ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of December 20, 2000 by and among Grand Court Lifestyles, Inc. and its
affiliates, a Delaware corporation and the Official Committee of Unsecured
Creditors of Grand Court Lifestyles, Inc. (collectively "Grand Court"), GFB-AS
Investors, LLC, a Delaware limited liability company ("GFB-AS"), and The
Official Committee of the Unsecured Equity Investors of Grand Court (the "Equity
Committee").
RECITALS:
A. Grand Court owns directly or indirectly (i) except as otherwise
disclosed on Exhibit "A" 100% of the economic interest of the sole general
partner or sole managing partner as the case may be of the owning partnerships
set forth on Exhibit "A", and (ii) l0O% (except for those specifically
identified on Exhibit "A" in which Grand Court is not the general partner but
will use its best efforts to cause the general partner to withdraw) of the
economic interests of the general partners of the investing partnerships set
forth on Exhibit "A" (the "General Partner Rights") (the partnerships set forth
on Exhibit "A" are referred to as the "Partnerships" or "Partnership" when
referencing a particular partnership).
B. The Partnerships are comprised of syndicated limited partnerships (the
"Investing Partnerships") in which limited partnership interests were offered to
investors in private placements and general or limited partnerships (the "Owning
Partnerships") that currently own senior living Facilities (hereinafter
defined). Grand Court has various Purchase Notes, Loans and Exchanges, and Other
Receivables (herein so called) associated with the Investing Partnerships and
Owning Partnerships as set forth on Exhibit "B" attached hereto.
C. Grand Court also has management contracts (the "Management Contracts")
to manage the senior living facilities (the "Facilities") for the Owning
Partnerships all as set forth on Exhibit "C" attached hereto.
D. GFB-AS desires to purchase from Grand Court the General Partner Rights
of Partnerships that directly or indirectly own Facilities on the First Closing
Date (hereinafter defined) (and become the new general partner of the Investing
Partnerships and the new managing partner of the Owning Partnerships), and the
Purchase Notes, the Loans and Exchanges, and the Other Receivables related to
such Partnerships (collectively the "GP Interests").
E. GFB-AS desires to purchase the Management Rights (hereinafter defined).
F. Grand Court is prepared to withdraw as general partner of the Investing
Partnerships and as managing partner of the Owning Partnerships and cancel the
current Management Contracts they have concerning the Facilities, in exchange
for the consideration set forth in this Agreement, and will endeavor to have any
other general partners of Investing Partnerships resign.
G. Grand Court is currently the subject of Chapter 11 proceedings in the
United States Bankruptcy Court, District of New Jersey, Xxxxxxx X. Xxxxxxxx,
United States Bankruptcy Court Judge ("Bankruptcy Court"), Case No.
O0-32578(NLW).
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, and covenants hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Assets to be Acquired.
(a) Upon the terms and subject to the conditions set forth herein,
at the First Closing (hereinafter defined) Grand Court shall sell, assign,
transfer, and deliver to GFB-AS, and GFB-AS shall purchase and acquire
from Grand Court, the GP Interests, free and clear of all liens, claims,
and encumbrances.
(b) Upon the terms and subject to the conditions set forth herein,
at the First Closing, Grand Court shall reject the Management Rights so
that they may be transferred to GFB-AS and shall sell, assign, transfer
and deliver to GFB-AS, and GFB-AS shall purchase and acquire from Grand
Court, the Management Rights, free and clear of all liens, claims, and
encumbrances.
(c) Upon the terms and subject to the conditions set forth herein,
at the Second Closing (hereinafter defined), GFB-AS agrees to establish
the LP Offset and LP Recovery Fund (hereinafter defined).
"GP Interests" shall include all books and records of the Partnerships in
the possession of Grand Court, all collateral, assets, investor notes, purchase
and other agreements (including Deferred Sales Proceeds), documents and rights
(but not obligations other than the obligations to net prepayments of investor
notes to the Purchase Notes as provided therein) related to the Purchase Notes
and any and all assets of Grand Court related to the Partnerships and set forth
on Schedule 1.1 attached hereto, and any other interests as a partner in the
Partnerships. "Management Rights" shall include all rights (but not any of Grand
Court's obligations) to manage the Facilities under new management agreements,
to hire the operational personnel of Grand Court, and shall include all of the
tangible assets of Grand Court set forth on Schedule 1.1 attached hereto used by
Grand Court in the performance of the Management Contracts. Further, Grand Court
agrees to transfer, or cause to be transferred, to GFB-AS at the First Closing
possession and control of any and all bank accounts containing Partnership funds
held by Grand Court in accordance with the terms of the Management Contracts
together with possession and control of any and all bank accounts held by the
Partnerships and used in the Partnerships' business, subject to the provisions
of Section 7.l(b)(iv) and (v) hereof. The parties agree that the GP Interests
and Management
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Rights do not include Grand Court's rights in its Boca Raton office lease and
furniture, furnishings and equipment located therein.
1.2 Excluded Assets. Grand Court shall not sell, assign, transfer, or
convey to GFB-AS hereunder any of the assets or property of Grand Court except
for the GP Interests and Management Rights.
1.3 Assumption of Certain Liabilities. Upon the terms and subject to the
conditions set forth herein, at the First Closing, GFB-AS shall agree to
guaranty, on terms reasonably acceptable to GFB-AS, the bank debt of
approximately $12.9 million as set forth on Schedule 1.3 attached hereto ("Bank
Debt") consisting of nine lenders holding as collateral, limited partner
investor notes in the approximate amount of $17.7 million as set forth on
Schedule 1.3 attached hereto ("Investor Notes"). The GFB-AS guaranty will be on
terms reasonably acceptable to GFB-AS, which shall include a requirement that
the holders of the Bank Debt, at their cost, continue to use their best efforts
on collection of the Investor Notes, which shall include litigation if
necessary, that GFB-AS or Grand Court, if requested, will send out the standard
notices of collection, and the best efforts of Grand Court, if requested, to
assist in the collection process and that GFB-AS shall only be called upon to
pay under its guaranty if such collection efforts fail. Except as expressly set
forth in this Agreement, GFB-AS do not hereby assume or agree to pay any other
liabilities or obligations of Grand Court, the limited partners of the
Partnerships, the Partnership, or any other entity. Each GFB-AS subsidiary that
is admitted as a general partner of an Owning Partnership or an Investing
Partnership shall have liability for obligations of such Partnership arising or
accruing after such admission as general partner to the full extent provided by
applicable law for an incoming general partner and the withdrawing general
partner shall have no liability for such obligations.
Except as provided above, it is expressly understood that GFB-AS shall not
be liable for and do not assume any of Grand Court's, the limited partners' of
the Partnerships, the Partnerships', or any other entity's obligations or
liabilities (whether known or unknown, matured or unmatured, or fixed or
contingent) other than the guaranty of the Bank Debt as expressly provided in
this Section 1.3 and those obligations and liabilities expressly set forth on
Schedule 1.3 attached hereto. Without limiting the foregoing, the GP Interests
and Management Rights shall not include (a) any claims for workmen's
compensation, (b) any federal, state, or local taxes on income or any federal,
state, or local taxes arising by reason of the sale of the rights as herein
provided or otherwise or any other Taxes (as hereinafter defined), (c) any
liability for any violation by Grand Court or the Partnerships of any applicable
statutes, laws, regulations, or ordinances of any federal, state, or local
government, (d) any liability for any breach of contract, negligence, or
misconduct by Grand Court or the Partnerships or any of its or their respective
agents, servants, or employees, (e) any liability of Grand Court or the
Partnerships arising out of or pursuant to this Agreement, (f) any liability of
Grand Court or the Partnerships relating to any litigation arising from any
event, action, or omission, (g) any liability for any employee or other
compensation, including, without limitation, any salaries, bonuses, incentive
compensation, or accrued vacation time, relating to services provided to Grand
Court or the Partnerships, before the First Closing, as to the Partnerships, (h)
any liability of Grand Court or the Partnerships relating to employee benefit
plans maintained by Grand Court or the Partnerships, before the First Closing,
as to the Partnerships, (i) any liability arising out of or incurred in respect
of any transaction of Grand
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Court occurring before or after the First Closing, (j) any liability for any
accrued and unpaid federal, state, or local taxes of Grand Court based on income
of its employees, (k) any trade or other accounts payable of Grand Court or the
Partnerships, or (1) any other liability or obligation of Grand Court or the
Partnerships other than the Bank Debt, unless such liabilities are set forth on
Schedule 1.3 attached hereto.
1.4 Sales Price. (a) The aggregate sales price payable by GFB-AS in
consideration for the sale of the GP Interests and Management Rights shall be
$10,250,000 (the "Sales Price") which shall be payable upon the First Closing.
(b) Grand Court acknowledges that GFB-AS has deposited in escrow
with Grand Court's attorneys' the sum of $1,537,500 which amount shall be held
in an interest bearing account (together with such interest the "Deposit") and
applied towards the Sales Price at the First Closing. In the event the First
Closing does not occur, the Deposit shall be returned to GFB-AS within two
business days of the termination of this Agreement.
1.5 Closings.
(a) First C1osing. Subject to the terms and conditions set forth
herein, at the First Closing:
(i) Grand Court shall sell, assign, transfer and deliver or
cause to be delivered to GFB-AS, (A) the Assignment of Partner
Interests in the form attached hereto as Exhibit "D", assigning all
of Grand Court's right, title, interest and privilege in, to, and
under the GP Interests to GFB-AS, (B) the Assignment of Management
Rights in the form attached hereto as Exhibit "E", assigning all of
Grand Court's right, title, interest, and privilege in the
Management Rights and in, to, and under the Management Contracts to
GFB-AS, (C) the Xxxx of Sale, Assignment and Transfer regarding the
transferred assets set forth on Schedule 1.1 attached hereto as
Exhibit "F", (D) the Certificate of Representations and Warranties
in the form attached hereto as Exhibit "G". (E) the certified
minutes of the special meeting of directors of Grand Court ratifying
the execution of this Agreement and approving and authorizing the
transactions contemplated by this Agreement and related Bankruptcy
Court Order (hereinafter defined), and (F) all files in Grand Courts
possession relating to the Partnerships or the Facilities and all
appropriate books and records, accounting information, and operating
information and data, current and historical, reasonably related to
the Management Contracts and the Management Rights.
(ii) GFB-AS shall deliver or cause to be delivered to Grand
Court the Sales Price in cash.
(b) Second Closing. Subject to the terms and conditions set forth
herein, at the Second Closing:
(i) GFB-AS shall establish a LP Recovery Fund (hereinafter
defined).
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(ii) GFB-AS shall assign one hundred percent (100%) of the
Deferred Sales Proceeds, as defined in the Purchase Agreement
payable by the Investing Partnerships or one hundred percent (100%)
of each managing partner's back-end interest, in each case over the
required one percent (1%) for tax purposes, in each Owning
Partnership to the LP Recovery Fund (such assignment being
hereinafter referred to as the "Back-End Assignment" and such
interests being hereinafter referred to as the "Back-End
Interests").
(iii) GFB-AS shall establish the LP Offset (as hereinafter
defined).
(c) GFB-AS and Grand Court will use their good faith best efforts to
cause the closing of the transactions contemplated by Section 1.5(a)
hereof to take place at the offices of the attorneys for Grand Court on or
before February 1, 2000 or such other date as provided for herein (the
"First Closing"). The Second Closing shall take place no later than five
business days after satisfaction of the conditions to the Second Closing
as set forth in Section 7.1(b) hereof (the "Second Closing" and together
with the First Closing the "Closings"). The date on which the First
Closing actually occurs is referred to herein as the "First Closing Date,"
and the date on which the Second Closing actually occurs is referred to
herein as the "Second Closing Date."
(d) Notwithstanding anything herein to the contrary, in the event
that all conditions to the First Closing have been satisfied or waived on
or prior to February 1, 2001 except for the obtaining of the Mortgagees'
Consents (as defined in Section 6.8 hereof) and/or the Claims Withdrawals
(as defined in Section 7.1(a)(v) hereof) (collectively, the "Debt
Conditions") then, (1) GFB-AS shall (x) deliver to Grand Court a
certification as to the Debt Conditions that have not been satisfied at
such date and (y) have the right to elect to waive the Debt Conditions and
(2) Grand Court shall have the right to either waive the Debt Conditions
or elect not to waive the Debt Conditions; provided, however, the Debt
Conditions shall be deemed waived by Grand Court with respect to the
failure to obtain any Mortgagees' Consent or Claims Withdrawal relating to
a mortgage loan which is then in default as a result of a monetary
default. If both GFB-AS and Grand Court elect to waive the Debt
Conditions, the First Closing shall occur on or before February 1, 2001.
If either or both of GFB-AS or Grand Court shall elect not to waive the
Debt Conditions, then;
(i) if the Mortgagees' Consents have been obtained but the
Claims Withdrawals have not been obtained, the date of the First
Closing shall automatically be extended, without any further action
by any party hereto, until the business day following the date on
which the last of the Claims Withdrawals shall have been received or
Grand Court waives such condition but in no event later than March
15, 2001, at which time, if any remaining Claims Withdrawals have
not been waived, the First Closing shall automatically be extended,
without any further action by any party hereto, until the business
day following the date on which the last of the Claim Withdrawals
shall have been received or Grand Court waives such condition but in
no event later than April 30, 2001 and GFB-AS shall pay to Grand
Court $75,000 in cash or wired funds on March 16, 2001 and $150,000
in cash
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or wired funds on April 1, 2001 (for a cumulative $225,000 to be
paid to Grand Court pursuant to this Section 1.5(d)(i));
(ii) If the Mortgagees' Consents have not been received or the
requirement thereof waived, the date of the First Closing shall
automatically be extended, without any further action by any party
hereto, until the business day following the date on which the last
of the Mortgagees' Consents shall have been received or Grand Court
waives such condition but in no event later than April 30, 2001 and
GFB-AS shall pay to Grand Court $150,000 in cash or wired funds on
February 1, 2001 and on the first day of each month thereafter
through April 30, 2001 (for a cumulative $450,000 to be paid to
Grand Court pursuant to this Section 1.5(d)(ii)) until the First
Closing shall occur; and
(iii) if the First Closing shall not have occurred on or prior
to April 30, 2001, GFB-AS may elect to further extend the date of
the First Closing until no later than June 30, 2001 and GFB-AS shall
pay to Grand Court $150,000 in cash or wired funds on May 1, 2001
and the first day of each month thereafter through June 30, 2001
(for a cumulative $300,000 to be paid to Grand Court pursuant to
this Section 1.5(d)(iii)).
1.6 New Entities. GFB-AS will form one or more wholly owned subsidiaries
to be admitted as the new general partners of the Investing Partnerships and the
new managing partners of the Owning Partnerships. GFB-AS will cause its
affiliates, Summerville Healthcare, Inc. and Brookdale Living Communities, Inc.,
to form one or more subsidiaries wholly owned by either or both of them to
manage the Facilities.
1.7 Purchase Price. The "Purchase Price" shall mean an amount equal to
$6,650,000. Any amounts paid by GFB-AS pursuant to Section 1.5(d) hereof shall
not be deemed "Purchase Price." The allocation of the Purchase Price to each
Partnership is set forth on Exhibit "I" attached hereto. The Purchase Price will
be increased by an amount equal to any amounts paid by GFB-AS on the Bank Debt
guarantee, provided, however, the Purchase Price increase shall not exceed
$2,150,000 reduced by $.652 for every dollar collected under the Investor Notes
and applied to the Bank Debt. The Purchase Price allocation to each Partnership
will be decreased (i) by $107,500.00 per Partnership in the event the Bank Debt
holders do not reduce and compromise the Bank Debt to the benefit of the limited
partners, or (ii) an amount equal to the benefit received by GFB-AS (to be
reasonably determined and allocated by GFB-AS and the Equity Committee) from
payments by limited partners on their investor notes after final payment and
full settlement of the Bank Debt (the increase or decrease referred herein as
the "Purchase Price Adjustment").
1.8 Allowed Claim. Prior to the First Closing, the Bankruptcy Court shall
order a $5,000,000 allowed, unsecured claim of the Partnership's and Limited
Partners against the estate of Grand Court (the "Allowed Claim") with the
exception of any claims by Xxxxxx Xxxxxxxxx. The independent directors appointed
by the Equity Committee to the Board of the manager of GFB-AS shall be the
administrator of this claim. Any proceeds received from the $5,000,000 unsecured
claim shall be allocated by final approval of the Equity Committee and
ratification of the respective Partnerships.
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ARTICLE 2
PARTNER APPROVALS
2.1 The Consent. Except as modified by Section 2.2 below, Grand Court and
GFB-AS agree that the First Closing is conditioned upon GFB-AS's receipt of the
written (or other mutually agreed) consent of limited partners of each of the
Investing Partnerships ("Limited Partners") owning more than 50% of the
outstanding limited partnership interests that have been issued by each of the
Investing Partnership (the "Consent") to (i) the removal, or the approval of the
withdrawal or resignation, of Grand Court as general partner of the Investing
Partnerships and managing partner of the respective Owning Partnership, (ii) the
admission of GFB-AS as the sole general partner of the Investing Partnerships
and the managing partner of the Owning Partnerships, (iii) the amendment of the
voting requirements whereby two-thirds of the limited partners in an Investing
Partnership can cause a capital transaction (i.e. sale or refinancing) of the
Property by its Owning Partnership, (iv) ratification of the Purchase Price
(hereinafter defined) allocation, (v) such other amendments as may be agreed to
by the Equity Committee (hereinafter defined) and GFB-AS (the "Partnership
Amendment" as set forth on Exhibit "H" attached hereto), and (vi) authorization
of the Owning Partnerships and Investing Partnerships to agree to limit all of
their claims against the Grand Court Bankruptcy Estate to a $5,000,000 unsecured
claim and release all other claims against said Estate. The parties acknowledge
that one or more of the Properties owned by the Owning Partnerships may be lost
through foreclosure from and after the date hereof and prior to the First Date
(the Investing Partnership that holds an interest in any such Owning Partnership
is hereinafter referred to as a "Foreclosed Partnership"). Notwithstanding
anything herein to the contrary, the requirement that the Consent of Foreclosed
Partnerships, or any of them, to the transactions contemplated hereby be
obtained may be waived by GFB-AS.
2.2 Solicitation. If the Consent of Limited Partners has not then been
received, the Equity Committee in cooperation with GFB-AS, shall have the right
to solicit the Consent of the Limited Partners at such times as they deem
appropriate. Such parties may solicit the Consent at any time but in no event
more than three times (not including amendments or follow-up communications to a
specific solicitation). The right to solicit the Consent granted by this Section
2.2 shall expire on the third instance in which Limited Partners owning more
than 50% of the outstanding limited partnership interests of any Investing
Partnership do not vote in favor of the matters set forth in Section 2.1. As to
each such solicitation that such parties decide should be made, Grand Court, if
requested by the Equity Committee, and the Equity Committee shall endorse GFB-AS
to the Limited Partners by a cover letter prepared by each party. The cover
letter for the solicitations shall be in form and substance reasonably
satisfactory to GFB-AS. Grand Court agrees that it will endorse, recommend,
cooperate with and assist the Limited Partners in all aspects of such
solicitations and shall use its best efforts, subject to any applicable
fiduciary duties, to have the Limited Partners approve the Consent. The cost of
any and all such solicitations of Limited Partners shall be borne by Grand
Court.
2.3 Materials. For each such solicitation the Equity Committee shall
prepare such solicitation materials, subject to reimbursement by Grand Court,
for review and approval by Grand Court and the Equity Committee, which approval
shall not be unreasonably withheld or delayed. On or before the First Closing
Date, GFB-AS shall provide written
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evidence satisfactory to Grand Court and the Equity Committee of the receipt of
the Consent. In the event the Consent has been obtained, GFB-AS shall be
obligated to proceed with the First Closing, subject to any other conditions
contained in Section 7.1(a). The Equity Committee shall engage, at the expense
of Grand Court, an independent third party ballot agent approved by GFB-AS,
Grand Court and the Equity Committee to receive and tally the ballots of the
Limited Partners and to report to all applicable parties the results of the
solicitation of the Consent.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GFB-AS
GFB-AS hereby represents and warrants to Grand Court as follows:
3.1 Due Organization. GFB-AS is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. GFB-AS has full company power and authority to enter into and perform
its obligations under this Agreement and each agreement, instrument, and
document required to be executed by GFB-AS in accordance herewith.
3.2 Due Authorization. The execution, delivery, and performance by GFB-AS
of this Agreement and the other agreements, documents, and instruments required
to be executed and delivered by GFB-AS in accordance herewith have been duly
authorized by all necessary company action. This Agreement and the other
agreements, documents, and instruments required to be executed and delivered by
GFB-AS in accordance herewith have been (or at the time required for delivery
hereunder, will have been) duly and validly executed and delivered by GFB-AS and
constitute (or at the time of delivery will constitute) valid and binding
obligations of GFB-AS enforceable in accordance with their respective terms.
3.3 Brokers and Finders. GFB-AS has not incurred any liability to any
finder, broker, or sales agent in connection with the execution, delivery, or
performance of this Agreement or the transactions contemplated hereby for which
Grand Court would be liable.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF GRAND COURT
4.1 Representations and Warranties of Grand Court. Grand Court hereby
represents and warrants to GFB-AS as follows:
(a) Due Organization. Grand Court is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware. Subject to the Bankruptcy Order, (hereinafter defined) Grand
Court has full corporate power and authority to enter into and perform its
obligations under this Agreement and each agreement, instrument, and
document required to be executed by Grand Court in accordance herewith.
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(b) Due Authorization. Upon the approval of the Bankruptcy Court,
the execution, delivery, and performance of this Agreement and any
agreements, instruments, and documents required to be executed by Grand
Court in accordance herewith have been duly authorized by all necessary
corporate and Bankruptcy Court action. Upon the approval of the Bankruptcy
Court, this Agreement and the agreements, documents, and instruments
required to be executed and delivered by Grand Court in accordance
herewith have been (or at the time required for delivery hereunder, will
have been) duly and validly executed and delivered by Grand Court and
constitute (or at the time of delivery will constitute) valid and binding
obligations of Grand Court enforceable in accordance with their respective
terms. Except as set forth on Schedule 4.1(b), the execution, delivery,
and performance of this Agreement or any other agreement, instrument, or
document to be executed by Grand Court in connection herewith does not or
will not (1) violate any federal, state, county, or local law, rule,
regulation, or order (a "Legal Requirement") applicable to Grand Court, or
its respective properties, (ii) violate, conflict with, or interfere with,
or permit the cancellation of, any agreement to which Grand Court, or by
which it or any of its respective properties are bound, or result in the
creation of any lien, security interest, charge, or encumbrance upon any
of such properties, (iii) result in the acceleration of the maturity of
any indebtedness of, or indebtedness secured by any property or other
assets of the Partnerships or Grand Court, or (iv) violate or conflict
with any provision of the Charter or by-laws of Grand Court.
(c) Consents. Except for the approval of the Bankruptcy Court and
the Consents, no actions, consents, or approvals of, or filings with, any
governmental authorities or third parties are required in connection with
Grand Court's execution, delivery, or performance of this Agreement or any
agreement or other document executed in connection herewith.
(d) Income Statements. Grand Court has delivered to GFB-AS the
unaudited income statement for each Partnership for the seven (7) month
period ending July 31, 2000 (the "Income Statements"). Such Income
Statements were prepared on a cash basis. To the actual knowledge of Grand
Court the Income Statements have been prepared on a consistent basis
throughout the periods indicated. To the actual knowledge of Grand Court,
except as set forth on Schedule 4.1(d), there are no current or pending
developments or circumstances, which would have a material adverse effect
on the GP Interests or Management Rights, or the transactions to be
entered into by Grand Court pursuant to this Agreement.
(e) Title. Upon completion of the transactions contemplated by the
First Closing, GFB-AS shall acquire title to the GP Interests and
Management Rights free and clear of all liens, security interests, claims,
rights of another, and encumbrances.
(f) Compliance with Laws. To Grand Court's actual knowledge, Grand
Court has complied in all material respects, and is in compliance in all
material respects, with all Legal Requirements that are applicable to the
GP Interests or Management Rights and has filed with the proper
authorities all material statements and material reports applicable to the
GP Interests or Management Rights and
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required by any Legal Requirements to which Grand Court, the Partnerships,
their property or operations are subject. To the actual knowledge of Grand
Court, no claim has been made by any governmental authority (and, to the
knowledge of Grand Court, no such claim is anticipated) to the effect that
the Grand Court has failed to comply, in any respect, with any Legal
Requirement applicable to the GP Interests or Management Rights. To the
actual knowledge of Grand Court, none of the Facilities are in violation
of any applicable environmental laws and have not received any notices of
any violation of, noncompliance with or remedial obligation under any
applicable environmental laws.
(g) Contracts and Agreements. The contracts and agreements provided
to GFB-AS at Grand Court's due diligence room or otherwise delivered to
GFB-AS by Grand Court prior to the First Closing constitute all of the
written or oral contracts, commitments, leases, and other agreements
(including, without limitation, promissory notes, loan agreements, and
other evidences of indebtedness) that relate to the Facilities, GP
Interests or Management Rights individually that involve liabilities of
more than $25,000 ("Material Contracts"). Grand Court has afforded or will
afford to GFB-AS and their respective officers, attorneys, and other
representatives the opportunity to review complete copies of all such
Material Contracts. Except as set forth on Schedule 4.1(g), Grand Court
and, to the actual knowledge of Grand Court, the Partnerships are not in
default (and no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default) under any such
Material Contract and Grand Court has not waived any right under any such
Material Contract. Except as set forth on Schedule 4.1(g), Grand Court
has not received any notice of default or termination under any such
Material Contract and, except as contemplated by this Agreement, Grand
Court has not assigned or otherwise transferred any rights under any such
Material Contract.
(h) Claims and Proceedings. Except as set forth on Schedule 4.1(h),
to the actual knowledge of Grand Court there are no claims, actions,
suits, or proceedings that relate to the GP Interests or Management Rights
pending or threatened against or affecting Grand Court, the Partnerships,
or any of their respective properties or assets, at law or in equity, or
before or by any court, municipal or other governmental department,
commission, board, agency, or instrumentality that will result in any
liability or loss which, in the aggregate, is material to the GP Interests
or Management Rights, and would impair the rights acquired by GFB-AS under
this Agreement notwithstanding the entry of the Bankruptcy Order, and, to
the actual knowledge of Grand Court, Grand Court has not been, is not now,
subject to any order, judgment, decree, stipulation, or consent of any
court, governmental body, or agency relating to the GP Interests or
Management Rights other than those claims that are the subject of the
Grand Court bankruptcy proceeding ("Bankruptcy Claims"). Except as set
forth on Schedule 4.1(h) to the actual knowledge of Grand Court no
inquiry, action, or proceeding has been asserted, instituted, or
threatened to restrain or prohibit the carrying out of the transactions
contemplated by this Agreement or to challenge the validity of such
transactions or any part thereof or seeking damages on account thereof
other than the Bankruptcy Claims. Except as set forth on Schedule 4.1(h)
to the knowledge of Grand Court, there is no basis for any such valid
claim or action or any other claims or actions
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which would, or could reasonably be expected to (individually or in the
aggregate), restrain or prohibit the transactions contemplated by this
Agreement or have a material adverse effect on the GP Interests or
Management Rights and would impair the rights acquired by GFB-AS under
this Agreement notwithstanding the entry of the Bankruptcy Order.
(i) Brokers. Grand Court has not caused any liability to be incurred
to any finder, broker, or sales agent for which GFB-AS, or the
Partnerships would be liable in connection with the execution, delivery,
or performance of this Agreement or the transactions contemplated hereby.
(j) Information Furnished. Grand Court has made available to GFB-AS
and their respective officers, attorneys, accountants, and representatives
true and correct copies of all agreements, documents, and other items in
Grand Court's possession and all books and records relating to the GP
Interests or Management Rights, and to Grand Courts knowledge, neither
this Agreement, the schedules hereto, nor any information, agreements, or
documents delivered to or made available to GFB-AS or their respective
officers, attorneys, accountants, and representatives pursuant to this
Agreement contain any untrue statement of a material fact or omit any
material fact necessary to make the statements herein or therein, as the
case may be, not misleading.
(k) Bank Accounts. Grand Court is not holding any Partnership funds
in any bank account in Grand Court's name. Each Partnership's funds are in
bank accounts in the name of such Partnership.
ARTICLE 5
COVENANTS OF GRAND COURT
5.1 Inspection. Upon 25 hours notice, Grand Court shall provide GFB-AS,
and its members, officers, attorneys, accountants, and representatives, free,
full, and complete access during reasonable business hours to all books,
records, tax returns, files, correspondence, personnel, facilities, and
properties of Grand Court relating to the Partnerships, the Management Rights
and the Facilities. Any investigation by GFB-AS or its members, attorneys,
accountants, or representatives shall not in any manner affect the
representations and warranties of Grand Court contained herein.
5.2 Compliance. From the date hereof to the First Closing, (and from the
date hereof to the Second Closing as to the representations and warranties in
Section 4.1(a), (b), (c) and (h)) Grand Court shall not take or fail to take any
action which action or failure to take such action shall cause the
representations and warranties made by Grand Court herein (including the
Certificate of Representations and Warranties attached hereto as Exhibit "G") to
be untrue or incorrect as of such Closing. Grand Court shall deliver to GFB-AS a
supplement to any Schedules to this Agreement promptly after Grand Court becomes
aware of any event which changes any representation or warranty made by Grand
Court in this Agreement including any Schedule hereto.
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5.3 Operation of the Partnerships. From the date hereof to the First
Closing, Grand Court will administer the day-to-day operations of the
Partnerships pursuant to the terms of the Management Contracts consistent with
reasonable and customary business practices in the ordinary course of business.
During that period, Grand Court agrees that it will not, without written consent
of GFB-AS, such consent not to be unreasonably withheld, or Order of the
Bankruptcy Court on notice to GFB-AS:
(a) cause any Partnership to incur any additional borrowed money
obligations to parties other than Grand Court except for trade payables in
the ordinary course of business in excess of $25,000 per Partnership;
(b) except as required for the Sections 363 Sale pursuant to Section
5.5 hereof, enter into negotiations for or cause the Partnerships to sell,
assign or convey any right, title, or interest whatever in any health care
facility or other real property held by the Partnerships (a "Property") to
any third party other than resident leases entered into in the normal
course of business; or
(c) negotiate or enter into any Material Contract relating to the
Properties, or modify or renew any existing Material Contract, including
any Material Contract relating to the properties relating to the
management, financing, leasing, or maintenance of any Property.
5.4 Satisfaction of All Conditions Precedent. From the date hereof to each
Closing, Grand Court shall use its best efforts to cause all conditions
precedent to the obligations of Grand Courtto be satisfied.
5.5 Section 363 Sale. From the date on which Grand Court has executed this
Agreement through the First Closing, Grand Court (and its officers, directors,
employees, agents and representatives) shall not discuss or pursue a possible
sale, or other disposition of the GP Interests, the Management Rights or any
portion thereof, with any other party or provide any information to any other
party in connection therewith, subject to the discharge of its fiduciary duties.
If Grand Court, pursuant to the discharge of its fiduciary duties, engages in
discussions or provides information to third parties, Grand Court shall notify
the Equity Committee and GFB-AS by telephone within 24 hours after providing
such information and shall provide copies of such information to the Equity
Committee and GFB-AS within 48 hours after providing such information.
5.6 Non-Hostility. Subject to its fiduciary duties, from the date hereof
to the earlier of the First Closing or the termination of this Agreement, Grand
Court agrees not to make, or sponsor or endorse an offer or solicitation to
replace the general partners of the Partnerships except pursuant to the Section
363 Sale procedures approved by the Bankruptcy Court.
5.7 Notice of Developments. From the date hereof to the Second Closing,
Grand Court shall, immediately upon becoming aware thereof, notify GFB-AS of any
material problems or developments with respect to the business, operations,
assets, or prospects of the Partnerships, the Management Rights and the
Facilities.
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5.8 Notice of Breach. From the date hereof to the Second Closing, Grand
Court shall, immediately upon becoming aware thereof, give detailed written
notice to GFB-AS of the occurrence of, or the impending or threatened occurrence
of, any event which would cause or constitute a breach, or would have caused or
constituted a breach had such event occurred or been known to Grand Court prior
to the date of this Agreement, of any of its respective covenants, agreements,
representations, or warranties contained or referred to herein or in any
document delivered in accordance with the terms hereof.
5.9 Limited Partner Approval. To the extent of its involvement, Grand
Court shall use its best efforts, subject to any applicable fiduciary duties, to
obtain the Consent of the limited partners.
5.10 Bank Debt. All negotiations by Grand Court with the Bank Debt lenders
shall include a representative of GFB-AS. The Bank Debt and related collateral
shall not be amended, modified or altered, in any way, without prior written
notice to GFB-AS.
5.11 Escrow. At the First Closing, Grand Court agrees to establish a
$1,150,000 escrow (the "Escrow") from the sales proceeds for the benefit of
GFB-AS. The Escrow will be deposited at a bank or financial institution
reasonably acceptable to GFB-AS (the "Bank"). The escrow instructions to the
Bank shall provide: (i) payment to Grand Court of $.348) for every dollar
collected from Investor Notes and applied to the Bank Debt; and (ii) if any
funds remain in the escrow, payment to GFB-AS upon proof that GFB-AS has paid
funds under its guaranty of the Bank Debt as more specifically provided in the
Escrow Agreement mutually agreed to by Grand Court and GFB-AS to be executed at
the First Closing.
ARTICLE 6
COVENANTS OF GFB-AS
6.1 Compliance. From the date hereof to each Closing, GFB-AS shall not
take or fail to take any action which action or failure to take such action
shall cause the representations and warranties made by GFB-AS herein to be
untrue or incorrect as of such Closing.
6.2 Notice of Developments. From the date hereof to the Second Closing,
GFB-AS shall, immediately upon becoming aware thereof, notify Grand Court of any
material problems or developments with respect to the business, operations,
assets, or prospects of the Partnerships.
6.3 Notice of Breach. From the date hereof to the Second Closing, GFB-AS
shall, immediately upon becoming aware thereof, give detailed written notice to
Grand Court of the occurrence of, or the impending or threatened occurrence of,
any event which would cause or constitute a breach, or would have caused or
constituted a breach had such event occurred or been known to GFB-AS prior to
the date of this Agreement, of any of its covenants, agreements,
representations, or warranties contained or referred to herein or in any
document delivered in accordance with the terms hereof.
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6.4 Bankrupt Remote Entities. The new general partners, managing partners
and property managers will be bankrupt remote entities, with one independent
director appointed by the Equity Committee and approved, such approval not to
be unreasonably withheld, by GFB-AS. The new entities shall comply with the
respective requirements of the particular mortgage lender of the Owning
Partnerships. Except as required by the mortgagees, the independent director
will not have any veto or super voting rights, except for bankruptcy filings of
the bankrupt remote entities, and receive compensation of $200.00 per board
meeting plus reasonable out-of-pocket expenses.
6.5 LP Recovery Fund. At the Second Closing, GFB-AS shall establish an LP
Recovery Fund. Upon the payment by a Partnership of such Partnership's allocable
share of the Purchase Price as set forth in Exhibit "I" attached hereto
(including the 10% per annum return on the Purchase Price), the LP Recovery Fund
shall be funded with (a) the remaining balances of the following items relating
to such Partnership (i) Purchase Notes, and (ii) the Back-End Interests, and (b)
an amount equal to the amount, if any, of proceeds from a Capital Transaction
used by the Partnership to pay such Partnership's allocable share of the
Purchase Price (including the 10% per annum return on the Purchase Price).
Notwithstanding the previous sentence, upon the receipt of the full Purchase
Price (including the 10% per annum return on the Purchase Price), GFB-AS shall
contribute all remaining balances of (i) Investor Notes, (ii) Purchase Notes,
(iii) Loans and Exchanges, (iv) Other Receivables, and (v) the portion of the
Back-End Interests not previously contributed, to the LP Recovery Fund. Proceeds
from the items contributed to this fund shall be shared only by those Limited
Partners who sign or are otherwise bound by an LP Release (hereinafter defined)
in a manner agreed upon by GFB-AS and the Equity Committee.
6.6 Back-End Assignment. At the Second Closing, GFB-AS would convey the
Back-End Assignment to the LP Recovery Fund.
6.7 LP Offset. At the Second Closing, limited partners whose Investor Note
balances are prepaid at the date of a Capital Transaction (as defined in their
respective Partnership Agreement) would receive an offset against the Purchase
Note purchased by GFB-AS regarding that particular Partnership, less any
recoveries by said limited partners from other sources (the "LP Offset"). The LP
Offset would be paid after return to GFB-AS equal to ten percent (10%) per annum
of the allocated Purchase Price balance, and then the Purchase Price balance.
Any balance of the Purchase Notes after the LP Offset would be allocated to the
LP Recovery Fund after the Second Closing.
6.8 Mortgagees' Consent. GFB-AS shall use good faith efforts to obtain the
consents of the mortgagees of the Facilities to the substitution of GFB-AS as
general partner of the Partnerships and the engagement of one or more of the
entities described in Section 1.6 hereof as manager of the Facilities
(individually, a "Mortgagee Consent" and collectively, the "Mortgagees'
Consents"). GFB-AS shall not be required to incur any expense to obtain such
consent.
6.9 Tender Offers. In the event that GFB-AS or any of its affiliates makes
one or more tender offers to acquire outstanding units of limited partnership
interests in one or more Investing Partnerships, GFB-AS or its affiliate, as the
case may be, shall vote any units so acquired on matters submitted to the vote
of the limited partners of such Investing Partnership
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(other than a vote for the removal of the general partner of such Investing
Partnership) immediately prior to the expiration of such voting period in
proportion to the vote of those units in such Investing Partnership then held by
limited partners who are not affiliates of GFB-AS; provided, however, the voting
restriction set forth in this Section 6.9 shall terminate with respect to an
Investing Partnership at such time as GFB-AS and its affiliates own 68% or more
of the units in such Investing Partnership.
6.10 Licenses. GFB-AS shall use its commercially reasonable efforts to
cause it or its affiliate who will manage the Facilities to obtain all licenses
required to manage such Facilities except where the failure to obtain such
licenses will not have a material adverse effect on the Owning Partnership or
the Investing Partnership. Notwithstanding anything in this Agreement to the
contrary, the obtaining of any such license is not a condition to the
consummation of the transactions contemplated hereby.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of GFB-AS.
(a) Conditions to the First Closing. The obligations of GFB-AS to
complete the transactions contemplated to be completed at the First
Closing are subject to the fulfillment of each of the following
conditions:
(i) The representations and warranties of Grand Court
contained in this Agreement shall be true and correct at and as of
the First Closing with the same effect as through such
representations and warranties had been made on and as of the First
Closing; Grand Court shall have performed and complied with all
agreements required by this Agreement to be performed or complied
with by them at or prior to the First Closing; and GFB-AS shall have
received certificates, dated as of the First Closing Date, signed by
the President or Chief Executive Officer of Grand Court to the
foregoing effect.
(ii) No action or proceeding shall have been instituted or
threatened for the purpose or with the possible effect of enjoining
or preventing the completion of this Agreement or seeking damages on
account thereof, provided, however, in the event all other
conditions except this subparagraph (ii) have been satisfied or
waived by GFB-AS, then Grand Court may give GFB-AS written notice
that all conditions to Grand Court's obligation to close have been
satisfied or waived, and GFB-AS will then have twenty (20) days to
waive the condition of this subparagraph (ii) or Grand Court
terminate this Agreement subject to Section 8.1 hereof.
(iii) Prior to the First Closing, except as disclosed in
Schedule 4.1(d) there shall have been no material adverse change in
excess of $25,000 in the financial condition, business, properties,
or operations of any of the Partnerships since July 31, 2000.
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(iv) All consents and approvals required to be obtained by
Grand Court in connection with the execution, delivery, and
performance of this Agreement shall have been obtained or waived and
all such consents and approvals shall be in form and content
reasonably satisfactory to GFB-AS.
(v) GFB-AS shall have received evidence of the Bank Debt and
mortgagee claims filed in the Grand Court bankruptcy proceeding
having been withdrawn, with prejudice, or the Bankruptcy Court
having overruled such claims (the "Claims Withdrawal"), the Consent
has been duly obtained and evidence of the withdrawal or removal of
Grand Court as general partner of the Investing Partnerships and
managing partner of the Owning Partnerships, consents of the
mortgagees of the Facilities to the foregoing shall have been
obtained and all such other instruments as shall be necessary or
desirable in the reasonable opinion of GFB-AS to vest in or confirm
in GFB-AS title to the GP Interests and in the reasonable opinion of
GFB-AS to vest in or confirm in GFB-AS title to the Management
Rights.
(vi) Grand Court shall have delivered such good standing
certificates, officer's certificates, and similar documents and
certificates as GFB-AS shall have reasonably requested prior to the
Closing Date.
(vii) At the First Closing, the Owning Partnerships and GFB-AS
or its affiliates, shall have entered into new management contracts
for the management of the Facilities, substantially in the form of
Exhibit "J" hereto notwithstanding any language to the contrary set
forth in paragraph 4 of Exhibit H hereto.
(viii) The Bankruptcy Court shall have entered a final,
non-appealable Order (the "Bankruptcy Order") in form and substance
reasonably acceptable to GFB-AS:
(1) Authorizing and approving this Agreement in its
entirety;
(2) Authorizing and directing Grand Court and its
affiliates to take all necessary actions and execute all
necessary documents to effectuate the transactions
contemplated by this Agreement;
(3) Authorizing, pursuant to Section 363 to the
Bankruptcy Code, the sale of all assets described in this
Agreement free and clear of all Claims (whether pre or post
petition and as defined in the Bankruptcy Code), liens and
encumbrances of any Entity (as defined in the Bankruptcy
Code);
(4) Rejecting, pursuant to Section 363 of the Bankruptcy
Code, all existing management contracts between Grand Court
and the Partnerships;
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(5) Authorizing the substitution of GFB-AS, or its
designee, as managing partner or general partner for each of
the Owning Partnerships and Investing Partnerships;
(6) Approving the Amendments to the Partnership
Agreements;
(7) Authorizing each of the Owning Partnerships to enter
into a new Management Agreement with GFB-AS or its designee;
(8) Approving the form of the new Management Agreements;
(9) Determining pursuant to Section 363(m) of the
Bankruptcy Code that the seller and purchasers acted in good
faith;
(10) Directing all public officers and officers to
accept for filing or recording all requisite documents or
instruments without payment of any tax as provided in Section
1146 of the Bankruptcy Code;
(11) Denying and rejecting all objections to the
transactions contemplated by this Agreement and rejecting any
other bids or offers;
(12) Containing such other findings and provisions as
are usual and customary in Orders authorizing the transactions
anticipated by this Agreement.
GFB-AS may waive the requirement that the Bankruptcy Order be final
and non-appealable.
(ix) Grand Court shall have executed and delivered to GFB-AS a
Certificate of Representations and Warranties in the form attached
as Exhibit G and such representations and warranties shall be true
and correct.
(x) Grand Court shall have completed Schedules 4.1(b), 4.1(d),
4.1(g), 4.1(h) and 7.l(a)(iii) and such schedules shall be
acceptable to GFB-AS in its reasonable discretion.
(b) Conditions to the Second Closing. The obligations of GFB-AS to
complete the transactions contemplated to be completed at the Second
Closing are subject to the fulfillment of each of the following
conditions:
(1) The First Closing shall have occurred.
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(ii) A Plan of Reorganization ("Plan") consistent with the
transactions contemplated herein shall have been confirmed by a
final, non-appealable order.
(iii) Grand Court and the Creditors Committee shall have
delivered a release to GFB-AS (the "Grand Court Release") of all
claims other than those arising from GFB-AS's agreements, covenants
and indemnifications as specifically set forth in this Agreement.
Grand Court and the Creditors Committee shall also release the
Partnerships listed on Exhibit "A" to this Agreement from all claims
and shall release the limited partners of said Partnerships from all
claims arising from payments or distributions received by such
partners on account of their Partnership interest in the listed
Partnerships. The Order of Confirmation of the Debtor's Plan shall
render such releases binding on any successor or Trustee. The Grand
Court Release shall include the same release by Grand Court's
directors and officers in the event the Bankruptcy Court approves a
Plan containing a channeling injunction or an order releasing claims
binding on all limited partners. If the Bankruptcy Court does not
approve such a provision in the Plan, the Grand Court directors and
officers release shall only run to those limited partners who have
affirmatively released such directors and officers by voting in
favor of the Plan and such release is legally enforceable.
Notwithstanding anything herein to the contrary, the Grand Court
Release shall not include the post-petition loans by Grand Court to
the Partnerships pursuant to order of the Bankruptcy Court as set
forth on Schedule 7.1(b)(iii) attached hereto.
(iv) A release from the limited partners and the Partnerships
is delivered (the "LP Release") releasing the Partnerships, Grand
Court, Grand Court's affiliates and Grand Court's and their
affiliates respective officers, directors, employees, consultants
and representatives from any and all claims arising from the limited
partners' transactions with Grand Court in connection only with the
Partnerships. The LP Release would not cover securities claims or
otherwise by virtue of the relief requested, any rights, claims and
defenses under applicable law against any third parties (including
any holders of Bank Debt obligations) other than Grand Court, Grand
Court's affiliates, Grand Court's officers, directors, employees,
consultants and representatives, GFB-AS, GFB-AS's affiliates and
GFB-AS's members, officers, directors, employees, consultants and
representatives. The limited partners will reserve any claims
against any current or former directors' and officers' liability
insurance policies as maintained by Grand Court to the extent such
liability insurance is applicable and to the extent of the aggregate
dollar limits of such insurance. Notwithstanding anything contained
herein to the contrary, in the event GFB-AS becomes a holder of Bank
Debt obligations, no such claims against GFB-AS as a holder of Bank
Debt obligations severed from the LP Release shall exceed the
monetary claim of GFB-AS as holder of such Bank Debt obligation.
(v) All claims of the Partnerships and limited partners
against Grand Court other than Xxxxxx Xxxxxxxxx associated with the
syndicated
18
senior living facilities, including administrative, constructive
trusts, priority and unsecured claims of any kind or nature, with
the sole exception of the Allowed Claim (hereinafter defined) shall
be extinguished, expunged and released.
(vi) No action or proceeding shall have been instituted or
threatened for the purpose or with the possible effect of enjoining
or preventing the completion of the transactions contemplated by the
Second Closing or seeking damages on account thereof.
The decision of GFB-AS to complete the transactions contemplated by the First
Closing or the Second Closing without the satisfaction of any of the preceding
conditions shall not constitute a waiver of any representation, warranty,
covenant or indemnity of Grand Court contained herein.
If all conditions to the Second Closing are met, the Purchase Note and related
documents shall be amended at the Second Closing so that a single investor note
default will only permit the holder of the Purchase Note to foreclose on that
limited partner's partnership interest or pursue other legal remedies against
that investor rather than proceed against the respective Investing Partnership
and foreclose on the interest in the Owning Partnership.
7.2 Conditions to Obligations of Grand Court.
(a) Conditions to the First Closing. The obligations of Grand Court
to complete the transactions contemplated by the First Closing are subject
to the fulfillment of the following conditions:
(i) The representations and warranties of GFB-AS contained in
this Agreement shall be true and correct at and as of the First
Closing with the same effect as though such representations and
warranties had been made as of the First Closing; all agreements to
be performed hereunder by GFB-AS at or prior to the First Closing
shall have been performed; and Grand Court shall have received a
certificate, dated as of the First Closing Date, signed by the
manager of GFB-AS to the foregoing effect.
(ii) GFB-AS shall have delivered such good standing
certificates, officer's certificates, and similar documents and
certificates as Grand Court shall have reasonably requested prior to
the Closing Date.
(iii) GFB-AS shall have tendered the Sale Price to Grand Court
subject to establishment of the Escrow.
(iv) The Claims Withdrawal and the Mortgagees' Consents shall
have been obtained.
(v) The Bankruptcy Court shall have entered an Order limiting
claims of the Partnerships and the Limited Partners (other than
Xxxxxx Xxxxxxxxx) to $5,000,000.
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(vi) The Consent shall have been obtained from a majority in
interest of the Limited Partners of each Investing Partnership.
(vii) Entry of the Bankruptcy Order.
(viii) An affiliate of GFB-AS having a net worth of at least
$10,000,000 and liquid assets of at least $5,000,000 shall have
agreed by executing a separate document to be included within the
defined term "GFB-AS" for purposes of Section 9.2 hereof only.
The decision of Grand Court to complete the transactions contemplated by the
First Closing without the satisfaction of any of the preceding conditions shall
not constitute a waiver of any representation, warranty, covenant or indemnity
of GFB-AS contained herein.
ARTICLE 8
TERMINATION
8.1 Termination Before First Closing. This Agreement may be terminated
prior to the First Closing by (a) the mutual written consent of Grand Court and
GFB-AS; (b) GFB-AS, upon the failure of Grand Court to perform or comply with
any of its covenants contained herein prior to the First Closing or if any
representation or warranty of Grand Court hereunder shall not have been true and
correct in a material respect as of the time at which such was made or becomes
untrue thereafter or if the Debt Conditions have not been satisfied on or prior
to April 30, 2001 and Grand Court elects not to waive such condition; or (c)
Grand Court, upon the failure of GFB-AS to perform or comply with any of its
covenants contained herein prior to the First Closing or if any representation
or warranty of GFB-AS shall not have been true and correct in a material respect
as of the time at which such was made or if GFB-AS does not make the election
under Section 1.5(d)(iii) hereof; or (d) either party, if the First Closing does
not occur on or prior to June 30, 2001, provided, that no party may terminate
this Agreement pursuant to (b), (c) or (d) of this paragraph if such party is,
at the time of any such attempted termination, in breach of any term hereof; or
(e) Grand Court, upon the Bankruptcy Court order that another offer is a higher
and better offer and the closing of that offer.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification of GFB-AS. Grand Court agrees to indemnify and hold
harmless GFB-AS, and its members and consultants and their respective partners,
members, officers, directors, employees (collectively, the "Indemnified
Parties"), from and against any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs, and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for and participating in any litigation or proceeding) (collectively,
"Indemnified Costs") which any of the Indemnified Parties may sustain, or to
which any of the Indemnified Parties may be subjected, arising directly and
solely as a result of a breach of
20
a representation, warranty, covenant of this Agreement that causes an
Indemnified Cost in excess of $25,000. GFB-AS acknowledges and understands that
Grand Court will file a Plan of Reorganization (the "Plan") and that the Plan
shall provide for the distribution of all available funds to creditors. The Plan
will also provides for a discharge under 11 U.S.C. 1141 of all preconfirmation
claims. GFB-AS covenants and agrees not to assert the existence of the
indemnification set forth herein as cause to delay or deny confirmation of the
Plan, nor distribution to creditors. GFB-AS further covenants and agrees not to
seek disgorgement or any recovery for such a breach from creditors, employees,
officers, directors or professionals employed in the Grand Court Bankruptcy case
to fund any recovery on the indemnification. Any claim for indemnification
pursuant to this Section 9.1 shall expire the earlier of: (a) twelve (12) months
after the First Closing, or (b) confirmation of a plan or
reorganization/liquidation in the Grand Court bankruptcy case. Grand Court's
indemnification obligations pursuant to this Section 9.1 shall not exceed
$2,000,000.
9.2 Indemnification of Grand Court. GFB-AS agrees to indemnify and hold
harmless Grand Court and each officer, director, employee, agent, and consultant
of Grand Court (collectively, the "Seller Indemnified Parties"), from and
against any and all damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs, and expenses (including court costs and reasonable
attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) which any of the Seller Indemnified Parties may
sustain, or to which any of the Seller Indemnified Parties may be subjected,
arising directly as a result of a breach of the representations, warranties,
covenants and agreements of this Agreement by GFB-AS that causes an Indemnified
Cost in excess of $25,000. Any claims for indemnification pursuant to this
Section 9.2 must be made in writing within twelve (12) months of the First
Closing. GFB-AS's aggregate indemnification obligations pursuant to this Section
9.2 shall not exceed $2,000,000.
9.3 Defense of Third-Party Claims. An Indemnified Party or a Seller
Indemnified Party, as appropriate, shall give prompt written notice to any
person who is obligated to provide indemnification hereunder (an "Indemnified
Party") of the commencement or assertion of any action, proceeding, demand, or
claim by a third party (collectively, a "third-party action") in respect of
which such Indemnified Party or Seller Indemnified Party shall seek
indemnification hereunder. Any failure so to notify an Indemnifying Party shall
not relieve such Indemnifying Party from any liability that it may have to such
Indemnified Party or Seller Indemnified Party under this Article 9 unless the
failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Parties shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as they deem appropriate; provided, however, that:
(a) The Indemnified Party or Seller Indemnified Party shall be
entitled, at his, her, or its own expense, to participate in the defense
of such third-party action (provided, however, that the Indemnifying
Parties shall pay the attorneys' fees of the Indemnified Party if (i) the
employment of separate counsel shall have been authorized in writing by
any such Indemnifying Party in connection with the defense of such
third-party action, (ii) the Indemnifying Parties shall not have employed
counsel reasonably satisfactory to the Indemnified Party or Seller
Indemnified Party to have charge of such third-party action after 30 days
notice, or (iii) the Indemnified
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Party's or Seller Indemnified Party's counsel shall have advised the
Indemnified Party or Seller Indemnified Party in writing, with a copy to
the Indemnifying Parties, that there is a conflict of interest that could
make it inappropriate under applicable standards of professional conduct
to have common counsel);
(b) The Indemnifying Parties shall obtain the prior written
approval, not to be unreasonably withheld, of the Indemnified Party or
Seller Indemnified Party before entering into or making any settlement,
compromise, admission, or acknowledgement of the validity of such
third-party action or any liability in respect thereof if, pursuant to or
as a result of such settlement, compromise, admission, or acknowledgement,
injunctive or other equitable relief would be imposed against the
Indemnified Party or Seller Indemnified Party or if, in the opinion of the
Indemnified Party, such settlement, compromise, admission, or
acknowledgement could have a material adverse effect on its business or,
in the case of an Indemnified Party who is a natural person, on his or her
assets or interests;
(c) No Indemnifying Party shall consent to the entry of any judgment
or enter into any settlement that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to each Indemnified
Party or Seller Indemnified Party of a release from all liability in
respect of such third-party action; and
(d) The Indemnifying Parties shall not be entitled to control (but
shall be entitled to participate at their own expense in the defense of),
and the Indemnified Party or Seller Indemnified Party shall be entitled to
have sole control over, the defense or settlement, compromise, admission,
or acknowledgement of any third-party action (i) as to which the
Indemnifying Parties fail to assume the defense within a reasonable length
of time, (ii) to the extent the third-party action seeks an order,
injunction, or other equitable relief against the Indemnified Party or
Seller Indemnified Party which, if successful, would materially adversely
affect the business, operations, assets, or financial condition of the
Indemnified Party; provided, however, that the Indemnified Party or
Seller Indemnified Party shall make no settlement, compromise, admission,
or acknowledgement which would give rise to liability on the part of any
Indemnifying Party without the prior written consent of the Indemnifying
Party (which consent will not be unreasonably withheld), or (iii) to the
extent that the Indemnified Party or Seller Indemnified Party reasonably
believes that the Indemnifying Party does not have adequate financial
resources to provide or maintain the defense of any third-party action, or
satisfy any award or judgment that may result from any third-party action.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article 9 and, in connection
therewith, shall furnish such records, information, and testimony and attend
such conferences, discovery proceedings, hearings, trials, and appeals as may be
reasonably requested.
9.4 Direct Claims. In any case in which an Indemnified Party or a Seller
Indemnified Party seeks indemnification hereunder which is not subject to
Section 9.3 hereof because no third-party action is involved, the Indemnified
Party or a Seller Indemnified Party shall notify the Indemnifying Parties in
writing of any Indemnified Costs which he, she, or it
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claims are subject to indemnification under the terms hereof. The failure of the
Indemnified Party or a Seller Indemnified Party to exercise promptness in such
notification shall not amount to a waiver of such claim unless the resulting
delay materially prejudices the position of the Indemnifying Parties with
respect to such claim.
ARTICLE 10
MISCELLANEOUS
10.1 Allocation of Sales Price; Capital Account. The parties hereto
acknowledge that the transactions contemplated hereby must be reported in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended.
Accordingly, the parties shall report the transactions contemplated hereunder
for all purposes in accordance with the Purchase Price allocation set forth on
Exhibit "K" hereto. The allocation of the Sales Price set forth on Exhibit "K"
shall not constitute any admission or consent by Grand Court as to the value of
the interests conveyed. Notwithstanding anything else to the contrary in this
Agreement, the parties agree to report for Federal and State income tax purposes
the transaction herein as a taxable sale by Grand Court of the General Partner
Rights for cash consideration equal to $500,000 divided by the number of General
Partner Rights listed on Exhibit "A"; and a purchase of the General Partner
Rights by GFB-AS for cash consideration equal to $500,000 divided by the number
of General Partner Rights listed on Exhibit "A".
10.2 Survival of Representations, Warranties and Covenants. Regardless of
any investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, all covenants, agreements,
indemnities, representations, and warranties made hereunder or pursuant hereto
or in connection with the transactions contemplated hereby shall survive the
Closing with respect to which such covenant, indemnity, representation or
warranty was made for a period of 12 months after that Closing.
10.3 No Third-Party Beneficiaries. Except for the Indemnified Parties not
a party to this Agreement, no person or entity not a party to this Agreement
(except permitted assigns) shall be deemed to be a third-party beneficiary
hereunder or entitled to any rights hereunder.
10.4 Specific Performance. The parties hereto acknowledge and agree that,
without limiting any other remedy available to the parties hereto at law or in
equity, the parties hereto shall be able to specifically enforce the terms of
this Agreement.
10.5 Sales Taxes. The parties hereto expressly agree that Grand Court
shall be responsible for and shall pay all federal, state, or local taxes, if
any, arising by reason of or resulting from the sale of the GP Interests or
Management Rights contemplated hereby.
10.6 Expenses. Each of the parties hereto shall pay its or his own
respective costs and expenses incurred in connection with this Agreement.
However, GFB-AS shall be reimbursed up to $250,000 for third party costs by the
bankruptcy estate of Grand Court in the event the GP Interests and Management
Rights are sold to a higher and better bidder for a reason other than the breach
of this Agreement by GFB-AS.
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10.7 Collateral Agreements, Amendments, and Waivers. This Agreement
(together with the documents delivered in connection herewith) supersedes all
prior documents, understandings, and agreements, oral or written, relating to
this transaction and constitutes the entire understanding among the parties with
respect to the subject matter hereof. Any modification or amendment to, or
waiver of, any provision of this Agreement (or any document delivered in
connection herewith unless otherwise expressly provided therein) may be made
only by an instrument in writing executed by the party against whom enforcement
thereof is sought.
10.8 Successors and Assigns. No rights or obligations of any party hereto
under this Agreement may be assigned except that GFB-AS may assign its rights
and obligations to any affiliate (as that term is defined in Rule 144 under the
Securities Act of 1933, as amended) thereof. Any assignment in violation of the
foregoing shall be null and void. Subject to the preceding sentences of this
Section 10.8, the provisions of this Agreement (and, unless otherwise expressly
provided therein, of any document delivered pursuant to this Agreement) shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors, and assigns.
10.9 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of such illegal, invalid, or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
10.10 Waiver. No failure or delay on the part of any party in exercising
any right, power, or privilege hereunder or under any of the documents delivered
in connection with this Agreement shall operate as a waiver of such right,
power, or privilege; nor shall any single or partial exercise of any such right,
power, or privilege preclude any other or future exercise thereof or the
exercise of any other right, power, or privilege.
10.11 Notices. Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein, under any document
delivered in connection with this Agreement) shall be given in writing and shall
be deemed received (a) when personally delivered to the relevant party at such
party's address as set forth below, (b) upon receipt, if delivered by overnight
courier service or telefacsimile or similar device, or (c) if sent by mail, on
the third day following the date when deposited in the United States mail,
certified or registered mail, postage prepaid, to the relevant party at its or
his address indicated below:
If to GFB-AS: GFB-AS Investors, LLC
000 Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
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Attn: Xxxxxxx X. Xxxxxx
Phone (000) 000-0000
Fax (000) 000-0000
with a copy to: Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Grand Court: Grand Court Lifestyles, Inc.
Xxx Xxxxxxxxx Xxxxx, Xxxxx 00
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxx, CEO and Xxxxx X. Xxxxxxx, Esq.
Phone (000) 000-0000
Fax (000) 000-0000
With a copy to: Sills, Cummis, Radin, Tischman, Xxxxxxx & Gross
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Phone (000) 000-0000
Fax (000) 000-0000
And a copy to: Xxxxxxxxx, Jurista & Xxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Phone (000) 000-0000
Fax (000) 000-0000
If to the Equity Committee: Xxxxxxx Xxxxxxxxx, Ph.D.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Phone (000) 000-0000 x-000
Fax (000) 000-0000
With a copy to: Xxxxxxx Xxxxxxx, Esq.
Duane, Morris & Heckscher LLP
Xxx Xxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Phone (000) 000-0000
Fax (000) 000-0000
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Each party may change its or her address for purposes of this Section 10.11 by
proper notice to the other parties, actually received by such parties.
10.12 Further Assurances. From time to time hereafter, (a) at the request
of GFB-AS, but without further consideration, Grand Court shall execute and
deliver such other instruments of conveyance, assignment, transfer, and delivery
and take such other action as GFB-AS may reasonably request in order more
effectively to complete the transactions contemplated hereby, and (b) at the
request of Grand Court, but without further consideration, GFB-AS shall execute
and deliver such other certificates, statements, and documents, and take such
other action as Grand Court may reasonably request in order to more effectively
complete the transactions contemplated hereby.
10.13 Access to Records. Following the First Closing, GFB-AS shall give
Grand Court access (and the right to make copies at the expense of Grand Court)
of the books and records that were acquired by GFB-AS hereunder and relate to
the business of Grand Court prior to the First Closing. Such access shall be
given on reasonable prior written notice and conducted in a manner as not to
unreasonably interfere with the operations of GFB-AS.
10.14 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. The parties agree that the
United States Bankruptcy Court for the District of New Jersey shall have
exclusive jurisdiction and venue over any and all disputes arising under this
Agreement.
10.15 Headings. The headings, captions, and arrangements used in this
Agreement are, unless specified otherwise, for convenience only and shall not be
deemed to limit, amplify, or modify the terms of this Agreement or affect the
meaning hereof.
10.16 Sections: Exhibits. All references to "Articles," "Sections,"
"Subsections," "Schedules," "Annexes," and "Exhibits" herein are, unless
specifically indicated otherwise, references to articles, sections, subsections,
schedules, annexes, and exhibits of and to this Agreement. All schedules and
exhibits attached hereto are made a part hereof for all purposes, the same as
set forth herein verbatim, it being understood that if any exhibit attached
hereto which is to be executed and delivered contains blanks, the same shall be
completed correctly and in accordance with the terms and provisions contained
and as contemplated herein prior to or at the time of the execution and delivery
thereof
10.17 Number and Reference of Words. Whenever herein the singular number
is used, the same shall include the plural where appropriate, and references to
persons of one sex shall be deemed to include references to persons of the other
sex where appropriate.
10.18 Multiple Counterparts. This Agreement may be executed in
counterparts, all of which taken together shall constitute one agreement binding
on all the parties notwithstanding that all the parties are not signatories to
the original or the same counterpart.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
GFB-AS INVESTORS, LLC
By: _____________________________________
Xxxxx Xxxxxxxxx
Authorized Signatory
Grand Court Lifestyles, Inc.
By: _____________________________________
Xxxx Xxxxxxx, CEO
The Official Committee of the Unsecured
Creditors of Grand Court Lifestyles, Inc.
By: _____________________________________
Xxxxxx X. Xxxxx
The Official Committee of the Unsecured
Equity Investors of Grand Court
Lifestyles, Inc.
By: _____________________________________
Xxxxxxx Xxxxxxxxx
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