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EXHIBIT 10.3
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated as of the
29th day of June, 2000, by and between (i) Sunrise Bellevue Assisted Living
Limited Partnership, a Washington limited partnership ("Sunrise Bellevue"),
Sunrise Cohasset Assisted Living Limited Partnership, a Massachusetts limited
partnership ("Sunrise Cohasset"), Sunrise Decatur Assisted Living Limited
Partnership, a Georgia limited partnership ("Sunrise Decatur"), Sunrise Xxxx
Cove Assisted Living, L. P., New York limited partnership ("Sunrise Xxxx Cove"),
Sunrise Lafayette Hills Assisted Living, L. P., a Pennsylvania limited
partnership ("Sunrise Lafayette Hills"), Sunrise Paoli Assisted Living, L. P., a
Pennsylvania limited partnership ("Sunrise Paoli"), Sunrise Paramus Assisted
Living Limited Partnership, a New Jersey limited partnership ("Sunrise
Paramus"), and Sunrise Walnut Creek Assisted Living Limited Partnership, a
California limited partnership ("Sunrise Walnut Creek") (Sunrise Bellevue,
Sunrise Cohasset, Sunrise Decatur, Sunrise Xxxx Cove, Sunrise Lafayette Hills,
Sunrise Paoli, Sunrise Paramus, and Sunrise Walnut Creek are hereinafter
individually and collectively referred to as "Seller") and (ii) Metropolitan
Senior Housing, LLC, a Delaware limited liability company (hereinafter referred
to as "Buyer").
RECITALS:
1. Prior to the "Closing Date" hereunder, Metropolitan/Bellevue
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Bellevue ("MSH Bellevue"), will own the assisted living facility located
in Bellevue, Washington known as Sunrise Assisted Living of Bellevue, as more
fully described on Exhibit A attached hereto and made a part hereof (the
"Bellevue Facility"), by reason of the contribution of the title to the Bellevue
Facility by Sunrise Bellevue to MSH Bellevue.
2. Prior to the "Closing Date" hereunder, Metropolitan/Cohasset
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Cohasset ("MSH Cohasset"), will own the assisted living facility located
in Cohasset, Massachusetts known as Sunrise Assisted Living of Cohasset, as more
fully described on Exhibit B attached hereto and made a part hereof (the
"Cohasset Facility"), by reason of the contribution of the title to the Cohasset
Facility by Sunrise Cohasset to MSH Cohasset.
3. Prior to the "Closing Date" hereunder, Metropolitan/Decatur
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Decatur ("MSH Decatur"), will own the assisted living facility located
in Decatur, Georgia known as Sunrise Assisted Living of Decatur, as more fully
described on Exhibit C attached hereto and made a part hereof (the "Decatur
Facility"), by reason of the contribution of the title to the Decatur Facility
by Sunrise Decatur to MSH Decatur.
4. Prior to the "Closing Date" hereunder, Metropolitan/Xxxx Cove
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Xxxx Cove ("MSH Xxxx Cove"), will own the assisted living facility
located in Glen Cove, New York known as Sunrise Assisted Living of Xxxx Cove, as
more fully described on Exhibit D attached hereto and made a part hereof (the
"Xxxx Cove Facility"),
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by reason of the contribution of the title to the Xxxx Cove Facility by Sunrise
Xxxx Cove to MSH Xxxx Cove.
5. Prior to the "Closing Date" hereunder, Metropolitan/Whitemarsh
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Lafayette Hills ("MSH Whitemarsh"), will own the assisted living
facility located in Xxxxxxxxx Xxxx, Xxxxxxxxxxxx known as Sunrise Assisted
Living of Lafayette Hill, as more fully described on Exhibit E attached hereto
and made a part hereof (the "Lafayette Hill Facility"), by reason of the
contribution of the title to the Lafayette Hill Facility by Sunrise Lafayette
Hills to MSH Whitemarsh.
6. Prior to the "Closing Date" hereunder, Metropolitan/Malvern
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Paoli ("MSH Malvern"), will own the assisted living facility located in
Malvern, Pennsylvania known as Sunrise Assisted Living of Paoli, as more fully
described on Exhibit F attached hereto and made a part hereof (the "Paoli
Facility"), by reason of the contribution of the title to the Paoli Facility by
Sunrise Paoli to MSH Malvern.
7. Prior to the "Closing Date" hereunder, Metropolitan/Paramus
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Paramus ("MSH Paramus"), will own the assisted living facility located
in Paramus, New Jersey known as Sunrise Assisted Living of Paramus, as more
fully described on Exhibit G attached hereto and made a part hereof (the
"Paramus Facility"), by reason of the contribution of the title to the Paramus
Facility by Sunrise Paramus to MSH Paramus.
8. Prior to the "Closing Date" hereunder, Metropolitan/Walnut Creek
Senior Housing, LLC, a Delaware limited liability company wholly owned by
Sunrise Walnut Creek ("MSH Walnut Creek"), will own the assisted living facility
located in Walnut Creek, California known as Sunrise Assisted Living of Walnut
Creek, as more fully described on Exhibit H attached hereto and made a part
hereof (the "Walnut Creek Facility"), by reason of the contribution of the title
to the Walnut Creek Facility by Sunrise Walnut Creek to MSH Walnut Creek.
MSH Bellevue, MSH Cohasset, MSH Decatur, MSH Xxxx Cove, MSH
Whitemarsh, MSH Malvern, MSH Paramus, and MSH Walnut Creek are individually
referred to herein as a "Facility Owner" and collectively referred to herein as
the "Facility Owners." The assisted living facilities described in recital
paragraphs 1 through 8 are individually referred to herein as a "Facility" and
are collectively referred to as the "Facilities."
9. Two or more of the Sellers are willing to contribute membership
interests in certain of the Facility Owners (the "Contributed Interests") in
exchange for an increase (the "Interest Increase") in the "Unreturned
Contributions" account (as defined in the Limited Liability Company Agreement of
Buyer) of Sunrise Assisted Living Investments, Inc. ("SALII"), the general
partner of Seller equal to twenty-five percent (25%) of the total agreed equity
value of the Facilities. For purposes hereof, the total agreed equity
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value of the Facilities is (i) the Net Operating Income (as defined in the
Limited Liability Company Agreement of Buyer) of the Facilities for the fiscal
quarter of Seller ending on Xxxxx 00, 0000, (xx) divided by 10.75%;
10. The remaining Sellers are willing to convey to Buyer the
remaining membership interests in the Facility Owners (the "Conveyed Interests,"
and together with the Contributed Interests, the "Interests"); and Buyer desires
to acquire and accept such Interests, according to the terms and conditions set
forth below. The Contributed Interests and the Conveyed Interests shall
constitute 100% of the membership interests in the Facility Owners.
11. On the Closing Date, the Facility Owners will lease the
Facilities to separate single-purpose entities (individually and/or collectively
referred to herein as "Lessee") of which MSH Operating, LLC, a Delaware limited
liability company, an Affiliate of Buyer, is the sole owner.
12. The Facilities will be managed by Sunrise Assisted Living
Management, Inc., a Virginia corporation (the "Operator"), pursuant to separate
Facility Operating Agreements with each Lessee.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE I
TERMINOLOGY
1.1 Defined Terms. As used herein, the following terms shall have
the meanings indicated:
Affiliate: With respect to any specified person or entity, another
person or entity which, or a member of an immediate family which,
directly or indirectly controls, is controlled by, or is under common
control with, the specified person or entity.
Code: The Internal Revenue Code of 1986, as amended.
Documents: This Agreement and all Exhibits hereto, and each other
agreement, certificate or instrument delivered pursuant to this
Agreement.
Due Diligence Period: The period ending on the earlier of 30 days after
execution of this Agreement or September 30, 2000, during which Buyer
may investigate the financial, legal, operational, environmental and
all other aspects of the Facilities as Buyer may desire in order to
determine whether to consummate the transactions contemplated by this
Agreement or terminate this Agreement in accordance with Section 3.2.
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Facility Operating Agreements: The agreements by and between Lessee and
Operator to be executed and delivered at Closing pertaining to the
operation, direction, marketing, management and supervision of the
Facilities, substantially in the form attached hereto as Exhibit J, and
incorporated herein by reference.
FF&E: The furniture, fixtures and equipment owned by Seller and located
at the Facilities, which are used or maintained in connection with
Seller's operation of the Facilities.
Xxxxxxx Mac Loans: Those certain loans secured by first lien mortgages
or deeds of trust encumbering the Facilities evidenced by promissory
notes dated March 22, 2000 in the following original principal amounts:
Bellevue Facility $ 9,000,000
Cohasset Facility $ 9,370,000
Decatur Facility $ 9,000,000
Xxxx Cove Facility $ 15,200,000
Lafayette Facility $ 7,908,000
Paoli Facility $ 11,100,000
Paramus Facility $ 8,885,000
Walnut Creek Facility $ 8,445,000
A complete list of the documents evidencing and securing the Xxxxxxx
Mac Loans is attached hereto as Exhibit W.
Health Department: Collectively, all the departments of health and/or
any other governmental or regulatory authorities of all the states
where the Facilities are located, which authorities have jurisdiction
over the licensing, ownership and/or operation of the Facilities as
assisted living/dementia facilities.
Knowledge: As used in this Agreement, the term "knowledge" when used to
refer to the knowledge of Seller or its Affiliates (a) shall mean and
apply to the actual knowledge of the responsible officers of Seller or
its Affiliates who are directly engaged in the management of the
Facilities and not to any other persons or parties, and (b) shall mean
the actual knowledge of such responsible officers, it being understood
and acknowledged that such responsible officers are not charged with
knowledge of all the acts and/or omissions of their predecessors or
with acts or omissions of agents or employees of Seller. Neither Seller
nor the "Responsible Parties" as hereinafter defined, shall be
obligated to do or perform any independent investigation in connection
with the making of any representations or warranties as set forth in
this Agreement; provided, however, that the Responsible Parties shall
make a good faith inquiry of the executive director of each of the
Facilities in connection with such representations and warranties. The
responsible
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officer of Seller directly engaged in the management and operation of
the Facilities is: Xxxxxx X. Xxxxxx (whether one or more, the
"Responsible Parties").
Lessee: Individually or collectively, those eight (8) certain
single-purpose Delaware limited liability companies which will, at the
Closing, enter into separate Lease and Security Agreements
(individually, a "Facility Lease;" collectively, the "Facility Leases")
whereby Lessee will lease the Facilities from Buyer.
Licenses. All certificates, licenses, and permits issued by
governmental authorities held by Seller, the Facility Owners or
Seller's Affiliates in connection with the ownership, use, occupancy,
operation, and maintenance of the Facilities. A list of Licenses for
each of the Facilities is attached hereto and incorporated herein as
Exhibit X.
Xxxx: Any mortgage, deed of trust, pledge, hypothecation, title defect,
right of first refusal, security or other adverse interest,
encumbrance, claim, option, lien, lease or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise,
affecting any assets or property, including any agreement to give or
grant any of the foregoing, any conditional sale or other title
retention agreement, and the filing of or agreement to give any
financing statement with respect to any assets or property under the
Uniform Commercial Code or comparable law of any jurisdiction.
Loss: With respect to any person or entity, any and all costs,
obligations, liabilities, demands, claims, settlement payments, awards,
judgments, fines, penalties, damages and reasonable out-of-pocket
expenses, including court costs and reasonable attorneys' fees, whether
or not arising out of a third party claim.
Material Adverse Effect: A material adverse effect on the assets,
business, operations, financial condition or results of operations of
the Facilities, or any one of them.
Operator: Sunrise Assisted Living Management, Inc., a Virginia
corporation, its successors or assigns, which shall be the operator of
the Facilities under the Facility Operating Agreements.
Permitted Lien: Any statutory lien which secures a payment not yet due
that arises, and is customarily discharged, in the ordinary course of
Seller's business.
Resident Deposits: All refundable deposits or advances of any kind or
nature from any resident of any Facility.
Taxes: All federal, state, local and foreign taxes including, without
limitation, income, gains, transfer, unemployment, withholding,
payroll, social security, real property, personal property, excise,
sales, use and franchise taxes, levies, assessments, imposts, duties,
licenses and registration
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fees and charges of any nature whatsoever, including interest,
penalties and additions with respect thereto and any interest in
respect of such additions or penalties.
Tax Return: Any return, filing, report, declaration, questionnaire or
other document required to be filed for any period with any taxing
authority (whether domestic or foreign) in connection with any Taxes
(whether or not payment is required to be made with respect to such
document).
1.2 Additional Defined Terms. As used herein, the following terms
shall have the meanings defined in the recitals or section indicated below:
Balance Sheet Section 4.4
Buyer Recitals
Closing Section 9.1
Closing Date Section 9.1
Excluded Assets Section 2.2
Facilities Recitals
Facility Agreements Section 2.1(c)
Facility Lease Definitions: "Lessee"
Indemnified Party Section 10.4(a)
Indemnifying Party Section 10.4(a)
Intellectual Property Section 2.2(j)
Land Section 2.1(a)
Permitted Exception Section 7.3(b)
Personal Property Section 2.1(b)
Post-Closing Purchase Price Adjustment Section 2.4(b)
Proration Date Section 2.6(a)
Proration Schedule Section 2.6(a)
Purchase Price Section 2.4
Real Property Section 2.1(a)
Receivables Section 2.7
Resident Agreements Section 2.1(c)
SALI Section 2.2(j)
Seller Recitals
Survey Section 7.3(d)
Title Commitment Section 7.3(a)
Title Defect Section 7.3(b)
Title Insurer Section 7.3(a)
Title Notice Section 7.3(b)
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ARTICLE II
PURCHASE AND SALE
2.1 Owned Assets. Upon and subject to the terms and conditions
provided herein, on the Closing Date, Seller will sell, transfer, assign and
convey (or contribute) to Buyer, and Buyer, which may exercise its rights
hereunder through one or more wholly-owned subsidiaries, will purchase (or
accept in exchange for the Interest Increase) from Seller, all of Seller's
right, title and interest in and to the Interests. As of the Closing Date, all
tangible and intangible assets (except Excluded Assets) used or useful in the
operation of the Facilities as they have been and are now operated by the Seller
and as they will be operated by the Facility Owners (the "Owned Assets") will be
owned by Seller (if Seller is obligated hereunder to assign, transfer or convey
such property to Lessee pursuant to the terms hereof) or (if Seller is not so
obligated) will be owned by the Facility Owners. Except for Owned Assets which
Seller is obligated to convey to Lessee pursuant to the terms hereof, Seller
shall convey the Owned Assets to the Facility Owners, provided that Seller shall
not convey such assets more than ten (10) days prior to the Closing Date. The
Owned Assets include the following:
(a) Real Property.
(i) That certain real property consisting of land ("Land")
and all buildings, structures, fixtures and other improvements
("Improvements") located as follows:
Xxxxxxxx, XX 00000 NE 0xx Xxxxxx
Xxxxxxxx, XX 00000
Cohasset, MA 000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Decatur, GA 000 Xxxxxxxxx Xxx.
Xxxxxxx, XX 00000
Glen Cove, NY 00 Xxxxxx Xxx.
Xxxx Xxxx, XX 00000
Lafayette Hill, PA 000 Xxxxx Xxxx
Xxxxxxxxx Xxxx, XX 00000
Paoli, PA 000 X. Xxxxxxxxx Xxx.
Xxxxxxx, XX 00000
Paramus, NJ 000 Xxxxxxx Xxxx
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Xxxxxxx, XX 00000
Walnut Creek, CA 0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
The Land and related real property (the "Real Property") are
more fully described on Exhibit A through Exhibit H and shall be deemed
to include all permits, easements, rights of way and related
appurtenances.
(ii) Seller's right, title and interest as landlord (whether
named as such therein, or by assignment or otherwise) in any leases and
subleases, if any, regarding the Real Property now existing or at any
time hereafter made, and all amendments, modifications, supplements,
renewals and extensions thereof, together with any refundable security
deposits made by the lessees thereunder.
(b) Personal Property.
(i) Any and all furniture, fixtures, furnishings, machinery
and equipment used in connection with the Facilities, and all other
personal property used in connection with the Real Property and located
upon the Real property, if any. A list of such tangible personal
property is attached hereto as Exhibit I. In no event shall the
Personal Property include any property owned by Operator,
notwithstanding Operator's use of such property in connection with its
management and administration of the Facilities.
(ii) Goodwill, going concern, and all existing warranties and
guaranties (express or implied) issued to the Facility Owners or to the
Seller in connection with the Improvements or the personal property
described in paragraph (b)(i) above.
(iii) The tangible and intangible property described in
Sections 2.1(b)(i) and 2.1(b)(ii) shall be referred to herein as the
"Personal Property."
(c) Facility Agreements and Resident Agreements. All rights
of Seller in, to and under all contracts, leases, agreements, commitments and
other arrangements, and any amendments or modifications, used or useful in the
operation of the Facilities as of the date hereof or made or entered into by the
Facility Owners between the date hereof and the Closing Date in compliance with
this Agreement (the "Facility Agreements"), including but not limited to
occupancy, residency, lease, tenancy and similar written agreements entered into
in the ordinary course of business with residents of the Facilities, and all
amendments, modifications, supplements, renewals, and extensions thereof
("Resident Agreements") and all Resident Deposits.
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(d) Records. True and complete copies of all of the books,
records, accounts, files, logs, ledgers and journals pertaining to or used in
the operation of the Facilities, including, but not limited to, any electronic
data stored on computer disks or tapes, and originals of any of the foregoing
that relate to residents of the Facilities other than Excluded Assets.
(e) Miscellaneous Assets. Any other tangible or intangible
assets, properties or rights of any kind or nature not otherwise described above
in this Section 2.1 and now or hereafter owned by the Facility Owners (or the
Seller) and used in connection with the operation of the Facilities (except
Excluded Assets).
2.2 Excluded Assets. Notwithstanding any provision of this Agreement
to the contrary, the Owned Assets shall not include any of the following
(collectively, the "Excluded Assets"):
(a) Any and all cash, bank deposits and other cash
equivalents, certificates of deposits, marketable securities, cash deposits made
by or on behalf of the Facility Owners (or the Seller) to secure contract
obligations (except to the extent Seller receives a credit therefor under
Section 2.6).
(b) Any and all rights in and to claims or causes of action
of Seller or the Facility Owners or any of their Affiliates against third
parties (including, without limitation, for indemnification) with respect to, or
which are made under or pursuant to the Owned Assets or the Excluded Assets, and
which arose prior to the date of Closing, it being specifically agreed that
Seller shall be responsible for all costs and expenses (including attorneys
fees) incurred in connection with the prosecution of such claims or causes of
action.
(c) All prepaid expenses (and rights arising therefrom or
related thereto) except to the extent taken into account in determining the
Adjustment Amount under Section 2.6.
(d) All loan agreements and other instruments evidencing
indebtedness for borrowed money.
(e) All contracts of insurance, all coverages and (subject
to Section 13.17 below) proceeds thereunder and all rights in connection
therewith, including, without limitation, rights arising from any refunds due
with respect to insurance premium payments to the extent they relate to such
insurance policies.
(f) All tangible personal property disposed of or consumed
at or in connection with the Facilities between the date hereof and the Closing
Date in accordance with the terms and provisions of this Agreement.
(g) To the extent now or hereafter held by or issued in the
name of Seller, Operator or their Affiliates (other than the Facility Owners)
and not transferrable or assignable under applicable law, all Licenses (and any
renewals, extensions, amendments or modifications thereof), provided, however,
that
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Seller shall, and shall cause Operator and the Affiliates of Seller and
Operator, to fulfill their obligations as set forth in Section 6.12 to have such
Licenses transferred or reissued in the names of the appropriate Lessee, or such
other party as Buyer may direct.
(h) Any and all rights of Sunrise Assisted Living, Inc.
("SALI") or any of its Affiliates with respect to the use of (i) all trade
names, trademarks, service marks, copyrights, patents, jingles, slogans,
symbols, logos, inventions, computer software or other proprietary material,
process, trade secret or trade right used by SALI or its Affiliates in the
operation of the Facilities, (ii) all registrations, applications and licenses
for any of the foregoing, and (iii) any additional such items acquired or used
by SALI or its Affiliates in connection with the operation of the Facilities
between the date hereof and the Closing Date (collectively, the "Intellectual
Property"), provided, however, that Buyer or its Affiliates shall have the right
to use the Intellectual Property in connection with the operation of the
Facilities for so long as the Facility Operating Agreements with Operator govern
operation of the Facilities.
(i) All corporate minute books, corporate seals, stock
transfer records and other corporate records (except to the extent such records
pertain primarily to or are used primarily in the operation of the Facilities)
and any records relating to Excluded Assets and to liabilities other than the
Assumed Obligations.
(j) Personal property of all officers or employees of SALI
or its Affiliates located in their respective personal offices at the
Facilities.
(k) All other assets of Seller or its Affiliates not located
on or used in connection with the operation of the Facilities.
2.3 Assumption of Liabilities. Buyer acknowledges the existence of,
and will cause Lessee and/or the Facility Owners at Closing to assume and agree
to pay, discharge and perform when due, from and after Closing, the following
liabilities and obligations (collectively, the "Owner Obligations"):
(a) The Xxxxxxx Mac Loans;
(b) All liabilities and obligations arising under the
Facility Agreements transferred to Lessee in accordance
with this Agreement to the extent such liabilities and
obligations arise during and relate to any period from
and after the Closing Date; and
(c) Provided that Seller pays Buyer the amount, if any, owed
by Seller at Closing under Section 2.6, the Owner
Obligations shall also include such other liabilities of
Seller (including but not limited to Resident Deposits
or any personal funds belonging to residents of the
Facilities held by Seller) to the extent, and only to
the
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extent, the amount thereof is included as a credit to
Buyer in calculating the Adjustment Amount as ultimately
determined pursuant to Section 2.6.
2.4 Purchase Price.
(a) The purchase price for the Conveyed Interests ("Purchase
Price") shall be an amount equal to (i) seventy-five percent (75%) of the Net
Operating Income (as defined in the Limited Liability Company Agreement of
Buyer) of the Facilities for the fiscal quarter of Seller ending on Xxxxx 00,
0000, (xx) divided by 10.75%. The Purchase Price, subject to adjustment as
provided in Section 2.6 below, shall be paid by Buyer to Seller on the Closing
Date by (i) Buyer assuming the Xxxxxxx Mac Loans, the outstanding principal
balance of which on the Closing Date shall be credited against the Purchase
Price, and (ii) wire transfer of immediately available funds to the Title
Insurer or at Seller's direction in an amount equal to the balance of the
Purchase Price.
(b) In the event that aggregate Gross Revenues (as defined
in the Facility Operating Agreements) for the Facilities in any of the first
three (3) full fiscal quarters after the Closing is less than the "Threshold
Revenue Amount" for any such fiscal quarter (as shown in Exhibit K), then the
Purchase Price shall be reduced by the amount determined as shown in Exhibit K,
but in no event shall the aggregate amount of reduction exceed the amount shown
as the "Purchase Price Reduction" on Exhibit K (the "Post-Closing Purchase Price
Adjustment") for each such fiscal quarter. Such Post-Closing Purchase Price
Adjustment, if any, shall be allocated among the Owned Assets in the proportion
that the Purchase Price is allocated among the Owned Assets in Section 2.5
below. The determination of the aggregate Gross Revenues for the Facilities and
Seller's payment, if any, of the Post-Closing Purchase Price Adjustment in cash
to Buyer shall be made within sixty (60) days following the end of the third
(3rd) full fiscal quarter after the Closing.
2.5 Allocation of the Purchase Price. Seller and Buyer shall agree
to an allocation of the Purchase Price among the Owned Assets prior to the
Closing Date. Buyer and Seller further agree that, for purposes of the exchange
of the Contributed Interests for the Interest Increase, the value of the
Contributed Interests shall be an amount equal to twenty-five percent (25%) of
(i) the Net Operating Income (as defined in the Limited Liability Company
Agreement of Buyer) of the Facilities for the fiscal quarter of Seller ending on
Xxxxx 00, 0000, (xx) divided by 10.75%. Buyer and Seller each agree to report
such allocations, if agreed upon, to the Internal Revenue Service in the form
required by Treasury Regulation 1.1060-IT and to use such allocation for all
other reporting purposes after Closing in connection with federal, state and
local income and, to the extent permitted under applicable law, franchise taxes.
2.6 Adjustment of Purchase Price.
(a) All income and expenses (including prepaid expenses) of the
Facilities (including the Facilities to which the Contributed Interests relate)
shall be prorated on a daily basis between Seller and
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Buyer as of 11:59 p.m., September 30, 2000 (the "Proration Date"). Such items to
be prorated shall include:
(i) Rents under the leases and Resident Agreements and other
income, if any, including prepaid rents and security deposits;
(ii) Utility charges, if any;
(iii) Payments under service agreements assigned to Buyer, if
any;
(iv) Periodic charges or fees assessed by any governmental
authority, if any.
(v) Food inventory;
(vi) Supplies inventory;
(vii) Xxxxx cash;
(viii) Real estate and personal property taxes;
(ix) Payments under any leases of personal property used in
connection with the operation of the Facilities; and
(x) Interest payable under the Xxxxxxx Mac Loans.
Buyer and Seller shall prepare a schedule (the "Proration Schedule") at
least three (3) days prior to Closing, including: (i) the items listed above,
(ii) any items which are customarily apportioned between a purchaser and seller
in the localities in which the Facilities are located, and (iii) any other items
the parties determine necessary. Such Proration Schedule shall include all
applicable income and expenses with regard to the Facilities. Notwithstanding
the foregoing, Buyer's due diligence expenses (including the cost of preparing
surveys and title insurance premiums) payable in connection with the
transactions contemplated herein shall be paid by Buyer, provided that transfer
taxes shall be paid in accordance with Section 9.4.
(b) Any escrow accounts held by any utility companies, and any cash
deposits made by Seller prior to Closing to secure obligations under contracts
which will continue after Closing, shall be either paid to the Seller or, if
assigned to Buyer, Seller shall receive a credit at Closing for any such
deposits.
(c) The applicable Lessee shall receive all income from the
Facilities attributable to the period from and after the Proration Date and
Lessee and Buyer shall be responsible for all expenses of the Facilities
attributable to the period from and after the Proration Date. In the event
Seller receives any payment from a resident for rent due for any period from and
after the Proration Date, Seller shall forward such payment to the applicable
Lessee. In addition, in the event Seller has received any pre-paid rent or
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any security deposits from a resident for any period from and after the
Proration Date, Seller shall forward such pre-paid rent and or security deposits
to the applicable Lessee.
(d) The parties agree that any amounts which may become due under
this Section 2.6 shall be paid at Closing as can best be determined. A
post-Closing reconciliation of such pro-rated items shall be made by the parties
sixty (60) days after Closing and any amounts due at that time shall be promptly
forwarded to the respective party in a lump sum payment. Any additional amounts
which may become due after such determination shall be forwarded at the time
they are received. Any amounts due under this Section 2.6 which cannot be
determined within sixty (60) days after Closing (such as, for example, fiscal
year-end real estate taxes) shall be reconciled as soon thereafter as such
amounts can be determined. Seller, on behalf of itself and its Affiliates,
agrees that Federal Street Operating, LLC, a member of Buyer, shall have the
right to audit the records of Seller in connection with any such post-closing
reconciliation.
2.7 Accounts Receivable. As of September 30, 2000, the Facilities
will have certain outstanding accounts receivable (the "Receivables"). Buyer
shall make an adjustment payment to Seller in consideration of Lessee's right to
collect the Receivables after Closing. Such adjustment payment shall be in an
amount equal to the lesser of (i) seventy-five percent (75%) of the Receivables
outstanding as of the Closing Date or (ii) a sum to be determined by mutual
agreement of Buyer and Seller. Seller agrees that during the term of this
Agreement, it shall continue to use usual and customary procedures to collect
the Receivables.
ARTICLE III
DUE DILIGENCE PERIOD
3.1 Due Diligence Period. During the period beginning on the date of
full execution of this Agreement through the date thirty (30) days thereafter
(the "Due Diligence Period"), Buyer shall have the right to review and evaluate
the Owned Assets, the nature and extent of the Owned Assets and operations and
all rights and liabilities related thereto. Seller shall furnish or make
available to Buyer or its representatives within five (5) days after the date
hereof, the following to the extent they are in Seller's possession or control:
(a) Any and all title insurance policies, (together with copies of
all exception documents referenced therein), as-built surveys, environmental
reports, property condition reports, site inspection reports, and MAI
Appraisals;
(b) Any and all contracts, leases, equipment agreements, and
information regarding any claims affecting the Real Property or the Personal
Property;
(c) All licenses and permits currently held by Seller or its
Affiliates in connection with the ownership or operation of the Facilities, and
all existing warranties and guaranties (express or implied) issued in connection
with the Owned Assets; and
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(d) Facility budgets for the year 2000.
(e) All other such documents or items as Buyer may reasonably
request in connection with its due diligence investigations of the Facilities.
3.2 Termination during Due Diligence. At any time during the Due
Diligence Period, Buyer shall have the right, in its sole discretion and for any
reason or no reason, to terminate this Agreement by written notice to Seller.
Upon such notice, this Agreement shall terminate and be of no further force and
effect.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller represents, warrants and covenants to Buyer as follows:
4.1 Organization, Good Standing and Entity Authority. Each Seller is
a limited partnership, duly organized, validly existing and in good standing
under the laws of the State in which the Facility owned by its wholly-owned
subsidiary Facility Owner is located, and has all requisite authority to own,
and operate its Owned Assets and carry on its business. Each Facility Owner
will, prior to Closing, be a limited liability company duly organized, validly
existing and in good standing under the laws of Delaware, and will, prior to
Closing, have all requisite authority to own, operate and lease its properties
and carry on its business. Each Facility Owner will, prior to Closing, be duly
qualified to do business in the State in which the Facility owned by it is
located.
4.2 Authorization and Binding Effect of Documents. Seller has all
requisite power and authority to enter into this Agreement and the other
Documents to which it is a party and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement and each of the
other Documents by Seller and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Seller and Seller's general partners. This Agreement has
been, and each of the other Documents at or prior to Closing will be, duly
executed and delivered by Seller. This Agreement constitutes (and each of the
other Documents, when executed and delivered, will constitute) the valid and
binding obligation of Seller enforceable against Seller in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights of creditors generally and to the
exercise of judicial discretion in accordance with general principles of equity,
whether applied by a court of law or of equity.
4.3 Absence of Conflicts. The execution, delivery and performance by
Seller of this Agreement and the other Documents, and consummation by Seller of
the transactions contemplated hereby and thereby, do not and will not, to the
best of Seller's knowledge, (i) conflict with or result in any breach of any of
the terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in a violation of, (iv)
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give any third party the right to modify, terminate or accelerate any obligation
under, or (v) result in the creation of any Lien upon the Interests or the Owned
Assets under the provisions of the Certificate of Limited Partnership or
Partnership Agreement of Seller, the organizational instruments of any Facility
Owner, any laws or regulations to which Seller or any Facility Owner is subject,
or any indenture, mortgage, lease, loan agreement or other agreement or
instrument to which Seller, any Facility Owner or the Facilities are subject.
4.4 Financial Statements. Seller has delivered to Buyer prior to the
date of this Agreement the unaudited financial statements for each of the
Facilities as of December 31, 1999, including but not limited to an unaudited
balance sheet as of December 31, 1999 (the "Balance Sheet"). Seller has also
delivered to Buyer prior to the date of this Agreement the unaudited financial
statements for each of the Facilities as of March 31, 2000 and will promptly
deliver the unaudited financial statements for each of the Facilities as of June
30, 2000, certified by the Chief Financial Officer of SALI (the "Interim
Statements"). All such statements (i) are and will be in accordance in all
material respects with the books and records of Seller and (ii) have been
prepared and will be prepared in accordance with GAAP applied on a consistent
basis and do and will fairly present the assets and liabilities of the
Facilities as of the dates stated and do and will accurately reflect the results
of operations of the Facilities for the periods covered by the statements, with
the exception that the Interim Statements are subject to normal year-end
adjustments.
4.5 Absence of Certain Changes or Events. Since the date of the
Balance Sheet (except as disclosed in the Interim Statements):
(a) There has not been any damage, destruction or other
casualty loss with respect to the Owned Assets (whether or not covered by
insurance) which, individually or in the aggregate has, or could reasonably be
expected to have, a Material Adverse Effect.
(b) None of the Seller, the Operator, the Facility Owners or
the Facilities has suffered any adverse change or development which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect.
(c) Neither Seller, the Facility Owners or the Operator has:
(i) amended or terminated any Facility Agreement
except in the ordinary course of business;
(ii) mortgaged, pledged, suffered or subjected to any
Lien, the Interests or any of the Owned Assets, except for Permitted
Liens and any Lien which will be released at or prior to the Closing
Date;
(iii) acquired or disposed of any assets or properties
affecting the Facilities or entered into any agreement or other
arrangement for such acquisition or disposition, except in the ordinary
course of business;
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(iv) entered into any agreement, commitment or other
transaction affecting the Facilities other than in the ordinary course
of business;
(v) operated the Facilities other than in the
ordinary course of business.
4.6 Broker's or Finder's Fees. No agent, broker, investment banker
or other person or firm acting on behalf of or under the authority of Seller,
the Facility Owners or any Affiliate of Seller is or will be entitled to any
broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with the transactions contemplated by this Agreement.
Seller agrees to indemnify and hold Buyer harmless from any Loss resulting from
a breach of this representation and warranty. Notwithstanding the provisions of
Article X below, such agreement to indemnify shall survive the Closing without
limitation.
4.7 Insurance. There is now, and until Closing there will remain, in
full force and effect with reputable insurance companies fire and extended
coverage insurance with respect to all tangible Owned Assets and public
liability insurance, all in commercially reasonable amounts.
4.8 Litigation. Except as set forth on Exhibit M, there is no
pending, or to the best of Seller's knowledge, threatened litigation, proceeding
or investigation (by any person, governmental or quasi-governmental agency or
authority or otherwise) to which Seller is a party, including without limitation
litigation brought by Seller or the Facility Owners against third parties. The
litigation, proceedings and investigations listed on Exhibit M will not,
individually or in the aggregate, materially adversely affect the ownership,
use, occupancy, operation or title to any of the Facilities.
4.9 Compliance with Laws. To the best of Sellers' knowledge, the
Improvements have been constructed and the Facilities have been and are
presently used and operated in compliance in all material respects with, and in
no material way violate any applicable statute, law, regulation, rule,
ordinance, order or permit of any kind whatsoever affecting the Facilities or
any part thereof. Neither Seller, the Facility Owners nor any of Seller's
Affiliates has received notice of any such violation.
4.10 Environmental Matters. To Seller's knowledge, neither Seller,
the Facility Owners, nor any of Seller's Affiliates has generated, stored or
disposed of any hazardous waste at any of the Facilities, and Seller has no
knowledge of any previous or present generation, storage, disposal or existence
of any hazardous waste at any of the Facilities. The term "hazardous waste"
shall mean "hazardous waste," "toxic substances," or other similar or related
terms as defined or used from time to time in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
1801, et seq.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. Section 6921, et seq.), similar state laws and regulations adopted
thereunder.
4.11 Assessments. There are no special or other assessments for
public improvements or otherwise now affecting any of the Facilities, nor does
Seller have knowledge of (i) any pending or
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threatened special assessments affecting any of the Facilities or (ii) any
contemplated improvements affecting any of the Facilities that may result in
special assessments affecting any of the Facilities.
4.12. Resident Agreements. Attached hereto as Exhibit N are true and
correct copies of the forms of Resident Agreement used at the Facilities. No
Resident Agreement currently in effect with respect to any of the Facilities
contains, and (unless Buyer grants its prior written consent) no Resident
Agreement entered into prior to the Closing Date will contain, any material
deviations from the forms attached hereto as Exhibit N. Seller is not in default
under any of its material obligations under any Resident Agreement or any lease
and, except as set forth on the rent roll attached hereto as Exhibit O (the
"Rent Roll"), Seller has no knowledge of any material default on the part of any
other party thereto. All of the Resident Agreements and lease identified on the
Rent Roll are currently in full force and effect.
4.13. Facility Agreements. The Facility Agreements listed on Exhibit O
hereto are all of the Facility Agreements relating to or affecting any of the
Facilities. Seller has heretofore delivered to Buyer true and complete copies of
all such Facility Agreements, including all amendments and modifications
thereto; no Seller is in default of any of its material obligations under any of
such Facility Agreements, and Seller has no knowledge of any material default on
the part of any other party thereto. All of the Facility Agreements listed on
Exhibit O are currently in full force and effect.
4.14 Permits. Exhibit K attached hereto is a true and complete list
of all Licenses. All the Licenses are valid and no material violations exist. To
Seller's knowledge, the Licenses are the only certificates, licenses, and
permits which are required for the lawful ownership, use, occupancy, operation
and maintenance of the Facilities as assisted living/dementia facilities.
4.15 Medicare; Medicaid. To Seller's knowledge, no action,
proceeding, or investigation in connection with Medicare, Medicaid or other
public or private third-party payor or other programs is pending or threatened
against Seller, the Facility Owners or any of Seller's Affiliates in connection
with the Facilities. Neither Seller, the Facility Owners nor Seller's Affiliates
has received notice of any threatened or pending investigation in connection
with (i) Medicare, Medicaid, or other public or private third-party payor
programs or (ii) any fraud, false statement or false claim applicable to its
business or (iii) any patient care, patient rights or other law applicable to
its business. Seller, the Facility Owners or Seller's Affiliates have prepared
and filed all cost reports, if any, that were required to be filed for Medicare
and Medicaid purposes and for all other public or private third-party
reimbursement programs through the date of this Agreement. All such cost
reports, if any, are correct and accurate and have been prepared in conformity
with Seller's books and records. Neither Seller, the Facility Owners nor
Seller's Affiliates has received notice that Medicare, Medicaid or any other
public or private third-party payor has any claims for disallowance of costs
against it. To Seller's knowledge, neither Seller, the Facility Owners nor any
Affiliate of Seller has committed any violation of the Medicare and Medicaid
fraud and abuse provisions of the Social Security Act, any similar state law or
Title VI of the Civil Rights Act.
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4.16 Condemnation. Neither Seller, the Facility Owners nor any of
Seller's Affiliates has received any written notice of any pending or
contemplated condemnation, eminent domain or similar proceeding with respect to
all or any portion of the Facilities.
4.17 Condition of Property. To Seller's knowledge, with regard to the
Improvements, (i) there are no material structural defects, (ii) they are free
of insect and rodent infestation, (iii) the roofs are free of leaks, (iv) all
mechanical and utility systems servicing the Improvements are in good condition
and proper working order, free of material defects and, to Seller's knowledge,
in compliance with all applicable laws and codes. To Seller's knowledge, all the
Personal Property is in good condition, working order and repair.
4.18 Independent Facilities. To Seller's knowledge, each Facility is
an independent unit which as of the date hereof does not rely, and as of the
Closing, will not rely on any facilities (other than the facilities of public
utility, sewer and water companies) located on any property not included in such
Facility (i) to fulfill any zoning, building code, or other municipal or
governmental requirement, or (ii) for structural support or the furnishing of
any essential building systems or utilities, including, but not limited to,
electric, plumbing, mechanical, heating, ventilating and air conditioning
systems. To Seller's knowledge, no building or other improvements not included
in the Facilities relies on any part of the Facilities to fulfill any zoning,
building code or other municipal or governmental requirement or for structural
support or the furnishing of any essential building systems or utilities.
4.19 Full Disclosure. None of the representations or warranties in
this Agreement by Seller, nor any descriptive information concerning the Owned
Assets set forth in this Agreement, nor, to Seller's knowledge, does any
document, statement, certificate, schedule or other information furnished or to
be furnished to Buyer by Seller in connection with this Agreement, contain, or
will as of the Closing, contain any untrue statement of a material fact or omit,
or will as of the Closing omit, to state a material fact necessary to make the
statements of fact contained therein not misleading.
4.20 Utilities Access. Each Facility has adequate water supply, storm
and sanitary sewer facilities, adequate access to telephone, gas and electricity
connections, adequate fire protection, drainage, means of ingress and egress to
and from public highways and, without limitation, other public utilities for
operation as an assisted living/dementia facility. To Seller's knowledge, the
parking facilities located on each Facility meet all applicable requirements
imposed by applicable law or requisite exceptions or variances to such laws. All
such public utilities are installed and operating and all installation and
connection charges have been paid in full. All streets and roads necessary for
access to and full utilization of each of the Facilities, and every part
thereof, have been built, completed, dedicated and accepted for maintenance and
public use by the appropriate governmental authorities or are otherwise owned
and maintained by local governments for public use. Seller has no knowledge of
any fact or condition existing that would result or could result in the
termination or reduction of the current access from the Facilities to the
existing roads and highways or to sewer or other utility services presently
serving the Facilities.
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4.21 Zoning. To Seller's knowledge, the use of each of the Facilities
as assisted living/dementia facilities, together with the ancillary uses
thereto, are permitted under the applicable municipal zoning ordinances, or
special exceptions, variances, or conditions thereto, and the Facilities comply,
to the extent required (and not waived or grandfathered), with all conditions,
restrictions and requirements of such zoning ordinances and all amendments
thereto.
4.22 No Employees. None of the employees at the Facilities is
employed by Seller or the Facility Owners. All such employees are employed by
Operator or its Affiliates other than Seller and the Facility Owners. Neither
Seller nor the Facility Owners now has, and at no time ever had, any employees.
4.23 FIRPTA. Seller is a "non-foreign person" within the meaning of
Section 1445 of the Code and the Regulations issued thereunder.
4.24 Bank Accounts. Exhibit P, attached hereto, sets forth the names
and locations of all banks, trust companies, savings and loan associations, and
other financial institutions or depositories at which Seller or the Facility
Owners maintain any safe deposit boxes or accounts of any nature, the numbers
and types thereof, and the names of all persons authorized to draw thereon, make
withdrawals therefrom or have access thereto. After the Closing, Seller shall
cooperate with Buyer to the extent necessary to close any such accounts which
Buyer desires closed, and to change the persons authorized to draw upon such
accounts which Buyer does not desire closed.
4.25 Taxes. Seller and the Facility Owners have accurately prepared
and duly and timely filed (or has filed as part of a consolidated tax filing)
all tax reports and returns required to be filed by it and, whether or not shown
on such returns or reports to be due, has duly paid or provided for the payment
of all taxes and other charges due or claimed to be due from it by federal,
state, local or foreign taxing authorities (including, without limitation, those
due in respect of the properties, income, franchises, licenses, sales, usages or
payrolls of Seller and the Facility Owners; there are no tax liens upon any
property or assets of any Seller and the Facility Owners except liens for
current taxes not yet due. The federal income tax returns of Seller and the
Facility Owners have not been audited or otherwise examined by the Internal
Revenue Service within the past three years, and no state or local income,
sales, use, or property tax returns of Seller and the Facility Owners have been
audited or otherwise examined within the past three years. Seller has no notice
of the pendency of any such audit or examination. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any federal or state income tax return for any period and neither Seller nor the
Facility Owners has filed any consent under Section 341(f) of the Code.
4.26 Owned Assets. The Owned Assets (except Excluded Assets)
constitute all real, tangible and intangible assets and property used or useful
in the operation of the Facilities as they have been operated by the Seller and
are now operated by the Facility Owners. Seller is the Landlord under all leases
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and Resident Agreements relating to the Facilities. The Facility Owners do not
own or hold an interest in any property, real or personal, tangible or
intangible, except for the Owned Assets.
4.27 Interests. Seller owns 100% of the membership interests in each
Facility Owner, free and clear of all liens, options, claims, encumbrances or
charges of any kind, and there are no outstanding options or other rights to
purchase or otherwise acquire any membership interest in any of the Facility
Owners.
4.28 Executive Director. The executive director of each Facility is
the person most likely to have knowledge regarding the accuracy or inaccuracy of
any of the representations of Seller set forth herein which are qualified to
Seller's knowledge.
4.29 Title Encumbrances. Neither Seller nor the Facility Owners are
in default under any of their material obligations under any recorded agreement,
easement or instrument encumbering title to any of the Facilities, and Seller
has no knowledge of any material default on the part of any other party thereto.
4.30 Affordable Housing Units. Attached hereto as Exhibit Q is a true
and complete list of each unit within the Facilities (specifying the number of
bedrooms in each unit) which is leased or reserved for lease as an affordable
housing unit, or for low or moderate income residents. Exhibit Q truly and
correctly lists the number of units (and the number of bedrooms in each such
unit) at the Facilities which may be required to be leased as an affordable
housing unit, or for low or moderate income residents, pursuant to a presently
existing agreement or requirement of law.
4.31 No New Survey Matters. To Seller's knowledge, since the dates of
the as-built surveys for each of the Facilities previously provided to Buyer by
Seller (the "Xxxxxxx Mac Surveys"), no new survey matters have arisen in
connection with any of the Real Property which would otherwise be required under
the applicable ALTA/ACSM standards used in preparing the Xxxxxxx Mac Surveys to
be shown thereon.
4.32 Xxxxxxx Mac Loans. The Xxxxxxx Mac Loans are in full force and
effect, there exists no Event of Default thereunder, and there is no event or
circumstance which, with the passing of time or giving of notice, would
constitute an Event of Default thereunder. Exhibit W is a complete list of all
documents and agreements (including amendments) evidencing or relating to the
Xxxxxxx Mac Loans.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 Organization and Good Standing. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. Buyer has all requisite
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company power to own, operate and lease its properties and carry on its business
as it is now being conducted and as the same will be conducted following the
Closing.
5.2 Authorization and Binding Effect of Documents. Buyer has all
requisite company power and authority to enter into this Agreement and the other
Documents and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and each of the other Documents by
Buyer and the consummation by Buyer of the transactions contemplated by this
Agreement have been duly authorized by all necessary company action on the part
of Buyer. This Agreement has been, and each of the other Documents at or prior
to Closing will be, duly executed and delivered by Buyer. To the best of Buyer's
knowledge, this Agreement constitutes (and each of the other Documents, when
executed and delivered, will constitute) the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights of creditors generally and to the exercise of judicial
discretion in accordance with general principles of equity, whether applied by a
court of law or of equity.
5.3 Absence of Conflicts. The execution, delivery and performance by
Buyer of this Agreement and the other Documents, and consummation by Buyer of
the transactions contemplated hereby and thereby, do not and will not (i)
conflict with or result in any breach of any of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in a violation of,
(iv) give any third party the right to modify, terminate or accelerate any
obligation under, the provisions of the articles of organization or operating
agreement of Buyer, any indenture, mortgage, lease, loan agreement or other
agreement or instrument to which Buyer is bound or affected, or any law,
statute, rule, judgment, order or decree to which Buyer is subject.
5.4 Consents. The execution, delivery and performance by Buyer of
this Agreement and the other Documents, and consummation by Buyer of the
transactions contemplated hereby and thereby, do not and will not require the
authorization, consent, approval, exemption, clearance or other action by or
notice or declaration to, or filing with, any court or administrative or other
governmental body, or the consent, waiver or approval of any other person or
entity.
5.5 Broker's or Finder's Fees. No agent, broker, investment banker,
or other person or firm acting on behalf of Buyer or under its authority is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee, directly or indirectly, from Buyer in connection with the
transactions contemplated by this Agreement. Buyer agrees to indemnify and hold
Seller harmless form any Loss, resulting from a breach of the representations
and warranties set forth in this section. Notwithstanding the provisions of
Article X below, such agreement to indemnify shall survive the Closing without
limitation.
ARTICLE VI
OTHER COVENANTS
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6.1 Conduct of the Facility's Business Prior to the Closing Date.
Seller covenants and agrees with Buyer that from the date hereof through the
Closing Date, unless Buyer otherwise consents in writing (which consent shall
not be unreasonably withheld), Seller, the Facility Owners or Seller's
Affiliates shall:
(a) Operate the Facilities in the ordinary course of
business, including (i) incurring expenses consistent with the past practices,
(ii) making reasonable capital expenditures prior to the Closing Date in an
amount consistent with past practices and the current Facility budget, and (iii)
using commercially reasonable efforts to preserve the Facilities' present
business operations, organization and goodwill and its relationships with
customers, employees, advertisers, suppliers and other contractors.
(b) Operate the Facilities and otherwise conduct its
business in all material respects in accordance with the terms or conditions of
the Licenses, all applicable rules and regulations of the relevant State, and to
the best of its knowledge all other rules, regulations, laws and orders of all
governmental authorities having jurisdiction over any aspect of the operation of
such Facilities.
(c) Maintain Seller's books and records in accordance with
GAAP on a basis consistent with prior periods.
(d) Timely comply in all material respects with any Facility
Agreements.
(e) Not sell, lease, grant any rights in or to or otherwise
dispose of, or agree to sell, lease or otherwise dispose of, any of the Owned
Assets except for dispositions of assets that (A) are in the ordinary course of
business and (B) if material, are replaced by similar assets of substantially
equal or greater value and utility.
(f) Maintain the FF&E and Personal Property currently in use
in reasonably good operating condition and repair, except for ordinary wear and
tear, in a manner consistent with past practices.
(g) Perform all covenants, terms and conditions under the
Xxxxxxx Mac Loans in a timely fashion.
6.2 Notification of Certain Matters. Seller shall give prompt notice
to Buyer, and Buyer shall give prompt notice to Seller, of (i) the occurrence,
or failure to occur, of any event that would be likely to cause any of their
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Closing Date, and (ii) any failure on their respective parts to comply with
or satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by any of them under this Agreement.
6.3 Title; Additional Documents. At the Closing, Seller shall
transfer and convey to Buyer good and marketable title to the Interests free and
clear of any Liens except Permitted Exceptions. At the Closing, all warranties
relating to the Facilities shall be held and owned by the Facility Owners. At
and
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after the Closing, the Facilities shall be subject to the Xxxxxxx Mac Loans. At
the Closing, Seller shall transfer and convey to Lessee good and marketable
title to all other Owned Assets, free and clear of any Liens except Permitted
Exceptions and the Xxxxxxx Mac Loans. Seller shall execute or cause to be
executed such documents, in addition to those delivered at the Closing, as may
be necessary to confirm in Buyer such title to the Interests and the Owned
Assets and to carry out the purposes and intent of this Agreement. Buyer shall
execute or cause to be executed such documents, in addition to those delivered
at Closing as may be necessary to confirm Buyer's assumption of the Owner
Obligations.
6.4 Other Consents. Seller shall use reasonable efforts to obtain
the consents or waivers to the transactions contemplated by this Agreement
required under any Facility Agreements; provided that Seller shall not be
required to make any financial accommodation to a third party in order to obtain
any such consent or waiver (other than payment of any amount otherwise due such
third party).
6.5 Inspection and Access. Seller shall, commencing on the date of
this Agreement, open the assets, books, accounting records, correspondence and
files of Seller (to the extent related to the operation of the Facilities) for
examination by Buyer, its officers, attorneys, accountants and agents, with the
right to make copies of such books, records and files or extracts therefrom.
Such access will be available to Buyer during normal business hours, upon
reasonable notice and in such manner as will not unreasonably interfere with the
conduct of the business of the Facilities. All requests for access shall be made
by Buyer to Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx or Xxxxxxx Bath on behalf of
Seller. Buyer shall not contact or otherwise communicate with any of the
tenants, occupants, staff members or other employees or others providing goods
or services to the Facilities without the prior written consent of Seller, which
shall not be unreasonably withheld or delayed, but in no event shall contact be
made with any of the aforementioned before ten (10) days prior to Closing. As
and when Seller prepares the same for its own purposes (which preparation shall
be consistent in terms of timing with Seller's past practices), Seller will
furnish to Buyer unaudited financial statements of Seller for the periods from
and after the date of the Interim Statements prepared in a manner consistent
with the Interim Statements. Seller will make available to Buyer such additional
financial and operating data and other available information regarding the
Facilities or the Owned Assets as Buyer may reasonably request. Those books,
records and files (the possession of which is not being transferred to Buyer
pursuant to this Agreement) which relate to the Owned Assets shall be preserved
and maintained by Seller for four (4) years after the Closing and those books,
records and files relating to the Owned Assets the possession of which is being
transferred to Buyer hereunder shall be maintained and preserved by Buyer for a
period of four (4) years after the Closing. Each such party shall give to the
other party and its authorized representatives, during normal business hours,
such access to, and the opportunity at the other party's expense to copy, such
books and records retained by it as may be reasonably requested by the other
party.
6.6 Confidentiality. AEW Capital Management L.P. and SALI entered
into a confidentiality agreement dated February 8, 2000 (the "Confidentiality
Agreement"), a true and accurate copy of which is attached hereto as Exhibit R,
in connection with the transactions contemplated by this Agreement, which
agreement shall remain in full force and effect, unmodified by the terms of this
Agreement. In furtherance of the intent of the parties as set forth in the
Confidentiality Agreement, Buyer shall take strict care to
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prevent any disclosure of Proprietary Information (as defined in the
Confidentiality Agreement) of SALI or its Affiliates to any employee, agent or
representative of Buyer or its Affiliates (or to any other person or entity not
affiliated with SALI or its Affiliates) if such person(s) are directly involved
in any business venture in the assisted living/dementia care industry.
Notwithstanding any other provision in this Agreement, this Section shall
survive the Closing indefinitely.
6.7 Publicity. The parties agree that no public release or
announcement concerning the transactions contemplated hereby shall be issued by
any party without the prior written consent of the other party, except as
required by law or applicable regulations.
6.8 Material Adverse Change. Buyer and Seller will promptly notify
the other party of any event of which Buyer or Seller, as the case may be,
obtains knowledge which has had or could reasonably be expected to have a
Material Adverse Effect.
6.9 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to take all
action and to do all things necessary, proper or advisable to satisfy any
condition hereunder in its power to satisfy and to consummate and make effective
as soon as practicable the transactions contemplated by this Agreement.
6.10 Health Department Reports. Seller shall file, or cause its
Affiliates to file, on a current and timely basis and in all material respects
in a truthful and complete fashion until the Closing Date, all reports and
documents required to be filed with the Health Department with respect to the
Facilities.
6.11 Tax Returns and Payments. Seller will timely file with the
appropriate governmental agencies all Tax Returns required to be filed by Seller
with respect to the Facilities prior to Closing and timely pay all Taxes
reflected on such Tax Returns as owing by Seller or its Affiliates.
6.12 Post-Closing Obligation of Seller. Following Closing, Seller
shall use, and shall cause Operator to use diligent efforts to promptly
cooperate with Buyer and its Affiliates to have the Licenses reissued, if
reasonably necessary, in the names of the appropriate Lessee, or such other
party as Buyer may direct. This covenant of Seller shall survive Closing
indefinitely. In the event that the Licenses are not transferred to, or reissued
in the name of, Lessee or such other party as Buyer may direct (such transfer or
reissuance being hereafter referred to as the "License Transfer"), on or prior
to December 31, 2000, and such failure is not due to any act, omission,
condition, or characteristic of Buyer, Lessee, the member of Lessee or any
subsidiary or Affiliate (other than Affiliates of Seller) of Buyer, then such
failure shall constitute a material default of Seller hereunder. Furthermore, it
shall be a material default of Seller hereunder if a Material Adverse Effect is
(i) suffered prior to the License Transfer, (ii) as a result of the failure of
the License Transfer to occur prior to the occurrence of such Material Adverse
Effect, and (iii) not due to any act, omission, condition, or characteristic of
Buyer, Lessee, the member of Lessee or any subsidiary or Affiliate (other than
Affiliates of Seller) of Buyer.
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ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE
Buyer's obligation to close the acquisition of the Owned Assets
pursuant to the terms of this Agreement is subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, unless waived by
Buyer in writing:
7.1 Accuracy of Representations and Warranties; Closing Certificate.
(a) The representations and warranties of Seller contained
in this Agreement or in any other Document shall be true and correct in all
material respects on the date hereof, and at the Closing Date with same effect
as though made at such time except for changes permitted hereunder.
(b) Seller shall have delivered to Buyer on the Closing Date
a certificate that the conditions specified in Sections 7.1(a) and 7.2 are
satisfied as of the Closing Date.
7.2 Performance of Agreement. Seller shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement to be performed or complied with by it prior to or upon the
Closing Date.
7.3 Title Insurance and Survey.
(a) Within five (5) days after the execution of this
Agreement, Buyer, at its expense, shall order commitments for owner's policies
of title insurance (the "Title Commitments") issued by First American Title
Insurance Company - Washington, D.C. National Business Office ("Title Insurer")
covering each parcel of Real Property, in which the Title Insurer shall agree to
insure, in such amount as Buyer deems adequate, merchantable title to the Real
Property in the name of Buyer or its wholly-owned subsidiaries, as the case may
be, free from the Schedule B standard printed exceptions and all other
exceptions except Permitted Exceptions (as defined below). Such Title
Commitments shall have attached thereto complete, legible copies of all
instruments noted as exceptions therein. The Title Commitments shall be updated
prior to the Closing to reflect the state of the title not more than ten (10)
days prior to the Closing. Buyer shall pay any and all costs and expenses
related to the title insurance, including all search fees, closing fees and the
premium for the policy issued pursuant to the Title Commitments.
(b) If (1) the Title Commitments reflect any exceptions to
title other than Permitted Liens which are not acceptable to Buyer in Buyer's
reasonable discretion, or (2) the Survey delivered to Buyer pursuant to Section
7.3(d) below discloses any state of fact not acceptable to Buyer in Buyer's
reasonable discretion, or (3) at any time prior to the Closing, title to the
Real Property is encumbered by any exception to title other than Permitted Liens
which was not on the initial Title Commitments and is not acceptable to Buyer in
Buyer's sole discretion (any such exception or unacceptable state of fact being
referred to herein as a "Title Defect"), then Buyer shall, within ten (10) days
following receipt of the Title Commitments or discovery of the Title Defect, as
the case may be, give Seller written notice of such Title Defect (the "Title
Notice"). Such Title Notice shall include a copy of the relevant Title
Commitment and
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copies of the exceptions. Any exception to title to the Real Property that is
(i) disclosed in the Title Commitment, or (ii) identified on a Survey, which, in
either case, is not identified as a Title Defect in the Title Notice, shall be
deemed to be a "Permitted Exception" for purposes of this Agreement. Seller
shall have the right, but not the obligation, within ten (10) days after receipt
of any such Title Notice, to use its reasonable efforts to remove such Title
Defect. If Seller elects to do so, then, on or before the Closing, Seller shall
provide Buyer with reasonable evidence of such removal or provide reasonable
evidence that such Title Defect will be removed. Notwithstanding anything
contained herein to the contrary, Seller shall be obligated (or shall cause its
Affiliates) to expend whatever sums are reasonably required to cure the
following Title Defects prior to, or at, the Closing:
(i) All mortgages, security deeds, other security
instruments or other monetary liens encumbering the Real Property,
other than the Xxxxxxx Mac Loans;
(ii) All past due ad valorem taxes and assessments of
any kind, whether or not of record, which constitute, or may
constitute, a lien against the Real Property; and
(iii) Judgments against the Seller (which do not
result from acts or omissions on the part of Buyer) which have attached
to and become a lien against the Real Property.
(c) In the event Seller is unable or elects not to cure any
Title Defect within such period, Buyer shall have the option to (i) waive any
Title Defect and proceed to Closing or (ii) terminate this Agreement.
(d) Within five (5) days after the execution of this
Agreement, Buyer, at Buyer's expense, may order boundary surveys for each parcel
of the Real Property (the "Survey" or "Surveys") prepared by a registered land
surveyor or surveyors satisfactory to Buyer. The Surveys, if they are ordered,
shall (1) be completed in accordance with Buyer's reasonable survey
requirements, and shall be certified to Seller, Buyer, and the Title Insurer by
such surveyor; (2) have one perimeter description for the Real Property on which
each of the Facilities are located; (3) show all easements, rights-of-way,
setback lines, encroachments and other matters affecting the use or development
of the Real Property; and (4) disclose on the face thereof the gross and net
acreage of each parcel of Real Property. Upon receipt of the Survey by Buyer,
Buyer shall promptly furnish a copy of same to Seller. Buyer, at its option, may
choose not to order the Surveys and instead rely on the Xxxxxxx Mac Surveys and
the warranty of Seller in Article IV above that, to its knowledge, no new survey
matters have arisen with regard to the Facilities.
(e) Any failure by Buyer to perform under this Section 7.3
shall not relieve Buyer of its obligation to proceed to Closing under this
Agreement.
7.4 Other Inspections. During the due diligence period, at
reasonable times and upon reasonable notice, Buyer or Buyer's agent(s) shall
have the right, at Buyer's expense, to employ one or more consultants or other
professionals to perform or complete such inspections and assessments of the
Real Property and Improvements as Buyer deems necessary or desirable, including,
without limitation,
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environmental and structural aspects, and assessments of the compliance of the
Facilities with all applicable laws and regulations. Buyer shall cause its
inspectors and/or consultants to deliver to Seller a copy of each such
inspection report at the time such report(s) are delivered to Buyer. A failure
by Buyer to perform any inspections or assessments shall not relieve Buyer of
its obligation to proceed to Closing under this Agreement.
7.5 Delivery of Closing Documents. Seller shall have delivered or
caused to be delivered to Buyer on the Closing Date each of the documents
required to be delivered pursuant to Section 9.2.
7.6 Facility Leases. The Buyer (or its wholly-owned subsidiaries)
shall have entered into the Facility Leases.
7.7 Licenses.
(a) All Licenses shall have been issued as to all Facilities
and shall have, or will upon Closing, become effective under the rules of the
applicable Health Department and applicable law.
(b) Conditions which the Licenses or any order, ruling or
decree of any judicial or administrative body specifies and requires to be
satisfied prior to issuance of License shall have been satisfied.
7.8 Facility Operating Agreements. Operator shall have entered into
Facility Operating Agreements with Lessee for the operation of the Facilities,
which Facility Operating Agreements shall be in substantially the form as set
forth in Exhibit J.
7.9 LLC Operating Agreement. Federal Street Operating, LLC and SALII
(or their respective Affiliates) shall have entered into a Limited Liability
Company Agreement to govern the operations of Buyer.
7.10 Xxxxxxx Mac Approval. The holder of the Notes shall have given
its consent to the transactions contemplated by this Agreement and to the
assumption of the Xxxxxxx Mac Loans by Buyer, with an assumption fee not
exceeding one percent (1%) of the outstanding principal balance of the Xxxxxxx
Mac Loans.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO CLOSE
The obligations of Seller to close the sale of the Owned Assets
pursuant to the terms of this Agreement is subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, unless waived by
Seller in writing:
8.1 Accuracy of Representations and Warranties.
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(a) The representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time,
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date
a certificate that the conditions specified in Sections 8.1(a) and 8.2 are
satisfied as of the Closing Date.
8.2 Performance of Agreements. Buyer shall have performed in all
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
8.3 Licenses.
(a) All Licenses shall have been issued as to all Facilities
and shall have, or will upon Closing, become effective under the rules of the
applicable Health Department and applicable law.
(b) Conditions which the Licenses or any order, ruling or
decree of any judicial or administrative body specifies and requires to be
satisfied prior to issuance of License shall have been satisfied.
8.4 Facility Operating Agreements. Lessee shall have entered into
Facility Operating Agreements with Operator for the operation of the Facilities,
which Facility Operating Agreements shall be in substantially the form as set
forth in Exhibit J.
8.5 LLC Operating Agreement. Federal Street Operating, LLC and SALII
(or their respective Affiliates) shall have entered into a Limited Liability
Company Agreement to govern the operations of Buyer.
8.6 Delivery of Closing Documents. Buyer shall have delivered or
caused to be delivered to Seller on the Closing Date each of the Documents
required to be delivered pursuant to Section 9.3.
8.7 Xxxxxxx Mac Approval. The holder of the Notes shall have given
its consent to the transactions contemplated by this Agreement and to the
assumption of the Xxxxxxx Mac Loans by Buyer, with an assumption fee not
exceeding one percent (1%) of the outstanding principal balance of the Xxxxxxx
Mac Loans.
ARTICLE IX
CLOSING
9.1 Time and Place. Closing of the purchase and sale of the Conveyed
Interests and the exchange of the Contributed Interests for the Interest
Increase pursuant to this Agreement (the "Closing")
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shall take place through escrow at the offices of the Title Insurer at 10:00
a.m. on September 30, 2000, or at such earlier time or date as may be agreed
upon by the parties (the "Closing Date"). In no event shall the Closing be
extended beyond September 30, 2000, unless such delay is caused by Seller. Buyer
and Seller shall use commercially reasonable efforts to ensure that neither
party has to attend the Closing in person. Time is of the essence of the terms
of this Section.
9.2 Documents to be Delivered to Buyer by Seller. At the Closing,
Seller shall deliver or cause to be delivered to Buyer the following, in each
case in form and substance reasonably satisfactory to Buyer:
(a) Governmental certificates, dated as of a date as near as
practicable to the Closing Date, showing that (i) each entity defined herein as
"Seller," and each general partner of such entities, is in good standing in the
state of organization of such entity, and (ii) each Facility Owner is in good
standing in the State of Delaware and qualified to do business in the state in
where the Facility it owns is located.
(b) A certificate of the Secretary or Assistant Secretary of
Seller (or the general partner of Seller, as the case may be) attesting as to
the incumbency of each officer of Seller (or the general partner of Seller, as
the case may be) who executes this Agreement and any of the other Documents and
to similar customary matters.
(c) A xxxx of sale and other instruments of transfer and
conveyance transferring the Owned Assets held or owned by Seller to Lessee.
(d) An agreement of assignment and conveyance transferring
the Interests to Buyer.
(e) A certificate of nonforeign status under Section 1445 of
the Code, complying with the requirements of the Income Tax Regulations
promulgated pursuant to such section.
(f) The certificate described in Section 7.1(b).
(g) A true, correct and complete list certified by an
officer of Seller, of each resident of the Facilities as of the Closing Date,
which list shall specify the unit, bed or room number of such resident, and the
amount of the monthly fees to be paid by such resident (including room, meal and
other applicable monthly fees).
(h) Assignment and Assumption of Leases and Deposits for
each Facility from Seller to the corresponding Lessee in the form attached
hereto as Exhibit S, duly executed by Seller and each such Lessee.
(i) Assignment and Assumption of contracts and Other
Interests for each Facility from Seller to the corresponding Lessee in the form
attached hereto as Exhibit T, duly executed by Seller and each such Lessee.
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(j) Assignment and Assumption of Other Interests for each
Facility from Seller to the corresponding Facility Owner in the form attached
hereto as Exhibit U, duly executed by Seller and each such Facility Owner.
(k) A letter agreement from Seller and Operator in favor of
Buyer confirming their obligations under Section 6.12 above.
(l) Authority opinions from counsel for Seller regarding the
due organization, good standing, power, authority, and due execution of this
Agreement and all other Documents by Seller and SALII, of the Facility Operating
Agreements by XXXXX and the leases between the Facility Owners and Lessees by
the Facility Owners.
(m) A rent roll for each of the Facilities, certified on the
Closing Date, in the form attached hereto as Exhibit V.
(n) Letters from local counsel for each of the Facilities
addressing such matters regarding the Licenses as may be reasonably requested by
Buyer.
(o) (i) a Certificate of Compliance, in form and substance
reasonably satisfactory to Buyer, relating to the Order of Conditions recorded
in the land records of Norfolk County, Massachusetts at Book 11796, Page 343;
(ii) an original, signed termination statement terminating the UCC Financing
Statement UC97019183 naming Sunrise Cohasset as debtor and Fleet National Bank
as secured party; and (iii) a signed termination statement terminating the UCC
Financing Statement 055374 naming Sunrise Paramus as debtor and Nations Bank,
N.A. as secured party.
(p) Documentation reasonably satisfactory to Buyer
terminating the existing Management Agreements governing the operation of the
Facilities by XXXXX.
(q) Such additional information and materials as Buyer shall
have reasonably requested to evidence the satisfaction of the conditions to its
obligations hereunder, including without limitation, evidence that all consents
and approvals required as a condition to Buyer's obligation to close hereunder
have been obtained, title affidavits, such affidavits and indemnities as the
Title Insurer may require to issue non-imputation endorsements, and any other
documents expressly required by this Agreement to be delivered by Seller at
Closing, or as may be required by the Title Insurer.
9.3 Deliveries to Seller by Buyer. At the Closing, Buyer shall
deliver or cause to be delivered to Seller or other appropriate party the
following, in each case in form and substance reasonably satisfactory to Seller
or such other party:
(a) The Purchase Price in accordance with Section 2.4, and
the adjustments under Section 2.6.
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(b) The certificate described in Section 8.1(b).
(c) An agreement by Buyer assuming the Owner Obligations.
(d) Governmental Certificates dated as of a date as near as
practicable to the Closing Date showing that Buyer and Lessees are duly
organized and in good standing in the State of Delaware and that Lessees are
duly qualified to transact business in all the states where the Facilities are
located.
(e) A certificate of the Secretary or Assistant Secretary of
Buyer attesting as to the incumbency of each Officer of Buyer who executes this
Agreement and any of the other Documents and to similar customary matters.
(f) All documents required in order to consummate the
assumption of the Xxxxxxx Mac Loans, which documents shall be signed by the
lender of the Xxxxxxx Mac Loans and shall be in form and substance reasonably
satisfactory to Buyer.
(g) Such additional information and materials as Seller
shall have reasonably requested to evidence the satisfaction of the conditions
to their obligations hereunder.
9.4 Closing Costs. Buyer and Seller shall each pay the costs of
their respective attorneys' fees. Buyer shall pay all costs of the title company
to insure title, and the cost of owner's title insurance policies, and all costs
associated with the assumption of the Xxxxxxx Mac Loans. All items described in
Section 2.6 above shall be prorated between the parties as of the Closing Date.
Buyer shall pay sixty-six and 67/100 percent (66.67%) of all county or state
transfer or recording taxes, if any, and Seller shall pay thirty-three and
33/100 percent (33.33%) of all such taxes, if any.
ARTICLE X
INDEMNIFICATION
10.1 Survival. All representations, warranties, covenants and
agreements in this Agreement or any other Document shall survive the Closing for
a period of one (1) year. The rights to indemnification set forth in this
Article X shall be exclusive of all other rights to monetary damages that any
party (or the party's successors or assigns) would otherwise have by statute or
common law in connection with the transactions contemplated by this Agreement or
any other Document. Notwithstanding anything to the contrary herein, if (a)
Buyer is notified of the untruth of any representation or warranty made by
Seller hereunder by (i) written notice from Seller (which notice shall refer to
the representation or warranty which is untrue) or (ii) the professional written
reports and studies prepared by Buyer as part of Buyer's due diligence, and (b)
Buyer nevertheless elects to close under this Agreement, then Buyer shall be
deemed to have waived the breach in question and shall not assert any
post-closing claim against Seller with respect to that breach.
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10.2 Indemnification by Seller and SALII. Seller and SALII shall
indemnify, defend, and hold harmless Buyer and its officers, directors,
employees, Affiliates, successors and assigns from and against, and pay or
reimburse each of them for and with respect to, any Loss relating to, arising
out of or resulting from any of the following:
(a) Any breach by Seller of any of its representations,
warranties, covenants or agreements in this Agreement or any other Document; or
(b) Any obligation, indebtedness or liability of Seller
other than (i) the Assumed Obligations and (ii) obligations, indebtedness or
liabilities to the extent an adjustment is made to the Purchase Price pursuant
to Section 2.6. Subject to the foregoing clauses (i) and (ii), the obligations,
indebtedness and liabilities of Seller hereunder shall include, but not be
limited to, (a) claims by state or federal governmental agencies for repayment
of claims for reimbursement of costs, regardless of whether disclosed to Buyer
and regardless whether constituting a breach by Seller of any representation,
warranty, covenant or agreement hereunder or under any other Document, and (b)
all claims and causes of action held by Seller against third parties, or held by
any third party against Seller, which claims or causes of action accrued prior
to the Closing Date, regardless of whether constituting a breach by Seller of
any representation, warranty, covenant, or agreement hereunder; or
(c) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if such act applies, in connection with the transactions contemplated
by this Agreement.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold
harmless Seller and its officers, directors, employees, agents, representatives,
Affiliates, successors and assigns from and against, and pay or reimburse each
of them for and with respect to any Loss relating to, arising out of or
resulting from:
(a) Any breach by Buyer of any of its representations,
warranties, covenants or agreements in this Agreement or any other Document; or
(b) All Assumed Obligations; or
(c) Lessee's operation of the Facilities on or after the
Closing Date.
10.4 Administration of Indemnification. For purposes of administering
the indemnification provisions set forth in Sections 10.2 and 10.3, the
following procedure shall apply:
(a) Whenever a claim shall arise for indemnification under
this Article, the party entitled to indemnification (the "Indemnified Party")
shall reasonably promptly give written notice to the party from whom
indemnification is sought (the "Indemnifying Party") setting forth in reasonable
detail, to the extent then available, the facts concerning the nature of such
claim and the basis upon which the Indemnified Party believes that it is
entitled to indemnification hereunder.
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(b) In the event of any claim for indemnification resulting
from or in connection with any claim by a third party, the Indemnifying Party
shall be entitled, at its sole expense, either (i) to participate in defending
against such claim or (ii) to assume the entire defense with counsel which is
selected by it and which is reasonably satisfactory to the Indemnified Party
provided that (A) the Indemnifying Party agrees in writing that it does not and
will not contest its responsibility for indemnifying the Indemnified Party in
respect of such claim or proceeding and (B) no settlement shall be made and no
judgment consented to without the prior written consent of the Indemnified Party
which shall not be unreasonably withheld. If, however, (i) the claim, action,
suit or proceeding would, if successful, result in the imposition of damages for
which the Indemnifying Party would not be solely responsible, or (ii)
representation of both parties by the same counsel would otherwise be
inappropriate due to actual or potential differing interests between them, then
the Indemnifying Party shall not be entitled to assume the entire defense and
each party shall be entitled to retain counsel who shall cooperate with one
another in defending against such claim. In the case of Clause (i) of the
preceding sentence, the Indemnifying Party shall be obligated to bear only that
portion of the expense of the Indemnified Party's counsel that is in proportion
to the damages indemnifiable by the Indemnifying Party compared to the total
amount of the third-party claim against the Indemnified Party.
(c) If the Indemnifying Party does not choose to defend
against a claim by a third party, the Indemnified Party may defend in such
manner as it deems appropriate or settle the claim (after giving notice thereof
to the Indemnifying Party) on such terms as the Indemnified Party may deem
appropriate, and the Indemnified Party shall be entitled to periodic
reimbursement of defense expenses incurred and prompt indemnification from the
Indemnifying Party in accordance with this Article.
(d) Failure or delay by an Indemnified Party to give a
reasonably prompt notice of any claim (if given prior to expiration of any
applicable Survival Period) shall not release, waive or otherwise affect an
Indemnifying Party's obligations with respect to the claim, except to the extent
that the Indemnifying Party can demonstrate actual loss or prejudice as a result
of such failure or delay.
(e) The provisions of Sections 10.2, 10.3, and this Section
10.4 shall survive the Closing hereunder indefinitely.
ARTICLE XI
DEFAULT AND TERMINATION
11.1 Right of Termination. This Agreement may be terminated prior to
Closing:
(a) By Buyer during the Due Diligence Period or as otherwise
permitted by this Agreement; or
(b) By written agreement of Seller and Buyer.
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11.2 Remedies upon Default. If Seller materially defaults on any of
its obligations hereunder, and such default continues for ten (10) business days
after written notice thereof specifying such default, Buyer may, as its sole
remedy hereunder, by serving notice in writing to the Seller in the manner
provided in this Agreement, either:
(a) Terminate this Agreement and declare it null and void
(in which event Seller shall pay to Buyer the
reasonable, out-of-pocket costs and expenses incurred by
Buyer in connection with the transactions contemplated
hereby); or
(b) Waive any such conditions, title objections or defaults
and consummate the transaction contemplated by this
Agreement in the same manner as if there had been no
title objections, conditions or defaults without any
reduction in the Purchase Price and without any further
claim against the Seller therefor.
11.3 Specific Performance. The parties acknowledge that the
Facilities are of a special, unique and extraordinary character, and that
damages alone are an inadequate remedy for a breach of this Agreement by either
party. Accordingly, as an alternative to termination of this Agreement under
Section 11.2, Buyer shall be entitled, in the event of a breach by Seller, to
enforcement of this Agreement (subject to obtaining any required approval of the
Health Department) by a decree of specific performance or injunctive relief
requiring Seller to fulfill its obligations under this Agreement. Such right of
specific performance or injunctive relief shall be in lieu of Buyer's right to
recover damages and to pursue any other remedies available to Buyer for Seller's
breach. In any action to specifically enforce the Seller's obligation to close
the transactions contemplated by this Agreement, Seller shall waive the defense
that there is an adequate remedy at law or in equity and agrees that the Buyer
shall be entitled to obtain specific performance of the Seller's obligation to
close without being required to prove actual damages. As a condition to seeking
specific performance, Buyer shall tender the Purchase Price.
11.4 Obligations Upon Termination. Upon termination of this
Agreement, each party shall thereafter remain liable for breach of this
Agreement prior to such termination. If this Agreement is terminated without any
breach by either party hereto, each of the parties shall be liable and
responsible for any costs incurred by such party in connection with the
transactions contemplated by this Agreement.
11.5 Termination Notice. Each notice given by a party to terminate
this Agreement shall specify the Subsection of Article 11 pursuant to which such
notice is given. If at the time a party gives a termination notice, such party
is entitled to give such notice pursuant to more than one Section of Article 11,
the Subsection pursuant to which such notice is given and termination is
effected shall be deemed to be the section specified in such notice provided
that the party giving such notice is at such time entitled to terminate this
Agreement pursuant to the specified section.
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11.6 Survival. Notwithstanding anything to the contrary contained
herein upon the expiration or any termination of this Agreement the rights and
obligations of the parties under Section 6.6 and Section 6.7 shall survive such
termination or expiration for a period of one (1) year.
ARTICLE XII
TRANSITIONAL MATTERS
12.1 Prior to Closing. Upon a written request from Buyer or Operator,
the parties shall conduct meetings with residents, families of residents and
employees of Operator for the purpose of explaining as the parties hereto deem
reasonably necessary any changes in ownership and operation of the Facilities
arising out of the transactions contemplated hereby.
ARTICLE XIII
MISCELLANEOUS
13.1 Further Actions. From time to time before, at and after the
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents as reasonably requested by the other party in
order more effectively to consummate the transactions contemplated hereby.
13.2 Payment of Expenses.
(a) Except as provided in Section 9.4, all sales, use,
transfer and other similar Taxes or charges payable in connection with
consummation of the transactions contemplated by this Agreement, shall be paid
by Buyer. All other Taxes shall be paid by the party primarily liable under
applicable law to pay such Tax.
(b) Except as otherwise expressly provided in this
Agreement, each of the parties shall bear its own expenses, including the fees
of any attorneys and accountants engaged by such party, in connection with the
transactions contemplated by this Agreement.
13.3 Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered by
courier (including overnight delivery service) or sent by registered or
certified mail, first class, postage prepaid, addressed as follows:
(a) If to Buyer, to:
AEW Capital Management LP
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx XX 00000
Attention: Xxxxxx X. Xxxxx, Managing Director
with copies to:
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Xxxxxx X. Xxxxxxxxx, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
and:
AEW Capital Management LP
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
(b) If to Seller, to:
Sunrise Assisted Living, Inc.
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Senior Vice
President
with copies to:
Sunrise Assisted Living, Inc.
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
and to:
Xxxxx X. Xxxxxxx, Esq.
Watt, Tieder, Hoffar & Xxxxxxxxxx, L.L.P.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
or such other address as a party may from time to time notify the other party in
writing (as provided above). Any such notice, demand or communication shall be
deemed to have been given (i) if so mailed, as of the close of the third
business day following the date so mailed, and (ii) if delivered by courier, on
the date received.
13.4 Entire Agreement. This Agreement, Exhibits and the other
Documents constitute the entire agreement and understanding between the parties
with respect to the subject matter hereof and supersede any prior negotiations,
agreements, understandings or arrangements between the parties hereto with
respect to the subject matter hereof.
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13.5 Binding Effect; Benefits. Except as otherwise provided herein,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or permitted assigns. Except to the
extent specified herein, nothing in this Agreement, express or implied, shall
confer on any person other than the parties hereto and their respective
successors or permitted assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
13.6 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by either party without the
prior written consent of the other party, provided that Buyer may assign all of
its rights under this Agreement to an Affiliate, provided that (i) the
representations and warranties of Buyer hereunder shall be true and correct in
all material respects as applied to the assignee, (ii) both Buyer and the
assignee shall execute and deliver to Seller a written instrument in form and
substance satisfactory to Seller within their reasonable judgment in which both
Buyer and the assignee agree to be jointly and severally liable for performance
of all of Buyer's obligations under this Agreement, and (iii) Buyer and the
assignee shall deliver such other documents and instruments as reasonably
requested by Seller, including appropriate certified resolutions of the boards
of directors of Buyer and the assignee.
13.7 Governing Law. This Agreement shall in all respects be governed
by and construed in accordance with the laws of the Commonwealth of Virginia
without regard to its principles of conflicts of laws, provided, however, that,
in the event Seller or Buyer breach this agreement and such breach relates to a
particular Facility, neither Seller nor Buyer shall be precluded from exercising
any rights or remedies which it may have under the laws of the jurisdiction in
which such Facility is located. For purposes of illustration only, if Seller
were to breach its obligation to convey the Bellevue Facility to Buyer, then
Buyer would not be precluded from seeking specific performance under Washington
law.
13.8 Amendments and Waivers. No term or provision of this Agreement
may be amended, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against whom the enforcement of such
amendment, waiver, discharge or termination is sought. Any waiver shall be
effective only in accordance with its express terms and conditions.
13.9 Severability. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
13.10 Headings. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
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13.11 Counterparts. This Agreement may be executed in any number of
counterparts, and by any party on separate counterparts, each of which shall be
an original, and all of which together shall constitute one and the same
instrument.
13.12 References. All references in this Agreement to Articles and
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.13 Exhibits. Unless otherwise specified herein, each Exhibit
referred to in this Agreement is attached hereto, and each such Exhibit is
hereby incorporated by reference and made a part hereof as if fully set forth
herein.
13.14 Attorneys' Fees. In the event either party brings an action to
enforce or interpret any of the provisions of this Agreement, the "prevailing
party" in such action shall, in addition to any other recovery, be entitled to
its reasonable attorneys' fees and expenses arising from such action and any
appeal or any bankruptcy action related thereto, whether or not such matter
proceeds to court. For purposes of this Agreement, "prevailing party" shall
mean, in the case of a person asserting a claim, such person is successful in
obtaining substantially all of the relief sought, and in the case of a person
defending against or responding to a claim, such person is successful in denying
substantially all of the relief sought.
13.15 Section 1031 Exchange. The parties agree and understand that, if
requested by either party, the other party shall cooperate in permitting the
requesting party to accomplish an exchange under Section 1031 of the Code;
provided, however, that such exchange shall not modify any terms of this
Agreement, shall not delay the Closing, shall not relieve Seller of any
liability for Seller's obligations hereunder, shall not cause Buyer to incur any
liability or additional expense therefor or be required to take title to any
other property, and shall not cause Buyer (except for customary consent to
assignment of this Agreement to an exchange intermediary) to incur obligations
to any third parties.
13.16 Closing Affidavits. Seller shall execute, and shall cause its
Affiliates to execute, at Closing, such affidavits and/or certifications as may
be necessary to consummate the transactions contemplated hereby, including
without limitation, non-imputation affidavits.
13.17. Joint and Several. Each Seller shall be jointly and severally
liable with the other Sellers for performing all obligations of Seller under
this Agreement.
13.18 Casualty and Condemnation.
(a) The risk of any loss or damage to the Facilities by fire
or other casualty before the Closing shall continue to be borne by Seller.
Seller shall promptly give Buyer written notice of any fire or other casualty
(in any event within five (5) days of the occurrence of same, which notice shall
include a description thereof in reasonable detail and an estimate of the cost
of time to repair. In the event that any Facility shall suffer any fire or other
casualty or any injury and Buyer does not elect to cancel this
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Agreement as hereinafter provided, Seller shall repair the damage at its sole
cost and expense before the Closing Date or, in the alternative, make an
appropriate reduction in the purchase price herein set forth based on a
reasonable approximation of the cost of such repair as agreed by the parties
plus any deductibles. In the event of any material damage or destruction of any
of the Facilities, Buyer, at any time thereafter, by written notice to Seller,
shall have the option to cancel this Agreement. For the purposes hereof,
"material" damage or destruction shall include any damage or destruction which
would require more than $250,000 to repair (including in said amount the amount
of any revenues lost as a result of said fire or other casualty). If Buyer so
elects to cancel this Agreement, this Agreement shall terminate and be of no
further force and effect and neither party shall have any liability to the other
hereunder, except as may be otherwise set forth herein with regard to surviving
provisions.
(b) The risk of any loss or damage to the Facilities by
condemnation before the Closing Date shall continue to be borne by Seller. In
the event any condemnation proceeding is commenced or threatened, Seller shall
promptly give Buyer written notice thereof (in any event within five (5) days
after the occurrence of same), together with such reasonable details with
respect thereto as to which Seller may have knowledge. As soon thereafter as the
portion or portions of the Facility to be taken are reasonably determinable,
Seller shall give Buyer written notice thereof ("Seller's Notice") together with
Seller's estimate of the value of the portion or portions of the Facility to be
so taken. In the event of any taking of all or a material portion of any
Facility, Buyer, by written notice to Seller at any time thereafter, shall have
the option to cancel this Agreement, in which event this Agreement shall
terminate and be of no further force and effect and neither party shall have any
liability to the other hereunder, except as may be otherwise set forth herein
with regard to surviving provisions. If Buyer shall not so elect to cancel this
Agreement, then the sale of Owned Assets shall be consummated as herein provided
at the purchase price provided for herein (without abatement) and Seller shall
pay over to Buyer at the Closing all amounts theretofore received by Seller in
connection with such condemnation or insurance received therefore. Buyer shall
be entitled to participate in any such condemnation proceeding and Seller shall
cooperate with Buyer in such respect.
(c) The parties' obligations, if any, under this Section
13.18 shall survive the Closing.
13.19 Buyer's Condition Precedent. Buyer's obligations under this
Agreement shall be conditioned upon the approval of the Investment Committee of
AEW Capital Management, L.P., in its sole and absolute discretion. The
contingency set forth in this Section 13.19 shall expire seven (7) days after
the lender of the Xxxxxxx Mac Loans approves in writing the transactions
contemplated by this Agreement and the assumption of the Xxxxxxx Mac Loans by
Buyer.
[SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above.
SELLER:
------
SUNRISE BELLEVUE ASSISTED LIVING LIMITED
PARTNERSHIP, a Washington limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------------------
Title: Vice President
------------------------------------------
SUNRISE COHASSET ASSISTED LIVING LIMITED
PARTNERSHIP, a Massachusetts limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
SUNRISE DECATUR ASSISTED LIVING LIMITED
PARTNERSHIP, a Georgia limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
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00
XXXXXXX XXXX XXXX ASSISTED LIVING, L.P.,
a New York limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
SUNRISE LAFAYETTE HILLS ASSISTED LIVING, L.P.,
a Pennsylvania limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
SUNRISE PAOLI ASSISTED LIVING, L.P., a
Pennsylvania limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
SUNRISE PARAMUS ASSISTED LIVING LIMITED
PARTNERSHIP, a New Jersey limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
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00
XXXXXXX XXXXXX XXXXX ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
For purposes of acknowledging its indemnification
obligations under Article X:
SUNRISE ASSISTED LIVING INVESTMENTS, INC.,
a Virginia corporation
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
BUYER:
METROPOLITAN SENIOR HOUSING, LLC, a Delaware
limited liability company
By: Sunrise Assisted Living Investments, Inc., a
Virginia corporation, Managing Member
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
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By: Federal Street Operating, LLC, a Delaware limited
liability company, member
By: Federal Street Management, LLC, its Managing
Member
By: Federal Street Management Co., Inc., its
Manager
By: /s/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------------
Title: Vice President
------------------------------------
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EXHIBIT LIST
Exhibit A - Legal Description - Bellevue Facility
Exhibit B - Legal Description - Cohasset Facility
Exhibit C - Legal Description - Decatur Facility
Exhibit D - Legal Description - Xxxx Cove Facility
Exhibit E - Legal Description - Lafayette Facility
Exhibit F - Legal Description - Paoli Facility
Exhibit G - Legal Description - Paramus Facility
Exhibit H - Legal Description - Walnut Creek Facility
Exhibit I - (To be attached)
Exhibit J - Form of Facility Operating Agreement
Exhibit K - (To be attached)
Exhibit L - (To be attached)
Exhibit M - (To be attached)
Exhibit N - (To be attached)
Exhibit O - (To be attached)
Exhibit P - (To be attached)
Exhibit Q - (To be attached)
Exhibit R - Confidentiality Agreement
Exhibit S - (To be attached)
Exhibit T - (To be attached)
Exhibit U - (To be attached)
Exhibit V - (To be attached)
Exhibit W - (To be attached)
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