i) [INTEGRATED
LIVING COMMUNITIES OF ], a _____________________ ("ASSIGNOR"),
having an office at c/o Horizon Bay Management, L.L.C., 000 X. Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 and (ii) [EMERITUS CORPORATION OR ITS
DESIGNEE], a ___________________ ("ASSIGNEE"), having an office at 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
1. Reference to Sale Contract. Reference is made to a Sale Contract
-----------------------------
dated _______________, 2002 between Assignor, as seller, and Assignee, as buyer,
pursuant to which Assignor has agreed to sell to Assignee, and Assignee has
agreed to purchase from Assignor, the Assignor's interest in its respective
Facility (the "SALE CONTRACT"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Sale Contract.
2. Assignment. For good and valuable consideration received by
----------
Assignor, the receipt and sufficiency of which are hereby acknowledged, Assignor
hereby grants, transfers and assigns to Assignee all right, title and interest
of Assignor as landlord in and to each of the Occupancy Agreements and the
security deposits thereunder. Assignor is not assigning any right to receive
delinquent rent, and any delinquent rent as of the date hereof shall be
collected and paid to Seller in the manner provided by the Sale Contract.
3. Assumption. Assignee hereby assumes, and agrees to be bound by, all
----------
of the covenants, agreements and obliga-tions of Assignor as landlord under the
Occupancy Agreements which shall arise or be incurred, or which are required to
be performed, on and after the date of this Assignment, and Assignee further
assumes all liability of Assignor for the proper refund or return of the
security deposits if, when and as required by the Occupancy Agreements or
otherwise by law. Assignee is not assuming any obligation to collect and/or pay
to Seller any delinquent rent as of the date hereof, except as expressly
provided in the Sale Contract.
4. Binding Effect. This Assignment shall inure to the benefit of, and
---------------
be binding upon, each of the parties hereto and their respective successors and
assigns.
5. Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed an original, but all of which, taken together, shall
constitute one and the same instrument.
6. Indemnification.
---------------
(a) Assignor agrees to indemnify, defend and hold Assignee
harmless from and against all claims and demands of a resident or tenant under
any Occupancy Agreement arising as a result of Assignor's performance of, or
failure to perform, the covenants, agreements and obligations of the
licensor/landlord under the Occupancy Agreements to be kept and performed by
Assignor as such licensor/landlord before the date of this Assignment and
Assignor shall pay all costs and expenses (including reasonable attorneys' fees)
incurred by Assignee in enforcing this indemnity.
(b) Assignee agrees to indemnify, defend and hold Assignor
harmless from and against all claims and demands of a resident or tenant under
any Occupancy Agreements arising as a result of Assignee's performance of, or
failure to perform, the covenants, agreements and obligations of the
licensor/landlord under the Occupancy Agreements to be kept and performed by
Assignee as such licensor/landlord, as the case may be, on and after the date of
this Assignment and Assignee shall pay all costs and expenses (including
reasonable attorneys' fees) incurred by Assignor in enforcing this indemnity.
[SIGNATURES OF THE PARTIES ARE SET FORTH ON THE NEXT PAGE]
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment on
the day and year first above written.
ASSIGNOR:
[INTEGRATED LIVING COMMUNITIES OF ],
a ____________
By: ____________________________________
Name:
Title:
ASSIGNEE:
[EMERITUS CORPORATION OR ITS DESIGNEE], a
By:
Name:
Title:
------
X-0
X-0
EXHIBIT E
---------
FORM OF ASSIGNMENT OF LICENSES, INTANGIBLES
-------------------------------------------
(INCLUDING TRADE NAME) AND WARRANTIES
-------------------------------------
THIS ASSIGNMENT OF LICENSES, INTANGIBLES (INCLUDING TRADE NAME) AND
WARRANTIES (this "ASSIGNMENT") is entered into on this ___ day of __________
2002, between (i) [INTEGRATED LIVING COMMUNITIES OF ], a
_____________________ ("ASSIGNOR"), having an office at c/o Horizon Bay
Management, L.L.C., 000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 and
(ii) [EMERITUS CORPORATION OR ITS DESIGNEE], a ___________________ ("ASSIGNEE"),
having an office at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
1. Reference to Sale Contract. Reference is made to a Sale Contract dated
----------------------------
_______________, 2002, between Assignor, as seller, and Assignee, as buyer (the
"SALE CONTRACT"), pursuant to which Assignor agreed to sell to Assignee, and
Assignee agreed to purchase from Assignor, the Assignor's interest in its
respective Facility and other assets described therein. Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Sale Contract.
2. Assignment. For good and valuable consideration received by
----------
Assignor, the receipt and suffi-ciency of which are hereby acknowledged,
Assignor hereby grants, transfers and assigns to Assignee all right, title and
interest of Assignor in and to: the Assignable Licenses, the Trade Names and any
other intangibles or warranty to the extent not excluded from transfer under the
terms of the Sale Contract. This Assignment shall not be effective as to any
Assignable License, Trade Name or other intangible or warranty which, by its
terms or as a matter of law, cannot be assigned.
3. Binding Effect. This Assignment shall inure to the benefit of, and
---------------
be binding upon, each of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, Assignor has executed this Assignment on the day and
year first above written.
By: [INTEGRATED LIVING COMMUNITIES OF ],
a ________________
By: ________________________
Name:
Title:
F-2
F-1
EXHIBIT F
---------
FORM OF ASSIGNMENT AND ASSUMPTION
---------------------------------
OF OPERATING CONTRACTS
----------------------
THIS ASSIGNMENT AND ASSUMPTION OF OPERATING CONTRACTS (this "ASSIGNMENT")
----------
is entered into on this ___ day of __________ 2002, between (i) [INTEGRATED
LIVING COMMUNITIES OF ], a _____________________ ("ASSIGNOR"),
having an office at c/o Horizon Bay Management, L.L.C., 000 X. Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 and (ii) [EMERITUS CORPORATION OR ITS
DESIGNEE], a ___________________ ("ASSIGNEE"), having an office at 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000. ("ASSIGNEE").
--------
1. Property. The "PROPERTY" shall mean the real property located in
-------- --------
__________ legally described in EXHIBIT A to this Assignment.
2. Service Contracts. The "OPERATING CONTRACTS" shall mean all contracts
------------------ --------------------
relating to the Property listed in EXHIBIT B to this Assignment.
3. Assignment. For good and valuable consideration received by Assignor,
----------
the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
grants, transfers and assigns to Assignee all right, title and interest of
Assignor in and to each of the Operating Contracts.
4. Assumption. Assignee hereby assumes, and agrees to be bound by, all of
----------
the covenants, agreements and obligations of Assignor under the Operating
Contracts which shall arise or be incurred, or which are required to be
performed, on and after the date of this Assignment.
5. Indemnification.
---------------
(a) Assignor agrees to indemnify, defend and hold Assignee harmless from and
against all claims and demands of a vendor under any Operating Contract
arising as a result of Assignor's performance of, or failure to perform, the
covenants, agreements and obligations of the vendee under the Operating
Contracts to be kept and performed by Assignor as such vendee, before the date
of this Assignment (provided, however, that Assignor shall be responsible for
all payment obligations accrued by the vendee under the Operating Contracts
before the date of this Assignment even if such sums are not due until after the
date of this Assignment) and Assignor shall pay all costs and expenses
(including reasonable attorneys' fees) incurred by Assignee in enforcing this
indemnity.
(b) Assignee agrees to indemnify, defend and hold Assignor harmless from and
against all claims and demands of a vendor under any Operating Contract arising
as a result of Assignee's performance of, or failure to perform, the covenants,
agreements and obligations of the vendee under the Operating Contracts to be
kept and performed by Assignee as such vendee, as the case may be, on and after
the date of this Assignment and Assignee shall pay all costs and expenses
(including reasonable attorneys' fees) incurred by Assignor in enforcing this
indemnity.
6. Binding Effect. This Assignment shall inure to the benefit of, and
---------------
be binding upon, each of the parties hereto and their respective successors and
assigns.
7. Exhibits. The Exhibits referred to in this Agreement and attached hereto
--------
are incorporated herein by this reference and made a part hereof.
8. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
effective as of the day and year first above written.
ASSIGNOR:
[INTEGRATED LIVING COMMUNITIES OF ],
-
a ____________
By: ____________________________________
Name:
Title:
ASSIGNEE:
[EMERITUS CORPORATION OR ITS DESIGNEE], a ______________
By: ____________________________________
Name:
Title:
G-4
G-1
EXHIBIT G
---------
FORM OF XXXX OF SALE
------------------------
THIS XXXX OF SALE (this "XXXX OF SALE") is executed on this ____ day of
____________, 2002, by [INTEGRATED LIVING COMMUNITIES OF ]
("SELLER"), a ______________________________, having an office at 000 X. Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, in favor of [EMERITUS CORPORATION OR
ITS DESIGNEE] ("BUYER"), a ___________________, having an office at 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
1. Reference to Sale Contract. Reference is made to a Sale Contract
-----------------------------
dated _______________, 2002 between Seller and Buyer, pursuant to which Seller
has agreed to sell to Buyer, and Buyer has agreed to purchase from Seller, the
Seller's interest in its respective Real Property and other assets described
therein (the "SALE CONTRACT"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Sale Contract .
2. Sale. For good and valuable consideration received by Seller, the
----
receipt and sufficiency of which is hereby acknowledged, Seller hereby sells,
assigns and transfers its Tangible Personal Property to Buyer free and clear of
all liens, charges and encumbrances. Seller covenants and agrees to warrant and
forever defend title to its respective Tangible Personal Property unto Buyer
against all and every person or persons. Except as set forth in the immediately
preceding sentence, Seller makes no warranties or representations as to its
Tangible Personal Proper-ty.
IN WITNESS WHEREOF, Seller has executed this Xxxx of Sale the day and year
first above written.
SELLER:
[INTEGRATED LIVING COMMUNITIES OF
],
a ____________
By: ____________________________________
Name:
Title:
------
X-0
X-0
XXXXXXX H
---------
FORM OF CONFIDENTIALITY AGREEMENT
---------------------------------
PERSONAL AND CONFIDENTIAL
---------------------------
______________ ___, 2002
c/o Horizon Bay Management, L.L.C.
000 X. Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Thilo D. Best
RE: CONFIDENTIALITY AGREEMENT
--------------------------
Dear Thilo:
In connection with the consideration by Emeritus Corporation or its affiliates
("BUYER") of the potential purchase (the "PURCHASE") from Integrated Living
Communities of Alexandria, L.L.C., Integrated Living Communities of Lake
Xxxxxxx, L.L.C., Integrated Living Communities of Lafayette, L.L.C., Integrated
Living Communities of Xxxxxxxxx, X.X., Integrated Living Communities of Oakwell,
L.P., Integrated Living Communities of San Antonio, L.P., and Integrated Living
Communities of XxXxxxxx, X.X. (collectively, the "SELLERS"), of the Sellers'
interest in its respective Facilities, as defined in the Sale Contract dated as
of _________, 2002 between Sellers and Buyer, Buyer has requested that Sellers
supply certain Confidential Information (as defined in paragraph 1 below). As a
condition to Sellers' agreement to furnish and/or disclose such Confidential
Information to Buyer for its review and inspection, Buyer agrees to be bound by
the terms set forth herein.
1. "CONFIDENTIAL INFORMATION" shall include all information furnished to
Buyer by Sellers relating to Sellers or assets held by Sellers, as well as
written memoranda, notes, analysis, reports, compilations, or studies prepared
by Buyer which contain, or are derived from, such information furnished by
Sellers, whether in writing, computer diskette, other medium or oral
communication. Notwithstanding the foregoing, information provided by Sellers
shall not constitute Confidential Information if such information (i) is or
becomes generally available to the public other than as a result of a disclosure
by or through Buyer or its directors, officers, employees or affiliates in
contravention of this agreement, (ii) was already available to, or in the
possession of, Buyer prior to its disclosure by, or at the direction of, Sellers
in connection with Buyer's evaluation of the potential Purchase, or (iii) is or
becomes available to Buyer from a source (other than Sellers) not bound, to the
knowledge of Buyer, by any legal or other obligation prohibiting the disclosure
of Confidential Information by such source to Buyer.
2. Buyer agrees that it will use Confidential Information exclusively for
the purpose of evaluating the potential Purchase. Buyer further agrees that it
will not disclose Confidential Information to any third party; provided,
however, that Buyer may without liability disclose Confidential Information (i)
to any director, officer, employee of Buyer, or attorney, accountant, or other
technical expert retained by Buyer who needs to know such Confidential
Information for the purpose of evaluating the potential Purchase or later
administering such Purchase and to Buyer's auditors, accountants and attorneys
(it being understood and agreed that Buyer shall advise such persons of the
confidential nature of such Confidential Information and such persons shall
agree to maintain the confidentiality of such Confidential Information in
accordance with the terms hereof), and (ii) to the extent required by a
subpoena, judicial, or administrative process.
3. In the event that Buyer desires to disclose Confidential Information
under the circumstances contemplated by clause (ii) of the preceding paragraph,
Buyer will (a) provide Sellers with prompt notice thereof, (b) consult with
Sellers on the advisability of taking steps to resist or narrow such disclosure,
and (c) reasonably cooperate with Sellers in any attempt that Sellers may make
to obtain an order or other reliable assurance that confidential treatment will
be accorded to designated portions of the Confidential Information. However,
Buyer shall not be obligated to suffer civil or criminal liability to prevent
disclosure of Confidential Information required by a subpoena, judicial,
regulatory or administrative process.
4. Buyer agrees that in the event the Purchase fails to occur, all written
Confidential Information and all copies thereof will be returned to Sellers
promptly upon Sellers' request.
5. In addition to any other remedies available to Sellers, Buyer
acknowledges and agrees that Sellers shall be entitled to seek the remedies of
injunction and specific performance for any breach of the provisions of this
agreement by Buyer.
6. Buyer agrees to indemnify and hold harmless Sellers from and against all
loss, liability, claim, damage and expenses (including attorneys' fees) arising
out of any breach of this agreement by Buyer or its representatives.
7. This agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
Very truly yours,
Emeritus Corporation,
By:
Name:
Title:
AGREED TO AND ACCEPTED:
Horizon Bay Management, L.L.C., on behalf of Sellers
By:
Thilo D. Best
President and Chief Executive Officer
I-3
I-1
EXHIBIT I
---------
GUARANTY OF OPERATING LOSSES
----------------------------
THIS GUARANTY (the "GUARANTY") is made and entered into this ____ day of
, 2002, by HORIZON BAY MANAGEMENT, L.L.C. ("GUARANTOR"), for the benefit of
EMERITUS CORPORATION ("BUYER").
RECITALS
--------
A. Integrated Living Communities of Alexandria, L.L.C., Integrated
Living Communities of Lake Xxxxxxx, L.L.C., Integrated Living Communities of
Lafayette, L.L.C., Integrated Living Communities of Xxxxxxxxx, X.X., Integrated
Living Communities of Oakwell, L.P., Integrated Living Communities of San
Antonio, L.P., and Integrated Living Communities of XxXxxxxx, X.X. (each a
"SELLER" and collectively, the "SELLERS"), and Buyer entered into a Sale
Contract dated as of , 2002 (the "SALE CONTRACT") pursuant to
which Buyer agreed to acquire Sellers' interests in the Facility Leases and the
Facilities, each as defined in the Sale Contract, subject to the terms and
conditions of the Sale Contract.
B. Guarantor benefited by Buyer and Sellers entering into the Sale
Contract, and, therefore, Guarantor executed the Sale Contract for the purpose
of guaranteeing the performance of the Guaranteed Obligations (as defined
herein).
NOW, THEREFORE, as an inducement for Buyer to consummate the transactions
contemplated by the Sale Contract, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
1. Definitions. Capitalized terms used in this Guaranty which are
-----------
defined in the Sale Contract as now in effect or as it may hereafter be amended
from time to time have the meanings specified in the Sale Contract unless
expressly otherwise defined herein.
2. Guaranty of Payment and Performance. As set forth in Section 4(e)
-------------------------------------
of the Sale Contract, Guarantor hereby irrevocably and unconditionally
guarantees to Buyer the payment of Sellers' obligation to fund Operating Losses,
provided that Guarantor's maximum amount of liability under the Guaranty shall
not exceed the applicable Operating Loss Caps. This Guaranty is an
unconditional guaranty of payment and not of collection, and Guarantor agrees
that Buyer shall not be required to assert any claim or cause of action against
Sellers before asserting any claim or cause of action against Guarantor under
this Guaranty. This Guaranty is a continuing guaranty which shall remain in
full force and effect until all of the obligations set forth herein shall have
been completely performed or otherwise discharged. The obligations under this
Section which Guarantor is guaranteeing under this Guaranty are hereinafter
referred to as the "GUARANTEED OBLIGATIONS".
3. Waiver of Notice. Guarantor hereby waives notice of acceptance
------------------
hereof, and of nonperformance or nonpayment by Sellers of any of the Guaranteed
Obligations.
4. Further Assurances. Guarantor will at any time and from time to
-------------------
time upon request by Buyer take or cause to be taken any action and execute and
deliver such, if any, further documents as, in the opinion of Buyer, may be
necessary in order to assure to Buyer the full benefits of this Guaranty.
5. Waiver. Neither this Guaranty nor any term hereof may be changed,
------
waived, discharged or terminated except by an instrument in writing signed by
Buyer and Guarantor expressly referring to this Guaranty and to the provisions
so changed or limited. No such waiver shall extend to or affect any obligation
not expressly waived or impair any right consequent thereon. No course of
dealing or delay or omission on the part of Buyer in exercising any right under
this Guaranty shall operate as a waiver thereof or otherwise be prejudicial
thereto.
6. Insolvency of Sellers or Guarantor. This Guaranty shall not be
--------------------------------------
affected, modified, or impaired by the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangements, composition with creditors or readjustment of, or other similar
proceedings affecting Sellers or Guarantor, or any of the assets belonging to
any of them.
7. Notices. Any demand or notice required or permitted to be given by
-------
Buyer to Guarantor under this Guaranty shall be given pursuant to the terms and
conditions set forth in Section 19 of the Sale Contract, and addressed to
Guarantor at Horizon Bay Management, L.L.C., Attention: Thilo D. Best,
President and CEO, 000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
Tel. No. 000-000-0000, Fax No. 000-000-0000, with a copy to Whitehall Street
Real Estate Limited Partnership VII, Attention: Chief Financial Officer, 00
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and with a copy to Xxxxxxx
X. Xxxxx, Esquire, Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC, 0000 Xxxxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000, Tel. No. 000-000-0000; Fax No.
000-000-0000, or at any other address designated by Guarantor to Buyer.
8. Waiver of Notice and Consent. Without notice to Guarantor, without
-----------------------------
the consent of Guarantor, and without affecting or limiting Guarantor's
liability hereunder, Buyer may:
(a) xxxxx Xxxxxxx extensions of time for payment of the Guaranteed
Obligations or any part thereof;
(b) xxxxx Xxxxxxx extensions of time for performance of agreements
or other indulgences;
(c) compromise, settle, release, or terminate any or all of the
obligations,
covenants, or agreements of Sellers under the Sale Contract; and
(d) with Sellers' written consent, modify or amend any obligations,
covenant, or agreement of Sellers as set forth in the Sale Contract (and such
amendments shall nevertheless be binding upon Guarantor).
9. Continued Effectiveness and Reinstatement. This Guaranty shall
--------------------------------------------
continue to be effective, or be reinstated, as the case may be, if at any time
any whole or partial payment or performance of any of the Guaranteed Obligations
or any other obligation hereunder is or is sought to be rescinded or must
otherwise be restored or returned by Buyer upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Sellers or Guarantor upon or as a
result of the appointment of a receiver, intervener, or conservator of, or
trustee or similar officer for, Sellers or Guarantor of or for any substantial
part of its property, or otherwise, all as though such payments and performance
had not been made.
10. General Provisions. This Guaranty shall be binding upon the
-------------------
respective successors and assigns of Guarantor, and shall inure to the benefit
of Buyer and its successors and assigns; provided, however, Guarantor will not
assign or otherwise transfer this Guaranty without the prior written consent of
Buyer, which consent may be granted or refused in Buyer's sole discretion. This
Guaranty shall be governed by and construed in accordance with the laws of the
State of Delaware. The descriptive headings of the Sections of this Guaranty
have been inserted herein for convenience of reference only and shall not define
or limit the provisions hereof. If any provision of this Guaranty shall be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
be in no way affected thereby, and this Guaranty shall operate and be
enforceable as if such invalid, illegal or unenforceable provisions had not been
included herein.
IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as of the
day and year first above written.
GUARANTOR:
---------
HORIZON BAY MANAGEMENT, L.L.C.
By:
Thilo D. Best
President and Chief Executive Officer
------
J-3
J-1
EXHIBIT J
---------
GUARANTY OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
THIS GUARANTY (the "GUARANTY") is made and entered into this ____ day of
, 2002, by HORIZON BAY MANAGEMENT, L.L.C. ("GUARANTOR"), for the benefit of
EMERITUS CORPORATION ("BUYER").
RECITALS
--------
A. Integrated Living Communities of Alexandria, L.L.C., Integrated
Living Communities of Lake Xxxxxxx, L.L.C., Integrated Living Communities of
Lafayette, L.L.C., Integrated Living Communities of Xxxxxxxxx, X.X., Integrated
Living Communities of Oakwell, L.P., Integrated Living Communities of San
Antonio, L.P., and Integrated Living Communities of XxXxxxxx, X.X. (each a
"SELLER" and collectively, the "SELLERS"), and Buyer entered into a Sale
Contract dated as of , 2002 (the "SALE CONTRACT") pursuant to
which Buyer agreed to acquire Sellers' interests in the Facility Leases and the
Facilities, each as defined in the Sale Contract, subject to the terms and
conditions of the Sale Contract.
B. Guarantor benefited by Buyer and Sellers entering into the Sale
Contract, and, therefore, Guarantor executed the Sale Contract for the purpose
of guaranteeing the collection of the Guaranteed Obligations (as defined
herein).
NOW, THEREFORE, as an inducement for Buyer to consummate the transactions
contemplated by the Sale Contract, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
1. Definitions. Capitalized terms used in this Guaranty which are
-----------
defined in the Sale Contract as now in effect or as it may hereafter be amended
from time to time have the meanings specified in the Sale Contract unless
expressly otherwise defined herein.
2. Guaranty of Payment and Performance. As set forth in Section 25(c)
------------------------------------
of the Sale Contract, Guarantor hereby irrevocably and unconditionally
guarantees to Buyer Sellers' obligation to pay to Buyer damages due under the
Sale Contract arising from a breach of a representation and warranty set forth
in Section 7(a) of the Sale Contract, provided that Guarantor shall only be
liable under this Guaranty to the extent that Sellers would be liable under the
provisions of Section 25 of the Sale Contract and Guarantor's maximum amount of
liability under this Guaranty shall not exceed the Cap Amount. This Guaranty
is an unconditional guaranty of payment and not of collection, and is no way
conditioned upon any attempt by Buyer to collect from Sellers. This Guaranty is
a continuing guaranty which shall remain in full force and effect until all of
the obligations set forth herein shall have been completely performed or
otherwise discharged. The obligations under this Section which the Guarantor is
guaranteeing under this Guaranty are hereinafter referred to as the "GUARANTEED
OBLIGATIONS".
3. Waiver of Notice. Guarantor hereby waives notice of acceptance
------------------
hereof, and of nonperformance or nonpayment by Sellers of any of the Guaranteed
Obligations.
4. Further Assurances. Guarantor will at any time and from time to
-------------------
time upon request by Buyer take or cause to be taken any action and execute and
deliver such, if any, further documents as, in the opinion of Buyer, may be
necessary in order to assure to Buyer the full benefits of this Guaranty.
5. Waiver. Neither this Guaranty nor any term hereof may be changed,
------
waived, discharged or terminated except by an instrument in writing signed by
Buyer and Guarantor expressly referring to this Guaranty and to the provisions
so changed or limited. No such waiver shall extend to or affect any obligation
not expressly waived or impair any right consequent thereon. No course of
dealing or delay or omission on the part of Buyer in exercising any right under
this Guaranty shall operate as a waiver thereof or otherwise be prejudicial
thereto.
6. Insolvency of Sellers or Guarantor. This Guaranty shall not be
--------------------------------------
affected, modified, or impaired by the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangements, composition with creditors or readjustment of, or other similar
proceedings affecting Sellers or Guarantor, or any of the assets belonging to
any of them.
7. Notices. Any demand or notice required or permitted to be given by
-------
Buyer to Guarantor under this Guaranty shall be given pursuant to the terms and
conditions set forth in Section 19 of the Sale Contract, and addressed to
Guarantor at Horizon Bay Management, L.L.C., Attention: Thilo D. Best,
President and CEO, 000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
Tel. No. 000-000-0000, Fax No. 000-000-0000, with a copy to Whitehall Street
Real Estate Limited Partnership VII, Attention: Chief Financial Officer, 00
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and with a copy to Xxxxxxx
X. Xxxxx, Esquire, Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC, 0000 Xxxxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000, Tel. No. 000-000-0000; Fax No.
000-000-0000, or at any other address designated by Guarantor to Buyer.
8. Waiver of Notice and Consent. Without notice to Guarantor, without
-----------------------------
the consent of Guarantor, and without affecting or limiting Guarantor's
liability hereunder, Buyer may:
(a) xxxxx Xxxxxxx extensions of time for payment of the Guaranteed
Obligations or any part thereof;
(b) xxxxx Xxxxxxx extensions of time for performance of agreements
or other indulgences;
(c) compromise, settle, release, or terminate any or all of the
obligations,
covenants, or agreements of Sellers under the Sale Contract; and
(d) with Sellers' written consent, modify or amend any obligations,
covenant, or agreement of Sellers as set forth in the Sale Contract (and such
amendments shall nevertheless be binding upon Guarantor).
9. Continued Effectiveness and Reinstatement. This Guaranty shall
--------------------------------------------
continue to be effective, or be reinstated, as the case may be, if at any time
any whole or partial payment or performance of any of the Guaranteed Obligations
or any other obligation hereunder is or is sought to be rescinded or must
otherwise be restored or returned by Buyer upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Sellers or Guarantor upon or as a
result of the appointment of a receiver, intervener, or conservator of, or
trustee or similar officer for, Sellers or Guarantor of or for any substantial
part of its property, or otherwise, all as though such payments and performance
had not been made.
10. General Provisions . This Guaranty shall be binding upon the
-------------------
respective successors and assigns of Guarantor, and shall inure to the benefit
of Buyer and its successors and assigns; provided, however, Guarantor will not
assign or otherwise transfer this Guaranty without the prior written consent of
Buyer, which consent may be granted or refused in Buyer's sole discretion. This
Guaranty shall be governed by and construed in accordance with the laws of the
State of Delaware. The descriptive headings of the Sections of this Guaranty
have been inserted herein for convenience of reference only and shall not define
or limit the provisions hereof. If any provision of this Guaranty shall be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
be in no way affected thereby, and this Guaranty shall operate and be
enforceable as if such invalid, illegal or unenforceable provisions had not been
included herein.
IN WITNESS WHEREOF, the Guarantor has signed this Guaranty under seal as of
the day and year first above written.
GUARANTOR:
---------
HORIZON BAY MANAGEMENT, L.L.C.
By:
Thilo D. Best
President and Chief Executive Officer
SCHEDULE 4(B)
-------------
FORM OF OPERATING LOSS REPORT
-----------------------------
See attached.
Operating Loss Funding
Year 1 Examples
(in 000's)
Operating Loss Funding
Year 1 Examples
(in 000's)
SCHEDULE 4(E)
--------------
EXAMPLES OF OPERATING LOSS CALCULATIONS
-------------------------------------------
Group A.
--------------
Month. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income
--------------
Loss
--------------
(1) Month 1: Group A Closes
1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <150>
(2) Month 2: Both Groups Are Closed
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <140>
(3) Month 10: Losses of $2.2 Million at End of Month 9 and Company Makes Money
9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . End of Month 9
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(4) Month 11: Company Loses Money Funding to Extent of Aggregate Losses
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <30>
(5) Month 12: Company Loses Money in Aggregate
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(6) Month 13: Group A Moves to Year 2 Funding Group B Still Draws From Year 1 Funds Subject to Cap.
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Group B. Total
------------- ---------
Month. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Aggregate
------------- ---------
Funding
(1) Month 1: Group A Closes
1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 <150>
150
(2) Month 2: Both Groups Are Closed
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <130> <420>
420
(3) Month 10: Losses of $2.2 Million at End of Month 9 and Company Makes Money
9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <2,200> 2,200
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 <2,125>
2,200
(4) Month 11: Company Loses Money Funding to Extent of Aggregate Losses
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <55> <2,210>
2,210
(5) Month 12: Company Loses Money in Aggregate
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <70> <2,230>
2,230
(6) Month 13: Group A Moves to Year 2 Funding Group B Still Draws From Year 1 Funds Subject to Cap.
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <50> <2,280>
2,238
------
4
------
SCHEDULE 7(A)(VI)
-----------------
LITIGATION
----------
Lexington Insurance Company and ILC of McKinney, Inc. vs.
-----------------------------------------------------------------
Highland Fire Protection Co., et al.
-----------------------------------------
KP at Stonebridge Ranch is a nominal plaintiff in this subrogated action brought
by plaintiff Lexington Insurance Company ("Lexington") in the name of ILC of
McKinney, Inc. (predecessor to Integrated Living Communities of XxXxxxxx, X.X.)
against the contractor, architect, et al., resulting from a property claim paid
by Lexington several years ago. The property claim relates to the sprinkler
system freezing, which caused water damage (the water damage and sprinkler
system have been repaired).
3
3
SCHEDULE 7(A)(XI)
-----------------
OPERATING CONTRACTS
-------------------
OPERATING CONTRACTS
PROPERTY. . . . . . . . . . . . . . COMPANY NAME CONTRACT DATE
KP @ Lafayette. . . . . . . . . . . Excel Protection Systems, Inc 10/18/2001
Choice Lawn & Landscape . . . . . 5/31/2001
Choice Lawn & Landscape . . . . . 5/31/2001
Orkin . . . . . . . . . . . . . . 8/7/2001 Pest control
Xxxx Pest Control . . . . . . . . 2/20/1998 Pest control
Waste Management. . . . . . . . . 9/23/1999 Non hazardous waste
Pitney Xxxxx Credit Corporation . 12/31/1997 Lease postage meter -- Equipment lease
KP @ Lake Xxxxxxx . . . . . . . . . Xxx Xxxxxxxx 2/10/1998
Xxxxxxx Xxxxxxx . . . . . . . . . 9/8/2000 Xxxxxx and beauty shop
Xxxx Xxxxxxx. . . . . . . . . . . Undated Aerobic instructor
Canon Financial Services Inc. . . 2/8/2000 Copier lease -- Equipment lease
Louisiana Special Systems, Inc. . 4/1/1998 Fire alarm inspection agreement
Louisiana Special Systems, Inc. . 3/27/1998 Fire alarm monitoring agreement
BFI . . . . . . . . . . . . . . . 9/5/2000 Trash removal
KP @ Medical Center . . . . . . . . Anco Inc. 7/1/1998
JM Electronic Engineering Inc.. . 1/1/2000 Inspection of kitchen xxxx
XX Electronic Engineering Inc.. . 9/8/1998 Fire alarm and sprinkler inspection
Commercial Pest Control, Inc. . . 7/2/1998 Pest control
Oakdell Pharmacy, Inc.. . . . . . 1/1/2001 Pharmacy agreement
KP @ Medical Center . . . . . . . . Oakdell Pharmacy, Inc. 1/1/2001
Xxxxx Xxxxxx. . . . . . . . . . . 7/23/1999 Beauty salon lease
Pitney Xxxxx. . . . . . . . . . . 11/12/1997 Equipment Lease
Cingular Wireless . . . . . . . . 8/1/2001 Wireless service agreement
KP @ Oakwell. . . . . . . . . . . . Commercial Pest Control, Inc. 8/3/1998
JM Electronic Engineering Inc.. . 12/3/2000 Inspection of kitchen xxxx
XX Electronic Engineering Inc.. . 12/3/2000 Fire alarm and sprinkler inspection
Radiant Lady #1 . . . . . . . . . 6/13/1998 Beauty salon lease
KP @ Stonebridge. . . . . . . . . . Symphony Mobilex 1/2/2002
Care Alliance . . . . . . . . . . 1/1/1998 Lease space & perform therapies
Blue Star Storage . . . . . . . . 11/12/2001 Storage lease
TCN . . . . . . . . . . . . . . . 1/11/2000 Temporary nursing staff
BFI . . . . . . . . . . . . . . . 10/8/1997 Medical Waste
Xxxxx Xxxxxxxxx . . . . . . . . . 3/9/2000 Xxxxxx & Beauty Shop
Xxxxxx. . . . . . . . . . . . . . Undated Termite & Pest Control--Cancelled effective 1/31/2002
Xxxxxx Landscape. . . . . . . . . 4/1/2000 Lawn maintenance
Xxxxxx Rite-Value Pharmacy. . . . 4/1/2000 Pharmacy
Xxxxxxxx Fire Protection. . . . . 12/1/1997 Fire protection and inspections--Equipment lease
City of XxXxxxxx. . . . . . . . . 10/22/1997 Water and sanitation service
Physicians Reference Laboratories 11/30/1998 Laboratory services
Podiatric Resource Service, Inc.. 4/21/1999 Podiatrist
Xxxxxx Pest & Lawn, Inc.. . . . . 1/16/2002 Pest control
KP @ Henderson. . . . . . . . . . . U.S. Liquids 3/5/2001
Senior Psychology Services. . . . 4/10/2001 Psychology services
Emi Xxxxx . . . . . . . . . . . . 12/28/2000 Lease for home health services
Assist Care . . . . . . . . . . . 12/28/2000 Lease for home health services
KP @ Alexandria . . . . . . . . . . Xxxxxx Xxxxxxxxxx 5/31/2000
Xxxx Pest Control . . . . . . . . Nov-98 Pest control
GE Capital. . . . . . . . . . . . 4/23/2001 Copier lease -- Equipment lease
Xxxxxxxxxx Business Systems . . . 3/22/2002 Copier maintenance
U.S. Postal Service . . . . . . . 12/10/1997 Postage meter license
TCA Management Company. . . . . . 1/21/1998 Cable television
M and M Lawn Service. . . . . . . 5/30/2001 Grounds maintenance
PROPERTY. . . . . . . . . . . . . . NOTES
KP @ Lafayette. . . . . . . . . . . Fire alarm inspection
Choice Lawn & Landscape
Choice Lawn & Landscape
Orkin
Xxxx Pest Control
Waste Management
Pitney Xxxxx Credit Corporation
KP @ Lake Xxxxxxx . . . . . . . . . Registered Dietitian
Xxxxxxx Xxxxxxx
Xxxx Xxxxxxx
Canon Financial Services Inc.
Louisiana Special Systems, Inc.
Louisiana Special Systems, Inc.
BFI
KP @ Medical Center . . . . . . . . Landscape maintenance
JM Electronic Engineering Inc.
JM Electronic Engineering Inc.
Commercial Pest Control, Inc.
Oakdell Pharmacy, Inc.
KP @ Medical Center . . . . . . . . Consultant pharmacist agreement
Xxxxx Xxxxxx
Pitney Xxxxx
Cingular Wireless
KP @ Oakwell. . . . . . . . . . . . Pest control
JM Electronic Engineering Inc.
JM Electronic Engineering Inc.
Radiant Lady #1
KP @ Stonebridge. . . . . . . . . . Mobile x-ray--Equipment lease
Care Alliance
Blue Star Storage
TCN
BFI
Xxxxx Xxxxxxxxx
Xxxxxx
Xxxxxx Landscape
Xxxxxx Rite-Value Pharmacy
Xxxxxxxx Fire Protection
City of XxXxxxxx
Physicians Reference Laboratories
Podiatric Resource Service, Inc.
Xxxxxx Pest & Lawn, Inc.
KP @ Xxxxxxxxx. . . . . . . . . . . Grease trap service
Senior Psychology Services
Emi Xxxxx
Assist Care
KP @ Alexandria . . . . . . . . . . Beauty shop services
Xxxx Pest Control
GE Capital
Xxxxxxxxxx Business Systems
U.S. Postal Service
TCA Management Company
M and M Lawn Service
