EXECUTION COPY
EXHIBIT 2.2
AMENDED AND RESTATED TRANSACTION AGREEMENT
THIS AMENDED AND RESTATED TRANSACTION AGREEMENT (this "AGREEMENT") is
dated as of the 30th day of January, 2002, by and among (i) Sunrise Bloomingdale
Assisted Living, L.L.C., an Illinois limited liability company ("SUNRISE
BLOOMINGDALE"), (ii) Sunrise Smithtown A.L., L.L.C., a New York limited
liability company ("SUNRISE SMITHTOWN"), (iii) Sunrise Alexandria Assisted
Living, L.P., a Virginia limited partnership ("SUNRISE ALEXANDRIA"), (iv)
Sunrise Assisted Living Limited Partnership III, a Pennsylvania limited
partnership ("SUNRISE BLUE XXXX"), (v) Sunrise Riverside Assisted Living, L.P.,
a California limited partnership ("SUNRISE RIVERSIDE"), (vi) Sunrise Fleetwood
A.L., L.L.C., a New York limited liability company ("SUNRISE FLEETWOOD"), (vii)
Sunrise Buffalo Grove Assisted Living, L.L.C., an Illinois limited liability
company ("SUNRISE BUFFALO GROVE"), (viii) Sunrise Beach Cities Assisted Living,
L.P., a California limited partnership ("SUNRISE HERMOSA BEACH"), (ix) Sunrise
Northville Assisted Living, L.L.C., a Michigan limited liability company
("SUNRISE NORTHVILLE"); (x) Sunrise Pacific Palisades Assisted Living, L.P., a
California limited partnership ("SUNRISE PACIFIC PALISADES"), (xi) Sunrise
Sterling Canyon Assisted Living, Limited Partnership, a California limited
partnership ("SUNRISE STERLING CANYON"), (xii) AL Investments, L.L.C., a
Virginia limited liability company ("SUNRISE ROCHESTER"), (xiii) Sunrise Mission
Viejo Assisted Living, L.L.C., a Virginia limited liability company ("SUNRISE
MISSION VIEJO"), (xiv) Sunrise Assisted Living Investments, Inc., a Virginia
corporation ("SALII"), and (xv) Sunrise Development, Inc., a Virginia
corporation ("SDI") (the entities listed in items (i) through (xv) above being
hereinafter collectively referred to as "SUNRISE," and all such entities other
than SALII and SDI being hereinafter collectively referred to as "Facility
Owners" or each a "FACILITY OWNER"), (xvi) Sunrise Assisted Living, Inc., a
Delaware corporation ("SALI") and (xvii) US Assisted Living Facilities, Inc., a
Delaware corporation (the "INVESTOR").
RECITALS:
A. Sunrise and Investor entered into the Transaction Agreement
dated as of December 28, 2001 (the "ORIGINAL TRANSACTION AGREEMENT"), and desire
to amend and restate such Original Transaction Agreement as follows.
B. Sunrise Bloomingdale owns the assisted living facility located
in Bloomingdale, Illinois known as Sunrise Assisted Living of Bloomingdale, as
more fully described on Exhibit A-1 attached hereto and made a part hereof (the
"BLOOMINGDALE FACILITY"). SALII owns 100% of the membership interests in Sunrise
Bloomingdale.
C. Sunrise Smithtown owns the assisted living facility located in
Smithtown, New York known as Sunrise of Smithtown, as more fully described on
Exhibit A-2 attached hereto and made a part hereof (the "SMITHTOWN FACILITY").
SDI owns 100% of the membership interests in Sunrise Smithtown.
D. Sunrise Alexandria is the lessee under a ground lease dated June
23, 1995 as assigned pursuant to that Assignment and Assumption of Lease dated
September 20, 1996 (collectively, the "ALEXANDRIA GROUND LEASE") between The
Xxxxxxxx Company, L.L.C., as
lessor, and Sunrise of Alexandria Assisted Living, L.P., as successor lessee,
and operates the assisted living facility located in Alexandria, Virginia known
as Sunrise of Alexandria, as more fully described on Exhibit A-3 attached hereto
and made a part hereof (the "ALEXANDRIA FACILITY"). SALII owns a 1% general
partnership interest in Sunrise Alexandria and SALI owns a 99% limited
partnership interest in Sunrise Alexandria.
E. Sunrise Blue Xxxx owns the assisted living facility located in
Xxxxxxxxxx, Pennsylvania known as Sunrise of Blue Xxxx, as more fully described
on Exhibit A-4 attached hereto and made a part hereof (the "BLUE XXXX
FACILITY"). SALII owns a 1% general partnership interest in Sunrise Blue Xxxx
and SALI owns a 99% limited partnership interest in Sunrise Blue Xxxx.
F. Sunrise Fleetwood owns the assisted living facility located in
Mount Vernon, New York known as Sunrise at Fleetwood, as more fully described on
Exhibit A-6 attached hereto and made a part hereof (the "FLEETWOOD FACILITY").
SDI owns 100% of the membership interests in Sunrise Fleetwood.
G. Sunrise Hermosa Beach is the successor lessee under a ground
lease dated December 11, 1997 as amended by Addendum No. 1 dated as of December
22, 1997 and Addendum No. 2 effective as of September 24, 1999 and as assigned
to Sunrise Hermosa Beach by SDI pursuant to an Assignment Agreement dated as of
September 22, 1999 (as amended and assigned, the "HERMOSA GROUND LEASE") between
Beach Cities Health District and SDI and operates the assisted living facility
located in Hermosa Beach, California known as Sunrise of Hermosa Beach, as more
fully described on Exhibit A-8 attached hereto and made a part hereof (the
"HERMOSA BEACH FACILITY"). SALII owns a 1% general partnership interest in
Sunrise Hermosa Beach and SALI owns a 99% limited partnership interest in
Sunrise Hermosa Beach.
H. Sunrise Northville owns the assisted living facility located in
Northville, Michigan known as Sunrise at Northville, as more fully described on
Exhibit A-9 attached hereto and made a part hereof (the "NORTHVILLE FACILITY").
SDI owns 100% of the membership interests in Sunrise Northville.
I. Sunrise Sterling Canyon owns the assisted and independent living
facility located in Sterling Canyon, California known as Sunrise at Sterling
Canyon, as more fully described on Exhibit A-11 attached hereto and made a part
hereof (the "STERLING CANYON FACILITY"). SALII owns a 1% general partnership
interest in Sunrise Sterling Canyon and SALI owns a 99% limited partnership
interest in Sunrise Sterling Canyon.
J. Sunrise Rochester owns the assisted living facility located in
Rochester, Michigan known as Sunrise of Rochester, as more fully described on
Exhibit A-12 attached hereto and made a part hereof (the "ROCHESTER FACILITY").
SALII owns 100% of the membership interest in Sunrise Rochester.
K. Sunrise Mission Viejo owns the assisted living facility located
in Mission Viejo, California known as Sunrise Assisted Living of Mission Viejo,
as more fully described on Exhibit A-13 attached hereto and made a part hereof
(the "MISSION VIEJO Facility"). SALII owns 100% of the membership interests in
Sunrise Mission Viejo.
L. The Facilities (as defined below) identified in recitals B
through K above are
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sometimes collectively referred to herein as the "FIRST CLOSING FACILITIES."
M. Sunrise Buffalo Grove owns the assisted living facility located
in Buffalo Grove, Illinois known as Sunrise at Buffalo Grove, as more fully
described on Exhibit A-7 attached hereto and made a part hereof (the "BUFFALO
GROVE FACILITY"). SDI owns 100% of the membership interests in Sunrise Buffalo
Grove.
N. Sunrise Riverside owns the assisted living facility located in
Riverside, California, known as Sunrise at Canyon Crest, as more fully described
on Exhibit A-5 attached hereto and made a part hereof (the "CANYON CREST
FACILITY"). SALII owns a 1% general partnership interest in Sunrise Riverside
and SALI owns a 99% limited partnership interest in Sunrise Riverside.
O. Sunrise Pacific Palisades owns the assisted living facility
located in Pacific Palisades, California known as Sunrise of Pacific Palisades,
as more fully described on Exhibit A-10 attached hereto and made a part hereof
(the "PACIFIC PALISADES Facility"). SALII owns a 1% general partnership interest
in Sunrise Pacific Palisades, and SALI owns a 99% limited partnership interest
in Sunrise Pacific Palisades.
P. The Facilities (as defined below) identified in recitals M, N
and O above are sometimes collectively referred to herein as the "FUTURE CLOSING
FACILITIES."
Q. The assisted living facilities owned by the Facility Owners are
referred to collectively as the "FACILITIES," and each, a "FACILITY."
R. SALII, SDI and SALI (hereinafter, collectively, the "UNDERLYING
INTEREST OWNERS") are the owners of all the membership interests in the Facility
Owners that are limited liability companies and the general and limited
partnership interests in the Facility Owners that are partnerships.
S. SALII intends to form a Delaware limited liability company to be
known as Sunrise First Assisted Living Holdings, L.L.C. (the "JOINT VENTURE").
SALII will initially own 100% of the membership interests and will be the
managing member of the Joint Venture. The principal purpose of the Joint Venture
will be to enter into a lease agreement (the "FACILITY LEASE") with each
Facility Owner, pursuant to which the Joint Venture (or certain subsidiaries of
the Joint Venture) will, as tenant, have the right to possess and operate each
of the Facilities. In addition, each Facility Owner and the Joint Venture (or
certain subsidiaries of the Joint Venture) will enter into side agreements
consisting of Supplemental Agreement, a Put Option Letter, a Call Option Letter
and a Tax Matters Agreement (collectively, with the Facility Lease, referred to
as the "LEASE DOCUMENTATION").
T. GSS Holdings, Inc. ("GSS") intends to form (i) a Delaware
corporation as a wholly-owned subsidiary to be known as AL Funding Inc.
("FUNDING") and (ii) a Delaware limited liability company as a wholly-owned
subsidiary of Funding to be known as AL Subfunding LLC ("SUBFUNDING").
U. Investor desires to acquire an 80% membership interest in the
Joint Venture (the 80% membership interest to be acquired by Investor is
referred to herein as the "INTERESTS") in exchange for a cash capital
contribution to the Joint Venture as set forth below; and the Joint
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Venture desires to accept such capital contribution from Investor in exchange
for issuance by the Joint Venture to Investor of the Interests, according to the
terms and conditions set forth below and in the Amended and Restated Operating
Agreement of the Joint Venture (the "VENTURE AGREEMENT"). The Investor has
specified certain conditions in this Agreement which must be satisfied in order
for it to make its investment in the Joint Venture.
V. At Closing, Investor and SALII will enter into the Venture
Agreement to govern the operation of the Joint Venture setting forth, inter
alia, the 80% ownership by Investor and the 20% ownership by SALII, and the
acknowledgment and consent of SALII to the dilution of its ownership interest in
the Joint Venture due to issuance by the Joint Venture of the Interests. The
Venture Agreement will provide for, inter alia, the rights and obligations of
Investors and SALII to cash flow distributions, allocations of profits and
losses, the determinations of capital accounts, and the funding of operating
deficits. The form of the Venture Agreement is attached hereto as Exhibit R.
W. With the exception of the Rochester Facility, the Underlying
Interest Owners have proposed to contribute for the benefit of SALII, 81% of the
membership or partnership interests in the Facility Owners to the Joint Venture.
The Joint Venture intends thereafter to transfer such membership and partnership
interests to Funding. Investor has consented to the Joint Venture directing that
the Underlying Interest Owners transfer the 81% interest in each of the Facility
Owners directly to Funding or to Subfunding. Investor has further required that
Subfunding be the general partner of each Facility Owner which is a limited
partnership and that Funding be the managing member of each Facility Owner which
is a limited liability company. The continuing interest in the Facility Owners
retained by one or more of Underlying Interest Owners shall have no voting or
consent rights; and Underlying Interest Owners shall have no right to
participate in the operation and control of the business of the Facility Owners
in any manner.
X. The Lease Documentation will be executed by each Facility Owner
(except Sunrise Rochester) at such time as Funding or Subfunding, as the case
may be, becomes the general partner or managing member, as the case may be, of
each Facility Owner (except Sunrise Rochester). The Facility Owners (except
Sunrise Rochester), after such time as they are majority owned and controlled by
Funding, are hereafter referred to as special purpose vehicles (each, an "SPV").
Y. Sunrise Rochester will transfer the Rochester Facility by deed
to Sunrise Rochester Assisted Living, LLC, a Michigan limited liability company
("NEW SUNRISE ROCHESTER"), whose membership interests will be owned 81% by
Funding and 19% by SALII. Funding will be the managing member of New Sunrise
Rochester. The interest in New Sunrise Rochester retained by SALII shall have no
voting or consent rights; and SALII shall have no right to participate in the
operation and control of the business of the New Sunrise Rochester in any
manner. New Sunrise Rochester will execute the Lease Documentation and is
hereafter sometimes referred to as a SPV.
Z. The funds necessary to construct each of the Facilities (the
"PROJECT FINANCING") were advanced by Underlying Interest Owners to each of the
Facilities Owners to the extent that the first trust construction financing
obtained by the Facility Owners was insufficient to pay the total cost of
developing the respective assisted living facilities. The Project Financing
advanced by Underlying Interest Owners was either advanced directly by
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SALI to the Facility Owners, or was advanced by SALI to SDI or SALII and then
forwarded to the Facility Owners (such advances being hereinafter called
"SUNRISE LOANS"). SALI obtained the Project Financing from that certain
$265,000,000 Revolving Credit Facility by Bank of America, N.A. dated June 13,
2001 (the "B OF A CREDIT FACILITY"), which B of A Credit Facility amended and
restated certain earlier revolving credit agreements by Bank of America, N.A. to
SALI and its affiliates. The B of A Credit Facility was made to certain
wholly-owned subsidiaries of SALI and is guaranteed by SALI.
AA. The Facility Owners desire to apply any funds which may be
received by them under the Lease Documentation to repay the B of A Credit
Facility.
BB. Pursuant to the Lease Documentation between the SPV's and the
Joint Venture (or certain of its subsidiaries), the Joint Venture will make an
initial payment to the Facility Owners/SPVs in an amount set forth below in the
Agreement, which will be used to repay amounts owed pursuant to the B of A
Credit Facility.
CC. The Facilities will be managed by Sunrise Assisted Living
Management, Inc., a Virginia corporation ("MANAGER"), pursuant to separate
Management Agreements between the Joint Venture, as "Owner" and Manager, with
respect to each Facility.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
AMENDMENT AND RESTATEMENT; TERMINOLOGY
1.1 AMENDMENT AND RESTATEMENT.
This Agreement amends, restates and supersedes in its entirety the
Original Transaction Agreement.
1.2 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, directly or indirectly controls, is controlled by, or is
under common control with, the specified person or entity.
Agreed Value: With respect to each Facility, the total value of the
Facility as agreed to by Sunrise and Investor, without any reduction for any
loans secured by the Facility, which value is set forth on Exhibit B attached
hereto. Sunrise and the Investor 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.
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Closing Date: The First Closing Date (as defined in Section 9.1) with
respect to the First Closing Facilities and the Future Closing Date (as defined
in Section 9.1) with respect to the Future Closing Facilities.
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 at 5:00PM EST on January 31,
2002, during which Investor may investigate the financial, legal, operational,
environmental and all other aspects of the Facilities as Investor 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.
Extended Due Diligence Period: The Due Diligence period with respect to
the Extended Facilities ending at 5:00PM EST on February 28, 2002.
Extended Facilities: Those Facilities consisting of Buffalo Grove,
Hermosa Beach, Mission Viejo and Pacific Palisades for which the period for Due
Diligence has been extended.
FF&E: All the furniture, fixtures and equipment owned by the Facility
Owners and located at the Facilities, which is used or maintained in connection
with the operation of the Facilities.
Xxxxxx Xxx Loans: Those certain loans secured by first lien mortgages or
deeds of trust encumbering the First Closing Facilities or the Future Closing
Facilities evidenced by promissory notes in the following original principal
amounts:
Alexandria Facility $ 8,750,000
Bloomingdale Facility $11,625,000
Blue Xxxx Facility $10,200,000
Buffalo Grove XXX
Xxxxxx Xxxxx XXX
Rochester Facility TBD
Smithtown Facility $14,975,000
Fleetwood Facility $17,295,000
Mission Viejo $11,700,000
Northville Facility $10,050,000
Sterling Canyon Facility $12,600,000
The Xxxxxx Xxx Loan on the Rochester Facility is not in place as of the
date of this Agreement, but shall be placed after the date hereof, but prior to
or simultaneously with the First Closing, as hereinafter set forth and as
provided in the Venture Agreement. The Xxxxxx Mae Loans on the Buffalo Grove
Facility and the Canyon Crest Facility are not in place as of the date of this
Agreement, but shall be placed after the date hereof, but prior to or
simultaneously with the Future Closing, as hereinafter set forth and as provided
in the Venture Agreement.
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Knowledge: As used in this Agreement, the term "knowledge" when used to
refer to the knowledge of Sunrise or its Affiliates (a) shall mean and apply to
the actual knowledge of the Responsible Parties 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 Parties, it being understood
and acknowledged that such Responsible Parties 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 Sunrise. Neither Sunrise nor the "Responsible Parties" as
hereinafter defined, shall be obligated to make a reasonable independent inquiry
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 or other
appropriate management employee in connection with such representations and
warranties. The officers of Sunrise directly engaged in the management and
operation of the Facilities are: Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx, and Xxxxxxx
Bath (whether one or more, the "RESPONSIBLE PARTIES").
Licenses. All certificates, licenses, and permits issued by governmental
authorities held by SALII, SDI, the Facility Owners, Manager or SALII'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.
Management Agreements: The agreements by and between the Joint Venture
and Manager to be executed and delivered at Closing pertaining to the operation,
direction, marketing, management and supervision of the Facilities, the form of
which is attached hereto as Exhibit M.
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.
Permitted Lien: Any statutory lien which secures a governmentally
required payment not yet due that arises, and is customarily discharged, in the
ordinary course of the Facility Owner's business.
Resident Deposits: All deposits or advances of any kind or nature from
any resident of any Facility.
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Senior Financing. The financing secured by the Facilities as of the date
on which the Joint Venture acquires the Facilities (or interests therein), sells
the Facility to the SPV and enters into the Lease Documentation with respect to
the Facility, including, without limitation, the Xxxxxx Xxx Loans. The Senior
Financing is more particularly described in Section 6.13 below.
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 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,
but excluding impact fees or other similar exactions levied or payable in
connection with the development of any of the Facilities and excluding special
assessments.
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).
1.3 ADDITIONAL DEFINED TERMS.
As used herein, the following terms shall have the meanings defined in
the recitals or section indicated below:
Agreement Preamble
Alexandria Facility Recital D
Alexandria Ground Lease Recital D
Balance Sheet Section 4.4
Bloomingdale Facility Recital B
Blue Xxxx Facility Recital E
BofA Credit Facility Recital Z
Buffalo Grove Facility Recital M
Buffalo Grove Initial Property Value Section 14.3(a)
Canyon Crest Facility Recital N
Closing Section 9.1
Confidentiality Agreement Section 6.6
Contribution Section 2.4
Deposit Section 2.4(b)
Excluded Assets Section 2.2
Facility Recital Q
Facility Agreements Section 2.1(c)
Facility Lease Recital S
Facility Owner Preamble
Financing Surveys Section 4.28
First Closing Date Section 9.1
First Closing Facilities Recital L
Fleetwood Facility Recital F
Funding Recital T
Future Closing Date Section 9.1
Future Closing Facilities Recital P
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Xxxxxx Recital T
GSS Recital T
Hazardous Waste Section 4.10
Hermosa Beach Facility Recital G
Hermosa Ground Lease Recital G
Identified Parties Section 5.6
Improvements Section 2.1(a)(i)
Indemnified Party Section 10.4(a)
Indemnifying Party Section 10.4(a)
Intellectual Property Section 2.2(h)
Interests Recital U
Investor Preamble
Joint Venture Recital S
Land Section 2.1(a)(i)
LTV Section 6.14
Lease Documentation Recital S
Macquarie Section 4.6
Manager Recital CC
Mission Viejo Facility Recital K
Northville Facility Recital H
New Sunrise Rochester Recital Y
Original Transaction Agreement Recital A
Owned Assets Section 2.1
Owner Obligations Section 2.3
Pacific Palisades Facility Section O
Pacific Palisades Initial Property Value Section 14.2(a)
Permitted Exception Section 7.3(b)
Personal Property Section 2.1(b)(iv)
Project Financing Recital Z
Proration Date Section 2.5(a)
Proration Schedule Section 2.5(a)
Real Property Section 2.1(a)(iii)
Receivables Section 2.6
Rent Roll Section 4.12
Resident Agreements Section 2.1(c)
Responsible Parties Section 1.2
Rochester Facility Recital J
SALI Preamble
SALII Preamble
SDI Preamble
Senior Lenders Section 7.9
Smithtown Facility Recital C
SPV Recital X
Sterling Canyon Facility Recital I
Subfunding Recital T
Sunrise Preamble
Sunrise Alexandria Preamble
Sunrise Bloomingdale Preamble
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Sunrise Blue Xxxx Preamble
Sunrise Buffalo Grove Preamble
Sunrise Buffalo Grove Support Section 14.2
Sunrise Fleetwood Preamble
Sunrise Hermosa Beach Preamble
Sunrise Loans Recital Z
Sunrise Northville Preamble
Sunrise's Notice Section 13.17(b)
Sunrise Pacific Palisades Preamble
Sunrise Riverside Preamble
Sunrise Rochester Preamble
Sunrise Smithtown Preamble
Sunrise Sterling Canyon Preamble
Surveys Section 7.3(d)
Title Commitments Section 7.3(a)
Title Defect Section 7.3(b)
Title Insurer Section 7.3(a)
Title Notice Section 7.3(b)
Title Policy Section 9.2(p)
Underlying Interest Owners Recital R
Venture Agreement Recital U
1.4 RECITALS.
The Recitals are hereby incorporated herein as part of this Agreement,
and the parties confirm the accuracy thereof and their agreement thereto.
ARTICLE II
CONTRIBUTION AND ACQUISITION OF INTERESTS
2.1 OWNED ASSETS.
Upon and subject to the terms and conditions provided herein, on the
First Closing Date, (i) the Underlying Interest Owners, at the direction of the
Joint Venture, will transfer 81% membership or partnership interests in all
Facility Owners of the First Closing Facilities other than Sunrise Rochester to
Funding or to Subfunding, (ii) Sunrise Rochester will transfer the Rochester
Facility by deed to Sunrise New Rochester, (iii) after such transfers, each
resulting SPV shall execute with respect to the First Closing Facilities the
Lease Documentation as lessor, (iv) the Joint Venture will issue to Investor the
Interests in accordance with this Agreement and the Venture Agreement, and (v)
Investor will make the "Contribution" (defined below) to the Joint Venture as
described in this Agreement. Immediately prior to the First Closing Date with
respect to the First Closing Facilities and the Future Closing Date with respect
to the Future Closing Facilities, all tangible and intangible assets (except
Excluded Assets) used or useful in the operation of the applicable Facilities
(the "OWNED ASSETS") as they have been operated by the Facility Owners will be
owned by the Facility Owners. The Owned Assets include the following:
(a) Real Property.
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(i) Owned Real Property relating to First Closing
Facilities. That certain real property consisting of land ("LAND") and all
buildings, structures, fixtures and other improvements ("IMPROVEMENTS") located
thereon, such Land and Improvements being more particularly described as
follows:
Home Address Units
---- ------- -----
Bloomingdale 000 X. Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000 82
Blue Xxxx 000 Xxxxxxx Xxxx
Xxxx Xxxx, XX 00000 79
Fleetwood 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000 85
Mission Viejo 00000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000 86
Northville 00000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000 70
Rochester 000 Xxxx Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 84
Smithtown 00 Xxxxx XXX
Xxxxxxxxx, XX 00000 76
Sterling Canyon 00000 XxXxxx Xxxxxxx
Xxxxxxxx Xxxxxx, XX 00000 120
(ii) Ground Leased Property relating to First Closing
Facilities. The certain Land and Improvements located thereon more particularly
described as follows:
Home Address Units
---- ------- -----
Alexandria 0000 Xxxx Xxxxxx 00
Xxxxxxxxxx, XX 00000
Hermosa Beach 0000 Xxxxxxx Xxxxx Xxxxxxx 00
Xxxxxxx Xxxxx, XX 00000
(iii) Owned Real Property relating to Future Closing
Facilities. The certain real property consisting of Land and other Improvements
located thereon being more particularly described as follows:
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Home Address Units
---- ------- -----
Buffalo Grove 000 Xxxx Xxxx Xxx Xxxx
Xxxxxxx Xxxxx, XX 00000 00
Xxxxxx Xxxxx 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 64
Pacific Palisades 00000 Xxxx Xxxxxx Xxxx.
Xxxxxxx Xxxxxxxxx, XX 00000 40
The Land and related real property (the "REAL PROPERTY") are more fully
described on Exhibit A-1 through Exhibit A-13 and shall be deemed to include all
permits, easements, Licenses (except for those Licenses that relate directly to
the operation of the Facilities as assisted living or dementia facilities, which
are described in 2.1(e) below or to the extent hereinafter expressly excluded)
rights-of-way, rights and related appurtenances.
(iv) All right, title and interest of the Facility Owners 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 tenant or Resident 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 applicable Facilities, and all other
personal property used in connection with the Real Property and now located upon
the Real Property, if any. A confirmed list of such tangible personal property
will be attached hereto as Exhibit C within ten (10) days of the date hereof. In
no event shall the Personal Property include any property owned by Manager,
notwithstanding Manager's use of such property in connection with its management
and administration of the applicable Facilities. A confirmed list of any such
excluded personal property located on any of the Real Property shall be attached
hereto as Exhibit C-1, within ten (10) days of the date hereof.
(ii) Goodwill, going concern, and all existing warranties and
guaranties (express or implied) issued to the Facility Owners in connection with
the Improvements or the Personal Property described in paragraph (b)(i) above.
(iii) Subject to apportionment pursuant to Section 2.5, all
operating bank accounts, xxxxx cash, tenant or Resident security deposits and
working capital accounts or reserves maintained in connection with each
Facility.
(iv) The tangible and intangible property described in
Sections 2.1(b)(i) - 2.1(b)(iii) shall be referred to herein as the "PERSONAL
PROPERTY."
(c) Facility Agreements and Resident Agreements. All rights of
Sunrise 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 applicable Facilities as of the date hereof or made or entered
into by the Facility Owners between the date hereof and the First Closing Date,
with respect to the First Closing Facilities, or between the date hereof and the
Future Closing
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Date, with respect to the Future Closing Facilities, 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.
(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) Licenses. Any and all Licenses now held in the name of Sunrise
or any Affiliate or either of them and used or useful in the operation of the
Facilities, and any renewals, extensions, amendments or modifications thereof,
except to the extent not transferable or assignable under applicable law.
(f) 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 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 to secure contract obligations (except to the
extent included under Section 2.1(b)(iii) or Sunrise receives a credit therefor
under Section 2.5).
(b) Any and all rights in and to claims or causes of action of SDI,
SALII 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 Sunrise
shall be responsible for all costs and expenses (including attorney's fees)
incurred in connection with the prosecution of such claims or causes of action;
provided, however, Owned Assets shall include rights in and to any such claims
or causes of action to the extent they are in the nature of enforcing a
guaranty, warranty or a contract obligation to complete improvements, make
repairs or deliver services to any of the Facilities.
(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 2.5.
(d) Intentionally deleted
(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
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relate to such insurance policies. After the Closing, the placement of insurance
shall be governed by the Management Agreement.
(f) All tangible personal property disposed of or consumed at or
in connection with the First Closing Facilities between the date hereof and the
First Closing Date (and in connection with the Future Closing Facilities between
the date hereof and the Future 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
SDI, SALII, SDI, Manager or their Affiliates (other than the Facility Owners)
and not transferable or assignable under applicable law, all Licenses (and any
renewals, extensions, amendments or modifications thereof), provided, however,
that SDI and SALII shall, and shall cause Manager and the Affiliates of SALII
and Manager, to fulfill their obligations as set forth in Section 6.12 to have
such Licenses transferred or reissued in the names of the appropriate Facility
Owner, or such other party as Investor may direct.
(h) Any and all rights of 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 First
Closing Date (collectively, the "INTELLECTUAL PROPERTY"), provided, however,
that Investors or their Affiliates shall have the right to use the Intellectual
Property in connection with the operation of the Facilities for so long as the
Management Agreements with Manager 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 Sunrise
located in their respective personal offices at the Facilities.
2.3 ACKNOWLEDGMENT OF LIABILITIES.
Investor acknowledges that the Facility Owners shall be obligated to
pay, discharge and perform when due, from and after Closing, the liabilities and
obligations listed below (collectively, the "OWNER OBLIGATIONS"), but Underlying
Interest Owners shall be obligated to fulfill and discharge all duties and
obligations, and shall be responsible for all liabilities with respect to all
items listed below, to the extent attributable to or arising out of matters that
occur prior to Closing:
(a) The Senior Financing;
(b) All liabilities and obligations arising under the Facility
Agreements; and
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(c) Such other liabilities of the Facility Owners (including but not
limited to Resident Deposits) to the extent, and only to the extent, the amount
thereof is included as a credit to the Joint Venture in calculating the
adjustment amount as ultimately determined pursuant to Section 2.5.
This Section 2.3 shall survive the Closing.
2.4 CONTRIBUTION AMOUNT.
(a) The amount of Investor's contribution to the Joint Venture at
Closing for the Interests shall be an amount equal to (i) eighty percent (80%)
of the excess of (a) the Agreed Value of each First Closing Facility which the
Joint Venture acquires an interest in, thereafter sells and leases back pursuant
to the Lease Documentation, over (b) the outstanding principal balance due on
the Senior Financing as of the First Closing Date and (ii) eighty percent (80%)
of a $50,000 working capital reserve for each Facility pursuant to the terms of
the Venture Agreement. The amount contributed by Investor shall be subject to
adjustment as provided in Section 2.5 below and shall be increased by Investor's
share of the closing costs to be borne by the Joint Venture as hereinafter set
forth. The total amount to be contributed by the Investor to the Joint Venture
on the First Closing Date (hereinafter, the "CONTRIBUTION") shall be paid by
wire transfer of immediately available funds to the Title Insurer (as defined in
Section 7.3). Less than all the Facilities may be acquired on the First Closing
Date, as set forth in Section 3.3 below.
(b) On January 7, 2002, Investor delivered to the Title Insurer,
acting as an independent escrow agent, by wire transfer, same day funds in the
amount of $1,000,000 (the "DEPOSIT"). Such amount is being held by Title Insurer
pursuant to the terms of the Escrow Agreement dated January 7, 2002 among
Investor, Sunrise and Title Insurer, a form of which is attached hereto as
Exhibit Q, and shall applied to the Contribution due from Investor on the First
Closing Date.
2.5 ADJUSTMENT OF CONTRIBUTION AMOUNT.
(a) All income and expenses (including prepaid expenses) of the
First Closing Facilities shall be prorated on a daily basis between the Facility
Owners and the Joint Venture as of 11:59 p.m., on the date (the "PRORATION
DATE") immediately preceding the First Closing Date. Such items to be prorated
shall include:
(i) Rents under the leases and Resident Agreements and other
income, if any, including prepaid rents, community fees and security deposits.
Community fees will be prorated between Sunrise and the Joint Venture based upon
the period over which such community fees are refundable to the individual
resident who has paid such community fee. For example, a resident may have paid
a $4,000 community fee which is refundable on a prorated basis over the first
four (4) months of such resident's occupancy. If the Closing takes place one (1)
month after such resident occupies a unit in a Facility, then one quarter of
such community fee (or $1,000) would have been earned by the Facility Owner
prior to the First Closing Date. In such event, the Joint Venture shall receive
credit at Closing for $3,000 of such community fee. Investor acknowledges that
the amount of community fees, and the time period over which community fees are
earned, may vary from Facility to Facility and from resident to resident.
Accordingly, community fees will be adjusted on a resident by resident basis for
each Facility, if and to the
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extent that the community fees have not been fully earned by the Facility Owner
prior to the First Closing Date.
(ii) Utility charges, if any, including water, sewer,
electric, and gas, based upon the last reading of meters prior to the Closing
shall be prorated. Sunrise shall endeavor to obtain meter readings on the day
before the First Closing Date, and if such readings are obtained, there shall be
no proration of such items. Sunrise shall pay at Closing the bills therefor for
the period to the day preceding the Closing, and the Joint Venture shall pay the
bills therefor for the period subsequent thereto. If the utility company will
not issue separate bills, the Joint Venture will receive a credit for Sunrise's
portion and will pay the entire xxxx prior to delinquency after Closing. If
Sunrise has paid any utilities no more than 30 days in advance in the ordinary
course of business, then the Joint Venture shall be charged its portion of such
payment at Closing;
(iii) Fees and charges under such of the service agreements,
licenses and permits as are being assigned to and assumed by the Joint Venture
at the Closing, on the basis of the periods to which such service agreements,
licenses and permits relate shall be prorated.;
(iv) Food inventory;
(v) Supplies inventory;
(vi) Xxxxx cash;
(vii) Taxes imposed by governmental authority and any
assessments imposed by private covenant constituting a lien or charge on the
First Closing Facilities for the then current calendar year or other current tax
period not yet due and payable shall be prorated. If the Closing occurs prior to
the receipt by Sunrise of the tax xxxx for the calendar year or other applicable
tax period in which the Closing occurs, Sunrise and the Joint Venture shall
prorate Taxes for such calendar year or other applicable tax period based upon
the most recent ascertainable assessed values and tax rates.;
(viii) Any escrow accounts or cash deposits held by an utility
companies or otherwise to secure obligations under contracts that will continue
after Closing;
(ix) Interest on the Senior Financing; and
(x) Payments under any leases of personal property used in
connection with the operation of the First Closing Facilities.
Sunrise shall prepare a proposed schedule (the "PRORATION SCHEDULE") and deliver
it to the Investor at least five (5) business days prior to Closing, including:
(i) the items listed above, (ii) any items which are customarily apportioned
between parties in a similar transaction in the localities in which the First
Closing 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. Sunrise and Investor will use all
reasonable efforts to finalize and agree upon the Proration Schedule at least
two (2) business days prior to Closing. The amount of the Contribution shall be
adjusted in accordance with the Proration Schedule. Each party shall be
responsible for its own legal fees, appraisal fees and costs of third party
market and/or valuation reports in connection with this transaction. All other
costs of Closing, including, without
16
limitation, the costs of Surveys, Title Insurance, all transfer taxes, and all
fees charged by Xxxxxx Xxx or other Senior Lenders to provide consent to the
execution of the Lease Documentation, shall be paid by the Joint Venture, except
that any such costs which are customarily paid by the seller in the applicable
market in which a particular Facility is located shall be paid separately by
Sunrise.
(b) The parties agree that any amounts which may become due under
this Section 2.5 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
no later than 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 2.5
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. Facility Owners agree that
Investor shall have the right to audit the records of Facility Owners in
connection with any such post-closing reconciliation. The covenants contained in
this Section 2.5 shall survive Closing.
2.6 ACCOUNTS RECEIVABLE.
As of the Proration Date, the First Closing Facilities will have certain
outstanding accounts receivable (the "Receivables"). Each Facility Owner shall
receive a credit at Closing in consideration of the Joint Venture's right to
collect the Receivables after Closing. Such credit shall be in an amount equal
to eighty percent (80%) of the Receivables outstanding as of the First Closing
Date for the First Closing Facilities and eighty percent (80%) of the
Receivables outstanding as of the Future Closing Date for the Future Closing
Facilities. During the term of this Agreement, Facility Owners and Manager
covenant and agree to continue to use usual and customary procedures to collect
the Receivables which will be listed on Exhibit J within ten (10) days of the
date hereof.
2.7 DEPOSITS.
All tenant or Resident security deposits in Sunrise's possession, as
reflected on a final Rent Roll delivered to the Joint Venture (and interest
thereon if required by law or contract to be earned thereon) and not theretofore
applied to tenant obligations under the Leases, shall be transferred or credited
to the Joint Venture at Closing or placed in escrow if required by law. As of
the Closing, the Joint Venture shall assume Sunrise's obligations related to
tenant or Resident security deposits. The Joint Venture will indemnify, defend,
and hold Sunrise and the Investor harmless from and against all demands and
claims made by tenants arising out of the transfer or disposition of any tenant
or Resident security deposits transferred to the Joint Venture and will
reimburse Sunrise and the Investor for any reasonable expenses (including all
reasonable attorneys' fees) incurred or that may be incurred by Sunrise or the
Investor as a result of any such claims or demands by tenants. Sunrise will
indemnify, defend and hold the Joint Venture harmless from and against all
demands and claims made by tenants arising out of any tenant or Resident
security deposits not transferred to the Joint Venture and will reimburse the
Joint Venture for any reasonable expenses (including all reasonable attorneys'
fees) incurred or that may be incurred by the Joint Venture as a result of any
such claims or demands by tenants.
ARTICLE III
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DUE DILIGENCE PERIOD
3.1 DUE DILIGENCE PERIOD.
During the Due Diligence Period, Investor 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. Sunrise shall have
furnished or made available to Investor or its representatives within five (5)
days after the date of the Original Transaction Agreement, the items described
on Exhibit O attached hereto, or any other items reasonably requested by
Investor, to the extent they are in Sunrise's possession or control or are
readily obtainable by Sunrise.
3.2 TERMINATION DURING DUE DILIGENCE.
The Investor and Sunrise acknowledge and agree that the Due Diligence
Period has ended with respect to the following Facilities: Alexandria,
Bloomingdale, Blue Xxxx, Canyon Crest, Fleetwood, Northville, Rochester,
Smithtown and Sterling Canyon and, pursuant to Section 2.4(b) hereof, the
Deposit is no longer refundable.
3.3 PARTIAL TERMINATION.
(a) Deletion and Substitution. Investor shall have the right, prior
to the end of the Extended Due Diligence Period, to delete up to four (4) of the
Extended Facilities specified herein from this Agreement, in which case the
Agreement shall continue in full force and effect with respect to those
Facilities not so deleted. Sunrise shall have the right to offer one or more
replacement facilities with a proposed Agreed Value to replace the Extended
Facilities deleted as aforesaid. Sunrise shall propose such replacement
facilities to Investor in writing and, if Investor agrees in writing to review
such replacement facilities, Sunrise shall deliver to Investor, within five (5)
business days after Investor so agrees to review such replacement facilities the
due diligence materials described in Section 3.1 with respect thereto. For each
replacement facility that Investor agrees to review, a thirty (30) Due Diligence
Period shall commence upon the delivery of such materials and during such
period, Investor shall be free at its sole discretion to accept or reject any
such replacement facility. If any one or more replacement facilities and its
Agreed Value are accepted by Investor, in its sole discretion, then such
replacement facilities shall become "Facilities" for purposes hereof, the Agreed
Value shall be included on a restated Exhibit B, and this Agreement shall
continue in full force and effect with such replacement facilities as
Facilities. The parties agree to use best efforts to close on all the Facilities
together, however, the closing date for any replacement facility may be extended
by mutual agreement of the parties to no later than April 15, 2002. If following
the conclusion of the Extended Due Diligence Period (as extended with respect to
any replacement facility), Investor decides in its sole discretion, to delete a
replacement facility from the transaction, it shall proceed to close on the
remaining Facilities provided a total of nine (9) or more Facilities remain.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SUNRISE
Sunrise represents and warrants to Investor as follows:
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4.1 ORGANIZATION, GOOD STANDING AND ENTITY AUTHORITY.
Each of the Facility Owners is a limited liability company or a limited
partnership, as the case may be, duly organized, validly existing and in good
standing under the laws of the State in which the Facility which it owns is
located (except for Sunrise Mission Viejo, which is organized under the laws of
the Commonwealth of Virginia) , and has all requisite authority to own, and
operate its Owned Assets and carry on its business. SDI and SALII are each
corporations duly organized, validly existing and in good standing under the
laws of the Commonwealth of Virginia. SALI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.
SDI, SALII, SALI and each Facility Owner have all requisite power and
authority to enter into this Agreement and the other Documents to which they are
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 SDI,
SALII and SALI (and, to the extent applicable each Facility Owner) and the
consummation by SDI, SALII and SALI (and, to the extent applicable each Facility
Owner) of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of SDI, SALII and SALI (and, to
the extent applicable each Facility Owner) and SDI's, SALII's and SALI's members
or board of directors, as the case may be. This Agreement has been, and each of
the other Documents at or prior to Closing will be, duly executed and delivered
by SDI, SALII and SALI (and, to the extent applicable each Facility Owner). This
Agreement constitutes (and each of the other Documents, when executed and
delivered, will constitute) the valid and binding obligation of SDI, SALII and
SALI (and, to the extent applicable each Facility Owner) enforceable against
SDI, SALII and SALI (and, to the extent applicable each Facility Owner) 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 Sunrise of this Agreement and
the other Documents, and consummation by Sunrise of the transactions
contemplated hereby and thereby, do not and will not, to the best of Sunrise'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) 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 Owned Assets under the provisions of the Articles of Incorporation or Bylaws
of SDI, SALII or SALI, the organizational instruments of any Facility Owner, any
laws or regulations to which SDI, SALII, SALI or any Facility Owner is subject,
or any indenture, mortgage, lease, loan agreement or other agreement or
instrument to which SDI, SALII, SALI, any Facility Owner or the Facilities are
subject, except for the need to obtain the consent of Xxxxxx Xxx and any other
holders of any Senior Financing and the ground lessors under each of the
Alexandria Ground Lease and the Hermosa Ground Lease. Sunrise shall diligently
pursue such consents, the granting of which shall be a condition to closing.
19
4.4 FINANCIAL STATEMENTS.
Sunrise has delivered to Investor prior to the date of this Agreement
the unaudited financial statements for each of the Facilities as of November 30,
2001, including but not limited to an unaudited balance sheet as of November 30,
2001 (the "BALANCE SHEET"). Sunrise shall deliver unaudited financial statements
for the calendar year 2001 to Investor by no later than January 30, 2002. All
such statements (i) are in accordance in all material respects with the books
and records of the Facility Owners and (ii) have been prepared in accordance
with GAAP applied on a consistent basis and fairly present the assets and
liabilities of the Facilities as of the dates stated and accurately reflect the
results of operations of the Facilities for the periods covered by the
statements, with the exception that the Balance Sheet is subject to normal
year-end adjustments.
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since the date of the Balance Sheet:
(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 SDI, SALII, Manager, 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) None of SDI, SALII, the Facility Owners, or Manager has:
(i) amended or terminated any Facility Agreement or Resident
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 First Closing Date with respect
to the First Closing Facilities or the Future Closing Date with respect to the
Future Closing Facilities;
(iii) acquired or disposed of any assets, personal property 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;
(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 Sunrise 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
20
contemplated by this Agreement, except for Macquarie Capital Partners LLC
("MACQUARIE"). Sunrise has agreed to pay Macquarie a consulting fee pursuant to
a separate agreement. Sunrise agrees to indemnify and hold Investor 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, full replacement cost, "all risks"
property insurance with respect to each of the Facilities and commercial general
liability insurance with respect to each of the Facilities, with combined single
limits for personal injury, death and property damage, of at least $3,000,000.00
per occurrence. Sunrise has delivered or made available to Investor copies of
all casualty, liability, business interruption and other insurance policies
insuring against loss of the Owned Assets and all such insurance policies are in
full force and effect.
4.8 LITIGATION.
Except as set forth on Exhibit F, there is no pending, or to the best of
Sunrise's knowledge, threatened litigation, proceeding or investigation (by any
person, governmental or quasi-governmental agency or authority or otherwise) to
which Sunrise is a party, including without limitation litigation brought by
Sunrise against third parties. The litigation, proceedings and investigations
listed on Exhibit F will not, individually or in the aggregate, materially
adversely affect the ownership, use, occupancy, operation, cash flow,
profitability or title to any of the Facilities.
4.9 COMPLIANCE WITH LAWS.
To the best of Sunrise's 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, License or permit
of any kind whatsoever affecting the Facilities or any part thereof or their
operation as assisted living facilities. Sunrise has not received notice of any
such violation. To Sunrise's knowledge, Sunrise has not received written notice
from any insurance company or underwriter of any defect that would materially
adversely affect the insurability of any Facility or cause an increase in
insurance premiums and, to Sunrise's knowledge, no there are no such structural
defects at any of the Facilities.
4.10 ENVIRONMENTAL MATTERS.
Except as set forth in the environmental reports delivered to Investor
pursuant to Section 3.1, to Sunrise's knowledge, Sunrise has not generated,
stored or disposed of any hazardous waste at any of the Facilities, and Sunrise
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. Hazardous waste shall not include (1) pre-packaged
21
supplies, cleaning materials and petroleum products customarily used in the
operation and maintenance of comparable properties, (2) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for
consumer use and used by tenants and residents in the Facilities; and (3)
petroleum products used in the operation and maintenance of motor vehicles from
time to time located on the Facilities' parking areas, so long as, to the extent
required, all applicable permits for the use of any of the foregoing have been
obtained and are in full force and effect and so long as all the foregoing are
used, stored, handled, transported and disposed of in compliance with all
hazardous substances laws and any such applicable permits. The term "hazardous
waste" includes petroleum, including crude oil or any fraction thereof, natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for
fuel (or mixtures of natural gas or such synthetic gas), asbestos and asbestos
containing materials and any substance, material waste, pollutant or contaminant
listed or defined as hazardous or toxic under any Environmental Law.
4.11 ASSESSMENTS.
There are no special or other assessments for public improvements or
otherwise now affecting any of the Facilities, nor does Sunrise have knowledge
of (i) any pending or 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.
Sunrise has supplied Investor with true and correct copies of the forms
of Resident Agreement used at the Facilities. The Resident Agreements currently
in effect with respect to the Facilities are in substantially the same form as
the copies previously delivered to Investor. Sunrise is not in default under any
of its material obligations under any Resident Agreement or any lease and,
except as set forth on the aged receivable report attached hereto as Exhibit K
(the "RENT ROLL"), Sunrise has no knowledge of any material default on the part
of any other party thereto. All of the Resident Agreements and leases identified
on the Rent Roll are currently in full force and effect. The Rent Roll is true
and correct in all material respects and Sunrise will provide an updated Rent
Roll at Closing and will re-affirm the foregoing representations and warranty
with respect to such updated Rent Rolls.
4.13 FACILITY AGREEMENTS.
The Facility Agreements listed on Exhibit G hereto are all of the
Facility Agreements relating to or affecting any of the Facilities. Sunrise has
heretofore delivered to Investor true and complete copies of all such Facility
Agreements, including all amendments and modifications thereto; Sunrise is not
in default of any of its material obligations under any of such Facility
Agreements, and Sunrise has no knowledge of any material default on the part of
any other party thereto. All the Facility Agreements listed on Exhibit G are
currently in full force and effect. Except for the Facility Agreements and the
Resident Agreements described in Section 4.12 above, there are no material
service contracts, leases or other contracts or agreements affecting any of the
Facilities.
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4.14 PERMITS.
Exhibit D attached hereto is a true and complete list of all Licenses.
All the Licenses are valid and no material violations exist. To Sunrise'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.
As of the date hereof, no resident at any Facility is a participant in
Medicare, Medicaid or other public payor program with respect to such resident's
fees or other services payable to SDI, SALII, SALI, any Facility Owner, or
Manager. To Sunrise'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 Sunrise in connection with
the Facilities. Sunrise has not 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. Sunrise has 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 Sunrise's books and
records. Sunrise has not received notice that Medicare, Medicaid or any other
public or private third-party payor has any claims for disallowance of costs
against it. To Sunrise's knowledge, Sunrise has not 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.
4.16 CONDEMNATION.
Sunrise has not 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 and, to Sunrise's knowledge, no such
condemnation proceeding is being considered.
4.17 CONDITION OF PROPERTY.
To Sunrise'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 active leaks, (iv) all mechanical and
utility systems servicing the Improvements are in good condition and proper
working order, free of material defects and, to Sunrise's knowledge, in
compliance with all applicable laws and codes. To Sunrise's knowledge there are
no violations of any applicable laws, orders or insurance underwriting
guidelines relating to safety, structural, mechanical or other physical systems
or portions of the Improvements, except to the extent such violation does not
cause and is not reasonably expected to cause a material adverse effect on the
management income from such Improvements. To Sunrise's knowledge, all the
Personal Property is in good condition, working order and repair.
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4.18 INDEPENDENT FACILITIES.
To Sunrise'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 Sunrise'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 Sunrise,
nor any descriptive information concerning the Owned Assets set forth in this
Agreement, nor, to Sunrise's knowledge, does any document, statement,
certificate, schedule or other information furnished or to be furnished to
Investor by Sunrise 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 Sunrise's knowledge, the parking
facilities located on each Facility meet all applicable requirements imposed by
applicable law or requisite exceptions, conditions, or variances to such laws.
All such public utilities are installed and operating and all installation and
connection charges have been paid in full and all such utilities are provided to
each Facility either directly from an adjacent public right-of-way or through
valid, recorded, insurable public or private easements. 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. Sunrise 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.
4.21 ZONING.
To Sunrise'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. Sunrise has not
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received written notice that any Facility is in violation of any applicable
zoning code or ordinance, except for any such matters which may have been
previously cured by Sunrise.
4.22 NO EMPLOYEES.
None of the employees at the Facilities is employed by the Facility
Owners and none of the employees at the Facilities are union labor. All such
employees are employed by Manager or its Affiliates other than the Facility
Owners. The Facility Owners do not now have, and at no time ever had, any
employees. The Joint Venture will not take on any employee liability after
Closing; all such liability will stay with the Manager and all employee costs
will be a Facility expense reimbursable to Manager under the Management
Agreement.
4.23 TAXES.
Sunrise has 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 them 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 Sunrise); there are no tax
liens upon any property or assets of Sunrise except liens for current taxes not
yet due. Each of the Facilities is a separate, independent tax parcel consisting
of the applicable tract of Land and the Improvements thereon. The federal income
tax returns of Sunrise 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 Sunrise have been audited or
otherwise examined within the past three years. Sunrise 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 Sunrise has not filed any
consent under Section 341(f) of the Code.
4.24 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
applicable Facilities as they have been operated by the Facility Owners. Sunrise
or Manager is the Landlord under all leases and Resident Agreements relating to
the applicable Facilities. Sunrise has not pledged or assigned its right with
respect to any of the Resident Agreements, except for the collateral assignment
thereof as security for the Senior Financing. The Facility Owners will not, as
of Closing, own or hold an interest in any property, real or personal, tangible
or intangible, except for the Owned Assets.
4.25 INTERESTS.
SALII or SDI owns 100% of the membership interests in each Facility
Owner, which is a limited liability company, as set forth in the Recitals. SALII
owns all the general partnership interests, and SALI owns all the limited
partnership interests, in each Facility Owner which is a limited partnership.
All such interests are 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 or partnership
interest in any of the Facility Owners.
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4.26 TITLE ENCUMBRANCES.
Sunrise is not in default under any of its material obligations under
any recorded agreement, easement or instrument encumbering title to any of the
Facilities, and Sunrise has no knowledge of any material default on the part of
any other party thereto.
4.27 AFFORDABLE HOUSING UNITS.
Exhibit H 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 H 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.
4.28 NO NEW SURVEY MATTERS.
To Sunrise's knowledge, since the dates of the as-built surveys for each
of the Facilities provided to Investor by Sunrise (the "FINANCING SURVEYS"), no
new survey matters have arisen in connection with any of the Real Property which
would otherwise be required to be shown thereon under the applicable ALTA/ACSM
standards used in preparing the Xxxxxx Xxx Surveys to be shown thereon.
4.29 XXXXXX MAE LOANS.
Attached hereto as Exhibit P is a schedule describing the material
business terms of the Xxxxxx Xxx Loans secured by the Bloomingdale, Smithtown,
Alexandria, Fleetwood, Northville, Sterling Canyon, Blue Xxxx and Mission Viejo
Facilities. The information contained on Exhibit P is true and correct in all
material respects. To the best of Sunrise's knowledge, as of the date hereof,
the Xxxxxx Xxx Loans secured by the Bloomingdale, Smithtown, Alexandria,
Fleetwood, Northville, Sterling Canyon, Blue Xxxx and Mission Viejo Facilities,
as shown on Exhibit P, are in full force and effect, and there exists no Event
of Default thereunder, and no event or circumstance which, with the passing of
time or giving of notice, would constitute an Event of Default thereunder.
Sunrise has delivered to Investor full and complete copies of all the loan
documents evidencing and securing the foregoing Xxxxxx Xxx Loans.
4.30 INSOLVENCY.
Sunrise has not (i) commenced a voluntary case or had entered against it
a petition for relief under any federal bankruptcy act or any similar petition
order or to create under any federal or state law or statute relative to
bankruptcy, insolvency or other relief for debtors, (ii) caused, suffered or
consented to the appointment of a receiver, trustee, administrator, conservator,
liquidator or similar official in any federal, state or foreign judicial or
nonjudicial proceeding to hold, administer and/or liquidate all or substantially
all of its assets, (iii) had filed against it any involuntary petition seeking
relief under any federal or state law or statute relative to bankruptcy,
insolvency or other relief to debtors which involuntary petition is not
dismissed within sixty (60) days, or (iv) made a general assignment for the
benefit of creditors.
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4.31 SERVICE CONTRACTS.
The list of service contracts for each Facility delivered, or to be
delivered, to Investor pursuant to this Agreement is or will be true, correct,
and complete as of the date of its delivery. Neither Sunrise nor, to Sunrise's
knowledge, any other party is in material default under any service contract.
4.32 RIGHTS OF OTHERS.
No portion of any Owned Asset or interest in any Facility Owner is
subject to any outstanding agreement of sale, options, right of first refusal or
other rights of third parties to acquire any interest therein.
4.33 ACCURACY OF DOCUMENTS AND INFORMATION.
Sunrise has delivered or made available to Investor complete copies of
all engineering reports, environmental reports and inspection reports delivered
in connection with the placement of Senior Financing, and which relate to any
Facility.
4.34 USE OF PROPERTY.
Sunrise has not misrepresented any material fact which would prevent the
Owned Assets from being operated after the date hereof in the manner in which
the Owned Assets are currently being used and operated.
4.35 LEASES.
There are no leases by Sunrise or any Facility Owner (as landlord) of
any portion of the Owned Assets or leases of any equipment, vehicles, furniture
or any other item of personal property used in connection with the Owned Assets,
except as set forth on Schedule 1 attached hereto and incorporated herein by
this reference.
4.36 INTELLECTUAL PROPERTY.
For as long as the Facilities are managed by an affiliate of Sunrise,
the Joint Venture shall have the benefit of all trade names, trademarks, service
marks or copyrights (or any registrations with any government entity of, or
applications for registration pending with respect to, any of the foregoing)
owned or licensed by Sunrise or any Facility Owner material to the operation of
the Owned Assets. All registrations with any government entity are in good
standing.
4.37 ACCURACY OF STATEMENTS.
Neither this Agreement nor any document, instrument, schedule, exhibit,
statement, list, certificate or other information furnished or to be furnished
to Investor in connection with this Agreement or any of the transactions
contemplated hereby contains any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
materially misleading.
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4.38 PERSONAL PROPERTY.
The items of Personal Property to be set forth in the inventory jointly
prepared and initialed by the parties at Closing will constitute all of the
Personal Property located at the Facilities, and such Personal Property is
adequate and sufficient to operate the Facilities.
4.39 OWNERSHIP. Sunrise or the Facility Owners own the Personal
Property free and clear of all liens and encumbrances, other than (a) the
existing mortgage encumbering the Owned Assets which shall be discharged or
assigned to the Joint Venture's lender at Closing and (b) liens securing de
minimis financings affecting Personal Property.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to Sunrise as follows:
5.1 ORGANIZATION AND GOOD STANDING.
Investor is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware. Investor has all
requisite 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.
Investor has all requisite 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 Investor and the consummation by Investor of the
transactions contemplated by this Agreement is duly authorized by all necessary
company action on the part of Investor. This Agreement has been, and each of the
other Documents at or prior to Closing will be, duly executed and delivered by
Investor. To the best of Investor's knowledge, this Agreement constitutes (and
each of the other Documents, when executed and delivered, will constitute) the
valid and binding obligation of Investor enforceable against Investor 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 Investor of this Agreement
and the other Documents, and consummation by Investor 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 Investor, any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which
Investor is bound or affected, or any law, statute, rule, judgment, order or
decree to which Investor is subject.
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5.4 CONSENTS.
The execution, delivery and performance by Investor of this Agreement
and the other Documents, and consummation by Investor 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 Investor 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 Investor in connection with the transactions contemplated by this
Agreement. Investor agrees to indemnify and hold Sunrise harmless from 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.
5.6 RESPONSIBILITY FOR PARTICIPANTS.
Sunrise acknowledges that indirect ownership interests in Investor will
be syndicated to various offshore parties pursuant to a Private Placement
Memorandum to be prepared by representatives of offshore investment vehicles
organized by affiliates of Investor. Such parties may trade their indirect
shareholding interests. Personnel who have been identified to Sunrise
("IDENTIFIED PERSONNEL") will control and manage Investor and the offshore
parties which hold shares in Investor. Sunrise will have a right to receive a
copy of the foregoing Private Placement Memorandum. The trading of the indirect
shareholding interests in Investor shall not impact the operations of the Joint
Venture or the relationship between SALII and the Investor in the Joint Venture
or under this Agreement. Identified Personnel and Investor will provide
sufficient information to enable Sunrise and the lenders providing the Senior
Financing to confirm that none of the parties owning indirect shareholding
interests in Investor are on the United States Treasury Department's Office of
Foreign Asset Control Restricted List, or subject to economic sanctions imposed
by acts, laws or regulations and/or executive orders issued thereunder. The
foregoing assurance shall also be contained in the Venture Agreement.
5.7 ANTI-MONEY LAUNDERING POLICY.
Investor represents and warrants that it is committed to enforcing
strict procedures to insure the integrity of this transaction and to assist in
the global effort against money laundering and terrorism. Accordingly, Investor
represents and warrants that it subscribes to and will continue to subscribe to
the principles and procedures set forth on Exhibit L attached hereto.
ARTICLE VI
OTHER COVENANTS
6.1 CONDUCT OF THE FACILITY'S BUSINESS PRIOR TO THE FIRST CLOSING
DATE.
Sunrise covenants and agrees that from the date hereof through the First
Closing Date with respect to the First Closing Facilities and through the Future
Closing Date with respect to
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the Future Closing Facilities, unless Investor otherwise consents in writing
(which consent shall not be unreasonably withheld), Sunrise and Manager 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 applicable Closing Date, but only
in an amount consistent with past practices, and (iii) using commercially
reasonable efforts to preserve the Facilities' present business operations,
organization and goodwill and its relationships with residents, 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 and all applicable insurance requirements.
(c) Maintain their 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 and make all
payments under the Senior Financing in a timely fashion.
(h) Not enter into any Resident Agreements except at rental rates,
term duration and on other terms and conditions consistent in all material
respects with the existing Resident Agreements for the applicable Facility, as
set forth in the Rent Rolls attached to this Agreement.
(i) Not make any alterations or improvements to any Facility or make
any capital expenditure with respect to any Facility, except as described in
item 6.1(a)(ii) above.
(j) Not enter into any Facility Agreements which call for annual
payments in excess of $20,000.00 or for a term in excess of one year, unless the
applicable Facility Agreement can be terminated by the Facility Owner upon not
more than sixty (60) days prior written notice without the payment of any
termination fee or penalty payment.
(k) Promptly furnish to Investor a copy of any written notice (i)
Sunrise receives from any governmental authority of any eminent domain or
condemnation action against the Owned Assets or any material violation of any
law, rule, code, regulation or ordinance; or (ii) of default given or received
by Sunrise prior to the applicable Closing Date.
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6.2 NOTIFICATION OF CERTAIN MATTERS.
Sunrise shall give prompt notice to Investor, and Investor shall give
prompt notice to Sunrise, 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 through the First Closing Date
with respect to the First Closing Facilities and through the Future Closing Date
with respect to the Future Closing Facilities, 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 First Closing, the Facility Owners of the First Closing
Facilities shall own the Owned Assets free and clear of any Liens except
Permitted Exceptions and the Senior Financing. At the First Closing, all
warranties and guaranties relating to the First Closing Facilities shall be held
and owned by the Facility Owners, other than Sunrise Rochester but including
Sunrise New Rochester, but will be transferred to the Joint Venture. At the
Future Closing, the Facility Owners of the Future Closing Facilities shall own
the Owned Assets free and clear of any Liens except Permitted Exceptions and the
Senior Financing. At the Future Closing, all warranties and guaranties relating
to the Future Closing Facilities shall be held and owned by the Facility Owners,
but will be transferred to the Joint Venture. Sunrise shall execute or cause to
be executed such documents, in addition to those delivered at the applicable
Closing, as may be necessary to confirm in Investor good and marketable title to
the Interests and to carry out the purposes and intent of this Agreement, to
include the issuance of a title policy with the customary zoning endorsement.
Investor shall execute or cause to be executed such documents, in addition to
those delivered at the applicable Closing as may be necessary to confirm
Investor's status as a member of the Joint Venture.
6.4 OTHER CONSENTS.
Sunrise shall use reasonable efforts to obtain the consents or waivers
to the transactions contemplated by this Agreement required under any Facility
Agreements or other third party agreements, such as the Alexandria Ground Lease
and the Hermosa Ground Lease; provided that Sunrise 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) and in the event that Sunrise is unable to obtain a material consent,
Investor shall not be obligated to close on such asset.
6.5 INSPECTION AND ACCESS.
Sunrise and Manager shall, commencing on the date of this Agreement,
open the assets, books, accounting records, correspondence and files of Sunrise
(to the extent related to the operation of the applicable Facilities) for
examination by Investor, 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 Investor during normal business hours, upon
reasonable notice and in such manner as will not unreasonably interfere with the
conduct of the business of the applicable Facilities. All requests for access
shall be made by Investor to Xxxxxx X. Xxxxxx, Xxx Xxxxxxxx or Xxxxxxx Bath on
behalf of Sunrise. As and when Sunrise prepares
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the same for its own purposes (which preparation shall be consistent in terms of
timing with Sunrise's past practices), Sunrise will furnish to Investor
unaudited financial statements of Sunrise for the periods from and after the
date of the Balance Sheet prepared in a manner consistent with the Balance
Sheet. Sunrise will make available to Investor such additional financial and
operating data and other available information regarding the applicable
Facilities or the Owned Assets as Investor may reasonably request. 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; EXCLUSIVITY.
(a) Sunrise and Investor entered into a confidentiality agreement
dated December 28, 2001 (the "CONFIDENTIALITY AGREEMENT"), a copy of which is
attached hereto as Exhibit I, 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. Sunrise and Investor will use their
best efforts to comply with the terms of the Confidentiality Agreement.
Notwithstanding any other provision in this Agreement, this Section 6.6 shall
survive the Closing indefinitely.
(b) For the period following the date hereof through the applicable
Closing or the earlier termination of this Agreement, Sunrise shall negotiate
exclusively with Investor and shall not solicit or seek offers or expressions of
interest with respect to any of the Facilities from any party other than
Investor.
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.
Investor and Sunrise will promptly notify the other party of any event
of which Investor or Sunrise, as the case may be, obtains knowledge which has
had or could reasonably be expected to have a Material Adverse Effect.
6.9 [Intentionally Omitted]
6.10 HEALTH DEPARTMENT REPORTS.
Sunrise shall file, on a current and timely basis and in all material
respects in a truthful and complete fashion until the applicable Closing Date,
all reports and documents required to be filed with the Health Department with
respect to the Facilities.
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6.11 TAX RETURNS AND PAYMENTS.
Sunrise will timely file with the appropriate governmental agencies all
Tax Returns required to be filed by Sunrise with respect to the First Closing
Facilities prior to Closing and timely pay all Taxes reflected on such Tax
Returns as owing by Sunrise or its Affiliates.
6.12 POST-CLOSING OBLIGATION OF SUNRISE.
If required by the applicable State licensing agencies in connection
with the execution of the Lease Documentation contemplated by this Agreement,
following Closing, Sunrise shall use, and shall cause Manager to use diligent
efforts to have the Licenses reissued in accordance with Section 7.6 of this
Agreement. This covenant of Sunrise shall survive Closing indefinitely.
6.13 SENIOR FINANCING.
Sunrise will endeavor to close permanent Senior Financing in an
Islamically acceptable form on all the First Closing Facilities including those
now subject to the Xxxxxx Mae Loans. All such financing shall be at fixed
interest rates with an amortization period of 300 months and a term acceptable
to Investor. If and to the extent that Sunrise is unable to place acceptable
Senior Financing prior to the First Closing Date, the terms of Sections 3.3 and
14.2 herein shall apply.
6.14 HERMOSA BEACH FACILITY.
Sunrise, on behalf of the Joint Venture, agrees to use its best efforts
to obtain from Senior Lender financing with a Loan to Value ("LTV") equal to or
greater than sixty-five percent (65%) to be secured by the Hermosa Beach
Facility. If the financing from Senior Lender is not sufficient to reach such
LTV, then Sunrise agrees in such instance to provide credit support which shall
not, however, include a cash escrow, a guarantee of the loan nor seller
financing, to make up the difference.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION OF INVESTOR TO CLOSE
Investor's obligation to make the Contribution and acquire the Interests
pursuant to the terms of this Agreement is subject to the satisfaction, on or
prior to the First Closing Date with respect to First Closing Facilities and on
or prior to the Future Closing Date with respect to Future Closing Facilities,
of each of the following conditions, unless waived by Investor in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
(a) The representations and warranties of Sunrise 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 applicable Closing Date with same effect
as though made at such time except for changes permitted hereunder.
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(b) Sunrise shall have delivered to Investor on the applicable
Closing Date a certificate that the conditions specified in Sections 7.1(a) and
7.2 are satisfied as of the applicable Closing Date.
7.2 PERFORMANCE OF AGREEMENT.
Sunrise 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
applicable Closing Date.
7.3 TITLE INSURANCE AND SURVEY.
(a) The parties have ordered commitments for leasehold 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 Investor deems adequate, merchantable
title to the leasehold interest created by the Lease Documentation in the name
of the Joint Venture, free from the Schedule B standard printed exceptions and
all other exceptions except Permitted Exceptions (as defined below) with such
endorsements as Investors shall reasonably require (to include a zoning and a
non-imputation endorsement) and with insurance coverage over any "gap" period.
Such Title Commitments shall have attached thereto complete, legible copies of
all instruments noted as exceptions therein. The Joint Venture 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 Investor, or (2) the
Survey delivered to Investor pursuant to Section 7.3(d) below discloses any
state of fact not acceptable to Investor, 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 Investor (any such exception or unacceptable state of fact
being referred to herein as a "TITLE DEFECT"), then Investor shall, on or before
the later of the end of the Due Diligence Period or ten (10) days following
receipt of the Title Commitments or discovery of the Title Defect, as the case
may be, give Sunrise written notice of such Title Defect (the "TITLE NOTICE").
Such Title Notice shall include a copy of the relevant Title Commitment and
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. Sunrise
shall have the right, but not the obligation, within ten (10) days after receipt
of any such Title Notice, to notify Investor that Sunrise will take the action
necessary to remove such Title Defect. If Sunrise elects to so notify Investor,
then, on or before the Closing, Sunrise shall provide Investor with reasonable
evidence of such removal or provide title insurance over such Title Defect in
form satisfactory to Investor. Notwithstanding anything contained herein to the
contrary, Sunrise shall be obligated (or shall cause its Affiliates) to expend
whatever sums and take whatever other steps are 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 Senior Financing;
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(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 Sunrise (which do not result from acts
or omissions on the part of Investor) which have attached to and become a lien
against the Real Property.
(c) In the event Sunrise does not notify Investor, within such ten
(10) day period, that Sunrise will cure any Title Defect, Investor shall have
the option to (i) waive any Title Defect and proceed to Closing or (ii)
terminate this Agreement and receive a refund of the Deposit. If Sunrise
notifies Investor that Sunrise will cure any Title Defect but fails to do so, or
if Sunrise is obligated to cure a Title Defect pursuant to subparagraph (b)
above and fails to do so, Investor shall have the right, in addition to the
rights described in the preceding sentence, to: (x) pay a sum (up to a maximum
of $10,000 per Facility) necessary to cure the Title Defect and deduct such
amount from the Contribution, or (y) pursue any and all remedies provided in
Section 11.2 of this Agreement as a result of Sunrise's default. Such maximum
sum shall not apply in the case of liens of a liquidated amount which are not
being disputed by Sunrise.
(d) Within five (5) days after the execution of this Agreement,
Investor, at its expense (to be reimbursed at closing by the Joint Venture if
closing takes place), 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 Investor. The Surveys, if they are ordered, shall (1)
be completed in accordance with Investor's reasonable survey requirements, and
shall be certified to Sunrise, Investor, the Joint Venture, and the Title
Insurer by such surveyor; (2) have one perimeter description for the Real
Property on which each of the applicable 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 Investor, Investor shall promptly furnish a copy of
same to Sunrise. Investor, at its option, may choose not to order the Surveys
and instead rely on the Xxxxxx Xxx Surveys and other surveys prepared in
connection with the Senior Financing and the warranty of Sunrise in Article IV
above that, to its knowledge, no new survey matters have arisen with regard to
the Facilities.
(e) Any failure by Investor to perform under this Section 7.3 shall
not relieve Investor of its obligation to proceed to Closing under this
Agreement.
(f) At Closing, the Title Insurer shall be prepared to issue Title
Insurance Policies in accordance with the Title Commitments, with all
endorsements (to include zoning endorsements) included and with coverage over
any "gap" period.
7.4 OTHER INSPECTIONS.
During the Due Diligence Period, at reasonable times and upon reasonable
notice, Investor or its agent(s), consultants or other retained professionals
shall have the right, at Investor's expense, to perform or complete such
inspections and assessments of the Real Property and Improvements as Investor
deems necessary or desirable, including, without limitation, environmental and
structural aspects, and assessments of the compliance of the Facilities with all
applicable laws and regulations. Investor shall cause its inspectors and/or
consultants to deliver to Sunrise a copy of each such inspection report at the
time such report(s)
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are delivered to Investor. A failure by Investor to perform any inspections or
assessments shall not relieve Investor of its obligation to proceed to Closing
under this Agreement.
7.5 DELIVERY OF CLOSING DOCUMENTS.
Sunrise shall have delivered or caused to be delivered to Investor on
the applicable Closing Date each of the documents required to be delivered
pursuant to Section 9.2.
7.6 LICENSES.
If any change in the Licenses is required under applicable law in
connection with the execution of the Lease Documentation by the Facility Owners
as contemplated by this Agreement, then the Facility Owners shall timely file
any required application with the applicable Health Department, and the
appropriate Licenses shall have been issued or appropriate assurances received
that operations at the Facilities may continue without disruption. Sunrise shall
have provided outside counsel opinions (other than with respect to Sunrise
Alexandria) in a form satisfactory to Investor, with respect to those Facilities
for which a License is not yet in place, regarding the validity of operating
such Facilities under the new Joint Venture structure prior to the issuance of a
new License.
7.7 MANAGEMENT AGREEMENTS.
The execution and delivery by Manager and the Joint Venture of mutually
acceptable Management Agreements for the operation of each of the applicable
Facilities, the latest draft of which is attached hereto as Exhibit M.
7.8 VENTURE AGREEMENT.
The execution and delivery by Investor and SALII of a mutually
acceptable Venture Agreement to govern the operation of the Joint Venture, the
latest draft of which is attached hereto as Exhibit R.
7.9 SENIOR FINANCING APPROVAL.
Xxxxxx Mae and the other holders of the Senior Financing (such lenders
collectively, the "SENIOR LENDERS") shall have given their consent to the
transactions contemplated by this Agreement. There shall be no assumption fee on
the Xxxxxx Xxx Loans, other than standard review fees and attorney's fees, which
shall be a Joint Venture expense. SDI and SALII shall provide a certificate to
Investor certifying that the Senior Financing is in full force and effect, and
there exists no Event of Default thereunder, and no event or circumstance which,
with the passing of time or giving of notice, would constitute an Event of
Default thereunder. SALII and Investor shall reasonably consider any
commercially reasonable modifications to this Agreement, the Lease Documentation
and the Venture Agreement that Senior Lenders may require in connection with the
approval by Senior Lenders of the transactions contemplated hereby.
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7.10 CLOSING REQUIREMENT ITEMS.
The following closing requirement items with respect to the Facilities
indicated below are to be provided to Investor prior to the applicable Closing
Date as a condition precedent to Closing on the Facility indicated:
(a) Alexandria - (i) Execution of an acceptable Ground Lease
Amendment and (ii) evidence of a valid special use permit following the
transactions contemplated by this Agreement.
(b) Bloomingdale - Issuance of an operating license, or in lieu
thereof, an opinion from outside counsel regarding the validity of operating the
Facility with an application for a license pending with the State of Illinois.
(c) Canyon Crest - Delivery of a reasonably acceptable updated
appraisal at least five (5) business days prior to the First Closing Date.
(d) Hermosa Beach - Execution of an acceptable Ground Lease
Amendment.
(e) Smithtown - Delivery of documentation satisfactory to Investor
explaining (i) why the wastewater treatment system will operate without
violating any permit limits (ten parts per million) for total nitrogen
discharges, (ii) the cause of such wastewater treatment system problems in the
past and the corrective measures that were initiated in response or, in the
alternative, what is planned in the future and (iii) actions taken to satisfy
the permit obligation to monitor groundwater quality.
(f) Blue Xxxx - Delivery of evidence of zoning compliance.
(g) Fleetwood - Delivery of evidence of compliance with subdivision
ordinances.
7.11 XXXXX'AH COMMITTEE APPROVAL.
The structure, documentation, terms and the form of the transactions
contemplated by this Agreement and the Venture Agreement has been approved by
Investor's Xxxxx'ah committee.
7.12 PACIFIC PALISADES GUARANTEE.
As a condition precedent to closing on the Pacific Palisades Facility,
and as set forth in the Venture Agreement, Sunrise shall have executed a
guarantee agreement, in form mutually agreeable to Investor and Sunrise,
guaranteeing the net operating income of such Facility based on a 9.5% return
through March 31, 2003 on the Pacific Palisades Initial Property Value as
defined herein.
7.13 BUFFALO GROVE GUARANTEE.
As a condition precedent to closing on the Buffalo Grove Facility, and
as set forth in the Venture Agreement, Sunrise shall have executed a guarantee
agreement, in form mutually agreeable to Investor and Sunrise, guaranteeing the
net operating income of such Facility based on a 10.5% return through March 31,
2003 on the Buffalo Grove Initial Property Value as defined herein.
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7.14 RELIANCE LETTERS.
As a condition precedent to closing, Sunrise shall have provided or
caused to be provided to Investor letters from the providers of third party
environmental reports, physical condition reports and appraisals entitling
Investor to rely on such reports.
7.15 ZONING COMPLIANCE LETTERS.
As a condition precedent to closing, Sunrise shall have provided or
caused to be provided to Investor, WHERE AVAILABLE, current zoning compliance
letters for the First Closing Facilities.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF SUNRISE TO CLOSE
The obligations of Sunrise to transfer the interests in the Facilities
to the Joint Venture and to close the transactions contemplated in this
Agreement pursuant to the terms of this Agreement are subject to the
satisfaction, on or prior to the applicable Closing Date, of each of the
following conditions, unless waived by Sunrise in writing:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of Investor contained in this
Agreement shall be true and correct in all material respects on the date hereof
and at the applicable Closing Date with the same effect as though made at such
time, except for changes that are not materially adverse to Sunrise.
(b) Investor shall have delivered to Sunrise on the applicable
Closing Date a certificate that the conditions specified in Sections 8.1(a) and
8.2 are satisfied as of the applicable Closing Date.
8.2 PERFORMANCE OF AGREEMENTS.
Investor 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
applicable Closing Date.
8.3 LICENSES.
If any change in the Licenses is required under applicable law in
connection with the execution of the Lease Documentation by the Facility Owners
contemplated by this Agreement, and the Facility Owners have timely filed an
application with the applicable Health Departments, the appropriate Licenses
shall have been issued or appropriate assurance received that operations at the
Facilities may continue without disruption.
8.4 SENIOR LENDERS' APPROVAL.
Senior Lenders shall have given their consent to the transactions
contemplated by this Agreement, with an assumption fee not exceeding one percent
(1%) of the outstanding principal
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balance of those loans other than the Xxxxxx Xxx Loans, assuming that Closing
takes place prior to April 1, 2002.
8.5 VENTURE AGREEMENT.
The execution and delivery by Investor and SALII of a mutually
acceptable Venture Agreement to govern the operation of the Joint Venture, the
latest draft of which is attached hereto as Exhibit R.
8.6 MANAGEMENT AGREEMENT.
The execution and delivery by Manager and the Joint Venture of mutually
acceptable Management Agreements for the operation of each of the applicable
Facilities, the latest draft of which is attached hereto as Exhibit M.
8.7 DELIVERY OF CLOSING DOCUMENTS.
Investor shall have delivered or caused to be delivered to Sunrise on
the applicable Closing Date each of the Documents required to be delivered
pursuant to Section 9.3.
ARTICLE IX
CLOSING
9.1 TIME AND PLACE.
Closing of the transfer of interests in the First Closing Facilities and
the making of the Contribution and Investor's acquisition of the Interests
pursuant to this Agreement (the "CLOSING" or "FIRST CLOSING") shall take place
through escrow with the Title Insurer at Sunrise's offices, thirty (30) days
after the end of the Due Diligence Period, but in no event later than March 15,
2002 (the "FIRST CLOSING DATE"). The Closing with respect to the Future Closing
Facilities (the "FUTURE CLOSING") shall take place, if at all, as set forth in
Article 14 hereof and in the Venture Agreement (the date of such Closing being
hereinafter referred to as the "FUTURE CLOSING DATE"). Time is of the essence of
the terms of this Section.
9.2 DOCUMENTS TO BE DELIVERED TO INVESTOR BY SUNRISE.
At the Closing, Sunrise shall deliver or cause to be delivered to
Investor the following, in each case in form and substance reasonably
satisfactory to Investor:
(a) Governmental certificates, dated as of a date as near as
practicable to the applicable Closing Date, showing that (i) each entity defined
herein as "Sunrise," 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 its
organization and qualified to do business in the state in which the applicable
Facility it owns is located.
(b) A certificate of the Secretary or Assistant Secretary of SDI and
SALII attesting as to the incumbency of each officer of SDI and SALII who
executes this Agreement and any of the other Documents, certifying that
resolutions and consents necessary for SDI and SALII to act in
39
accordance with the terms of this Agreement have been adopted or obtained (with
copies thereof attached) and to similar customary matters.
(c) The Venture Agreement and Management Agreements in the form
agreed to by the parties.
(d) The certificate described in Section 7.1(b).
(e) A true, correct and complete Rent Roll certified by an officer
of SDI or SALII, for each Facility listing each resident as of the applicable
Closing Date, 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), the amount of security deposit, if any, date of
Resident Agreement and the expiration date of such Resident Agreement, in the
form of Exhibit K.
(f) An indemnity agreement from Sunrise (unlimited in amount and
duration), in form satisfactory to Investor, indemnifying Investor and the Joint
Venture from any and all claims, liabilities, obligations, damages or expenses
that may have existed or which arise out of events that occurred prior to
Closing with respect to the Facility Owners, except for liabilities accruing
under the Owner Obligations on or after the Proration Date; and
(g) All Lease Documentation, duly executed by the SPVs.
(h) Such additional information and materials as Investor 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 Investor's obligation to close
hereunder have been obtained, title affidavits, such affidavits and indemnities
as the Title Insurer may require to issue the Title Insurance policies, and any
other documents expressly required by this Agreement to be delivered by Sunrise
at Closing, or as may be required by the Title Insurer.
(i) The Owned Assets in accordance with Article II.
(j) A warranty deed for the Rochester Facility.
(k) A Xxxx of Sale for the Personal Property and an Assignment of
Leases, Rents and Security Deposits for the Rochester Facility.
(l) A Foreign Investment in Real Property Tax Act affidavit executed
by Sunrise.
(m) The Title Policies together with non-imputation and zoning
endorsements.
(n) ALTA 1999 Surveys for the Real Property of each applicable
Facility.
(o) Authority documentation evidencing authority for the
transactions contemplated hereby as shall be required by the Title Company or
the Investor.
(p) An estoppel certificate and consent to the transactions
contemplated by this Agreement as they relate (i) to the Alexandria Facility
executed by the lessor under the
40
Alexandria Ground Lease and (ii) to the Hermosa Beach Facility executed by the
lessor under the Hermosa Ground Lease, each in form and substance satisfactory
to Investor.
(q) Any additional documents that the Title Insurer may reasonably
require for the proper transfer of title to the Facilities to the Joint Venture
or Joint Venture designees and the issuance of an Owner's Title Insurance Policy
(the "TITLE POLICY") for each applicable Facility for which title is so
transferred in an amount equal to the applicable Property Value with extended
coverage and subject only to the Permitted Exceptions.
9.3 DELIVERIES TO SUNRISE BY INVESTOR.
At the Closing, Investor shall deliver or cause to be delivered to
Sunrise or other appropriate party the following, in each case in form and
substance reasonably satisfactory to Sunrise or such other party:
(a) The Contribution to the Joint Venture in accordance with Section
2.4, and the adjustments under Section 2.5.
(b) The certificate described in Section 8.1(b).
(c) The Venture Agreement and Management Agreements in the form
agreed to by the parties.
(d) Governmental Certificates dated as of a date as near as
practicable to the applicable Closing Date showing that Investor is duly
organized and in good standing in the State of Delaware.
(e) A certificate of the Secretary or Assistant Secretary of
Investor attesting as to the incumbency of each Officer of Investor who executes
this Agreement and any of the other Documents and to similar customary matters.
(f) All documents required in order to obtain the consent of Senior
Lenders to the transaction contemplated hereby provided that, subject to
Sections 7.9 and 9.4, Investor shall not be required to incur any cost in order
to obtain such consent or to agree to any modification to the terms of the
transaction contemplated by this Agreement that would adversely affect the
rights and benefits bargained for by Investor.
9.4 CLOSING COSTS.
Investor and Sunrise shall each pay their respective attorneys' fees and
expenses. All costs relating to the Senior Financing including any up front
arrangement, commitment or origination fees, legal fees and due diligence
expenses of lender providing the Senior Financing shall be borne by the Joint
Venture. With respect to each Facility, all costs of the Title Insurer to insure
title, and the cost of leasehold owner's title insurance policies shall be paid
by the Joint Venture, and all county or state transfer or recording taxes, if
any, will be paid by either the Joint Venture or Sunrise in accordance with the
custom and practice in the jurisdiction in which each Facility is located and
treated as a capital contribution of the respective party to the Joint Venture.
The Joint Venture shall also reimburse the Facility Owners (or Underlying
Interest Owners) for all costs incurred in placing the Senior Financing,
including loan fees, title and
41
recording costs, attorneys' fees and costs, appraisal fees and the like. All
items described in Section 2.5 above shall be prorated between the Joint Venture
and Sunrise as of the applicable Closing Date.
ARTICLE X
INDEMNIFICATION
10.1 SURVIVAL.
All representations, warranties, covenants and agreements in this
Agreement or any other Document shall survive the Closing. 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) Investor is notified of
the untruth of any representation or warranty made by Sunrise hereunder by (i)
written notice from Sunrise (which notice shall refer to the representation or
warranty which is untrue) or (ii) the professional written reports and studies
prepared by Investor as part of Investor's due diligence, and (b) Investor
nevertheless elects to close under this Agreement, then Investor shall be deemed
to have waived the breach in question and shall not assert any post-closing
claim against Sunrise with respect to that breach. However, if Sunrise first
notifies Investor of any such untruth after the end of the Due Diligence Period
or extended Due Diligence Period, as applicable, such notification shall be
deemed a material default by Sunrise and, if Investor elects to terminate this
Agreement, Investor shall be entitled to liquidated damages, as provided in
Section 11.2(a)(i) below.
10.2 INDEMNIFICATION BY SUNRISE.
Sunrise shall indemnify, defend, and hold harmless Investor, the Joint
Venture, and their respective 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 Sunrise of any of its representations, warranties,
covenants or agreements in this Agreement or any other Document; or
(b) Any obligation, indebtedness or liability of Sunrise other than
(i) the Owner Obligations and (ii) obligations, indebtedness or liabilities to
the extent an adjustment is made to the Contribution pursuant to Section 2.5.
Subject to the foregoing clauses (i) and (ii), the obligations, indebtedness and
liabilities of Sunrise hereunder shall include, but not be limited to, (a)
claims by state or federal governmental agencies for payment of claims for
reimbursement of costs, regardless of whether disclosed to Investor and
regardless whether constituting a breach by Sunrise of any representation,
warranty, covenant or agreement hereunder or under any other Document, including
any claims relating to liability or responsibility under any Environmental Law
and (b) all claims and causes of action held by SALII against third parties, or
held by any third party against SALII, which claims or causes of action accrued
prior to the First Closing Date, regardless of whether constituting a breach by
Sunrise of any representation, warranty, covenant, or agreement hereunder.
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10.3 [Intentionally Deleted]
10.4 ADMINISTRATION OF INDEMNIFICATION.
For purposes of administering the indemnification provision set forth in
Sections 10.2, 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.
(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 and this Section 10.4 shall
survive the Closing hereunder indefinitely.
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ARTICLE XI
DEFAULT AND TERMINATION
11.1 RIGHT OF TERMINATION.
This Agreement may be terminated as to the Extended Facilities during
the Extended Due Diligence Period for any reason or no reason, for failure of
any of the conditions set forth in Article VII to occur, or as otherwise
permitted by this Agreement. Investor shall not be entitled to receive a refund
of the Deposit with respect to such a termination.
11.2 REMEDIES UPON DEFAULT.
(a) If Sunrise defaults on any of its material obligations
hereunder, Investor may, as its sole remedy hereunder, by serving notice in
writing to the Sunrise in the manner provided in this Agreement, either:
(i) Terminate this Agreement and declare it null and void,
in which event the Deposit shall be immediately returned to Investor and in
addition, Sunrise shall pay to Investor the sum of One Million Dollars
($1,000,000) as agreed and liquidated damages, and as the sole legal or
equitable remedy for Sunrise's default, Sunrise and Investor hereby
acknowledging and agreeing that the damages which Investor would suffer as a
result of such default and termination would be difficult, if not impossible, to
determine and that the liquidated damages provided for herein are a fair and
reasonable estimation of such damages; or
(ii) 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 Contribution and without any further claim against Sunrise
therefor.
(b) If Investor materially defaults on any of its obligations
hereunder, including, without limitation, the obligation to make the
Contribution on or before the applicable Closing Date, time being of the
essence, then Sunrise may as its sole remedy hereunder, by serving notice in
writing to Investor in the manner provided in this Agreement, obtain the Deposit
from Title Insurer in the amount of One Million Dollars ($1,000,000), Investor
and Sunrise hereby acknowledging and agreeing that the damages which Sunrise
would suffer as a result of such default and termination would be difficult, if
not impossible, to determine and that the liquidated damages provided for herein
are a fair and reasonable estimation of such damages.
11.3 NO SPECIFIC PERFORMANCE.
Investor specifically agrees that Investor shall not be entitled, in the
event of a breach by Sunrise, to enforcement of this Agreement by a decree of
specific performance or injunctive relief requiring Sunrise to fulfill its
obligations under this Agreement. Investor hereby knowingly and intentionally
waives any such right of specific performance or injunctive relief in favor of
Investor's right to recover liquidated damages as set forth in Section 11.2(a)
above for Sunrise's breach.
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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 XI 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 XI 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.
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 Investor or Manager, the parties shall
conduct meetings with residents, families of residents and employees of Manager
for the purpose of explaining as the parties hereto deem reasonably necessary
any changes resulting from the Lease Documentation or in the 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 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 Investor, to:
US Assisted Living Facilities, Inc.
00
x/x Xxxxxxxx Xxxxxxx Xxxxxxxxxxx Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: X. XxxXxxxx Kenan
Telephone: 000-000-0000
Facsimile: 000-000-0000
with copies to:
Macquarie Capital Partners, LLC
00 X. XxXxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. House, Managing Director
Telephone: 000-000-0000
Telecopier: 000-000-0000
and:
King & Spalding
1185 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 212-556-2222
(b) If to Sunrise, to:
Sunrise Assisted Living, Inc.
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Executive Vice President
Telephone: 000-000-0000
Telecopier: 000-000-0000
with copies to:
Sunrise Assisted Living, Inc.
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
and to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxxxxxxx, L.L.P.
46
0000 Xxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
(c) if to Escrow Agent, to:
First American Title Insurance Company
0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
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.
13.3 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.
13.4 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.
13.5 ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by Sunrise. This Agreement may be assigned by
Investor, to any affiliate controlled by, controlling or under common control
with the Identified Personnel without the prior written consent of Sunrise.
13.6 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 Sunrise
or Investor breach this agreement and such breach relates to a particular
Facility, neither Sunrise nor Investor 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.
47
13.7 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.
13.8 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.
13.9 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.
13.10 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.
13.11 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.
13.12 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.
13.13 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.
48
13.14 SECTION 1031 EXCHANGE; TAX MATTERS.
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 Sunrise of any liability for Sunrise's obligations hereunder, shall
not cause Investor to incur any liability or additional expense therefor or be
required to take title to any other property, and shall not cause Investor
(except for customary consent to assignment of this Agreement to an exchange
intermediary) to incur obligations to any third parties. Investor shall
cooperate with Sunrise in all reasonable respects, subject to Xxxxx'ah
compliance, to reduce or defer income taxes and recordation taxes imposed in
connection with the transactions contemplated hereby.
13.15 CLOSING AFFIDAVITS.
Sunrise 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.
13.16 JOINT AND SEVERAL.
Each of the parties defined as "Sunrise" shall be jointly and severally
liable with the other such parties for performing all obligations of Sunrise
under this Agreement.
13.17 CASUALTY AND CONDEMNATION.
(a) The risk of any loss or damage to the First Closing Facilities,
or any of them individually, by fire or other casualty before the First Closing
Date shall continue to be borne by Sunrise. The risk of any loss or damage to
the Future Closing Facilities, or any of them individually, by fire or other
casualty before the Future Closing Date shall continue to be borne by Sunrise.
Sunrise shall promptly give Investor 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 Investor does not elect to cancel this
Agreement as to that Facility as hereinafter provided, Sunrise shall repair the
damage at its sole cost and expense before the applicable Closing Date or, at
the option of Investor, make an appropriate and proportionate reduction in the
Contribution 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, Investor, at any time
thereafter, by written notice to Sunrise, shall have the option to cancel this
Agreement as to the Facility which suffered the casualty. For the purposes
hereof, "material" damage or destruction shall include any damage or destruction
which would require more than $250,000 per Facility to repair (including in said
amount the amount of any revenues lost as a result of said fire or other
casualty). If Investor so elects to cancel this Agreement as to the Facility
which suffered the casualty, this Agreement shall terminate and be of no further
force and effect as to such Facility only.
(b) The risk of any loss or damage to the First Closing Facilities
by condemnation before the First Closing Date shall continue to be borne by
Sunrise. The risk of any loss or damage to the Future Closing Facilities by
condemnation before the Future Closing Date shall continue to
49
be borne by Sunrise. In the event any condemnation proceeding is commenced or
threatened, Sunrise shall promptly give Investor 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 Sunrise may have knowledge.
As soon thereafter as the portion or portions of the Facility to be taken are
reasonably determinable, Sunrise shall give Investor written notice thereof
("SUNRISE'S NOTICE") together with Sunrise's estimate of the value of the
portion or portions of the Facility to be so taken. In the event of any taking
of any portion of any Facility or any means of access thereto, Investor, by
written notice to Sunrise at any time thereafter, shall have the option to
cancel this Agreement as to the Facility which is the subject of the
condemnation, in which event this Agreement shall terminate as to the Facility
which is the subject of the condemnation, and be of no further force and effect.
If Investor shall not so elect to cancel this Agreement, then Investor's
acquisition of the Interests and Contribution to the Joint Venture shall be
consummated as herein provided (without abatement) and Sunrise shall pay over to
the Joint Venture at the Closing all amounts theretofore received by Sunrise in
connection with such condemnation or insurance received therefor and shall
assign to the Joint Venture all rights to any future condemnation
awards/proceeds due with respect thereto.
(c) The parties' obligations, if any, under this Section 13.17 shall
survive the Closing.
ARTICLE XIV
FUTURE CLOSINGS
14.1 FUTURE CLOSING FACILITIES.
The Facilities listed below, or such other Facilities that do not close
as of the First Closing Date shall constitute the Future Closing Facilities.
Provided that the conditions set forth in the Venture Agreement are satisfied
with respect to such Facilities and that the Investor desires to close on such
Facilities, then the Future Closing Facilities shall proceed to close as though
they were First Closing Facilities, subject to the provisions of this Agreement,
except as modified below.
Home Address Units
---- ------- -----
Buffalo Grove 000 Xxxx Xxxx Xxx Xxxx
Xxxxxxx Xxxxx, XX 00000 00
Xxxxxx Xxxxx 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 64
Pacific Palisades 00000 Xxxx Xxxxxx Xxxx.
Xxxxxxx Xxxxxxxxx, XX 00000 40
14.2 FUTURE CLOSING DATES.
Investor's initial acquisition of the Interests shall take place on the
First Closing Date specified in Section 9.1 herein, at which time the Joint
Venture shall have acquired the First Closing Facilities (or interests therein)
from Underlying Interest Owners, sold the First Closing Facilities (or
interests) to the SPVs and entered into Lease Documentation with respect to a
minimum of nine (9) First Closing Facilities. It is possible that the Senior
Financing shall not
50
have been placed on all the Facilities by the First Closing Date. In particular,
Investor acknowledges that, as of the date of this Agreement, the Canyon Crest
Facility and the Buffalo Grove Facility are pre-stabilized and are not expected
to stabilize (that is, have greater than a 93% occupancy for three consecutive
months) until the end of February, 2002. Accordingly, it is unlikely that
Sunrise Riverside and Sunrise Buffalo Grove will be able to close on Senior
Financing with respect to those Facilities by the First Closing Date. Sunrise
Riverside will use its best efforts to obtain permanent financing in the amount
of approximately $8,778,000, and to close such financing by April 15, 2002.
Sunrise Buffalo Grove will use its best efforts to obtain permanent financing in
the amount of approximately $9,100,000, and to close such financing by April 15,
2002. If the permanent financing with respect to Sunrise Buffalo Grove is not
sufficient to reach the minimum agreed upon loan amount of $9,100,000 then
Sunrise agrees to use its best efforts to provide credit support to Xxxxxx Xxx,
which shall not, however, include a cash escrow, a guarantee of the loan nor
seller financing, in order to reach such loan amount (the "SUNRISE BUFFALO GROVE
SUPPORT"). On the Future Closing Date, such Future Closing Facility will be
acquired by the Joint Venture, sold to the SPV and the SPV will enter into the
Lease Documentation with the Joint Venture. At such time, Investor shall
contribute to the Joint Venture an amount equal to 80% of the excess of the
Agreed Value for such Future Closing Facility over the outstanding principal
balance of the Senior Financing secured by the Future Closing Facility. Sunrise
shall have the right to withdraw such contribution from the capital of the Joint
Venture or, in the alternative, such amount will be paid by the Joint Venture to
the Facility Owner or the Underlying Interest Owner. If, despite Sunrise's best
efforts, the Senior Financing on the Canyon Crest Facility or the Buffalo Grove
Facility has not closed by April 15, 2002, the Joint Venture shall have the
continuing right to cause Sunrise Riverside and/or Sunrise Buffalo Grove to
obtain the permanent financing in an Islamically acceptable form through July
31, 2002. If, prior to April 15, 2002, the permanent financing has been
obtained, then Sunrise Riverside and/or Sunrise Buffalo Grove shall within five
(5) days thereafter enter into the Lease Documentation with the Joint Venture.
Sunrise will use best efforts such that the Senior Financing shall have an
interest rate of 7.5% per annum or below. If the Senior Financing on the Canyon
Crest or Buffalo Grove facilities is not closed by July 31, 2002, or the terms
thereof are not acceptable to Investor, the Investor may, in its sole
discretion, terminate the Joint Venture's obligation to acquire the Canyon Crest
Facility or the Buffalo Grove Facility as applicable, and Investor shall no
longer have an obligation to make the contribution to the Joint Venture with
respect thereto. If there are other Facilities with respect to which the
permanent financing has not been closed by the First Closing Date, then, at
Investor's sole option, the acquisition of such Future Closing Facility, sale
thereof to the SPV and the execution and delivery of the Lease Documentation
with such SPV, may be deferred through July 31, 2002 in order to provide
adequate time for the Senior Financing to be closed. If the Senior Financing is
not acceptable to the Investor, Investor shall have the right to cause the Joint
Venture to terminate its rights to acquire such Future Closing Facility. The
covenants contained in this Section 14.2 shall survive the applicable Closing.
14.3 PACIFIC PALISADES FACILITY.
The Pacific Palisades Facility is not expected to stabilize until
mid-2002. The Agreed Value ("PACIFIC PALISADES INITIAL PROPERTY VALUE") shown on
Exhibit B is subject to adjustment as set forth in the Venture Agreement. Until
such adjustment is final, SALII will guarantee, pursuant to a separate guarantee
agreement, the net operating income of the Facility based on a
51
9.50% return on the Pacific Palisades Initial Property Value. The Joint Venture
does not intend to seek permanent Senior Financing on the Pacific Palisades
Facility until it reaches stabilization. Until such time as permanent Senior
Financing is in place, Sunrise will use best, good faith efforts to obtain first
trust bridge financing for approximately fifty percent (50%) of the Pacific
Palisades Initial Property Value, and SALII will provide financing on the asset,
all in an Islamically acceptable form, at an aggregate loan-to-value of
approximately 65% and a market interest rate. SALII's financing will be
subordinate to the Senior Financing and will meet any requirements described in
the documentation of the Senior Financing. Once the Pacific Palisades Final
Property Value has been determined, Investor and Sunrise will work together, as
members of the Joint Venture, to secured fixed rate Senior Financing on the
Facility in an Islamically acceptable form. Proceeds from the Senior Financing
will be used to repay the bridge loan and SALII's financing. This Section 14.3
shall survive the Closing.
14.4 BUFFALO GROVE FACILITY.
The Buffalo Grove Facility is pre-stabilized and not expected to
stabilize until mid-2002. The Agreed Value ("BUFFALO GROVE INITIAL PROPERTY
VALUE") shown on Exhibit B is subject to adjustment as set forth in the Venture
Agreement. Until such adjustment is final, Sunrise will guarantee the net
operating income of the Facility based on a 10.50% return on the Buffalo Grove
Initial Property Value. If the Senior Financing has not closed by April 15,
2002, the Joint Venture shall have the continuing right to cause Sunrise Buffalo
Grove to obtain the permanent financing in an Islamically acceptable form
through July 31, 2002. If the Senior Financing is not closed by July 31, 2002,
or the terms thereof are not acceptable to Investor, then Investor may, in its
sole discretion, terminate the Joint Venture's obligation to acquire the
Facility and Investor shall no longer have the obligation to make the
contribution to the joint venture with respect thereto.
14.5 CANYON CREST FACILITY.
The Canyon Crest Facility is pre-stabilized and not expected to
stabilize until the end of February 2002. Accordingly, it is unlikely that
Sunrise Riverside will be able to close on Senior Financing by the First Closing
Date. If the Senior Financing has not closed by April 15, 2002, the Joint
Venture shall have the continuing right to cause Sunrise Riverside to obtain the
permanent financing in an Islamically acceptable form through July 31, 2002. If
the Senior Financing is not closed by July 31, 2002, or the terms thereof are
not acceptable to Investor, then Investor may, in its sole discretion, terminate
the Joint Venture's obligation to acquire the Facility and Investor shall no
longer have the obligation to make the contribution to the joint venture with
respect thereto.
14.6 MODIFIED PROVISIONS.
If Investor desires to close on the Future Closing Facilities, then the
such Facilities shall proceed to close in the same manner and subject to the
same terms, conditions and covenants as though they were First Closing
Facilities, subject to the provisions of this Agreement.
[SIGNATURES FOLLOW ON NEXT PAGE]
52
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first written above.
SUNRISE:
-------
SUNRISE BLOOMINGDALE ASSISTED LIVING, L.L.C.,
an Illinois limited liability company
By: Sunrise Assisted Living Investments, Inc.,
sole member
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
SUNRISE SMITHTOWN A.L., L.L.C.,
a New York limited liability company
By: Sunrise Development, Inc., sole member
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
SUNRISE ALEXANDRIA ASSISTED LIVING, L.P.,
a Virginia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
general partner
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
S-1
SUNRISE ASSISTED LIVING LIMITED
PARTNERSHIP III, a Pennsylvania
limited partnership
By: Sunrise Assisted Living Investments, Inc.,
general partner
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
SUNRISE RIVERSIDE ASSISTED LIVING, L.P.,
a California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
general partner
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
SUNRISE FLEETWOOD A.L., L.L.C., a New York
limited liability company
By: Sunrise Development, Inc., sole member
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
SUNRISE BUFFALO GROVE ASSISTED LIVING, L.L.C.
By: Sunrise Development, Inc., sole member
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
S-2
SUNRISE BEACH CITIES ASSISTED LIVING, L.P.,
a California limited partnership
By: Sunrise Assisted Living Investments, Inc.,
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
SUNRISE MISSION VIEJO ASSISTED LIVING,
L.L.C., a Virginia limited liability company
By: Sunrise Assisted Living Investments, Inc.,
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
SUNRISE NORTHVILLE ASSISTED LIVING, L.L.C.,
a Michigan limited liability company
By: Sunrise Development, Inc., sole member
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
SUNRISE PACIFIC PALISADES ASSISTED
LIVING, L.P., a California limited partnership
By: Sunrise Assisted Living Investments, Inc.
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
S-3
SUNRISE STERLING CANYON ASSISTED
LIVING, LIMITED PARTNERSHIP, a California
limited partnership
By: Sunrise Assisted Living Investments, Inc.,
general partner
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
AL INVESTMENTS, L.L.C.,
a Virginia limited liability company
By: Sunrise Assisted Living Investments, Inc.,
sole member
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, Vice President
SUNRISE ASSISTED LIVING INVESTMENTS,
INC., a Virginia corporation
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx, Vice President
SUNRISE DEVELOPMENT, INC.
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx, Senior Vice President
SUNRISE ASSISTED LIVING, INC.
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------------
Title: President
-----------------------------------------
INVESTOR:
--------
S-4
US ASSISTED LIVING FACILITIES, INC.,
a Delaware corporation
By:/s/ Xxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxxx
------------------------------------------
Title: President
-----------------------------------------
S-5
TITLE INSURER (as to Section 2.4(b) only):
FIRST AMERICAN TITLE INSURANCE COMPANY
By:/s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Xxxxx X. Xxxxxxx, Vice President
S-6
EXHIBIT LIST*
------------
Exhibit A-1 - Legal Description - Bloomingdale Facility
Exhibit A-2 - Legal Description - Smithtown Facility
Exhibit A-3 - Legal Description - Alexandria Facility
Exhibit A-4 - Legal Description - Blue Xxxx Facility
Exhibit A-5 - Legal Description - Canyon Crest Facility
Exhibit A-6 - Legal Description - Fleetwood Facility
Exhibit A-7 - Legal Description - Buffalo Grove Facility
Exhibit A-8 - Legal Description - Hermosa Beach Facility
Exhibit A-9 - Legal Description - Northville
Exhibit A-10 - Legal Description - Pacific Palisades Facility
Exhibit A-11 - Legal Description - Sterling Canyon Facility
Exhibit A-12 - Legal Description - Rochester Facility
Exhibit A-13 - Legal Description - Mission Viejo
Exhibit B - Agreed Values of the Facilities
Exhibit C - List of Tangible Personal Property
Exhibit C-1 - Excluded Personal Property
Exhibit D - List of Licenses
Exhibit E - intentionally deleted
Exhibit F - Schedule of Pending Litigation
Exhibit G - Schedule of Facility Agreements
Exhibit H - List of Affordable Housing Units
Exhibit I - Confidentiality Agreement
Exhibit J - Receivables Listing
Exhibit K - Rent Rolls
Exhibit L - Anti-Money Laundering Policy
Exhibit M - Form Management Agreement
Exhibit N - Islamic Operating Principles
Exhibit O - Due Diligence Items
Exhibit P - Schedule of Material Business Terms of Xxxxxx Mae
Loans
Exhibit Q - Escrow Agreement
Exhibit R - Form of Venture Agreement
SCHEDULES LIST
--------------
Schedule 1 - Personal Property Leases
Sunrise and Investor acknowledge and agree that the Exhibits and
Schedules to this Agreement shall be prepared and attached no later than five
(5) business days after the date of execution of this Agreement.
* The registrant agrees to furnish supplementally a copy of omitted exhibits
A-R to the SEC upon request.
1
