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ASSET PURCHASE AGREEMENT
Dated as of July 28, 1998
between
Capital Senior Living Properties, Inc.,
a Texas corporation
and
Gramercy Hill Enterprises,
a Texas general partnership
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Table of Contents
Page
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Article I. DEFINITIONS........................................................................1
Section 1.1 Definitions...............................................................1
Section 1.2 Interpretation............................................................5
Article II. SALE AND PURCHASE OF ACQUIRED ASSETS...............................................5
Section 2.1 Purchase And Sale.........................................................5
Section 2.2 Acquired Assets and Excluded Assets.......................................6
Section 2.3 Assumption of Certain Liabilities and Obligations.........................8
Article III. PURCHASE PRICE....................................................................11
Section 3.1 Purchase Price...........................................................11
Section 3.2 Allocation of Purchase Price.............................................11
Article IV. THE CLOSING.......................................................................11
Section 4.1 Closing Date.............................................................11
Section 4.2 Transactions To Be Effected At The Closing...............................12
Article V. REPRESENTATIONS AND WARRANTIES OF SELLER..........................................12
Section 5.1 Seller's Organization; Good Standing.....................................12
Section 5.2 Authority; Execution and Delivery.......................................12
Section 5.3 Consents; No Violation, Etc..............................................13
Section 5.4 Financial Statements; Undisclosed Liabilities............................13
Section 5.5 Title to Acquired Assets.................................................13
Section 5.6 Real Property............................................................13
Section 5.7 Accounts Receivable......................................................14
Section 5.8 Absence of Certain Changes or Events.....................................14
Section 5.9 Employment Matters .....................................................14
Section 5.10 Employee Benefit Plans...................................................14
Section 5.11 Litigation...............................................................14
Section 5.12 Compliance with Laws.....................................................15
Section 5.13 Sufficiency of Acquired Assets...........................................15
Section 5.14 Contracts................................................................15
Section 5.15 Environmental Matters....................................................16
Section 5.16 Interests in Seller......................................................16
Section 5.17 No Brokers...............................................................16
Section 5.18 Exclusive Representations and Warranties.................................16
Article VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................................16
Section 6.1 Purchaser's Organization; Good Standing..................................16
Section 6.2 Authority; Execution and Delivery........................................16
Section 6.3 Consents; No Violations, Etc.............................................17
Section 6.4 Litigation...............................................................17
Section 6.5 No Brokers...............................................................17
Section 6.6 ERISA....................................................................17
Section 6.7 Availability of Funds....................................................17
Article VII. CERTAIN COVENANTS AND AGREEMENTS..................................................17
Section 7.1 Covenants of Seller Relating to Conduct of Business......................17
Section 7.2 Purchaser's Access to Information........................................18
Section 7.3 Purchaser's Preservation of Records......................................18
Section 7.4 Legal Conditions to Closing..............................................19
Section 7.5 Employee Matters.........................................................19
Section 7.6 Collection of Receivables................................................20
Section 7.7 Expenses.................................................................20
Section 7.8 Financial Information....................................................21
Section 7.9 Bulk Transfer Laws.......................................................21
Section 7.10 Actions of Purchaser.....................................................21
Section 7.11 No Additional Representations............................................21
Section 7.12 Maintenance; Repair; Risk of Loss........................................22
Section 7.13 NO REPRESENTATIONS BY SELLER.............................................23
Section 7.14 RELEASE..................................................................23
Section 7.15 Disclosure Supplement....................................................24
Article VIII. CONDITIONS PRECEDENT..............................................................24
Section 8.1 Conditions to Each Party's Obligations...................................24
Section 8.2 Conditions to Obligations of Purchaser...................................25
Section 8.3 Conditions to the Obligations of Seller..................................26
Article IX. TERMINATION, AMENDMENT AND WAIVER.................................................28
Section 9.1 Termination..............................................................28
Section 9.2 Amendments and Waivers...................................................30
Article X. INDEMNIFICATION.................................................................30
Section 10.1 Indemnification by Seller................................................30
Section 10.2 Indemnification by Purchaser.............................................31
Section 10.3 Losses Net of Insurance, etc.............................................32
Section 10.4 Termination of Indemnification...........................................32
Section 10.5 Procedure................................................................33
Article XI. General Provisions..............................................................34
Section 11.1 Notices..................................................................34
Section 11.2 Headings.................................................................35
Section 11.3 Survival of Representations and Warranties...............................35
Section 11.4 Severability.............................................................35
Section 11.5 Counterparts.............................................................36
Section 11.6 Entire Agreement; No Third Party Beneficiaries...........................36
Section 11.7 Governing Law............................................................36
Section 11.8 Consent to Jurisdiction..................................................36
Section 11.9 Publicity................................................................36
Section 11.10 Assignment...............................................................36
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of July 28, 1998 (this
"Agreement"), is by and between Capital Senior Living Properties, Inc., a Texas
corporation (or its permitted assigns as provided in Section 11.10 hereof), as
purchaser ("Purchaser"), and Gramercy Hill Enterprises, a Texas general
partnership, as seller ("Seller").
WHEREAS, Seller is engaged in the Business; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller, substantially all of the assets used in
connection with the Business, all upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Article I. DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Acquired Assets" shall have the meaning set forth in Section
2.2(a).
"Acquired Employees" shall have the meaning set forth in
Section 7.5(a).
"Affiliate" shall mean, with respect to any person, any other
person that directly or indirectly Controls, is Controlled by or is under common
Control with such first person. A person shall be deemed to "Control" another
person if such first person has the power to direct or cause the direction of
such other person, whether through ownership of securities, by contract or
otherwise.
"Assumed Liabilities" shall have the meaning set forth in
Section 2.3(a).
"Benefit Plan" shall have the meaning set forth in Section
5.10.
"Business" shall mean the operation of the 148-unit full
service retirement community (including 89 independent living units and 59
assisted living units) located at 6800 "A" Street, Lincoln, Nebraska.
"Business Account Payable" shall mean any account payable of
Seller that relates primarily to or arises primarily out of the operation of the
Business.
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"Business Account Receivable" shall mean any account
receivable of Seller that relates primarily to or arises primarily out of the
operation of the Business.
The term "business day" shall mean any day other than a
Saturday, Sunday or other day on which banks in the City of New York are
permitted or required to close by law or regulation.
"Business Equipment" shall mean all furniture, medical and
other equipment, tools, and other tangible property (except for the Excluded
Assets) that are used or held primarily for use in the Business.
"Business Inventory" shall mean all inventory of goods and
supplies used or maintained in connection with the Business including, but not
limited to, food, cleaning materials, disposables, linens, consumables, office
supplies, drugs and medical supplies.
"Business Names" shall mean all of Seller's goodwill relating
to the Business and Seller's rights to the use in the Business of the names and
marks "Gramercy Hill" and any and all formative, variants and derivatives
thereof.
"Closing" and "Closing Date" shall have the respective
meanings set forth in Section 4.1 or Section 7.12(b), as applicable.
"Closing Date Undertaking" shall have the meaning set forth in
Section 8.3(d).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall have the meaning set forth
in Section 7.2.
"Contracts" shall mean contracts, leases, indentures,
agreements, commitments, purchase orders and all other legally binding
arrangements, whether in existence on the date hereof or subsequently entered
into, including all amendments thereto.
"Disclosure Schedule" shall mean the Schedules referred to in
Article V of this Agreement.
"Environmental Law" shall mean any applicable Governmental
Rule issued, promulgated or entered into by any Governmental Entity relating to
the environment, to the preservation or reclamation of natural resources, or to
Hazardous Substances.
"Escrow Amount" shall have the meaning set forth in Section
4.2(c).
"Excel" shall mean Excel Retirement Communities, Inc.
"Excluded Assets" shall have the meaning set forth in Section
2.2(b).
"Excluded Liabilities" shall have the meaning set forth in
Section 2.3(b).
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"Facility" shall mean the real property located in Lincoln,
Nebraska on which the Business is operated, as such real property is more
specifically described in Exhibit A, together with Seller's right, title and
interest in all buildings, fixtures and improvements thereon.
"Financial Statements" shall have the meaning set forth in
Section 5.4.
"First Six-Month Period" shall have the meaning set forth in
Section 10.1.
"General Assignment and Bill of Sale" shall have the meaning
set forth in Section 8.2(d).
"Governmental Entity" shall mean any court, administrative
agency or commission or other governmental authority or instrumentality, whether
domestic or foreign.
"Governmental Rule" shall mean any law, judgment, order,
decree, statute, ordinance, rule or regulation issued or promulgated by any
Governmental Entity.
"Gramercy Hill Limited Partnership" shall mean Gramercy Hill
Limited Partnership, a Nebraska limited partnership and the owner of a majority
of the partnership interests in Seller.
"Hazardous Substance" means any materials listed in 49 C.F.R.
__ss.__172.101 and any materials defined as toxic or hazardous pursuant to 42
U.S.C.A. ss. 9601 (14) or any other Environmental Law.
"HSR Act" shall mean Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Lender" shall mean the mortgagee (together with its permitted
assigns) pursuant to the Mortgage.
"Lien" shall mean any mortgage, claim, charge, lien, security
interest, easement, right of way, pledge, covenant, restriction or encumbrance
of any nature whatsoever.
"Loss" shall mean any loss, liability, claim, damage or
expense, including reasonable legal fees and expenses.
"Management Contract" shall mean the management contract
between Excel and Seller pursuant to which Excel manages the Facility.
"Marketing Materials" shall mean all advertising materials,
customer lists, training materials and market research materials.
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"Material Adverse Effect" shall mean an effect which,
individually or together with other adverse effects, is materially adverse to
the business, assets, financial condition or results of operations of the
Business taken as a whole, other than an effect relating to the economy in
general or changes relating to the Business' industry in general.
"Mortgage" shall mean the mortgage or deed of trust in respect
of the Facility, between Washington Mortgage Financial Group, Ltd. and Seller
and related documents, true and correct copies of which have previously been
delivered to Purchaser.
"Partnership Agreement" shall mean the Amended and Restated
Partnership Agreement of Gramercy Hill Enterprises dated as of January 31, 1985,
as amended by the First Amendment dated as of December 23, 1986.
"Partnership Consent" shall have the meaning set forth in
Section 5.2.
"Permitted Lien" shall mean (i) any Lien disclosed in Schedule
I, (ii) any Lien for Taxes, assessments and other governmental charges that are
not yet due and payable or that may thereafter be paid without penalty, or that
are being contested in good faith by appropriate proceedings and (iii)<0- 95>any
imperfection of title or other covenants, restrictions or encumbrance that,
individually or in the aggregate with other such imperfections, covenants,
restrictions and encumbrances, is not substantial in character or amount and
does not materially interfere with the use of the Acquired Assets in the
Business as presently conducted.
The term "person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust, business
association, organization, Governmental Entity or other entity.
"Personal Property" shall mean all of the Acquired Assets
other than the Facility.
"Purchase Price" shall have the meaning set forth in Section
_3.1.
"Purchaser" shall mean Capital Senior Living Properties, Inc.,
a Texas corporation.
"Purchaser Indemnified Parties" shall have the meaning set
forth in Section 10.1.
"Salomon Smith Barney" shall mean Salomon Brothers Inc and
Smith Barney Inc., collectively.
"Second Six-Month Period" shall have the meaning set forth in
Section 10.1.
"Seller" shall mean Gramercy Hill Enterprises, a Texas general
partnership.
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"Seller Indemnified Parties" shall have the meaning set forth
in Section 10.2.
"Tax" shall mean all Federal, state, local and foreign taxes
and assessments, including all interest, penalties and additions with respect
thereto.
"Tax Return" shall have the meaning set forth in Section 3.2.
"Termination Date" shall have the meaning set forth in Section
11.3.
"Third Party Claim" shall have the meaning set forth in
Section 10.5(b).
"WARN Act" shall have the meaning set forth in Section 7.5.
Section 1.2 Interpretation
a. When used in this Agreement the words
"include", "includes" and "including" shall
be deemed to be followed by the words
"without limitation".
b. When used in this Agreement, the word
"primarily" shall be deemed to be followed
by the words "or exclusively".
c. Any terms defined in the singular shall have
a comparable meaning when used in the
plural, and vice versa.
d. When used in this Agreement, the word "or"
is not exclusive.
e. All references to Articles, Sections,
Exhibits, Schedules and Appendices shall be
deemed references to Articles, Sections,
Exhibits, Schedules and Appendices to this
Agreement.
f. This Agreement shall be deemed drafted
jointly by all the parties hereto and shall
not be specifically construed against any
party hereto based on any claim that such
party or its counsel drafted this Agreement.
Article II. SALE AND PURCHASE OF ACQUIRED ASSETS
Section 2.1 Purchase And Sale. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Seller shall sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser shall purchase, acquire
and accept, all of Seller's right, title and interest in, to and under the
Acquired Assets.
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Section 2.2 Acquired Assets and Excluded Assets.
a. The term "Acquired Assets" shall mean the
properties, assets, goodwill and rights of
whatever kind and nature, real or personal,
tangible or intangible, other than the
Excluded Assets, of Seller existing on the
Closing Date that relate primarily to or
arise primarily out of the operation of the
Business, including:
(i) the Facility;
(ii) all Business Equipment;
(iii) all Business Inventory;
(iv) all Business Accounts Receivable;
(v) all Business Names;
(vi) all right, title and interest of
Seller in and to the Contracts to
which Seller is a party or by which
Seller is bound that are listed in
Schedule 5.14 (other than those
Contracts which are identified on
Schedule 5.14 as Contracts not being
assumed by Purchaser), and all
other Contracts to which Seller is a
party on the Closing Date that
relate primarily to or arise
primarily out of the operation of
the Business that are not required
to be listed in such Schedule 5.14
and which were entered into in the
ordinary course of the Business, in
each case, to the extent such
Contracts are assignable;
(vii) all Marketing Materials that relate
primarily to or arise primarily out
of the operation of the Business
that are in the possession of
Seller;
(viii) all records and lists pertaining to
residents, accounts and suppliers,
personnel records, books, ledgers,
files and other printed and written
materials reasonably necessary for
Purchaser's continuing operation of
the Business, other than books,
records and other data relating to
the Excluded Assets and the Excluded
Liabilities and other books and
records reasonably retained by
Seller; and
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(ix) all of Seller's rights against third
parties pursuant to the warranties
and guarantees identified on
Schedule 2.2(a).
b. The term "Excluded Assets" shall mean the
following:
(i) cash on hand or in banks (except
security deposits and other deposits
from tenants) and cash equivalents
owned by Seller relating to the
operations of the Business;
(ii) all rights of Seller under this
Agreement and the agreements,
instruments and certificates
delivered in connection with this
Agreement;
(iii) all records prepared in connection
with the sale of the Business,
including the bids and other
information received from third
persons in respect of the Business
and analyses relating to the
Business;
(iv) any assets under any Benefit Plan;
(v) all rights relating to the Excluded
Liabilities;
(vi) business records reasonably retained
by Seller; provided, however, that
Purchaser may retain copies of such
records that are reasonably required
in the operation of the Business by
Purchaser;
(vii) any tax refunds, insurance refunds
from prepaid insurance, insurance
deposits or recoveries from claims
with respect to periods (or portions
thereof) ending prior to the Closing
Date, except as provided in Section
7.12(b) hereof;
(viii) manuals developed by Excel relating
to personnel, marketing and account-
ing policies and procedures;
(ix) the Management Contract;
(x) furniture, computers and similar
tangible property not located at the
Facility and identified on Schedule
2.2(b); and
(xi) all of Seller's rights, claims,
causes of action or rights of
set-off against third parties
relating to the Business or Acquired
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Assets with respect to periods (or
portions thereof) ending on or prior
to the Closing Date.
c. Nothing in this Agreement shall be construed
as an attempt by Seller to assign any
Contract to the extent that such Contract is
not assignable without the necessary consent
of the other party or parties thereto.
Seller shall use reasonable efforts, in
cooperation with Purchaser, to secure any
necessary consent to assignment of those
Contracts indicated with an asterisk on
Schedule 5.14 which consent has not been
obtained prior to the Closing Date;
provided, however, that Seller shall not be
required to make any payment to any person
or forego any benefits in order to obtain
such consent.
Section 2.3 Assumption of Certain Liabilities and Obligations.
a. Upon the terms and subject to the conditions of this
Agreement, Purchaser shall assume, effective as of the
Closing, and agrees to pay, perform and discharge when
due, and agrees to indemnify Seller and its Affiliates
and hold Seller and its Affiliates harmless from and
after the Closing from, the Assumed Liabilities (as
defined below). "Assumed Liabilities" means the
following and only the following:
(i) all obligations and liabilities of
Seller pursuant to the Mortgage and
pursuant to the Contracts included
in the Acquired Assets; provided
that (x) all payments pursuant to
the Mortgage which are due prior to
the Closing Date and (y) all
payments pursuant to the Contracts
included in the Acquired Assets
which are due prior to the Closing
Date shall have been paid by Seller;
(ii) all Business Accounts Payable for
which payment is made by Seller to
Purchaser pursuant to Section 2.3(c)
hereof;
(iii) any obligation or liability for
Taxes for any periods that are
attributable to the Business or
relating to the Acquired Assets,
relating to any periods (or portions
thereof) beginning on or after the
Closing Date; and
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(iv) the obligations of Seller with
respect to accrued but untaken
vacation and sick days earned by
Acquired Employees as of the Closing
Date, to the extent that Seller has
paid Purchaser for such obligations
as provided in Section 7.5(c).
b. The term "Excluded Liabilities" shall mean:
(i) any obligation or liability for
Taxes that relates primarily to or
arises primarily as a result of any
of the Excluded Assets;
(ii) any obligation or liability for
income Taxes that relates solely to
or arises solely as a result of the
sale or transfer from Seller to
Purchaser of any of the Acquired
Assets;
(iii) any obligation or liability of
Seller for Taxes attributable to the
Business or relating to the Acquired
Assets for any periods (or portions
thereof) ending on or prior to the
Closing;
(iv) all obligations and liabilities of
Seller in respect of any current or
former employee of Seller engaged in
the Business, which obligation or
liability arises out of acts or
conditions that occurred prior to
the Closing Date, including, without
limitation, any liability or
obligation under bonus programs
maintained by Seller;
(v) except as otherwise provided in
Section 7.5(c), any obligation or
liability of Seller arising under or
in connection with any Benefit Plan;
(vi) all payments due prior to the
Closing Date pursuant to (x) the
Mortgage and (y) the Contracts
included in the Acquired Assets;
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(vii) all Business Accounts Payable for
which payment is not made by Seller
to Purchaser pursuant to Section
2.3(c) hereof;
(viii) any liability under the Management
Contract; and
(ix) any obligations of Seller with
respect to accrued but untaken
vacation and sick days earned by
Acquired Employees as of the Closing
Date, except to the extent that
Seller shall have paid Purchaser for
such obligations as provided in
Section 7.5(c).
c. Except as to those items which are to be apportioned as
provided in Section 2.3(d) below, with regard to
expenses incurred in respect of Business Accounts
Payable during periods (or portions thereof) ending on
or prior to the Closing Date, Seller agrees (i) to pay
all Business Accounts Payable due and payable prior to
the Closing Date and (ii) at the Closing, to pay to
Purchaser an amount equal to the estimated cost of
Business Accounts Payable not previously paid.
d. Any ad valorem, use, real and personal property,
intangible and other similar Taxes, installments or
special assessments, utility, water or similar payments
arising from, or relating to, the Acquired Assets or
the conduct of the Business (including such other items
as are normally apportioned at the closings of
properties similar to the Facility in Lancaster County,
Nebraska), which relate to periods both before and
after the Closing Date, shall be prorated and adjusted
between Seller and Purchaser as of the Closing Date on
a per diem basis and Seller shall be responsible only
for the portion of such amounts allocable to the period
prior to the Closing Date and Purchaser shall be
responsible for the remainder.
e. Except as otherwise agreed to by the parties, whenever
it is necessary to deter- mine the liability for Taxes
for a portion of a taxable year or period that begins
before and ends on or after the Closing Date, the
determination of the Taxes for the portion of the year
or period ending on, and the portion of the year or
period beginning on or after, the Closing Date shall be
determined by assuming that the taxable year or period
ended at the close of business on the Closing Date.
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f. Except for the Assumed Liabilities, all obligations and
liabilities arising as a result of the ownership by
Seller prior to the Closing of, or the operation prior
to the Closing of the activities conducted at, the
Facility (including all obligations and liabilities
relating to personal injury or Environmental Laws)
shall be the responsi- bility of Seller. All
obligations and liabilities arising as a result of the
ownership by Purchaser subsequent to the Closing of, or
the operation subsequent to the Closing of the
activities conducted at, the Facility (including all
obligations and liabilities relating to personal injury
or Environmental Laws) shall be the responsi- bility of
Purchaser.
Article III. PURCHASE PRICE
Section 3.1 Purchase Price. The purchase price for the Acquired Assets
shall be an amount in cash (the "Purchase Price") equal to (x) $11,000,000 less
(y) the principal amount of the Mortgage outstanding as of the Closing Date.
Section 3.2 Allocation of Purchase Price. On or prior to the Closing
Date, Seller and Purchaser shall mutually agree on an allocation of the Purchase
Price and the amount of the Assumed Liabilities (and other capitalized costs)
among the Acquired Assets in accordance with Section 1060 of the Code and the
regulations promulgated thereunder and all applicable provisions of state, local
and foreign law (such allocations, the "Section 1060 Allocations"). If Seller
and Purchaser are unable to agree with respect to the Section 1060 Allocations,
Seller and Purchaser shall select a firm of independent certified public
accountants mutually acceptable to Seller and Purchaser from among Price
Waterhouse Coopers LLP, KPMG Peat Marwick LLP, Deloitte & Touche LLP, Ernst &
Young LLP, and Arthur Andersen LLP to determine such allocations. The
conclusions of such accounting firm shall be binding on the parties. The fees
and expenses of such accounting firm shall be shared equally by Seller and
Purchaser. Each of the parties hereto agrees (i) to prepare and file reports,
returns, declarations, statements, forms, extensions or other documents filed or
required to be filed with any federal, state, local or other governmental
department, court or other authority in respect of any Tax ("Tax Returns"),
including Form 8594, in a manner consistent with the Section 1060 Allocations,
as finally determined pursuant to this Section 3.2, (ii) to report this
transaction for federal, state, local and foreign income tax purposes in
accordance with the Section 1060 Allocations, as finally determined pursuant to
this Section 3.2, and (iii) to use its best efforts to sustain the Section 1060
Allocations, as finally determined pursuant to this Section 3.2, in any
subsequent tax audit or dispute.
Article IV. THE CLOSING
Section 4.1 Closing Date. The closing of the sale and transfer of the
Acquired Assets (hereinafter called the "Closing") shall take place at the
offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New York
10019, on the last business day of the month in which all of the conditions to
each party's obligations under Article VIII have been satisfied or waived, or at
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such other time, date and place as shall be mutually agreed to by the parties
hereto (such date of the Closing being hereinafter referred to as the "Closing
Date").
Section 4.2 Transactions To Be Effected At The Closing. At the
Closing:
a. Seller shall deliver or cause to be delivered to
Purchaser all documents referred to in Section 8.2, in
each case appropriately executed;
b. Purchaser shall deliver or cause to be delivered to
Seller (i) the Closing Date Undertaking, appropriately
executed; and (ii) all other documents referred to in
Section 8.3, in each case appropriately executed; and
c. Purchaser shall pay (i) $2,300,000 of the Purchase
Price (the "Escrow Amount") by wire transfer to an
escrow account to be established prior to the Closing
Date and (ii) the remainder of the Purchase Price
(which remainder shall be equal to (x) $11,000,000 less
(y) the principal amount of the Mortgage outstanding as
of the Closing Date less (z) the Escrow Amount) by wire
transfer to such bank account or accounts as may be
designated by Seller. Purchaser shall be provided with
wire transfer instructions at least two business days
prior to the Closing Date. The Escrow Amount shall be
disbursed to Seller by the escrow agent at such times
and by such amounts as the indemnification obligations
of Seller to the Purchaser Indemnified Parties are
reduced in accordance with the provisions of Article X
hereof.
Article V. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 5.1 Seller's Organization; Good Standing. Seller is a general
partnership, duly organized, validly existing and in good standing under the
laws of the State of Texas. Seller has the requisite power and authority to own
the Acquired Assets and to carry on the Business as currently conducted. Seller
is duly qualified to conduct business as a foreign entity in the State of
Nebraska.
Section 5.2 Authority; Execution and Delivery. Seller has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Seller, and the consummation of the transactions contemplated hereby have
been duly and validly authorized, subject to the consent of at least 51% in
interests of the Class A Limited Partners of Gramercy Hill Limited Partnership
(the "Partnership Consent"). Seller agrees to make a good faith effort to obtain
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the Partnership Consent. This Agreement has been duly executed and delivered by
Seller and, assuming the due authorization, execution and delivery of this
Agreement by Purchaser, constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, subject to the
Partnership Consent, and subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity (including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing) regardless of whether considered in
a proceeding in equity or at law.
Section 5.3 Consents; No Violation, Etc. Except for the applicable
requirements of the HSR Act and the rules and regulations promulgated thereunder
and except as set forth on Schedule 5.3, the execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and the compliance with the terms hereof will not (i) violate any Governmental
Rule applicable to Seller, (ii) subject to the Partnership Consent, conflict
with the Partnership Agreement, (iii) subject to the receipt of all required
consents to the assumption by Purchaser of all obligations and liabilities of
Seller pursuant to the Mortgage, conflict with any Contract set forth on
Schedule 5.14, or (iv) require any approval, authorization, consent, license,
exemption, filing or registration with any court, arbitrator or Governmental
Entity, except for such approvals, authorizations, consents, actions or filings
which have been obtained or made or which, if not obtained or made, would not
have a Material Adverse Effect or materially interfere with Seller's performance
of its obligations hereunder. Seller is not a "foreign person" as defined in
Section 1445 of the Code and the regulations relating thereto.
Section 5.4 Financial Statements; Undisclosed Liabilities. Attached
hereto as Schedule 5.4 are the audited financial statements of Seller as of
December 31, 1995, December 31, 1996 and December 31, 1997 and unaudited
financial statements for the six months ended June 30, 1998 (the "Financial
Statements"). The Financial Statements have been prepared from the books and
records of Seller and fairly present in all material respects the financial
condition and results of operations of Seller for the periods indicated (except
in each case as described in Schedule 5.4 and as may be described in the notes
included therein). There are no liabilities or obligations related to the
Business which would reasonably be expected to have a Material Adverse Effect,
except (i) as reflected in the Financial Statements, (ii) as disclosed in the
Disclosure Schedule, (iii) for purchase contract and orders for inventory
entered into in the ordinary course of business, (iv) for liabilities incurred
in the ordinary course of business since December 31, 1997 and (v) for Excluded
Liabilities.
Section 5.5 Title to Acquired Assets. Seller has good and valid title
to all the Acquired Assets, free and clear of all Liens other than Permitted
Liens. This Section 5.5 does not relate to the Facility, which is exclusively
the subject of Section 5.6.
Section 5.6 Real Property. Seller has good and insurable fee title to
the Facility, free and clear of all Liens other than (i) Permitted Liens, (ii)
easements, covenants, rights-of-way, and other encumbrances or restrictions
shown on the title commitment or survey previously delivered to Purchaser by
Seller, (iii) any grants or reservation of surface or subsurface rights of
others in and to the removal and mining of oil, gas or minerals, including
13
rights of ingress and egress with respect thereto, (iv) zoning, building, land
use and other restrictions imposed under any Governmental Rule and (v)
easements, covenants, rights-of-way or other encumbrances, restrictions or
imperfections of title not shown on the title commitment or survey previously
delivered to Purchaser by Seller, none of which items set forth in clauses
(iii), (iv) or (v), individually or in the aggregate, materially interfere with
the use of the Facility in the Business as presently conducted.
Section 5.7 Accounts Receivable. All the trade accounts receivable of
Seller that relate primarily to or arise primarily out of the operation of the
Business as of the Closing Date will represent actual sales made in the ordinary
course of business.
Section 5.8 Absence of Certain Changes or Events. Except as set forth
in Schedule 5.8, to Seller's actual knowledge, since December 31, 1997, Seller
has conducted the Business in the ordinary course consistent with past practice,
and there has not occurred any event or condition which would reasonably be
expected to have a Material Adverse Effect.
Section 5.9 Employment Matters
a. Schedule 5.9(a) sets forth, as of the date
hereof, all collective bargaining or similar
agreements with any labor unions or
associations representing employees of the
Business.
b. Except as set forth on Schedule 5.9(b), the
Business is in compliance with all
applicable laws, regulations and orders
relating to the employment of labor,
including all such laws, regulations and
orders relating to wages and hours, labor
relations, civil rights, safety and health,
workers' compensation, except for such
noncompliance which would not have a
Material Adverse Effect.
Section 5.10 Employee Benefit Plans. Schedule 5.10 contains a list and
a brief description of each "employee benefit plan" (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
and all other employee compensation and fringe benefit plans or arrangements
(including, without limitation, all bonus, incentive and stock compensation
plans) maintained or contributed to by the Business for the benefit of any
employees of the Business (collectively, the "Benefit Plans"). Seller has made
available to Purchaser complete and correct copies of (i) each Benefit Plan (or,
in the case of any unwritten Plan, a description thereof) and (ii) the most
recent summary plan description of each Benefit Plan (if such description was
required).
Section 5.11 Litigation. As of the date hereof, there is no suit,
claim, action, investigation or proceeding pending or threatened in writing
against Seller that relates to the Business or the Acquired Assets which (i) if
adversely determined would be reasonably expected to result in a Material
Adverse Effect or (ii) challenges or seeks to prevent or enjoin the transactions
contemplated by this Agreement.
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Section 5.12 Compliance with Laws. Except as set forth on Schedule
5.12, Seller is in compliance in all material respects with all Governmental
Rules applicable to it which relate primarily to the Acquired Assets, except
where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 5.12, Seller has not
received any written notice since January 1, 1997 of any asserted violation of
any such Governmental Rules and Seller has not received any written notice that
any investigation or review by any Governmental Entity with respect to the
Business is pending or that any such investigation or review is contemplated,
except where the outcome of such investigation or review if adversely determined
would not reasonably be expected to have a Material Adverse Effect. This Section
5.12 does not relate to environmental matters, which are exclusively the subject
of Section 5.15.
Section 5.13 Sufficiency of Acquired Assets. Except as set forth in
Schedule 5.13 and except for the fact that the Management Contract is an
Excluded Asset, the Acquired Assets are sufficient for the operation of the
Business in substantially the same manner as it is currently conducted.
Section 5.14 Contracts. Except for Contracts listed on Schedule 5.14,
and except for Contracts relating to Excluded Assets, Seller is not a party to
or bound by any contract primarily relating to the Acquired Assets, or the
Assumed Liabilities which is:
(i) an indenture, note, loan or credit
agreement or other Contract relating
to the borrowing of money by Seller
or to the direct or indirect
guarantee or assumption by Seller of
the obligation of any other person
in excess of $10,000;
(ii) a lease or similar agreement under
which Seller is a lessee of, or
holds or operates, any real property
owned by any third party;
(iii) a Contract involving future payment
for goods or services by Seller of
more than $10,000 (unless terminable
without payment or penalty upon no
more than 30 days' notice);
(iv) a Contract involving the obligation
of Seller to deliver in the future
products or services for payment of
more than $10,000 (unless terminable
without payment or penalty upon no
more than 30 days' notice);
(v) a Contract evidencing any Lien on
the Acquired Assets (other than
Permitted Liens or Liens created in
the ordinary course of business); or
15
(vi) a Contract with or Permit by or from
any Governmental Entity, the loss of
which would materially interfere
with the operation of the Business
as presently conducted.
Except as disclosed in Schedule 5.14, each Contract listed thereon is a valid
and binding obligation of Seller. Except as disclosed in Schedule 5.14, Seller
has not received any notice of default or notice of the intention of any party
to any such Contract to terminate such Contract. Complete and correct copies of
all Contracts referred to in Schedule 5.14, together with all modifications and
amendments thereto, have been made available to Purchaser.
Section 5.15 Environmental Matters. Seller has made available to
Purchaser a complete and correct copy of the Phase I Environmental Site
Assessment of the Facility, dated as of September 12, 1997.
Section 5.16 Interests in Seller. No partnership interests in Seller
are held by any entity other than (i) Gramercy Hill Limited Partnership and (ii)
Gramercy Hill Corp., a Nebraska corporation.
Section 5.17 No Brokers. Except for Salomon Smith Barney, the fees and
expenses of which will be paid by Seller, Seller has not entered into any
agreement, arrangement or understanding with any person or firm which will
result in the obligation to pay any finder's fee, brokerage commission or
similar payment in connection with the transactions contemplated hereby.
Section 5.18 Exclusive Representations and Warranties. Other than the
representations and warranties set forth herein, Seller is not making any other
representation or warranty, express or implied, with respect to the Business or
the Acquired Assets.
Article VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 6.1 Purchaser's Organization; Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas. Purchaser is duly qualified to conduct business as a
foreign corporation in the State of Nebraska. Purchaser has all requisite
corporate power and authority to carry on its business as it is currently being
conducted.
Section 6.2 Authority; Execution and Delivery. Purchaser has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Purchaser and the consummation of the transactions
contemplated hereby have been duly and validly authorized. This Agreement has
been duly executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery of this Agreement by Seller, constitutes
the legal, valid and binding obligation of Purchaser, enforceable against
16
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity (including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing) regardless of whether
considered in a proceeding in equity or at law.
Section 6.3 Consents; No Violations, Etc. Except for the applicable
requirements of the HSR Act and the rules and regulations promulgated
thereunder, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and the compliance with the
terms hereof will not (i) violate any applicable law, (ii) conflict with any
provision of the certificate of incorporation or by-laws of Purchaser or (iii)
require any approval, authorization, consent, license, exemption, filing or
registration with any court, arbitrator or Governmental Entity, except for such
approvals, authorizations, consents, actions or filings which have been obtained
or made or which, if not obtained or made, would not materially interfere with
Purchaser's performance of its obligations hereunder.
Section 6.4 Litigation. As of the date hereof, there is no suit, claim,
action, investigation or proceeding pending or threatened in writing against or
affecting Purchaser or any of its Affiliates which if adversely determined would
be reasonably expected to prevent or materially delay the ability of Purchaser
to perform its obligations hereunder.
Section 6.5 No Brokers. Purchaser has not entered into any agreement,
arrangement or understanding with any person or firm which will result in the
obligation to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
Section 6.6 ERISA. Purchaser is not acquiring the Acquired Assets with
the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA.
Section 6.7 Availability of Funds. Purchaser has cash available that is
sufficient to enable it to make payment of the Purchase Price and any other
amounts to be paid by it hereunder.
Article VII. CERTAIN COVENANTS AND AGREEMENTS
Section 7.1 Covenants of Seller Relating to Conduct of Business. During
the period from the date of this Agreement and continuing until the Closing,
Seller agrees (except as expressly provided in this Agreement, Schedule 7.1 or
the Disclosure Schedule, or to the extent that Purchaser shall otherwise consent
in writing) that:
a. Ordinary Course. Seller shall carry on the
Business and operate the Acquired Assets in
the ordinary course in substantially the
same manner as presently conducted, maintain
the business records of the Business in
substantially the same manner as presently
maintained and use reasonable efforts to
preserve intact the Business' present
business organization, keep available the
17
services of the Business' present employees
and preserve the Business' relationships
with residents, customers, suppliers and
others having business dealings with the
Business; provided, however, that nothing
contained herein shall be deemed to require
the expenditures of any funds outside the
ordinary course of business.
b. No Dispositions. Seller shall not sell,
lease, or transfer, or agree to sell, lease,
or transfer, any of the Acquired Assets,
except Business Inventory in the ordinary
course of business consistent with prior
practice.
c. No Salary Increases. Seller shall not
increase the salary of any employee of the
Business, except pursuant to existing
employment contracts or in the ordinary
course of business consistent with prior
practice.
d. No Additional Material Contracts. Seller
shall not enter into any Contract that would
be required to be listed on Schedule 5.14 if
it were in effect on the date hereof,
including any such Contract for the purchase
of capital assets, without the prior written
consent of Purchaser (which consent shall
not be unreasonably withheld).
e. Other Actions. Seller shall not knowingly
take any action that would reasonably be
expected to result in any of the
representations and warranties of Seller set
forth in this Agreement becoming untrue in
any material respect or in any of the
conditions of the Closing set forth in
Article VIII not being satisfied.
f. Advise of Changes. Seller shall advise
Purchaser within three business days after
Seller becomes aware of the occurrence of
any matter or event that occurs after the
date hereof and on or prior to the Closing
Date which is material to the Business.
Section 7.2 Purchaser's Access to Information. Seller shall afford to
Purchaser and its accountants, counsel and other representatives reasonable
access upon reasonable advance notice and during normal business hours during
the period prior to the Closing to all the properties, books, contracts,
commitments, Tax Returns and records of the Business (other than the Excluded
Assets). Purchaser acknowledges that any information being provided to it or its
representatives by Seller pursuant to this Agreement is subject to the terms of
a confidentiality agreement between Purchaser and Seller, dated May 5, 1998 (the
"Confidentiality Agreement"), which terms are incorporated herein by reference.
18
Section 7.3 Purchaser's Preservation of Records
a. Purchaser agrees that, at its own expense, it (i) shall
preserve and keep the books, contracts, commitments and
records included in the Acquired Assets for a period of
three years from the Closing Date, or for any longer
periods as may be required by any Governmental Entity
or as may be made prudent by the circumstances of any
ongoing litigation, and (ii) shall provide Seller with
reasonable access to the foregoing upon reasonable
notice and during normal business hours. In the event
Purchaser wishes to destroy such copies and records
after the time specified above, it shall first give 60
days' prior written notice to Seller, and Seller shall
have the right, at its option and expense, and upon
prior written notice given to Purchaser within such 60
day period, to take possession of all or any portion of
such copies and records.
b. Purchaser acknowledges and agrees that Seller shall
retain copies of certain personnel records included in
the Acquired Assets which relate to Seller's
liabilities in respect of the Acquired Employees'
post-employment benefits.
c. All information received or retained by Seller or any
representative of Seller pursuant to paragraph (a) or
(b) of this Section 7.3 shall be treated as
confidential by Seller and by such representatives and,
except to the extent such information is or becomes
generally available, Seller and its representatives
shall use all reasonable efforts to maintain the
confidentiality of such information. If Seller or any
of its representatives is required to disclose any such
information by or to any Governmental Entity, Seller
shall, to the extent feasible, prior to such
disclosure, notify Purchaser of such requirement.
Purchaser shall have the right, at its own expense, to
seek confidential treatment of any information to be so
disclosed.
Section 7.4 Legal Conditions to Closing. Each of Seller and Purchaser
agrees to take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to the Closing
(including the prompt filing of the premerger notification report under the HSR
Act and the furnishing of all information required under the HSR Act), and shall
cooperate with and furnish information to each other and to other parties in
connection with any such legal requirements.
Section 7.5 Employee Matters
a. Offer of Employment. Purchaser shall offer employment,
effective on the Closing Date, in a comparable position
and at no less favorable base salary, to each person
19
currently employed by Seller primarily in connection
with the Business. Such employment shall be subject to
a 90-day probationary period. All such employees of the
Business who accept Purchaser's offer of employment
shall be referred to herein as "Acquired Employees."
b. Provision of Similar Benefits. Purchaser shall provide
benefits to Acquired Employees that are, in the
aggregate, substantially similar to those provided to
similarly situated new employees of Purchaser and its
Affiliates generally.
c. Vacation and Other Pay. On or prior to the Closing
Date, Seller shall pay to Purchaser an amount equal to
the aggregate liability of Seller with respect to
accrued but untaken vacation and sick days earned by
Acquired Employees as of the Closing Date, and
Purchaser shall assume the obligations of Seller with
respect to such accrued but untaken vacation and sick
days.
d. WARN Act. Purchaser agrees to provide any required
notice under the Worker Adjustment and Retraining
Notification Act, as amended (the "WARN Act"), and any
similar statute, and to otherwise comply with any such
statute with respect to any "plant closing" or "mass
layoff" (as defined in the WARN Act), or similar event
affecting Acquired Employees and occurring on or after
the Closing Date. Purchaser shall indemnify and hold
harmless Seller and its Affiliates with respect to any
liability under the WARN Act or similar statute arising
from the actions of Purchaser or its Affiliates on or
after the Closing Date.
Section 7.6 Collection of Receivables. From and after the Closing,
Purchaser shall have the right and authority to collect for its own account all
accounts receivable and other items that are included in the Acquired Assets and
to endorse with the name of Seller any checks or drafts received with respect to
any such accounts receivable or other items. Seller agrees to deliver to
Purchaser any cash or other property received directly or indirectly by it with
respect to such accounts receivables and other items.
Section 7.7 Expenses. Except as provided in Section 9.1 hereof in
respect of termination of this Agreement pursuant to Section 9.1(a)(ii) hereof,
whether or not the Closing occurs, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses. Notwithstanding the foregoing or
any other provisions of this Agreement, (i) Purchaser and Seller shall share
equally (x) any sales, use, transfer, stamp, documentary or similar Taxes
applicable to the conveyance and transfer from Seller to Purchaser of the
Acquired Assets (except for filing fees, Taxes and related expenses the payment
of which is specifically governed by clauses (ii) and (iii) below), (y) any
20
governed by clauses (ii) and (iii) below), (y) any other transfer or documentary
Taxes or any filing or recording fees and related expenses applicable to such
conveyance and transfer (except for filing fees, Taxes and related expenses the
payment of which is specifically governed by clauses (ii) and (iii) below), and
(z) if title insurance is obtained by Purchaser, the cost of the title insurance
premium for a standard form owner's policy which insures the Facility for an
amount not exceeding the Purchase Price, such policy to be in the ALTA form in
use in the State of Nebraska, (ii) Purchaser shall pay (x) any sales Taxes
payable in connection with the transfer of Personal Property and (y) the cost of
any endorsements requested by Purchaser to the standard form of owner's title
insurance policy, and (iii) Seller shall pay any filing fees, transfer Taxes and
related expenses with respect to the transfer of the Facility to Purchaser.
Purchaser shall prepare and timely file all returns and other documents required
in connection with the foregoing and shall provide Seller with evidence of
filing of such returns and documents and payment of such sales, use, transfer,
stamp, documentary and similar Taxes promptly thereafter. Notwithstanding the
foregoing or any other provisions of this Agreement, Purchaser and Seller agree
that all fees incurred in connection with any filing made pursuant to the HSR
Act shall be paid by Purchaser.
Section 7.8 Financial Information. After the Closing, upon reasonable
written notice, Purchaser and Seller shall furnish or cause to be furnished to
each other and their respective accountants, counsel and other representatives
reasonable access, during normal business hours, to such information (including
records pertinent to the Business) and assistance relating to the Business as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any returns, reports or forms or the defense of any
Tax audit, proceeding, claim or assessment.
Section 7.9 Bulk Transfer Laws. Purchaser hereby waives compliance by
Seller with the provisions of any so-called "bulk transfer law" of any
jurisdiction in connection with the sale of the Acquired Assets to Purchaser.
Seller shall indemnify and hold harmless Purchaser against any and all
liabilities that may be asserted by third parties against Purchaser as a result
of noncompliance with any such bulk transfer law.
Section 7.10 Actions of Purchaser. Purchaser shall not knowingly take
any action that would reasonably be expected to result in any of the
representations or warranties of Purchaser set forth in this Agreement becoming
untrue in any material respect or in any of the conditions of the Closing set
forth in Article VIII not being satisfied.
Section 7.11 No Additional Representations. Purchaser acknowledges that
it and its representatives have been permitted full and complete access to the
Acquired Assets that it and its representatives have desired or requested to see
or review, and that its representatives have had a full opportunity to meet with
Seller and representatives of Seller and employees of the Business to discuss
the Business. Purchaser acknowledges that it and its representatives have
received or have had an opportunity to review prior to the date hereof all
written materials which Seller is required to deliver or make available, as the
case may be, to Purchaser pursuant to this Agreement on or prior to the date
hereof. Purchaser acknowledges that neither Seller nor any other person has made
any representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Business or the Acquired Assets
21
except as expressly set forth in this Agreement and the Disclosure Schedule, and
that neither Seller nor any other person will be subject to any liability to
Purchaser or any other person resulting from the distribution to Purchaser, or
Purchaser's use of, any such information in any form, including the Confidential
Memorandum dated Spring 1998 relating to the Business, any documents or
materials made available to Purchaser in any "data room," and any management
presentation in expectation of the transactions contemplated hereby.
Section 7.12 Maintenance; Repair; Risk of Loss
a. Until the Closing, Seller shall maintain the Facility
in substantially its present condition, subject to
ordinary wear and tear. Notwithstanding the foregoing,
Seller shall have no obligation to make any structural
repairs or capital improvements.
b. Prior to the Closing, the risk of loss or damage
(except ordinary wear and tear) by fire or other
casualty to the Facility, and the risk of condemnation
of the Facility, is on Seller. In case of damage beyond
ordinary wear and tear or a condemnation, (i) if the
estimated cost to repair the damage or restore to
substantially the condition existing before the
casualty or condemnation shall be less than $550,000,
or if the estimated time to repair the damage or
restore is less than 120 days, Seller may, at Seller's
option, elect to proceed to Closing and assign to
Purchaser the proceeds of any insurance or award
applicable to such casualty or condemnation, or proceed
promptly to repair and restore, at Seller's expense,
such damage in a good and workmanlike manner, using
equivalent materials, in which case the Closing shall
be adjourned, pending completion of such repair and
restoration, or (ii) in any other case, either party
may terminate this Agreement upon written notice to the
other given within five (5) business days of obtaining
actual knowledge of such casualty or condemnation.
Purchaser may preserve this Agreement following receipt
of a termination notice from Seller by notifying
Seller, in writing, within five (5) business days of
Seller's election to terminate, of Purchaser's election
to purchase the Property in its damaged condition
without abatement of Purchase Price (but with an
assignment from Seller of all insurance and/or
condemnation proceeds). Notwithstanding any other
provision of this Agreement, if there is an adjournment
of the Closing Date by Seller pursuant to this Section
7.12(b), the Closing Date shall be any business day
selected by Seller after substantial completion of
restoration on ten (10) days' notice to Purchaser.
22
Section 7.13 NO REPRESENTATIONS BY SELLER. OTHER THAN AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, SELLER HAS NOT MADE AND DOES NOT MAKE ANY
REPRESENTATIONS OR WARRANTIES AS TO THE PHYSICAL OR ENVIRONMENTAL CONDITION,
LAYOUT, LEASES, FOOTAGE, RENTS, INCOME, EXPENSES, ZONING, OPERATIONS, OR ANY
OTHER MATTER OR THING AFFECTING OR RELATING TO THE FACILITY, INCLUDING, WITHOUT
LIMITATION, THE ENVIRONMENTAL CONDITION THEREOF. PURCHASER ACKNOWLEDGES THAT NO
SUCH REPRESENTATIONS HAVE BEEN MADE OTHER THAN AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT AND AGREES UPON CLOSING TO TAKE THE FACILITY "AS IS, WHERE IS" AND
WITH ALL FAULTS, LATENT AND PATENT. WITH RESPECT TO ANY ITEMS OF PERSONAL
PROPERTY CONTAINED WITHIN THE FACILITY, SELLER HAS NOT MADE AND DOES NOT MAKE
ANY REPRESENTATIONS, PROMISES OR WARRANTIES (EXPRESS OR IMPLIED AND WHETHER
DEALING WITH MERCHANTABILITY, FITNESS FOR USE OR OTHERWISE). PURCHASER HEREBY
WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY AND ALL IMPLIED WARRANTIES. NO ORAL
WARRANTIES, REPRESENTATIONS OR STATEMENTS SHALL BE CONSIDERED A PART HEREOF.
SELLER ASSUMES NO RESPONSIBILITY FOR THE CONDITION OF THE FACILITY OR PERSONAL
PROPERTY, HAS MADE NO REPRESENTATIONS WITH RESPECT THERETO AND SHALL HAVE NO
LIABILITY FOR THE ACCURACY OF ANY INSPECTION REPORT RELATING THERETO, PURCHASER
HEREBY ACKNOWLEDGING THAT PURCHASER HAS INSPECTED THE FACILITY AND PERSONAL
PROPERTY AND IS SATISFIED WITH THE CONDITION THEREOF, INCLUDING, WITHOUT
LIMITATION, THE ENVIRONMENTAL CONDITION OF THE FACILITY.
Section 7.14 RELEASE. WITHOUT LIMITING THE PROVISIONS OF SECTION 7.13
ABOVE, PURCHASER HEREBY RELEASES SELLER AND (AS THE CASE MAY BE) SELLER'S
OFFICERS, DIRECTORS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS AND
AGENTS FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEY'S FEES WHETHER THE SUIT IS
INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT
(HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS") ARISING FROM OR RELATING TO
(i)_ ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR
CONSTRUCTION OF THE FACILITY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR
OTHERWISE, OR (ii)_ ANY OTHER CONDITIONS, INCLUDING ENVIRONMENTAL AND OTHER
PHYSICAL CONDITIONS, AFFECTING THE FACILITY WHETHER THE SAME ARE A RESULT OF
NEGLIGENCE OR OTHERWISE. THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY
INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER ANY ENVIRONMENTAL LAWS OF THE
UNITED STATES, THE STATE IN WHICH THE FACILITY IS LOCATED OR ANY POLITICAL
SUBDIVISION THEREOF OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY
23
OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS,
RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS,
REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT.
PURCHASER ACKNOWLEDGES THAT PURCHASER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF PURCHASER'S SELECTION AND PURCHASER IS GRANTING THIS RELEASE OF ITS
OWN VOLITION AND AFTER CONSULTATION WITH PURCHASER'S COUNSEL. THE RELEASE SET
FORTH HEREIN DOES NOT APPLY TO THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH
IN THIS AGREEMENT OR ANY INDEMNITY OR WARRANTY MADE BY SELLER IN THIS AGREEMENT
OR ANY DOCUMENT DELIVERED BY SELLER AT CLOSING.
Section 7.15 Disclosure Supplement. From time to time prior to 5:00
p.m. New York City time on July 30, 1998, Seller may supplement or amend the
Disclosure Schedule with respect to any matter hereafter arising or any
information obtained after the date hereof. Any supplement to or amendment of
the Disclosure Schedule shall be treated for all purposes of this Agreement as
though the matters identified or described therein had been included in the
Disclosure Schedule delivered by Seller contemporaneously with the execution and
delivery of this Agreement.
Article VIII. CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligations. The obligation of
Purchaser to purchase the Acquired Assets and assume the Assumed Liabilities and
the obligation of Seller to sell, assign, convey and deliver the Acquired Assets
to Purchaser shall be subject to the satisfaction prior to the Closing of the
following conditions:
a. HSR. Any applicable waiting period under the HSR Act
shall have expired or been terminated.
b. No Litigation, Injunctions, or Restraints. No temporary
restraining order, preliminary or permanent injunction
or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this
Agreement shall be in effect.
c. Lender Consent. All required consents to the assumption
by Purchaser of all obligations and liabilities of
Seller pursuant to the Mortgage shall have been
obtained. Any fees charged by Lender in connection with
such consent shall be the responsibility of Seller.
Purchaser agrees to provide any reasonable form of
assumption of Mortgage required by Lender.
24
Section 8.2 Conditions to Obligations of Purchaser. The obligation of
Purchaser to purchase the Acquired Assets and assume the Assumed Liabilities is
subject to the satisfaction on and as of the Closing of each of the following
conditions:
a. Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall
be true and correct as of the Closing as though made on
and as of the Closing, except (i) to the extent such
representations and warranties relate to an earlier
date (in which case such representations and warranties
shall be true and correct as of such earlier date) and
(ii) except for breaches of representations and
warranties as to matters that, individually or in the
aggregate (and without regard to any materiality
qualifications contained therein), are not reasonably
likely to have a Material Adverse Effect, and Purchaser
shall have received a certificate of Seller to such
effect.
b. Performance of Obligations of Seller. Seller shall have
performed or complied in all material respects with all
obligations, conditions and covenants required to be
performed by it under this Agreement at or prior to the
Closing, and Purchaser shall have received a
certificate of Seller to such effect.
c. Opinion of Counsel to Seller.1 Purchaser shall have
received an opinion of counsel to Seller, dated the
Closing Date, to the effect that:
(i) Seller is a general partnership duly
organized, validly existing and in
good standing under the laws of the
State of Texas. Seller is duly
qualified to conduct business as a
foreign entity in the State of
Nebraska.
(ii) Seller has the power and authority
to execute this Agreement and to
consummate the transactions
contemplated hereby; the execution
and delivery of this Agreement by
Seller and the consummation of the
transactions contemplated hereby
have been duly authorized; and this
Agreement has been duly executed and
delivered by Seller and, assuming
- --------
1 Opinion to be given by Nebraska/Texas counsel.
25
the due authorization, execution and
delivery of this Agreement by
Purchaser, constitutes the legal,
valid and binding obligation of
Seller enforceable against Seller in
accordance with its terms, subject
to applicable bankruptcy,
insolvency, reorganization,
moratorium, fraudulent transfer and
other similar laws affecting
creditors' rights generally from
time to time in effect and to
general principles of equity
(including, without limitation,
concepts of materiality,
reasonableness, good faith and fair
dealing) regardless of whether
considered in a proceeding in equity
or at law.
d. Deliveries. Seller shall have executed and delivered to
Purchaser (i) a deed, with covenants against grantor's
acts, for the real property included in the Facility;
(ii) a general assignment and bill of sale in
substantially the form set forth on Exhibit B hereto
(the "General Assignment and Bill of Sale") and (iii)
any required transfer tax forms and affidavits.
e. Absence of Certain Changes. Between the date of this
Agreement and the Closing Date, no event shall have
occurred, other than the announcement by a competitor
or potential competitor of a plan or intention to
construct a facility that would compete with the
Business and other than decreases in occupancy levels
due to natural attrition, which event would reasonably
be expected to result in an annualized decrease in the
combined net operating income before debt service for
calendar year 1998 of (i) the Business and (ii) the
business conducted at the 186-unit retirement community
located at 12335 West Bend Drive, St. Louis, Missouri
(the "Tesson Heights Business") of $300,000 or more, as
compared to annualized combined net operating income
before debt service of the Business and the Tesson
Heights Business for 1998 based on the seven-month
period ended July 31, 1998.
f. GAAP Financial Statements. Prior to the Closing, Seller
shall have provided Purchaser with audited financial
statements relating to the Business as of December 31,
1996 and December 31, 1997, which audited financial
statements shall be prepared in accordance with
generally accepted accounting principles.
Section 8.3 Conditions to the Obligations of Seller. The obligations
of Seller to sell, assign, convey, and deliver the Acquired Assets, or to cause
the Acquired Assets to be sold, assigned, conveyed or delivered, as applicable,
is subject to the satisfaction on and as of the Closing of each of the following
conditions:
26
a. Representations and Warranties. The representations and
warranties of Purchaser set forth in this Agreement
shall be true and correct in all material respects as
of the Closing as though made on and as of the Closing,
except to the extent such representations and
warranties expressly relate to an earlier date (in
which case such representations and warranties shall be
true and correct as of such earlier date), and Seller
shall have received a certificate signed by an
authorized officer of Purchaser to such effect.
b. Performance of Obligations of Purchaser. Purchaser
shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing, and Seller shall
have received a certificate signed by an authorized
officer of Purchaser to such effect.
c. Opinion of Purchaser's Counsel. Seller shall have
received an opinion of counsel to Purchaser, dated the
Closing Date, to the effect that:
(i) Purchaser is a corporation duly
organized, validly existing and in
good standing under the laws of its
state of incorporation. Purchaser is
duly qualified to conduct business
as a foreign corporation in the
State of Nebraska.
(ii) Purchaser has the requisite corpor-
ate power and authority to execute
this Agreement and to consummate the
transactions contemplated hereby;
the execution and delivery of this
Agreement and the consummation of
the transactions contemplated hereby
have been duly authorized by all
necessary corporate action on the
part of Purchaser; and this
Agreement has been duly executed and
delivered by Purchaser and, assuming
the due authorization, execution and
delivery of this Agreement by
Seller, constitutes the legal, valid
and binding obligation of Purchaser
enforceable against Purchaser in
accordance with its terms, subject
to applicable bankruptcy,
insolvency, reorganization,
moratorium, fraudulent transfer and
other similar laws affecting
creditors' rights generally from
27
time to time in effect and to
general principles of equity
(including, without limitation,
concepts of materiality, reasonable-
ness, good faith and fair dealing)
regardless of whether considered in
a proceeding in equity or at law.
d. Deliveries. Purchaser shall have executed and delivered
(i) a Closing Date Undertaking in substantially the
form set forth on Exhibit C hereto (the "Closing Date
Undertaking") and (ii) any required transfer tax forms
and affidavits.
e. Partnership Consent. The Partnership Consent shall have
been obtained.
Article IX. TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination
a. Notwithstanding anything to the contrary in this
Agreement, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time
prior to the Closing:
(i) by Purchaser by giving written
notice to Seller at any time prior
to 5:00 p.m., New York City time, on
July 30, 1998; provided, however,
that if Seller shall have supple-
mented or amended the Disclosure
Schedule after 5:00 p.m., New York
City time, on July 28, 1998, then
the time during which Purchaser may
terminate this Agreement pursuant to
this Section 9.1(a)(i) shall be ex-
tended from 5:00 p.m., New York City
time, on July 30, 1998 until 5:00
p.m., New York City time, on August
3, 1998;
(ii) by Purchaser or Seller at any time
from and after 5:00 p.m., New York
City time, on August 13, 1998 until
such time as Seller shall have
advised Purchaser that (x) Seller
has obtained the Partnership Consent
and (y) the consent of at least 51%
in interests of the Class A Limited
Partners of the Tesson Heights
Limited Partnership to the trans-
actions contemplated by that certain
Asset Purchase Agreement dated as of
July 28, 1998 between Capital Senior
Living Properties, Inc. and Tesson
Heights Enterprises has been
obtained;
(iii) by mutual written consent of Seller
and Purchaser;
28
(iv) by Seller if any of the conditions
set forth in Sections 8.1 or 8.3
shall have become incapable of
fulfillment and shall not have been
waived by Seller; or
(v) by Purchaser if any of the
conditions set forth in Sections 8.1
or 8.2 shall have become incapable
of fulfillment and shall not have
been waived by
Purchaser;
(vi) by Seller or Purchaser if the
Closing does not occur on or prior
to October 31, 1998; or
(vii) as provided for in Section 7.12(b);
provided, however, that the party seeking termination pursuant to clause (iv),
(v), (vi) or (vii) is not in breach in any material respects of any of its
representations, warranties, covenants or agreements contained in this
Agreement; and further provided, that in the event of termination of this
Agreement by Purchaser or Seller pursuant to clause (ii) above, Seller shall
promptly reimburse Purchaser for third party fees and expenses and for other
out-of-pocket expenses (but not internal time charges) reasonably incurred by
Purchaser in connection with the transactions contemplated hereby, upon
presentation by Purchaser of substantiating evidence thereof, up to a maximum
reimbursement equal to the sum of (x) $30,000 plus (y) the amount of any filing
fees paid by Purchaser in connection with filings made pursuant to the HSR Act
prior to the date of such termination.
b. In the event of termination by Seller, on the one hand,
or Purchaser, on the other hand, pursuant to this
Section 9.1, written notice thereof shall forthwith be
given to the other party and the transactions
contemplated by this Agreement shall be terminated,
without further action by any party. If the
transactions contemplated by this Agreement are
terminated as provided herein:
(i) Purchaser shall return all documents
and other material received from
Seller relating to the Business and
to the transactions contemplated
hereby, whether so obtained before
or after the execution hereof, to
Seller; and
(ii) all confidential information
received by Purchaser with respect
to Seller or the Business shall be
treated in accordance with the
Confidentiality Agreement, which
shall remain in full force and
effect notwithstanding the
termination of this Agreement.
29
c. If this Agreement is terminated and the transactions
contemplated hereby are abandoned, this Agreement shall
become null and void and of no further force and
effect, except for the provisions of the last sentence
of Section 7.2 and the provisions of Sections 7.7, 9.1,
11.7, 11.8 and 11.9. Nothing in this Section 9.1 shall
be deemed to release any party from any liability for
any breach by such party of the terms and provisions of
this Agreement.
Section 9.2 Amendments and Waivers. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. By an instrument in writing, Purchaser, on the one hand, or Seller, on
the other hand, may waive compliance by the other party with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform.
Article X. INDEMNIFICATION
Section 10.1 Indemnification by Seller
a. Seller hereby agrees to indemnify Purchaser and its
Affiliates and their respective officers, directors and
employees (the "Purchaser Indemnified Parties")
against, and agrees to hold them harmless from, any
Loss to the extent such Loss arises from or in
connection with the foregoing:
(i) any breach by Seller of any
representation or warranty contained
in this Agreement or any other
agreement or documents delivered in
connection herewith;
(ii) any breach by Seller of any of its
covenants contained in this
Agreement;
(iii) any and all claims made by third
parties arising out of the operation
of the Business by Seller prior to
the Closing Date; or
(iv) any Excluded Liability.
Notwithstanding the foregoing, the indemnifications in favor of the Purchaser
Indemnified Parties contained in this Section 10.1 shall be effective only as
follows: (x) there shall be no indemnification in respect of any individual Loss
or group of related Losses in an amount less than $10,000; and (y) with regard
to Losses in respect of which notice is given to Seller that indemnification is
sought pursuant to this Section 10.1 during the period from the Closing Date
until the 180th day after the Closing Date (the "First Six-Month Period"), the
indemnifications in favor of the Purchaser Indemnified Parties shall not be
effective once the aggregate dollar amount of all such Losses actually paid by
Seller in respect of which notice is or was given during the First Six-Month
Period aggregates $2,300,000, and Seller shall thereafter have no further
obligations or liabilities with respect to cany Losses in excess of such amount;
30
and (z) with regard to Losses in respect of which notice is given to Seller that
indemnification is sought pursuant to this Section 10.1 during the period from
the 181st day after the Closing Date until the 365th day after the Closing Date
(the "Second Six-Month Period"), the indemnifications in favor of the Purchaser
Indemnified Parties shall not be effective once the aggregate dollar amount of
all such Losses actually paid by Seller in respect of which notice is or was
given during the Second Six-Month Period aggregates an amount equal to (A)
$1,150,000 less (B) the amount of Losses actually paid by Seller in respect of
which notice was given to Seller that indemnification was sought pursuant to
this Section 10.1 during the First Six-Month Period, and Seller shall thereafter
have no further obligations or liabilities with respect to any Losses in excess
of such amount; provided, however, that the foregoing limitations on Seller's
indemnification obligations pursuant to this Section 10.1 shall not apply to any
indemnification by Seller for any Losses asserted against, imposed upon or
incurred by the Purchaser Indemnified Parties resulting from any Excluded
Liability or resulting from the operation of the Business by Seller prior to the
Closing Date.
1. Purchaser acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement
shall be pursuant to the indemnification provisions
set forth in this Article X. In furtherance of the
foregoing, Purchaser hereby waives, to the fullest
extent permitted under applicable law, any and all
rights, claims and causes of action it may have
against Seller arising under or based upon any
Governmental Rule.
Section 10.2 Indemnification by Purchaser
a. Purchaser hereby agrees to indemnify Seller and its
Affiliates and their respective officers, general
partners, limited partners, directors, officers and
employees (the "Seller Indemnified Parties") against,
and agrees to hold them harmless from, any Loss to the
extent such Loss arises from or in connection with:
(i) any breach by Purchaser of any
representation or warranty contained
in this Agreement or any other
agreement or document delivered in
connection herewith;
(ii) any breach by Purchaser of any
covenant contained in this
Agreement;
(iii) any and all claims made by third
parties arising out of the operation
of the Business by Purchaser after
the Closing Date; or
(iv) any Assumed Liability, including any
obligations or liability included in
Section 2.3(a)(iv).
31
Notwithstanding the foregoing, the indemnifications in favor of the Seller
Indemnified Parties contained in this Section 10.2 shall be effective only as
follows: (x) there shall be no indemnification in respect of any individual Loss
or group of related Losses in an amount less than $10,000; and (y) with regard
to Losses in respect of which notice is given to Purchaser that indemnification
is sought pursuant to this Section 10.2 during the First Six-Month Period, the
indemnifications in favor of the Seller Indemnified Parties shall not be
effective once the aggregate dollar amount of all such Losses actually paid by
Purchaser in respect of which notice is or was given during the First Six-Month
Period aggregates $2,300,000, and Purchaser shall thereafter have no further
obligations or liabilities with respect to any Losses in excess of such amount;
and (z) with regard to Losses in respect of which notice is given to Purchaser
that indemnification is sought pursuant to this Section 10.2 during the Second
Six-Month Period, the indemnifications in favor of the Seller Indemnified
Parties shall not be effective once the aggregate dollar amount of all such
Losses actually paid by Purchaser in respect of which notice is or was given
during the Second Six-Month Period aggregates an amount equal to (A) $1,150,000
less (B) the amount of Losses actually paid by Purchaser in respect of which
notice was given to Purchaser that indemnification was sought pursuant to this
Section 10.2 during the First Six-Month Period, and Purchaser shall thereafter
have no further obligations or liabilities with respect to any Losses in excess
of such amount; provided, however, that the foregoing limitations on Purchaser's
indemnification obligations pursuant to this Section 10.2 shall not apply to any
indemnification by Purchaser for any Losses asserted against, imposed upon or
incurred by the Seller Indemnified Parties resulting from any Assumed Liability
or resulting from the operation of the Business by Purchaser after the Closing
Date.
b. Seller acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall
be pursuant to the indemnification provisions set forth
in this Article X. In furtherance of the foregoing,
Seller hereby waives, to the fullest extent permitted
under applicable law, any and all rights, claims and
causes of action it may have against Purchaser arising
under or based upon any Governmental Rule.
Section 10.3 Losses Net of Insurance, etc. The amount of any Loss for
which indemnification is provided under this Article X shall be net of any
amounts recovered or recoverable by the indemnified party under insurance
policies with respect to such Loss.
Section 10.4 Termination of Indemnification. The obligations to
indemnify and hold harmless any party, (a) pursuant to Sections 10.1(a)(i) and
10.2(a)(i), shall terminate when the applicable representation or warranty
terminates pursuant to Section 11.3 and (b) pursuant to the other clauses of
Sections 10.1 and 10.2, shall not terminate.
32
Section 10.5 Procedure.
a. In order for an indemnified party (the "indemnified
party") to be entitled to any indemnification provided
for under this Agreement, such indemnified party shall,
following the discovery of the matters giving rise to
any Loss, notify the indemnifying party (the
"indemnifying party") in writing of its claim for
indemnification for such Loss, specifying in reasonable
detail the nature of such Loss and the amount of the
liability estimated to accrue therefrom; provided,
however, that failure to give such notification shall
not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have
been actually prejudiced as a result of such failure
(except that the indemnifying party shall not be liable
for any expenses incurred during the period in which
the indemnified party failed to give such notice and
except that, with regard to claims for indemnification
in respect of which notice is required to be given
during the First Six-Month Period or the Second
Six-Month Period, as the case may be, pursuant to the
provisions of Sections 10.1 and 10.2 above, the
indemnifying party shall have no liability for claims
in respect of which notice has not been received within
the required time period). Thereafter, the indemnified
party shall deliver to the indemnifying party, within
five business days after the indemnified party's
receipt of such notice, all information and
documentation reasonably requested by the indemnifying
party with respect to such Loss.
b. If the indemnification sought pursuant hereto involves
a claim made by a third party against the indemnified
party (a "Third Party Claim"), the indemnifying party
shall be entitled to participate in the defense of such
Third Party Claim and, if it so chooses, to assume the
defense of such Third Party Claim with counsel selected
by the indemnifying party. Should the indemnifying
party so elect to assume the defense of a Third Party
Claim, the indemnifying party shall not be liable to
the indemnified party for any legal expenses
subsequently incurred by the indemnified party in
connection with the defense thereof. If the
indemnifying party assumes such defense, the
indemnified party shall have the right to participate
in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the
indemnifying party, it being understood that the
indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and
expenses of counsel employed by the indemnified party
for any period during which the indemnifying party has
33
not assumed the defense thereof (other than during any
period in which the indemnified party shall have failed to
give notice of the Third Party Claim as provided above). If
the indemnifying party chooses to defend or prosecute a
Third Party Claim, all of the parties hereto shall cooperate
in the defense or prosecution thereof. Such cooperation
shall include the retention and (upon the indemnifying
party's request) the provision to the indemnifying party of
records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a
mutually convenient basis to provide additional information
and explanation of any material provided hereunder. If the
indemnifying party chooses to defend or prosecute any Third
Party Claim, the indemnified party will agree to any
settlement, compromise or discharge of such Third Party
Claim which the indemnifying party may recommend and which
by its terms obligates the indemnifying party to pay the
full amount of the liability in connection with such Third
Party Claim. Whether or not the indemnifying party shall
have assumed the defense of a Third Party Claim, the
indemnified party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party
Claim without the indemnifying party's prior written
consent.
Article XI. General Provisions
Section 11.1 Notices. All notices, requests and other communica-
tions hereunder shall be in writing and shall be sent, delivered or mailed,
addressed as follows:
a. if to Purchaser, to:
David R. Brickman, Esq.
Capital Senior Living Corporation
14160 Dallas Parkway, Suite 300
Dallas, Texas 75240
and
Mr. Lawrence Cohen
Capital Senior Living Corporation
237 Park Avenue
21st Floor
New York, New York 10017
with a copy (which shall not constitute
notice) to:
34
Jenkens & Gilchrist
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202-2799
Attention: Winston W. Walp II, Esq.
b. if to Seller, to:
Andrew C. Jacobs
Gramercy Hill Corp.
c/o Interactive Teleservices
1033 O Street
Suite 304
Lincoln, Nebraska 68508
with a copy (which shall not constitute
notice) to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Denise A. Cerasani, Esq.
Aileen C. Meehan, Esq.
Each such notice, request or other communication shall be given (i) by hand
delivery, (ii) by certified mail or (iii) by nationally recognized courier
service. Each such notice, request or communication shall be effective when
delivered at the address specified in this Section 11.1 (or in accordance with
the latest unrevoked direction from the receiving party).
Section 11.2 Headings. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 11.3 Survival of Representations and Warranties. All
representations and warranties of Seller and Purchaser contained herein or made
pursuant hereto shall survive the Closing Date for a period of one year after
the Closing Date. Any right of indemnification pursuant to Article X hereof with
respect to a claimed breach of a representation or warranty shall expire at the
date of termination of the representation or warranty claimed to be breached
(the "Termination Date"), unless on or prior to the Termination Date the party
from whom indemnification is sought shall have received notice in accordance
with the provisions of Section 10.5 herein.
Section 11.4 Severability. If any provision of this Agreement, or the
application thereof to any person, place or circumstances, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such provisions as applied to other persons,
places, and circumstances shall remain in full force and effect; provided,
however, that in the event that the terms and conditions of this Agreement are
35
materially altered as a result of this paragraph, the parties hereto will
renegotiate the terms and conditions of this Agreement to resolve any
inequities.
Section 11.5 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 11.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement constitute the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties hereto with respect to the subject matter hereof. Except as
specifically provided herein or therein, such agreements are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder or thereunder.
Section 11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
Section 11.8 Consent to Jurisdiction. Each of Purchaser and Seller
irrevocably submits to the non-exclusive jurisdiction of any Nebraska state
court and any Federal Court located in the State of Nebraska for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of Purchaser and Seller further agrees
that service of any process, summons, notice or document by U.S. registered mail
to such party's respective address set forth in Section 11.1 shall be effective
service of process for any action, suit or proceeding in Nebraska with respect
to any matters to which it has submitted to jurisdiction as set forth above in
the immediately preceding sentence. Each of Purchaser and Seller irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in any Nebraska state court and any Federal Court located in the State of
Nebraska and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
Section 11.9 Publicity. Except as may be required by applicable
securities laws upon the advice of counsel, neither Seller, on the one hand, nor
Purchaser, on the other hand, shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
Section 11.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent (which consent shall not be
unreasonably withheld) of the other parties, except that Purchaser may assign
its rights, interests and obligations hereunder to any Affiliate of Capital
Senior Living Corporation without the prior written consent of Seller, provided
that, prior to any such assignment to an Affiliate of Capital Senior Living
Corporation,
36
Purchaser executes and delivers to Seller a written guaranty, in form reasonably
satisfactory to Seller, of the performance of all of Purchaser's obligations
under this Agreement. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.
IN WITNESS WHEREOF, Purchaser and Seller have caused this
Agreement to be signed by their respective parties thereunto duly authorized,
all of the date first written above.
CAPITAL SENIOR LIVING
PROPERTIES, INC.
By: /s/ David R. Brickman
---------------------------
David R. Brickman
Vice President
ATTEST:
By: /s/ Scott Shamblin
------------------
Scott Schamblin
Director of Investor Services
GRAMERCY HILL ENTERPRISES, a
Texas general partnership
By: Gramercy Hill Limited Partnership,
a Nebraska limited partnership
By: Gramercy Hill Corp., a Nebraska
corporation
By: /s/ Andrew C. Jacobs
------------------------------
Andrew C. Jacobs
President
ATTEST:
By: /s/ Stephanie Clerc
-------------------
Stephanie Clerc
NY--187218.7
37
GRAMERCY HILL CORP., a
Nebraska Corporation
By: /s/ Andrew C. Jacobs
--------------------------------
Andrew C. Jacobs
President
By: /s/ Stephanie Clerc
-------------------
Stephanie Clerc
38