Exhibit 2.14
EXECUTION COPY
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PURCHASE AND SALE AGREEMENT
AEW "PACIFIC GARDENS" PORTFOLIO AND
THE AEW GLENWOOD GARDENS, FEDERAL WAY AND FAIRWAYS RESIDENCES
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TABLE OF CONTENTS
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SECTION 1 SALE OF PROPERTY AND ACCEPTABLE TITLE......................... 1
1.01 Agreement to Buy and to Sell Property......................... 1
1.02 Title......................................................... 2
1.03 Survey........................................................ 4
1.04 Assumed Liabilities........................................... 4
SECTION 2 PURCHASE PRICE, ACCEPTABLE FUNDS, DEPOSIT AND ESCROW OF
DEPOSIT....................................................... 4
2.01 Purchase Price................................................ 4
2.02 Payment of Monies............................................. 5
2.03 Payment of Purchase Price..................................... 5
2.04 Deposit; Escrow Agent......................................... 6
2.05 Escrow Provisions............................................. 7
SECTION 3 THE CLOSING................................................... 8
SECTION 4 SELLER'S DELIVERIES........................................... 9
4.01 Leases........................................................ 9
4.02 Taxes......................................................... 9
4.03 Current Rent Roll............................................. 9
4.04 Service and Other Contracts................................... 10
4.05 Utility Bills................................................. 10
4.06 Environmental Reports......................................... 10
4.07 Operating Statements.......................................... 10
4.08 Commission Agreements......................................... 10
4.09 Loan Documents................................................ 10
4.10 Property Related Materials.................................... 10
4.11 Disclaimer.................................................... 10
SECTION 5 REPRESENTATIONS AND WARRANTIES OF SELLER...................... 10
5.01 Ability to Perform............................................ 10
5.02 Absence of Conflicts.......................................... 11
5.03 Patriot Act................................................... 11
5.04 Leases........................................................ 11
5.05 Service and Other Contracts................................... 12
5.06 No Actions.................................................... 12
5.07 No Violation Notice........................................... 12
5.08 [Intentionally Deleted]....................................... 12
5.09 Operating Statements.......................................... 13
5.10 Vehicles and Equipment; Personal Property..................... 13
5.11 Bankruptcy Matters............................................ 13
5.12 Medicare; Medicaid; Third Party Payor Programs................ 13
5.13 Title to Personal Property.................................... 15
5.14 Environmental Matters......................................... 15
5.15 Permits and Licensure Requirements............................ 15
5.16 Inventory..................................................... 16
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5.17 Commissions................................................... 16
5.18 Labor Disputes; Employees..................................... 16
5.19 Compliance with Laws.......................................... 16
5.20 Materials Provided............................................ 17
5.21 ERISA......................................................... 17
5.22 Knowledge; Notice of Breach; Closing Certificate; Certain Cure
Rights........................................................ 17
SECTION 6 NOT USED...................................................... 19
SECTION 7 REPRESENTATIONS AND WARRANTIES OF BUYER....................... 19
7.01 Ability to Perform............................................ 19
7.02 Patriot Act................................................... 19
7.03 Absence of Conflicts.......................................... 19
7.04 ERISA......................................................... 19
7.05 Survival...................................................... 20
SECTION 8 ACCESS; PURCHASE "AS IS"; THIRD PARTY APPROVALS............... 20
8.01 Access........................................................ 20
8.02 Omitted....................................................... 21
8.03 Waivers....................................................... 21
8.04 Hazardous Materials Waiver.................................... 23
8.05 No Financial Representation................................... 24
8.06 Assistance with Financial Statements.......................... 24
8.07 Third Party Approvals......................................... 24
8.08 Loan Assumption and Payoff.................................... 30
8.09 [Intentionally Deleted]....................................... 33
8.10 Natural Hazard Disclosure..................................... 33
8.11 Employees..................................................... 33
SECTION 9 INSURANCE; RISK OF LOSS....................................... 35
9.01 Maintenance of Insurance...................................... 35
9.02 Casualty or Condemnation...................................... 35
9.03 Tarzana Property Risk of Loss................................. 36
SECTION 10 SELLER'S OBLIGATIONS PRIOR TO CLOSING......................... 36
10.01 No Lease Amendments........................................... 36
10.02 Continuation of Service Contracts and Equipment Leases;
Commercial Leases............................................. 37
10.03 Replacement of Personal Property.............................. 37
10.04 Tax Proceedings............................................... 37
10.05 Access........................................................ 37
10.06 [Intentionally Deleted]....................................... 37
10.07 Continued Operations.......................................... 37
10.08 Cooperation; Entry Access..................................... 37
10.09 Transfer of Records........................................... 38
10.10 Final Cost Report............................................. 38
10.11 Tail Insurance................................................ 39
10.12 Employees..................................................... 39
10.13 Operating Statements.......................................... 39
10.14 Cross Easement and Shared Services............................ 39
SECTION 11 SELLER'S CLOSING OBLIGATIONS.................................. 40
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11.01 Closing, Deliveries and Obligations........................... 40
11.02 Expenses...................................................... 42
11.03 Tarzana Closings.............................................. 42
SECTION 12 BUYER'S CLOSING OBLIGATIONS................................... 43
12.01 Payment of Purchase Price..................................... 43
12.02 Closing Documents............................................. 43
12.03 State Law Disclosures......................................... 43
12.04 Medicare/Medicaid Assignment.................................. 43
12.05 Business Associates Agreement................................. 43
12.06 Other Documents and Actions................................... 43
12.07 Buyer's Expenses.............................................. 44
12.08 Settlement Statement.......................................... 44
SECTION 13 APPORTIONMENTS AND ADJUSTMENTS TO PURCHASE PRICE.............. 44
13.01 Apportionment................................................. 44
13.02 Resident Rents and Services Fees.............................. 47
13.03 Post-Closing Reconciliation Process........................... 47
SECTION 14 FAILURE TO PERFORM............................................ 47
14.01 Buyer's Election.............................................. 47
14.02 Seller's Default.............................................. 48
14.03 Buyer's Default............................................... 48
SECTION 15 BROKERAGE FEES................................................ 49
15.01 Brokerage Fees................................................ 49
SECTION 16 NOTICES....................................................... 49
16.01 Effective Notices............................................. 49
SECTION 17 INDEMNIFICATION; LIMITATIONS ON SURVIVAL...................... 49
17.01 Indemnification by Seller..................................... 49
17.02 Indemnification by Buyer...................................... 50
17.03 Notification of Claims........................................ 50
17.04 Survival of Representations, Warranties and Covenants......... 51
SECTION 18 MISCELLANEOUS PROVISIONS...................................... 51
18.01 Assignment.................................................... 51
18.02 Limitation of Seller's Liability.............................. 52
18.03 Integration................................................... 54
18.04 Governing Law................................................. 54
18.05 Captions...................................................... 54
18.06 Bind and Inure................................................ 54
18.07 Drafts........................................................ 54
18.08 Number and Gender............................................. 54
18.09 Attachments................................................... 54
18.10 Like Kind Exchange............................................ 54
18.11 No Third-Party Beneficiary.................................... 55
18.12 Public Disclosure............................................. 55
18.13 Further Assurances............................................ 56
18.14 Attorney's Fees............................................... 56
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (the "Agreement") dated as of February 7,
2006 (the "Effective Date"), among the parties listed on Schedule 1.0 attached
hereto (collectively and individually, as the context may require, "Seller"),
and BLC Acquisitions, Inc., a Delaware corporation (together with its permitted
successors and assignees, "Buyer").
In consideration of the mutual undertakings and covenants herein contained,
Seller and Buyer hereby covenant and agree as follows:
SECTION 1
SALE OF PROPERTY AND ACCEPTABLE TITLE
1.01 Agreement to Buy and to Sell Property. Each applicable Seller shall
sell to Buyer, and Buyer shall purchase from each applicable Seller, at the
price and upon the terms and conditions set forth in this Agreement, the
following property owned by such Seller:
(a) as applicable, the fee interest in those certain tracts or parcels
of land described on Schedule A-1 attached hereto (collectively, the "Land").
For convenience of reference, a general schedule of the Land is contained at
Schedule A hereto.
(b) the buildings, improvements, facilities, fixtures, amenities,
structures, driveways and walkways constructed on the Land (collectively, the
"Improvements");
(c) all right, title and interest of Seller in and to any alleys,
strips or gores adjoining the Land, and any easements, rights-of-way or other
interests in, on, under or to, any land, highway, street, road, right-of-way or
avenue, open or proposed, in, on, under, across, in front of, abutting or
adjoining the Land, and all right, title and interest of Seller in and to any
awards for damage thereto by reason of a change of grade thereof;
(d) the accessions, appurtenant rights, privileges, appurtenances and
all the estate and rights of Seller in and to the Land and the Improvements, as
applicable, or otherwise appertaining to any of the property described in the
immediately preceding clauses (a), (b) and/or (c) (the property described in the
preceding clauses (a) through (d) is referred to herein collectively as the
"Real Property");
(e) fee or leasehold title to all equipment used in connection with
the Real Property (the "Equipment") and all other personal property used in
connection with the Real Property, including all supplies, inventory,
consumables, perishable and non-perishable food products, and other similar
property used in the operation of the Facility (collectively, the "Inventory"
and together with the Equipment, the "Personal Property"); provided that
Equipment, Inventory and Personal Property shall exclude items identified on
Schedule B as being retained by the applicable Manager;
(f) all of Seller's interest, to the extent assignable, in any
licenses, permits, approvals, guarantees, warranties and any other intangible
property now or hereafter owned by Seller and used in connection with the Land,
Improvements and Personal Property (but
specifically excluding the right to use the trade styles or names and trade
dress listed on Schedule B-1 attached hereto ("Excluded Names")), but otherwise
including all names or trade dress now used in connection with the same, and any
and all Leases (as defined in Section 5.04), Assumed Service Contracts (subject
to the provisions of Section 5.05), Equipment Leases (as defined in Section
5.05) and other contract rights, escrow or security deposits (but not security
deposits on Residency Agreements), utility agreements or other rights related to
the ownership of or use and operation of the Property, as hereinafter defined.
(g) Except for Seller's records, files and materials described on
Schedule B-2 and those which are confidential to Seller or Manager or for which
transfer is restricted by law (all of which may be retained by Seller or its
Manager), all books, records and documents in Seller's or Manager's possession
(whether maintained by Seller or its Manager (as hereinafter defined)) related
to the operations conducted at the Real Property, including financial and
accounting records, customer lists, referral source lists, regulatory surveys
and reports, incident tracking reports, advertising materials, sales leads and
referral information, resident records, employee files and all data on computers
at the Real Property;
(h) all security deposits on Commercial Leases (but not security
deposits under Residency Agreements), prepaid rent, reservation deposits,
move-in fees, utilities, utility deposits and other prepaid items related to the
operations conducted at the Real Property (but specifically excluding
non-refundable administrative fees); and
(i) rights, if any, to telephone and fax numbers, building names
(other than Excluded Names) and other general intangible assets used in the
operations conducted at the Real Property.
All of the items described in subparagraphs (a), (b), (c), (d), (e), (f),
(g), (h) and (i) above are collectively the "Property" or "Properties."
References to "Property" herein may mean, in context, a specific assisted living
facility included in the Properties and not all of the Properties.
To the extent any of the Property is owned by or in the possession of any
manager or operator of Seller (each, a "Manager" and together, the "Managers"),
Seller shall cause such Manager to convey and deliver such Property to Buyer at
the Closing in the manner and condition required herein.
1.02 Title. As applicable, each Seller shall convey to Buyer by Deed (as
defined in Section 11.01(a)) and Buyer shall accept the fee simple title to the
Land and Improvements owned by such Seller in accordance with the terms of this
Agreement, and Buyer's obligation to accept said title shall be conditioned upon
Buyer then being conveyed good and clear record and marketable fee simple title
to the Property, subject only to the Permitted Exceptions (as hereinafter
defined). All references to Closing in this Section 1.02 shall mean, with
respect to the Tarzana Property, the Second Tarzana Closing (as hereinafter
defined); provided that Buyer shall be obligated to accept title to the Tarzana
Property subject to, and Seller shall have no obligation to cure, any lien,
claim or encumbrance against the Tarzana Property not shown on the Tarzana
Pro-Forma and arising after Closing but prior to the Second Tarzana Closing,
other than any lien, claim or encumbrance created by, through or under Seller,
its Manager or their respective affiliates.
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Buyer acknowledges that it has received from Stewart Title Guaranty Company
(the "Title Insurer") for each Property a pro-forma title insurance policy with
legible copies of all instruments and plans mentioned therein as exceptions to
title (all of such items are hereinafter collectively referred to as the
"Pro-Formas"). The Pro-Formas are attached hereto as Schedule Z. Buyer has
approved those matters set forth on Schedule B of the Pro-Formas (all such
matters disclosed in Schedule B of the Pro-Formas and any matters which, with
the consent of Buyer, the Title Insurer has agreed to insure over in the
Pro-Formas, being collectively referred to herein with respect to each
applicable Property as the "Permitted Exceptions"). Seller covenants and agrees
to satisfy the title insurance requirements set forth in Schedule CC attached
hereto at or prior to Closing (the "Title Requirements"). Accordingly, provided
Seller satisfies the Title Requirements at or before Closing, Buyer has no right
to object to any title exceptions or terminate this Agreement pursuant to this
Section 1.02 with respect to all or any Properties, except as expressly set
forth in the following grammatical sentence and paragraph. Subject to the
provisions of the following grammatical paragraph, it shall be a condition to
Buyer's obligation to close the transaction that the Title Insurer, subject to
receipt of the premium therefor, issue owner's title insurance policies in the
form of the Pro-Formas.
Buyer may, prior to Closing, notify each Seller in writing (a "Gap Notice")
of any title exceptions other than the Permitted Exceptions; provided that Buyer
must notify each Seller of such unacceptable exceptions within three (3)
business days of being made aware of the existence of such exceptions in
writing. If Buyer sends a Gap Notice to Seller each Seller owning Property
subject to an unacceptable exception set forth in a Gap Notice may elect, in its
sole discretion, to (i) take up to thirty (30) days from the date the Seller
receives the Gap Notice (or in the case of monetary liens, until the Closing) to
remove or cure such exceptions to Buyer's reasonable satisfaction (such period,
the "Gap Title Cure Period"); (ii) not cure any one or more of such exceptions;
or (iii) with Buyer's consent (in its sole discretion), permit all Sellers to
proceed to Closing on all other Properties and terminate this Agreement with
respect to the Property as to which a Gap Notice is given. If Seller and Buyer
elect to proceed under clause (iii) of such sentence, the portion of the Deposit
previously allocated to the applicable Property for which this Agreement has
been terminated will be returned to Buyer. A Seller shall be deemed to have
given notice to Buyer that such Seller refuses to cure any unacceptable
exceptions, which such Seller may so do in its sole discretion, unless such
Seller, within five (5) business days after receipt of a Gap Notice, shall
notify Buyer in writing that such Seller will attempt to cure such unacceptable
exceptions. If a Seller fails or refuses to cure said unacceptable exceptions
set forth in a Gap Notice within the time period provided to Buyer's reasonable
satisfaction, or fails to give any notice above provided, Buyer may (a)
terminate this Agreement with respect to all but not less than all of the
Properties for which Closing has not occurred within five (5) business days
after such Seller gives notice, or is deemed to have given notice, that such
Seller refuses to cure such unacceptable exceptions, or in the case such Seller
elects to attempt to cure the unacceptable exceptions, within five (5) business
days after such Seller's failure to cure the same within the time period set
forth above, and the Deposit shall be returned to Buyer, or (b) if Buyer fails
to so terminate, Buyer shall be deemed to have waived such exceptions and accept
title subject thereto, in which event there shall be no reduction in the
Purchase Price for such title defective Property. The Closing Date for (i) all
and not less than all of the Properties other than the Glenwood Gardens (SNF)
Property, or (ii) the Glenwood
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Gardens (SNF) Property, as applicable, will be extended as necessary to give
effect to the Gap Title Cure Period.
Notwithstanding anything to the contrary herein, each Seller covenants and
agrees to pay, bond over or indemnify the Title Company against (at Seller's
election) at Closing any and all monetary liens against the Property in an
aggregate amount of less than $3,000,000 for all Sellers combined, other than
(a) the Payoff Loans (as defined in Section 8.08), and (b) the Assumed Loan (as
defined in Section 8.08). Buyer will pay off and discharge the Pay-Off Loans and
assume the Assumed Loan, all as set forth in Section 8.08. Seller covenants and
agrees not place any voluntary liens on the Property following the Effective
Date.
1.03 Survey. Each Seller has furnished Buyer with a copy of the most recent
survey of the Seller's Property in Seller's possession (each, a "Prior Survey"),
and Buyer has obtained current as-built surveys for each of the Properties
(each, a "New Survey," and collectively with each Prior Survey for a Property, a
"Survey") by a registered land surveyor. The New Surveys are listed on Schedule
FF attached hereto. All encumbrances, encroachments or other survey defects
(collectively "Survey Matters") shown on the Surveys are hereby approved by
Buyer and included in the Permitted Exceptions. Accordingly, Buyer has no right
to object to any Survey Matters or to terminate this Agreement with respect to
all or any Properties (except in connection with a Gap Notice as provided in
Section 1.02 hereof).
1.04 Assumed Liabilities. At each Closing, Buyer shall NOT assume any
liabilities or obligations of Seller whatsoever, fixed or contingent, other than
liabilities and obligations assumed by Buyer at such Closing pursuant hereto
with respect to the following to the extent such obligations and liabilities
relate to periods after such Closing: (a) the Assumed Loan with respect to the
Tarzana Property (with the timing of such assumption as set forth in the
documents effecting Tarzana Interim Structure (as defined below)), (b) the
Assumed Service Contracts relating to the Property subject to such Closing, (c)
all Leases relating to such Property, (d) the Equipment Leases for such
Property, if applicable, and (e) all Permitted Exceptions, ((a) - (e) are
sometimes collectively referred to herein as the "Assumed Liabilities").
SECTION 2
PURCHASE PRICE, ACCEPTABLE FUNDS,
DEPOSIT AND ESCROW OF DEPOSIT
2.01 Purchase Price. The purchase price ("Purchase Price") to be paid by
Buyer to Seller for the Property shall be the aggregate amount of Two Hundred
Nine Million Five Hundred Thousand Dollars ($209,500,000.00). The Purchase Price
shall be allocated among the Properties and Sellers, subject to the prorations
and adjustments as hereinafter provided in this Agreement, as follows:
Glenwood Gardens (IL/AZ) - Bakersfield, California $65,500,000
Glenwood Gardens (SNF) - Bakersfield, California $ 9,500,000
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Foundation House - Federal Way, Washington $42,500,000
Pacific Gardens - Santa Monica, California $36,500,000
Pacific Gardens - Tarzana, California $20,500,000
Pacific Gardens - Chino, California $19,000,000
The Fairways - Wickliffe, Ohio $16,000,000
Allocation of the Purchase Price among the Sellers and Properties shall not
be construed so as to permit Buyer to purchase less than all of the Properties,
except as expressly permitted in this Agreement.
2.02 Payment of Monies. All monies payable under this Agreement, unless
otherwise specified in this Agreement, shall be paid by wire transfer of
immediately available federal funds.
2.03 Payment of Purchase Price. The Purchase Price, subject to prorations
and adjustments, shall be paid as follows:
(a) Eight Million Dollars ($8,000,000.00) have been paid to Escrow
Agent as a deposit as of the Effective Date (the "Deposit"). The Deposit shall
be allocated among the Properties and Sellers as follows:
Glenwood Gardens (IL/AZ) - Bakersfield, California $2,501,193
Glenwood Gardens (SNF) - Bakersfield, California $ 362,768
Foundation House - Federal Way, Washington $1,622,912
Pacific Gardens - Santa Monica, California $1,393,795
Pacific Gardens - Tarzana, California $ 782,816
Pacific Gardens - Chino, California $ 725,537
The Fairways - Wickliffe, Ohio $ 610,979
Allocation of the Deposit among the Sellers and Properties shall not be
construed so as to permit Buyer to purchase less than all of the Properties,
except as expressly permitted in this Agreement.
(b) Payment at Closing. At the consummation of the transaction
contemplated hereby with respect to any Property (the "Closing"), Buyer shall
deliver to Escrow Agent cash in an amount equal to the Purchase Price for such
Property less the amount of the Deposit held by the Escrow Agent and subject to
adjustments and apportionments as set forth herein, including deposit of the Cap
Ex Escrow Funds and allocations for credits and other
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amounts pursuant to Sections 8.07 and Section 8.08. The Purchase Price, as
adjusted, shall be paid at Closing by wire transfer of immediately available
federal funds, transferred to the order or account of each Seller or such other
person as a Seller may designate in writing in accordance with the allocations
set forth above. Notwithstanding the foregoing, at the Closing (as provided in
Section 3) with respect to the Tarzana Property, the parties shall implement the
Tarzana Interim Structure, and at the Second Tarzana Closing (as provided in
Section 3) for the Tarzana Property the purchase and sale transaction provided
for herein with respect to the Tarzana Property shall be consummated pursuant to
the documents effecting the Tarzana Interim Structure.
2.04 Deposit; Escrow Agent. The Deposit shall be delivered by Buyer to the
Title Insurer, Boston National Title Service Office, 99 Summer Street, Boston,
Massachusetts 02110, Attention: Terrance P. Miklas (the "Escrow Agent")
simultaneously with the execution of this Agreement by Seller and Buyer. Upon
receipt from Buyer of the Deposit, Escrow Agent shall invest the Deposit in an
interest-bearing account or money market fund acceptable to Buyer and Seller.
All interest on the Deposit shall accrue to Buyer, except as otherwise provided
in Section 14.03 hereof, and shall become part of the "Deposit". At each
Closing, Escrow Agent shall release to Seller the portion(s) of the Deposit
allocated to the Properties for which Closing is occurring, which portion(s) of
the Deposit shall be credited against the balance of the Purchase Price owed by
Buyer to Seller, with all such interest and credits to be allocated among the
Sellers in accordance with the allocations set forth above. Escrow Agent shall
agree to hold and dispose of the Deposit in accordance with the terms and
provisions of this Agreement.
IF BUYER FAILS, WITHOUT LEGAL EXCUSE, TO CONSUMMATE THE PURCHASE OF THE
PROPERTY AS CONTEMPLATED HEREUNDER, THE DEPOSIT (INCLUDING ALL INTEREST EARNED
FROM THE INVESTMENT THEREOF) SHALL BE PAID TO AND RETAINED BY SELLER, ALLOCATED
AMONG SELLERS AS SET FORTH IN SECTION 2.03, AS LIQUIDATED DAMAGES. THE PARTIES
ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT THAT THE SALE IS NOT
CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.
THEREFORE, BY SEPARATELY EXECUTING THIS SECTION 2.04 BELOW, THE PARTIES
ACKNOWLEDGE THAT THE NONREFUNDABLE DEPOSIT, AS SO ALLOCATED AMONG THE SELLERS,
HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF
EACH SELLER'S DAMAGES AND AS EACH SELLER'S EXCLUSIVE REMEDY AGAINST BUYER IN THE
EVENT THE CLOSING DOES NOT OCCUR. IN ADDITION, IN THE EVENT BUYER FAILS, WITHOUT
LEGAL EXCUSE, TO CONSUMMATE THE PURCHASE OF THE PROPERTY AS CONTEMPLATED
HEREUNDER, THEN BUYER SHALL PAY ALL TITLE, SURVEY AND ESCROW CANCELLATION
CHARGES. NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THIS SECTION 2.04
LIMIT THE DAMAGES RECOVERABLE BY ANY PARTY AGAINST THE OTHER DUE TO (A) THE
OTHER PARTY'S OBLIGATION TO INDEMNIFY SUCH PARTY IN ACCORDANCE WITH THIS
AGREEMENT, OR (B) THIRD PARTY CLAIMS. BY THEIR INITIALING THIS SECTION 2.04
BELOW, BUYER AND SELLER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE
PROVISION COVERING LIQUIDATED DAMAGES, AND THAT EACH PARTY WAS REPRESENTED BY
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COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT
THE TIME THIS AGREEMENT WAS EXECUTED.
Buyer's Initials: ____________
Seller's Initials: ___________
2.05 Escrow Provisions. Escrow Agent hereby acknowledges receipt by Escrow
Agent of the Deposit paid by Buyer to be held and applied in strict accordance
with the terms of this Agreement. Escrow Agent agrees to hold, keep and deliver
the Deposit and all other sums delivered to it pursuant hereto in accordance
with the terms and provisions of this Agreement. Escrow Agent shall not be
entitled to any fees or compensation for its services hereunder. Escrow Agent
shall be liable only to hold said sums and deliver the same to the parties named
herein in accordance with the provisions of this Agreement, it being expressly
understood that by acceptance of this Agreement Escrow Agent is acting in the
capacity of a depository only and shall not be liable or responsible to anyone
for any damages, losses or expenses unless same shall have been caused by the
gross negligence or willful malfeasance of Escrow Agent. In the event of any
disagreement between Buyer and Seller resulting in any adverse claims and
demands being made in connection with or for the monies involved herein or
affected hereby, Escrow Agent shall be entitled to refuse to comply with any
such claims or demands so long as such disagreement may continue; and in so
refusing Escrow Agent shall make no delivery or other disposition of any of the
monies then held by it under the terms of this Agreement, and in so doing Escrow
Agent shall not become liable to anyone for such refusal; and Escrow Agent shall
be entitled to continue to refrain from acting until (a) the rights of the
adverse claimants shall have been finally adjudicated in a court of competent
jurisdiction of the monies involved herein or affected hereby, or (b) all
differences shall have been adjusted by agreement between Seller and Buyer, and
Escrow Agent shall have been notified in writing of such agreement signed by the
parties hereto. Escrow Agent shall not be required to disburse any of the monies
held by it under this Agreement unless in accordance with either a joint written
instruction of Buyer and Seller or an Escrow Demand from either Buyer or Seller
in accordance with the provisions hereinafter. Upon receipt by Escrow Agent from
either Buyer or any Seller (the "Notifying Party") of any notice or request (the
"Escrow Demand") to perform any act or disburse any portion of the monies held
by Escrow Agent under the terms of this Agreement, Escrow Agent shall give
written notice to the other parties (the "Notified Parties"). If within five (5)
business days after the giving of such notice, Escrow Agent does not receive any
written objection to the Escrow Demand from any Notified Party, Escrow Agent
shall comply with the Escrow Demand. If Escrow Agent does receive written
objection from any Notified Party in a timely manner, Escrow Agent shall take no
further action until the dispute between the parties has been resolved pursuant
to either clause (a) or (b) above. Further, Escrow Agent shall have the right at
all times to pay all sums held by it (i) to the appropriate party under the
terms hereof, or (ii) into any court of competent jurisdiction after a dispute
between or among the parties hereto has arisen, whereupon Escrow Agent's
obligations hereunder shall terminate.
Seller and Buyer jointly and severally agree to indemnify and hold harmless
said Escrow Agent from any and all costs, damages and expenses, including
reasonable attorneys' fees, that said Escrow Agent may incur in its compliance
of the terms of this Agreement; provided,
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however, this indemnity shall not extend to any act of gross negligence or
willful malfeasance on the part of the Escrow Agent.
SECTION 3
THE CLOSING
As set forth in this Section, there shall be two Closing Dates. On one Closing
Date, the simultaneous Closings for all Properties other than the Glenwood
Gardens (SNF) Property shall occur; on the other Closing Date, the Closing for
the Glenwood Gardens (SNF) Property shall occur. There shall also be a Second
Tarzana Closing for the Tarzana Property. References in this Agreement to
Closing and the Closing Date shall mean the applicable Closing and Closing Date
of the applicable Property as contemplated by this Section 3.
Except as otherwise provided in this Agreement, the delivery of all documents
necessary for the Closing for all Properties other than the Glenwood Gardens
(SNF) Property shall take place at a pre-closing (at which time all such
documents will be placed into escrow) in the offices of Escrow Agent or such
other place as Seller and Buyer shall mutually agree, on March 28, 2006, and the
payment of the Purchase Price and the Closing for such Properties (i.e., the
release of the documents from escrow and payment of the Purchase Price therefor
(after giving effect to adjustments and prorations) to Seller) shall take place
in the offices of Escrow Agent or such other place as Seller and Buyer shall
mutually agree at 10:00 a.m. local time on March 29, 2006 (the "Closing Date"
for such Properties) or such earlier date or place as the applicable Buyer and
Seller shall mutually agree in writing. The Closing for the Glenwood Gardens
(SNF) Property shall take place in the offices of the Escrow Agent or such other
place as Seller and Buyer shall mutually agree, at 10:00 a.m. local time on the
date specified in Section 8.07, and such date shall be the "Closing Date" for
the Glenwood Gardens (SNF) Property for all purposes in this Agreement. It is
acknowledged that the Closing Date may be extended for (i) all of the Properties
other than the Glenwood Gardens (SNF) Property, but not less than all of such
Properties, or (ii) the Glenwood Gardens (SNF) Property, as applicable, pursuant
only to the express provisions of other Sections of this Agreement.
Notwithstanding any provision in this Agreement to the contrary, Closing will
occur simultaneously for all Properties other than the Glenwood Gardens (SNF)
Property (with the Second Tarzana Closing occurring after the Closing for
Tarzana). The Closings shall be conducted through escrows administered by Escrow
Agent. It is agreed that time is of the essence of this Agreement. The Closing
and Closing Date shall have occurred with respect to each Property when the Deed
therefor has been delivered to Buyer and the Purchase Price therefor has been
delivered to Seller, except that with respect to the Tarzana Property there
shall be two (2) "closings." The Closing and Closing Date with respect to the
Tarzana Property shall have occurred when the operative documents putting in
place the Tarzana Interim Structure (as defined below) have been delivered to
Buyer and the loan provided therein funded by Buyer to Seller; and the second
"closing" and "closing date" with respect to the Tarzana Property (the "Second
Tarzana Closing") shall occur when the Deed and other Section 11 deliverables
therefor have been delivered to Buyer and the Purchase Price has been paid in
accordance with the Tarzana Interim Structure documents. The Second Tarzana
Closing shall occur on or before June 30, 2007, in accordance with the terms of
this Agreement and the documents implementing the Tarzana Interim Structure, and
such Second Tarzana Closing shall
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be subject only to Seller's delivering title to the Tarzana Property in
accordance with Section 1.02 hereof and the TPA Approval (as defined below)
having been obtained; or if the TPA Approval has not been obtained by June 1,
2007, the Second Tarzana Closing shall occur on June 1, 2007, Buyer shall pay to
Seller the Purchase Price in accordance with the Tarzana Interim Structure
documents, and Seller shall prepay the Assumed Loan out of such Purchase Price
paid by Buyer and convey the Tarzana Property in accordance with the provisions
of this Agreement and the Tarzana Interim Structure documents, so as to permit
the Title Company to issue its owner's policy of title insurance in accordance
with Section 1.02 hereof, without exception for the Deed of Trust with
Assignment of Rents securing the Assumed Loan or other instruments recorded in
connection with the Assumed Loan. The Purchase Price payable to Seller upon such
conveyance shall be an amount equal to the sum of (i) a cash payment in the
amount of the then current principal amount of the Assumed Loan to be pre-paid
by Seller (plus any accrued but unpaid interest to the extent not paid by Buyer
under the Tarzana Interim Structure documents, and specifically excluding the
prepayment premium due on account of such prepayment, it being the parties'
understanding that Seller shall bear the cost of such prepayment premium), less
the amount of any accrued and unpaid interest payable by Seller or its
affiliates under the loan made by Buyer or its affiliates under the Tarzana
Interim Structure, plus (ii) the cancellation of the principal amount of the
loan made by Buyer or its affiliate to Seller or its affiliate at the Closing
pursuant to the Tarzana Interim Structure (including the cancellation of the
promissory note and any other instruments given by Seller or its affiliate
evidencing such loan). Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, Closing shall not occur for any of the Pacific
Gardens Properties unless and until the Tarzana Interim Structure is approved by
HUD and GMAC (it being agreed that failure by HUD and GMAC to object to the
interim loan component of the Tarzana Interim Structure shall be deemed approval
by HUD and GMAC); and if HUD or GMAC expressly disapproves the Tarzana Interim
Structure, this Agreement shall terminate with respect to all Pacific Gardens
Properties and the portion of the Deposit allocated thereto shall be returned to
Buyer.
SECTION 4
SELLER'S DELIVERIES
Prior to the Effective Date, Buyer had been furnished with some and has had
limited access to, and from and after the Effective Date each Seller shall
furnish or make available (either at the Property or at Managers' or Sellers'
offices) to Buyer with respect to its Property, as specified below, the
following:
4.01 Leases. Seller has provided Buyer with access at the applicable
Property to the originals of all leases, residency agreements and related lease
files.
4.02 Taxes. A copy of 2003, 2004 and 2005 (if available) real estate and
personal property tax statements for the Property.
4.03 Current Rent Roll. A list of the current rents now being collected on
each of the units in the Improvements which includes: unit number, unit type,
tenant name, commencement and termination dates, rent, community fees and
security deposits.
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4.04 Service and Other Contracts. Copies of all service, maintenance and
supply contracts and equipment leases (including vehicle leases) affecting the
use, ownership, maintenance and/or operation of the Property.
4.05 Utility Bills. Copies of all utility bills (gas, electric, water and
sewer) relating to the Property for the immediately prior twelve (12) month
period.
4.06 Environmental Reports. Copies of all environmental reports in Seller's
possession since the date of Seller's acquisition of the Property.
4.07 Operating Statements. Copies of the operating statements (unaudited)
for the Property for 2004 and 2005 year to date.
4.08 Commission Agreements. Copies of all leasing commission agreements for
which commissions may be due after Closing.
4.09 Loan Documents. The note, mortgage, assignments and guaranties in the
Seller's possession for the Assumed Loan and all Pay-Off Loans (as defined in
Section 8.08), such loans being all of outstanding loans for which Seller has
loan documents in its possession or control.
4.10 Property Related Materials. Copies of all prior soils, structural and
engineering reports for the Properties, unrecorded parking and common areas
maintenance agreements, certificates of occupancy, zoning information, variances
and conditional use permits, licenses, licensing surveys, and correspondence
with applicable licensing agencies; all to the extent in Seller's possession.
4.11 Disclaimer. Except as expressly set forth in Section 5, Seller does
not represent or warrant the accuracy or completeness of any materials, or of
the contents thereof, provided to Buyer.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller represents and warrants to Buyer as follows with respect to
itself and its Property only:
5.01 Ability to Perform. Seller is a limited partnership or limited
liability company as indicated on Schedule 1.0, which has been duly organized
and is validly existing under the laws of the state indicated on Schedule 1.0.
Seller has the full legal right and authority to enter into this Agreement and
to consummate the transaction contemplated hereby. The person signing this
Agreement on behalf of Seller is authorized to do so. Seller has obtained any
required corporate, partnership or limited liability company approval required
for the consummation of the transaction contemplated by this Agreement. This
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable in accordance with its terms, subject to the effect of laws relating
generally to creditors' rights and the availability of equitable remedies.
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5.02 Absence of Conflicts. Neither the execution and delivery of this
Agreement, nor compliance with the terms and provisions hereof, will result in
any breach of the material terms, conditions or provisions of, or conflict with
or constitute a default under, or result in the creation of any lien, charge or
encumbrance upon the Property or the assets of the Seller pursuant to the terms
of, any indenture, mortgage, deed of trust, note, evidence of indebtedness,
agreement or other instrument to which the Seller or any affiliate of the Seller
may be a party or by which it or they or any of its or their properties or
assets may be bound, or violate any provision of law, or any applicable order,
writ, injunction, judgment or decree of any court, or any order or other public
regulation of any governmental commission, bureau or administrative agency; in
all cases, other than with respect to any mortgage loans which by their terms
may not be pre-payable.
5.03 Patriot Act. Seller is in compliance with the requirements of
Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the "Order") and
other similar requirements contained in the rules and regulations of the Office
of Foreign Assets Control, Department of the Treasury ("OFAC") and in any
enabling legislation or other Executive Orders or regulations in respect thereof
(the Order and such other rules, regulations, legislation or orders are
collectively called the ("Orders"). Neither the Seller nor any of its affiliates
(A) is listed on the Specially Designated Nationals and Blocked Person List
maintained by OFAC pursuant to the Order and/or on any other list of terrorists
or terrorist organizations maintained pursuant to any of the rules and
regulations of OFAC or pursuant to any other applicable Orders (such lists are
collectively referred to as the "Lists"), (B) is a Person (as defined in the
Order) who has been determined by competent authority to be subject to the
prohibitions contained in the Orders; or (C) is owned or controlled by
(including without limitation by virtue of such Person being a director or
owning voting shares or interests), or acts for or on behalf of, any person on
the Lists or any other Person who has been determined by competent authority to
be subject to the prohibitions contained in the Orders. The foregoing
representation shall not apply with respect to the beneficiaries of any pension
plan participating in a Seller.
5.04 Leases. As of the Effective Date, there are no residency agreements,
leases, subleases, licenses or other rental agreements or occupancy agreements
(written or verbal) which grant any possessory interest in and to any space
situated on or in the Property or that otherwise give rights with regard to use
of any portion of the Property other than the residency agreements (the
"Residency Agreements") and the commercial leases ("Commercial Leases")
described in Schedule C attached hereto (the "Rent Roll"). The Residency
Agreements and the Commercial Leases are collectively referred to as the
"Leases." The Rent Roll is true, accurate and complete in all material respects
as of the Effective Date (or if earlier, the date printed thereon). Except as
otherwise specifically set forth in the Rent Roll or elsewhere in this
Agreement:
(a) the Leases are in full force and effect and none of them has been
modified, amended or extended in any material respect except in the ordinary
course of Seller's business and consistent with its past practices, and to
Seller's knowledge, Seller has performed all its material obligations thereunder
required to be performed as of the Effective Date;
(b) Seller has neither sent written notice to any tenant of the
Property under a Commercial Lease, nor received any written notice from any such
tenant, claiming that such tenant, or Seller, as the case may be, is in default,
which default remains uncured;
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(c) there are no community fees, entrance fees or other fees, or
security deposits or other deposits under any Leases, and there are no tenant or
resident delinquencies more than thirty days old in the payment of rent or other
payment obligations under the Leases as of the date of the Rent Roll, other than
those set forth in the Rent Roll; and
(d) no leasing commission shall be due under Seller's commission or
bonus agreements for any period subsequent to the Closing other than for tenants
who have executed a Lease prior to Closing but on account of which the
commission is not due until after Closing, which commissions will be paid by
Seller; Buyer acknowledges that if it elects to continue Seller's commission or
bonus programs, it may owe commissions for lease extensions, expansions or
renewals of existing Leases.
5.05 Service and Other Contracts. Schedule D attached hereto lists all
service, maintenance and supply contracts (collectively, the "Service
Contracts") and equipment leases (including vehicle leases) (collectively, the
"Equipment Leases") affecting the operation of the Property. Seller is not in
material default under any Service Contracts or Equipment Leases. At least
fifteen (15) days prior to the Closing, Buyer will notify Seller in writing
which Service Contracts it elects to have terminated, and Seller shall terminate
such Service Contracts at Seller's sole cost and expense; provided, however, if
Buyer fails to give any such notice of termination to Seller at least 35 days
prior to Closing and such Service Contract(s) to be terminated require a 30-day
advanced notice of termination, then such termination may be delayed for such
30-day notice period (and Buyer shall honor such contracts) provided that Seller
gives prompt notice of termination upon receiving notice of termination pursuant
to this Section 5.05 from Buyer. All Service Contracts for which Seller does not
receive such a notice (or which Buyer is required to honor as aforesaid) shall
be referred to as the "Assumed Service Contracts."
5.06 No Actions. Except as set forth on Schedule E attached hereto, and
except for tenant collection actions, if any, and tort claims, if any, which are
fully covered by insurance, there are no pending, or to Seller's knowledge,
threatened material legal actions or proceedings against or relating to Seller
or the ownership or operation of the Property whether or not such pending or
threatened actions or proceedings are covered by insurance.
5.07 No Violation Notice. Except as set forth in Schedule X, Seller has not
received written notice:
(a) from any federal, state, county or municipal authority alleging
any fire, health, safety, building, pollution, environmental, zoning or other
violation of law, including, without limitation, applicable health care
licensure laws, in respect of the Property or any part thereof, which has not
been corrected; or
(b) concerning the possible or anticipated condemnation of any part of
the Property, or the widening, change of grade or limitation on use of streets
abutting the same or concerning any special taxes or assessments levied or to be
levied against the Property or any part thereof.
5.08 [Intentionally Deleted].
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5.09 Operating Statements. The operating statements for each Property
provided to Buyer by Seller for the calendar years ended December 31, 2003 and
December 31, 2004, and for the eleven-month period ended November 30, 2005, are
the operating statements maintained and used in the ordinary course of Seller's
business. To Seller's knowledge the operating statements fairly present, in all
material respects, the results of operations of such Property and, except for
the statements for Foundation House (Federal Way, Washington) and Glenwood
Gardens (IL/AZ/SNF) (Bakersfield, California), have been prepared in accordance
with generally accepted accounting principles consistently applied ("GAAP").
With respect to the statements for Foundation House (Federal Way, Washington)
and Glenwood Gardens (IL/AZ/SNF) (Bakersfield, California), the method of
accounting on which such financial statements have been prepared, including the
manner in which such operating statements do not conform to GAAP, is set forth
on Schedule E-1. Except as set forth above Seller does not represent or warrant
the accuracy or completeness of the operating statements.
5.10 Vehicles and Equipment; Personal Property. Attached hereto as Schedule
P is a list of all vehicles owned or leased by Seller in connection with the
operation of the Property. The vehicles are not subject to any liens or
encumbrances except as set forth on Schedule P. Except for proprietary software
owned by Seller's existing Manager, Seller or its Manager owns and has good
title to all Personal Property, free and clear of any liens and encumbrances,
except for the Assumed Loan, the Pay-Off Loans, the Permitted Exceptions and the
liens and encumbrances set forth in Schedule P.
5.11 Bankruptcy Matters. Seller has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by its creditors, suffered the appointment of
a receiver to take possession of all or substantially all of its assets,
suffered the attachment or other judicial seizure of all or substantially all of
its assets, admitted its inability to pay its debts as they come due, or made an
offer of settlement, extension or composition to its creditors generally.
5.12 Medicare; Medicaid; Third Party Payor Programs.
(a) Except as set forth on the Rent Roll attached hereto as Schedule
F-1, no portion of the income from the Property is attributable to Medicare,
Medicaid or any other public third party payor program. Except as set forth on
Schedule F-2, during the period which Seller owned the Property:
(i) if any Property has received Medicare or Medicaid
reimbursement, it is eligible to receive payment without restriction under
either Title XVIII ("Medicare") or Title XIX ("Medicaid") of the Social
Security Act, or both, and is a "provider" with valid and current provider
agreements and with one or more provider numbers with the federal Medicare
and/or all applicable state Medicaid and successor programs. For purposes
of this provision, Medicare, Medicaid, CHAMPUS, TRICARE and other federal,
state or local governmental reimbursement programs, or successor programs
to any of the above, are referred to as "Government Programs."
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(ii) if any Property has received payments under CHAMPUS or
TRICARE, it did so on a co-insurance basis and did not have separate
provider agreements or provider numbers with CHAMPUS and/or TRICARE.
(iii) if any Property participated or participates in Government
Programs, the Property is in compliance with the conditions of
participation, to the extent applicable, of the Government Programs in
which it participated or participates, in all material respects.
(iv) Seller currently holds such material, necessary licenses,
agreements and certificates pertaining to Medicare and/or Medicaid provider
agreements entered into with the state or commonwealth in which the
Property is located, the United States, and/or any municipality or other
Governmental Authority body that authorizes Seller to conduct its business
at the Property as presently operated.
(b) Except as set forth on Schedule F-3, all material cost reports of
Seller and the Property for the Government Programs which are required to be
filed prior to the Effective Date during the last three years, have been timely
and properly filed and are complete and accurate in all material respects, and
Seller and the Property have received no notice of material outstanding
overpayments, set offs or adjustments to any Government Programs.
(c) Except as set forth on Schedule F-4 attached hereto, there is no
outstanding material litigation, filed claim or proceeding, or to Seller's
knowledge investigation, currently pending against Seller or relating to the
Property for any violation or alleged violation of, and Seller has received no
written notice, and Seller has no knowledge, of any threat of any material suit,
action, claim, investigation, agency review or other proceeding pursuant to or
involving a violation or alleged violation of, (i) the False Claims Act, 31
U.S.C. Sections 3729 et seq., (ii) the Civil Monetary Penalties Law, 42 U.S.C
Section 1320a-7a, (iii) federal or state anti-kickback statutes, including but
not limited to 42 U.S.C. 1320a-7b, (iv) federal or state referral laws,
including but not limited to 42 U.S.C. Section 1395nn, (v) regulations
promulgated pursuant to any of the foregoing statutes, or (vi) any other federal
or state law or regulation of general applicability to health care fraud or
governing or regulating health care providers (to the extent compliance
therewith is required for reimbursement under Medicare and Medicaid), or
governing or regulating medical billing or reimbursement, including all
applicable Medicare and Medicaid statutes and regulations (collectively the
"Medicare/Medicaid Laws").
(d) Seller has timely filed all material forms, applications, reports,
statements, data and other information required to be filed with federal, state
or local entities under federal or state laws or regulations in connection with
the Medicare and Medicaid laws.
(e) All billing practices of Seller with respect to the Property are
in material compliance with all applicable laws and regulations of such
Government Programs. Except as set forth on Schedule C-1, to the best of
Seller's knowledge, Seller has not billed or received any payment or
reimbursement in excess of amounts permitted by applicable law, except to the
extent cured or corrected and all penalties or interest discharged in connection
with such cure or correction.
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(f) The Glenwood Gardens (SNF) (Bakersfield, CA) Facility has 120
licensed skilled nursing beds and billing to the Government Programs has been
consistent with these certification designations.
(g) There currently are no outstanding bed taxes or other fees owing
to state licensing authorities or any of the Government Programs, if applicable,
due to an exemption based on the Facility being part of a continuing care
retirement community and being included in the state's Multi-Level Facility
list, as set forth in that certain letter dated August 5, 2005 from Kellogg &
Anderson Accountants to Glenwood Gardens, a copy of which has been provided to
Buyer. Seller makes no representation or warranty as to whether Buyer will be
eligible for such exemption.
(h) To the best of Seller's knowledge, there are no outstanding Life
Safety Code deficiencies or waivers of deficiencies for any of the Properties,
if applicable.
The representations and warranties in this Section 5.12 apply only to
Sellers and Properties with such income attributable to Medicare, Medicaid or
any other public third party payor program.
5.13 Title to Personal Property. Seller or Manager has good and marketable
title to the Personal Property free and clear of all liens and encumbrances,
other than the Equipment Leases, the Assumed Loan, the Payoff Loans and the
Permitted Exceptions and the liens and encumbrances set forth on Schedule P.
5.14 Environmental Matters. Except as set forth on Schedule Q and in any
environmental reports listed on Schedule Q or prepared by or at the request of
Buyer:
(a) To Seller's knowledge, each Property has been operated in material
compliance with all applicable Hazardous Materials Laws (as defined in Section
8.04) during the period of Seller's ownership thereof.
(b) Seller has not received any written notice or citation from a
governmental agency for noncompliance with respect to any Hazardous Materials
Laws relating to the Property.
(c) To Seller's knowledge, no Hazardous Material has been during the
period of Seller's ownership of the applicable Property generated, stored,
transported, utilized, disposed of, managed, treated, released or located on or
from the Property (whether or not in reportable quantities) in material
violation of Hazardous Materials Laws.
(d) To Seller's knowledge, there are no underground storage tanks on
the Property.
5.15 Permits and Licensure Requirements. Schedule R identifies all existing
material governmental permits required for the operation of the Property as
currently operated (the "Permits"), and such Permits constitute all of the
material permits currently necessary for the operation of the Property as
currently operated in accordance with applicable laws, including, but
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not limited to, the assisted living license, if applicable, skilled nursing
facility license, if applicable, and the food and beverage licenses required to
sell and serve food and liquor (if applicable) at the Property. Seller has not
received a written notice from a governmental agency of a violation of any
Permit which has not been heretofore corrected, and all Permits are currently in
full force and effect. Seller has not received written notice from a
governmental agency that any such Permits will not be renewed upon expiration,
or that any material conditions will be imposed in order to receive any such
renewal. To Seller's knowledge, no Permits have been revoked or suspended in the
last three (3) years, except as set forth in Schedule X. No Permit is currently
revoked or suspended.
5.16 Inventory. The quantities of Inventory in each Property are consistent
with the standards of operation heretofore maintained by Seller and comply with
any minimum quantity requirements of applicable law.
5.17 Commissions. Except as may be disclosed in Schedule L, there are no
commissions or referral fees relating to the Property currently due and
outstanding.
5.18 Labor Disputes; Employees. During the three (3) years preceding the
Effective Date, neither Seller nor any Property has experienced any labor
disputes or labor trouble which have had a material adverse effect on the
operations of the Property. Schedule AA is a complete list of all employees
employed at each Property with their salaries or hourly pay rates, positions and
terms of employment; and (i) except as set forth on Schedule AA, Seller is not a
party to any employment contract and no union is presently serving as collective
bargaining agent for any employees; (ii) except for Service Contracts, neither
Seller nor any Manager has entered into any oral or written agreements which
would bind or obligate Buyer to engage the services of any person as an employee
or an independent contractor relating to the Property; (iii) to the best of
Seller's knowledge, no union presently is conducting, and Seller has not
received notice that any union is planning to conduct, an organizational
campaign for any employees at the Property; (iv) Seller has not received written
notice of any attempts within the past three (3) years by any employees to
initiate any collective bargaining agreements with respect to the Property; (v)
there has been no event within the past three (3) years that has caused or
required Seller to issue a notice under the Worker Adjustment and Retraining
Notification Act or any similar law with respect to the employees; and (vi)
there is no pension, profit sharing bonus, or other employee benefit plan
relating to current or past employees which would be binding on Buyer. Except as
noted in Schedule AA, there are no outstanding lawsuits, claims filed with the
EEOC or comparable state agencies, or claims filed with the National Labor
Relations Board filed by any past or present employees against Seller alleging
discrimination or unfair treatment of employees.
5.19 Compliance with Laws. Except as disclosed on Schedule G-1 or as known
to Buyer (such concept as defined in Section 5.22), the operation of each
Property constituting a Facility (as defined in Section 8.07) is in material
compliance with applicable laws and regulations (including, without limitation,
all applicable health care license laws and regulations), the failure to comply
with which would have a material adverse effect on the value, ownership or
operation of such Property.
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5.20 Materials Provided. Except as known to Buyer (such concept as defined
in Section 5.22), to Seller's knowledge the written materials provided to Buyer
are true, accurate and complete in all material respects.
5.21 ERISA. Seller is not an employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA, nor a plan as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (each of the
foregoing hereinafter referred to collectively as "Plan"). The assets of the
Seller do not constitute "plan assets" of one or more such Plans within the
meaning of Department of Labor ("DOL") Regulation Section 2510.3-101. If Seller
is a "governmental plan" as defined in Section 3(32) of ERISA, neither this
Agreement nor the closing of the sale of the Property will constitute or result
in a violation of state or local statutes regulating investments of and
fiduciary obligations with respect to governmental plans. Seller is acting on
its own behalf and not on account of or for the benefit of any Plan. Seller is
not a party in interest as defined in Section 3(14) of ERISA to a Plan, other
than a plan maintained by Seller for the benefit of its employees.
5.22 Knowledge; Notice of Breach; Closing Certificate; Certain Cure Rights.
As used in this Agreement, or in any other agreement, document, certificate or
instrument delivered by Seller to Buyer, the phrase "to Seller's knowledge" or
any similar phrase shall mean the actual, not constructive or imputed, knowledge
of Anthony C. Crooks, following due inquiry of the applicable Manager that
manages the Property, without any obligation on his part to make any independent
investigation of the matters being represented and warranted, or to make any
inquiry of any other persons, or to search or examine any files, records, books,
correspondence and the like. For the avoidance of doubt, it is expressly
understood and agreed that Anthony C. Crooks will have no liability under this
Agreement on account of the representations and warranties set forth herein or
otherwise.
As used in this Agreement, or in any other agreement, document, certificate
or instrument delivered by Buyer to Seller, the phrase "known to Buyer" or any
similar phrase shall mean (i) the actual, not constructive or imputed, knowledge
of Paul Froning, Geri Krupp-Gordon or Mike Rusch as of the Effective Date of
facts that any such individual knows constitutes a breach by Seller of any of
Seller's representations or warranties contained in this Agreement (and Buyer
represents that each of such individuals have read and understand the provisions
of this Agreement, including Section 5 hereof, and in any event such individuals
will be deemed to have read and understood the same) and (ii) such matters as
are disclosed to Buyer in all written environmental and property condition
(including engineering) reports commissioned by Buyer (or commissioned by Health
Care Property Investors, Inc. and actually received by Buyer) from third parties
in connection with this transaction. Buyer certifies to Seller that a complete
list of said reports is attached hereto as Schedule U-2.
The parties agree and acknowledge that Buyer has no affirmative obligation
to undertake any investigation with respect to the Properties or as to any other
matter, and it shall not be a defense to any claim by Buyer hereunder that Buyer
failed to discover any particular fact or circumstances or failed to undertake
any particular investigation or inquiry.
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Buyer and Seller each agree to inform the other promptly in writing if it
discovers that any representation or warranty of any Seller is inaccurate in any
material respect, or if it believes that any Seller has failed to deliver or
make available to Buyer any document or material which it is obligated to
deliver or make available hereunder.
At the Closing with respect to its Property, each Seller shall deliver to
Buyer a certificate (each, a "Seller's Representation Certificate") certifying
that all representations and warranties of such Seller in this Agreement remain
true and correct as of the applicable Closing Date in all material respects and
all of the representations and warranties contained herein shall be deemed
remade by Seller effective as of the applicable Closing Date; provided, however,
that to the extent that changes in facts or circumstances after the Effective
Date have occurred, the applicable Seller shall promptly deliver written notice
to Buyer of such facts or circumstances after becoming aware of same (but in no
event later than the Closing Date). A Seller's Representation Certificate may be
revised at Closing to make exception or qualification with respect to such
matters as may be necessary for such representations and warranties to remain
true in all material respects, provided that Buyer's agreement to allow such
amendment of a Seller's Representation Certificate shall not affect or indicate
any waiver of any condition to Closing set forth in this Agreement.
If Buyer notifies any Seller prior to Closing that any representation or
warranty made by such Seller in Section 5 is not true and correct in any
material (as defined below) respect in a manner not known to Buyer prior to the
Effective Date or any Seller fails, for any reason, to deliver a Seller's
Representation Certificate at Closing without any material change, except as to
changes which are expressly permitted pursuant to Section 10 hereof or to
account for matters known to Buyer prior to the Effective Date, and Buyer does
not elect to waive any such representation or warranty and close the transaction
without any reduction in the Purchase Price, then Seller may elect to delay
Closing and the Closing Date for, as applicable, (i) all Properties other than
the Glenwood Gardens (SNF) Property, but not less than all such Properties, or
(ii) the Glenwood Gardens (SNF) Property, for up to ten (10) days to provide
Seller with the opportunity to cure such material inaccuracy or change in the
representation or warranty. If Seller does not make such an election on or prior
to the otherwise scheduled Closing Date, or makes such election and then fails
to so cure such material inaccuracy or change, then this Agreement will
terminate with respect to all Properties for which Closing has not previously
occurred and the Deposit for the terminated Properties will be returned to
Buyer. With respect to each Seller and the Property owned by such Seller, any
changes or inaccuracies in the representations and warranties of such Seller
will not be considered "material" if they do not result in damages in excess of
$100,000, on a per Property basis, or with respect to each Seller Group and the
Properties owned by such Seller Group in excess of $150,000.00 in the aggregate.
If subsequent to a Closing Buyer notifies the applicable Seller within nine
(9) months after the Closing for such Seller's Property that Buyer discovered
post-Closing that any representation or warranty made by such Seller was not
true and correct in any material respect in a manner not known to Buyer before
the Effective Date, and specifying the breach with particularity, subject to the
limitations set forth in Section 18.02, Buyer shall have available all remedies
against the breaching Seller only at law or in equity as a consequence thereof.
If Buyer does not notify a Seller of the breach of any of its representations
and warranties within nine (9)
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months after the Closing on its Property and institute a lawsuit therefor in a
court of competent jurisdiction within three (3) months after such notice to a
Seller, Buyer shall be deemed to have waived all of its rights to claim and sue
for any breach by such Seller of any of its representations and warranties.
SECTION 6
NOT USED
SECTION 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller as follows:
7.01 Ability to Perform. Buyer is a corporation which has been duly
organized and is validly existing under the laws of the State of Delaware. Buyer
has the full legal right and authority to enter into this Agreement and to
consummate the transaction contemplated hereby. The person signing this
Agreement on behalf of Buyer is authorized to do so. Buyer has obtained all
corporate approvals required for the consummation of the transaction
contemplated by this Agreement. This Agreement constitutes the legal, valid and
binding obligation of Buyer, enforceable in accordance with its terms, subject
to the effect of laws relating generally to creditors' rights and the
availability of equitable remedies.
7.02 Patriot Act. Buyer is in compliance with the requirements of the Order
and other similar requirements contained in the rules and regulations of OFAC,
and in any other Orders. Neither Buyer nor any of its affiliates (A) is listed
on any Lists, (B) is a Person (as defined in the Order) who has been determined
by competent authority to be subject to the prohibitions contained in the
Orders; or (C) is owned or controlled by (including without limitation by virtue
of such Person being a director or owning voting shares or interests), or acts
for or on behalf of, any Person on the Lists or any other Person who has been
determined by competent authority to be subject to the prohibitions contained in
the Orders.
7.03 Absence of Conflicts. Neither the execution and delivery of this
Agreement, nor compliance with the terms and provisions hereof, will result in
any breach of the material terms, conditions or provisions of, or conflict with
or constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Buyer pursuant to the terms of, any
indenture, mortgage, deed of trust, note, evidence of indebtedness, agreement or
other instrument to which Buyer or any affiliate of Buyer may be a party or by
which it or they or any of its or their properties or assets may be bound, or
violate any provision of law, or any applicable order, writ, injunction,
judgment or decree of any court, or any order or other public regulation of any
governmental commission, bureau or administrative agency.
7.04 ERISA. Buyer is not an employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA, nor a plan as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (each of the
foregoing hereinafter referred to collectively as "Plan"). The
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assets of Buyer do not constitute "plan assets" of one or more such Plans within
the meaning of Department of Labor ("DOL") Regulation Section 2510.3-101. If
Buyer is a "governmental plan" as defined in Section 3(32) of ERISA, neither
this Agreement nor the closing of the sale of the Property will constitute or
result in a violation of state or local statutes regulating investments of and
fiduciary obligations with respect to governmental plans. Buyer is acting on its
own behalf and not on account of or for the benefit of any Plan. Buyer is not a
party in interest as defined in Section 3(14) of ERISA to a Plan, other than a
plan maintained by Buyer for the benefit of its employees.
7.05 Survival. The representations and warranties made in this Section 7
shall be deemed remade at and as of the Closing for the subject Property, and
shall survive Closing for nine (9) months thereafter. If a Seller does not
notify Buyer of the breach of any of its representations and warranties within
nine (9) months after the applicable Closing and institute a lawsuit therefor in
a court of competent jurisdiction within three (3) months after such notice to
Buyer, the Seller shall be deemed to have waived all of its rights to claim and
sue for any breach by Buyer of any of its representations and warranties.
SECTION 8
ACCESS; PURCHASE "AS IS"; THIRD PARTY APPROVALS
8.01 Access. Prior to Closing, Buyer, its agents and representatives, shall
be entitled to enter upon the Property (as coordinated through each Seller's
property manager), including all leased areas, upon reasonable prior notice to
Seller, to perform inspections and tests of the Property, including surveys,
environmental studies, examinations and tests of all structural and mechanical
systems within the Improvements, and to examine the books and records of Seller
and Seller's property manager relating to the Property. Before entering upon the
Property, Buyer shall furnish to Seller evidence of general liability insurance
coverage in such amounts and insuring against such risks as Seller may
reasonably require (provided Buyer will not be deemed to be in default hereunder
for failing to provide such evidence prior to the Effective Date hereof).
Notwithstanding the foregoing, Buyer shall not be permitted to interfere
unreasonably with any Seller's operations at any Property or unreasonably
disturb or interfere with any tenant's rights or occupancy at the Property, and
the scheduling of any inspections shall take into account the timing and
availability of access to tenants' premises, pursuant to tenants' rights under
the Leases or otherwise. Without limiting the foregoing, Buyer will not enter
any individual units, or contact any tenants of the property, without first
obtaining the express consent of the applicable Seller. If Buyer wishes to
engage in any testing which will damage or disturb any portion of any Property,
Buyer shall obtain the applicable Seller's prior consent thereto, which may be
refused or conditioned in Seller's sole discretion. Without limiting the
generality of the foregoing, Seller's written approval (which, notwithstanding
the foregoing, may be granted, withheld or conditioned in Seller's sole
discretion) shall be required prior to any testing or sampling of surface or
subsurface soils, surface water, groundwater or any materials in or about the
Improvements in connection with Buyer's environmental due diligence. Buyer shall
repair any damage to any Property caused by any such tests or investigations,
and indemnify Seller from any and all liabilities, claims, costs and expenses
resulting from such tests and investigations, including any liens, lien claims
and claims and demands for payment; provided
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that Buyer shall not be liable to Seller for damages resulting from the mere
discovery of any conditions, including, without limitation, the presence of
Hazardous Materials on a Property, but Buyer shall be liable to Seller for any
exacerbation of an existing condition caused by Buyer's investigation or
testing. The indemnifications set forth in this Section shall survive Closing or
the termination of this Agreement.
Prior to Closing, the results of all inspections and tests of the Property,
including without limitation the contents of any and all reports issued in
connection therewith, including any environmental reports, shall not be
disclosed by Buyer, its agents or representatives, to any third party without
the affected Seller's prior written consent, unless Buyer is legally compelled
to make such disclosure under applicable laws. Notwithstanding the foregoing,
Buyer may disclose such matters to Buyer's agents, representatives, directors,
officers, employees, legal counsel, investors, prospective investors, lenders
and prospective lenders and their counsel and advisors (herein collectively
called "Related Parties"), who in Buyer's reasonable opinion should know such
information for the purpose of evaluating the same for Buyer as a potential
purchaser of the Property. Buyer shall request that any Related Parties to whom
such documents, items or information are furnished not make the same available
or disclose the contents thereof to any person who is not a Related Party.
8.02 Omitted.
8.03 Waivers. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY
DOCUMENT EXECUTED AND DELIVERED BY SELLER AT CLOSING (OR AT THE SECOND TARZANA
CLOSING) ("TRANSACTION DOCUMENTS"), IT IS UNDERSTOOD AND AGREED THAT NO SELLER
NOR ANY SELLER AFFILIATE (AS DEFINED BELOW) IS MAKING NOR HAS AT ANY TIME MADE
ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR
REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY
TRANSACTION DOCUMENTS, BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING (IN THE
CASE OF THE TARZANA PROPERTY, UPON CLOSING AND THE SECOND TARZANA CLOSING, AS
APPLICABLE) EACH SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT
ITS PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS." EXCEPT AS MAY BE EXPRESSLY SET
FORTH IN THIS AGREEMENT OR IN ANY TRANSACTION DOCUMENTS, BUYER HAS NOT RELIED
AND WILL NOT RELY ON, AND NO SELLER OR SELLER AFFILIATE IS LIABLE FOR OR BOUND
BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS
OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING
SPECIFICALLY, WITHOUT LIMITATION, ANY PROSPECTUS DISTRIBUTED WITH RESPECT TO THE
PROPERTY) MADE OR FURNISHED BY ANY SELLER, ANY SELLER AFFILIATE (INCLUDING THE
MANAGERS OF ANY PROPERTY), OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT ANY SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR
INDIRECTLY, ORALLY
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OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN THE
TRANSACTION DOCUMENTS. BUYER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS
AND TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS IS", SUBJECT TO THE
EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5 OF THIS AGREEMENT
AND ANY SET FORTH IN THE TRANSACTION DOCUMENTS (AND IN EACH CASE THE LIMITATIONS
PLACED THEREON).
BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR
TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO,
THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR
DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE
EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY
HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF ANY
SELLER OR ANY SELLER AFFILIATE WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF A SELLER AS ARE EXPRESSLY SET FORTH
IN THIS AGREEMENT OR IN THE TRANSACTION DOCUMENTS. UPON CLOSING, BUYER SHALL
ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION
DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN
REVEALED BY BUYER'S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO
HAVE WAIVED, RELINQUISHED AND RELEASED EACH SELLER AND EACH SELLER'S AFFILIATED
ENTITIES (AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, PARTNERS, MEMBERS,
SHAREHOLDERS, EMPLOYEES, MANAGERS (INCLUDING PROPERTY MANAGERS) AND AGENTS
(COLLECTIVELY, "SELLER AFFILIATES")) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY
AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED
OR ALLEGED AGAINST ANY SELLER OR ANY SELLER AFFILIATE AT ANY TIME BY REASON OF
OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL
CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS,
OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING ANY PROPERTY. THE
FOREGOING WAIVER AND RELEASE SHALL NOT EXTEND TO ANY CLAIMS FOR BREACH OF A
COVENANT, REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN
THE TRANSACTION DOCUMENTS (BUT ONLY TO THE EXTENT SUCH CLAIMS ARE EXPRESSLY
PERMITTED UNDER THIS AGREEMENT OR THE TRANSACTION DOCUMENTS, AND IN ALL CASES
SUBJECT TO THE LIMITATIONS SET FORTH IN THIS AGREEMENT OR IN THE TRANSACTION
DOCUMENTS, AS APPLICABLE).
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THE PROVISIONS OF THIS SECTION SHALL SURVIVE CLOSING OR ANY TERMINATION OF
THIS AGREEMENT.
IN CONNECTION WITH THE FOREGOING, BUYER EXPRESSLY WAIVES ALL RIGHTS UNDER
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES THAT:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Buyer's Initials:_____________
Seller's Initials:_____________
8.04 Hazardous Materials Waiver. Buyer hereby agrees that, if at any time
after the Closing, any third party or any governmental agency seeks to hold any
Seller or Buyer responsible for the presence of, or any loss, cost or damage
associated with Hazardous Materials (as hereinafter defined) in, on, above or
beneath the Property or emanating therefrom, then Buyer shall, and hereby does,
waive any rights it may have against any Seller or any Seller Affiliates in
connection therewith including, without limitation, under CERCLA (defined
below), and Buyer agrees that it shall not (a) implead any Seller, (b) bring a
contribution action or similar action against any Seller, or (c) attempt in any
way to hold any Seller responsible with respect to any such matter; provided,
however, that nothing herein shall limit or interfere with Buyer's right (A) to
pursue a claim against Seller for a breach of a representation and warranty set
forth herein, subject to the terms and limitations set forth herein, or (B) to
the benefit from any allocation of responsibility among responsible parties or
potentially responsible parties resulting from action initiated by parties other
than Buyer (including federal and state agencies) provided Buyer does not take
any of the actions set forth in (a), (b) or (c) above. The provisions of this
Section 8.04 shall survive the Closing. Nothing in the foregoing sentence shall
be deemed a waiver of any claim by Buyer for breach of a representation or
warranty expressly set forth in this Agreement or in the Transaction Documents
(but only to the extent such claims are expressly permitted under this Agreement
or the Transaction Documents, and in all cases subject to the limitations set
forth in this Agreement or in the Transaction Documents, as applicable). As used
herein, "Hazardous Materials" shall mean and include, but shall not be limited
to any petroleum product and all hazardous or toxic substances, wastes or
substances, any substances which because of their quantitated concentration,
chemical, or active, flammable, explosive, infectious or other characteristics,
constitute or may reasonably be expected to constitute or contribute to a danger
or hazard to public health, safety or welfare or to the environment, including,
without limitation, any hazardous or toxic waste or substances which are
included under or regulated (whether now exiting or hereafter enacted or
promulgated, as they may be amended from time to time) including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic
Substance Control Act ("TSCAS"), 15 U.S.C. Section 2601 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1802; the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the Clean Water Act
("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking Water Act,
-23-
42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section
7401 et seq., the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., similar state laws and regulations adopted thereunder
(collectively, "Hazardous Materials Laws"). The provisions of this Section shall
survive Closing or any termination of this Agreement.
8.05 No Financial Representation. Each Seller has provided to Buyer certain
unaudited historical financial information regarding its Property relating to
certain periods of time in which Seller owned the Property. Seller and Buyer
hereby acknowledge that such information has been provided to Buyer at Buyer's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate (except as set forth in
Section 5 above) or that Buyer will achieve similar financial or other results
with respect to the operations of the Property, it being acknowledged by Buyer
that each Seller's operation of its Property and allocations of revenues or
expenses may be different than Buyer may be able to attain. Buyer acknowledges
that it is a sophisticated and experienced purchaser of real estate similar to
the Property and operator of senior housing facilities and further that Buyer
has relied upon its own investigation and inquiry with respect to the operation
of the Property.
8.06 Assistance with Financial Statements. Each Seller, at Buyer's cost and
expense, shall, for the period from the Effective Date through the first (1st)
anniversary of the Closing (or, with respect to the Tarzana Property, the Second
Tarzana Closing) of such Seller's Property, upon reasonable advance notice from
Buyer, provide Buyer and its representatives, agents and employees with access
to all financial and other information within such Seller's or its Manager's
possession or reasonable control pertaining to the period of such Seller's
ownership and operation of such Property, which information is relevant and
reasonably necessary, in the opinion of Buyer's outside, third party accountants
(the "Accountants"), to enable Buyer and its Accountants to prepare and audit
financial statements (including, without limitation, audited financial
statements of the Property for fiscal years 2002, 2003, 2004, and 2005 and
comparative unaudited financial statements through Closing (or, with respect to
the Tarzana Property, the Second Tarzana Closing) with respect to such Property
acquired by Buyer in compliance with any or all of (a) Rule 3-14 of Regulation
S-X of the Securities and Exchange Commission (the "Commission"); (b) any other
rule issued by the Commission and applicable to Buyer, and (c) any registration
statement, report or disclosure statement filed with the Commission by or on
behalf of Buyer or any affiliate of Buyer. Buyer shall reimburse Sellers and
Manager for those costs and expenses (including the wages and salaries and costs
of Manager and Manager's employees but excluding the wages and salaries of
Seller's employees) that Seller or Manager incurs in order to comply with the
foregoing requirement, but shall not exceed $30,000 in the aggregate for all
Sellers' and Managers' costs and expenses. Seller shall be obligated to fund any
such costs and expenses in excess of $30,000.
Seller agrees to cause an executive officer of Seller (or of its Manager)
with knowledge concerning the financials affairs of the Property to execute and
deliver a representation letter (the "Representation Letter") to Buyer's
Accountants with respect to all financial information delivered to Buyer and its
Accountants by Seller, in a form and substance substantially similar to what
would have been executed and delivered to their auditors had the Seller been
preparing audited financial statements for such time periods with respect to the
Property.
8.07 Third Party Approvals.
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(a) General. For each Property, Buyer shall use commercially
reasonable efforts to obtain prior to Closing (except the parties acknowledge
that the same will not be obtained until after Closing in the case of the
Foundation House (Federal Way, WA) and Fairways (Wickliffe, OH) Facilities) all
governmental and quasi-governmental waivers, consents, approvals and
authorizations required to transfer to Buyer or its designee the operation of
the facilities providing independent living for seniors, assisted living for
seniors or Alzheimer's/dementia care for seniors or skilled nursing for seniors,
as applicable, currently operated on the subject Property (each, a "Facility"),
including, without limitation, all licenses and approvals required by
governmental agencies charged with regulating or licensing such Facilities and,
in the case of the Glenwood Gardens (SNF) Facility, any necessary approval of
the assignment of the Provider Numbers for billing Government Programs for
residents of such Facility (the "Provider Numbers") (collectively, the "Third
Party Approvals"); provided, however, that any penalties or fines (as opposed to
capital expenditures) that may be required to be expended to bring any
Properties into compliance with applicable requirements and required to be paid
to secure the renewal or reissuance of a license or permit shall be the
responsibility of Seller. Notwithstanding the foregoing, reference is made to
subsection (b) below with respect to payment for certain of such capital
expenditure costs. Seller hereby authorizes Buyer to file all required
applications for all Third Party Approvals with respect to such Seller's
Property. Other than with respect to the Glenwood Gardens SNF Facility, Buyer
agrees promptly following the Effective Date to apply for and thereafter to use
commercially reasonable efforts to pursue the so-called "Emergency Approval to
Operate" ("EAO") procedure for each Facility (other than the Tarzana Facility)
located in California. Both Seller and Buyer shall have the right to communicate
directly with the Department of Social Services to try to obtain the EAO. The
parties acknowledge that it is not the custom of the Department of Social
Services to issue a formal approval of the EAO and the same will not be a
condition to Closing, provided that the Department of Social Services otherwise
communicates its approval of the EAO. Such approval will satisfy the requirement
for Third Party Approvals for Facilities located in California (other than with
respect to the Tarzana Facility and the Glenwood Gardens SNF Facility).
At Closing, Buyer and Seller will enter into a sale leaseback transaction
pursuant to which the Foundation House (Federal Way, WA) Property will be
operated under the applicable Seller's licenses ("Shared Licenses") in a manner
that is in compliance with all applicable laws and affords the Buyer the
material benefits of ownership and operation of the Property in the manner now
conducted by Seller (including, without limitation, the economic benefit and
operational control) ("Interim Structure"), which Interim Structure will be
documented utilizing documents in the form of the documents attached hereto as
Schedule DD (with such changes as the state licensing agencies may require,
provided that such changes do not materially alter the allocation of control,
liability or economics between the parties). In connection with the Interim
Structure: (i) Buyer agrees to indemnify, defend and hold harmless the Seller
and the Seller Affiliates from and against any losses, costs, damages or
expenses incurred by Seller or the Seller Affiliates in connection with the
Shared Licenses (or violations thereof) to the extent such losses, costs,
damages or expenses relate to Buyer's operation of such Facility under such
Shared License during any period from and after the Closing, except to the
extent the same is caused or contributed to by Seller or Seller Affiliates or
arises out of Seller's operation of such Facility prior to Closing, and (ii)
Seller agrees to indemnify, defend and hold harmless Buyer from and against any
losses, costs, damages or expenses incurred by Buyer in connection with the
Shared
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Licenses (or violations thereof) to the extent such losses, costs, damages or
expenses relate to Seller's operation of such Facility under such Shared License
prior to the Closing. The foregoing is not intended to, and will not be
construed so as to, expand Seller's liability with respect to the physical
condition of the property beyond that set forth by the express provisions of (i)
Section 8.07(b) below or (ii) any representations and warranties set forth in
Section 5 above.
The parties agree to submit the Interim Structure lease and management
agreement for the Washington Facility to the applicable state licensing agency
for review and approval prior to Closing, and will make the changes, if any, to
such documents required by the agency (provided that such changes do not
materially alter the allocation of control, liability or economics between the
parties). Both Seller and Buyer shall have the right to communicate directly
with the applicable agency to try to obtain such approval or a list of required
changes to the Interim Structure lease and management agreement. The parties
acknowledge that it is not the custom of such agency to issue a formal approval
letter and the same will not be a condition to Closing, provided that such
agency otherwise communicates its approval of such Interim Structure lease and
management agreement (the "Washington Approval").
If with respect to any Property (other than the Wickliffe, Ohio Property,
the Glenwood Gardens (SNF) Property and the Foundation House (Federal Way, WA)
Property) the necessary Third Party Approvals have not been obtained for the
transfer to Buyer or its designee of the operation of the Facility as currently
operated on the subject Property on or before the scheduled Closing Date or the
Washington Approval has not been obtained before the scheduled Closing Date,
then the Closing Date shall be extended for all, but not less than all, of the
Properties other than the Glenwood Gardens (SNF) Property for up to sixty (60)
days. In such case, (i) the parties will close on all of the Properties other
than the Glenwood Gardens (SNF) Property when the last of the Third-Party
Approvals and Washington Approval are obtained with respect thereto (assuming
all of the other conditions referenced in clause (ii) below are satisfied or
waived by Buyer), (ii) consummation of the delayed Closings for all such
Properties will be subject only to obtaining the applicable Third-Party
Approvals and Washington Approval for such Properties, there having been no
material adverse change to the Properties, taken as a group, and all other
conditions specified in this Agreement for the Closing of the Properties having
been satisfied, (iii) if such conditions are not satisfied or waived by Buyer
upon the expiration of such 60-day period, either party may terminate this
Agreement by notice to the other, whereupon the Deposit shall be returned to
Buyer and (iv) the parties will reasonably cooperate to schedule the delayed
Closing date for all the applicable Properties as specified by Buyer up to
fourteen (14) days after the satisfaction of such conditions (which the parties
acknowledge may result in the Closing Date being extended to a date not later
than June 15, 2006).
The Closing Date for the Glenwood Gardens (SNF) Property will be the tenth
(10th) business day after the Third Party Approval for such Property is
obtained, provided that if such Third Party Approval has not been obtained on or
prior to the date which is eighteen (18) months following the date hereof,
either Buyer or Seller may terminate this Agreement with respect to all
Properties for which Closing has not occurred by notice to the other. The
Closing for the Glenwood Gardens (SNF) Property will be upon the conditions set
forth in this Agreement and upon the further condition that: (i) if the
annualized NOI (as defined below) for the Glenwood
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Gardens (SNF) Property based on the three (3) calendar months prior to the
Closing Date for such Property (i.e., four times such three month NOI) is less
than $1,360,000 (the "Floor NOI"), Buyer may terminate this Agreement with
respect to all Properties for which Closing has not occurred by notice given to
Seller on or before the Closing Date for the Glenwood Gardens (SNF) Property,
and (ii) if the annualized NOI for the Glenwood Gardens (SNF) Property for the
three (3) calendar months prior to the Closing Date for such Property (i.e. four
times such three month NOI) is less than $1,600,000 (the "Base NOI"), but equal
to or greater than the Floor NOI, then Buyer shall not have the right to
terminate this Agreement on account thereof and Seller shall give Buyer a credit
at Closing for the Glenwood Gardens (SNF) Property in an amount equal to the
amount by which the Base NOI, exceeds the annualized NOI for the three (3)
calendar months prior to Closing for the Glenwood Gardens (SNF) Property. NOI
shall mean all revenue of the Glenwood Gardens (SNF) Property minus all expenses
of the Property, prior to payment of any management fee, and excluding all
non-cash items such as depreciation and amortization, and further excluding all
extraordinary items of revenue and expense, determined in accordance with the
accounting methodology set forth on Schedule E-1 applied in a manner consistent
with past practice. For purposes of clarification as to the methodology of
calculating NOI, it is understood that the items of revenue and expense to be
used in the calculation are the line items of revenue and expense on the
attached statement at Schedule HH, but excluding the management fee line item.
For new Residency Agreements with its residents, the Seller and Manager of the
Glenwood Gardens (SNF) will continue to use their current form of Residency
Agreement, without material modification (provided it is understood that
modifications consistent with industry standard may be made). Provided Seller
and Manager comply with the foregoing Residency Agreement requirement, the
parties confirm for the avoidance of doubt that the Closing for the Glenwood
Gardens (SNF) Property shall not be conditioned upon there not having been a
change in the Rent Roll for the Glenwood Gardens (SNF) Property and Seller shall
have no liability to Buyer for a change in the Rent Roll for such Property.
Notwithstanding any provision contained herein to the contrary, Buyer's
obligation to close the transactions contemplated by this Agreement will not be
conditioned upon Buyer obtaining any Third Party Approvals for the Fairways
(Wickliffe, Ohio) Facility. The Parties acknowledge that such Third Party
Approvals will not be obtained until after Closing. Nevertheless, promptly
following the Effective Date, Buyer will submit an application for such Third
Party Approvals for such Facility to the Ohio Department of Health and will
employ commercially reasonable efforts to pursue the same so that they may be
obtained following Closing without delay. At Closing, Seller, or Seller's
Manager, as applicable, will submit to the Ohio Department of Health a so-called
Change of Operator Consent Form, in the form attached hereto as Schedule U. The
Parties acknowledge that Buyer may be deemed to be operating the Ohio Facility
under Seller's Residential Care Facility License from the Ohio Department of
Health during the period between Closing and the issuance of a Residential Care
Facility License by the Ohio Department of Health to Buyer (the "Interim Ohio
Period"). The Parties anticipate that the Interim Ohio Period will be about 30
days, but may be longer or shorter. Regardless of whether the Interim Ohio
Period is longer or shorter than 30 days, Buyer will indemnify, defend and hold
Seller and the Seller Affiliates harmless from and against any violations,
losses, costs, damages or expenses incurred by Seller or the Seller Affiliates
in connection with the Seller's licenses which Buyer is operating under,
including the Residential Care Facility License, as affected by the Change of
Operator Consent Form (or violations thereof), to the extent such
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violations, losses, costs, damages or expenses (or license violations) relate to
Buyer's operation of such Facility during any period from and after Closing,
except to the extent the same is caused or contributed to by Seller or Seller
Affiliates or arises out of Seller's operation of such Facility prior to
Closing; and Seller will indemnify, defend and hold harmless Buyer from and
against any violations, losses, costs, damages or expenses incurred by Buyer in
connection with Seller's licenses which Buyer is operating under, including the
Residential Care Facility License, as affected by the Change of Operator Consent
Form (or violations thereof), to the extent such violations, losses, costs,
damages or expenses (or license violations) relate to Seller's operation of such
Facility during any period prior to Closing. The foregoing is not intended to,
and will not be construed so as to, expand Seller's liability with respect to
the physical condition of the Property beyond that set forth by the express
provisions of (i) Section 8.07(b) below or (ii) any representations and
warranties set forth in Section 5 above.
Seller agrees to use commercially reasonable efforts to cooperate with
Buyer, at Seller's cost and expense, in connection with Buyer's obligation to
seek to obtain the Third-Party Approvals, including, without limitation,
assigning the Provider Numbers pursuant to Section 11.01(p) and providing
information to Buyer on a timely basis to facilitate Buyer's preparation of
licensing applications and submissions. Seller shall cooperate (and if
applicable shall cause its Manager to cooperate and comply) with the
implementation of the Interim Structure through Closing and comply with the
lease and management agreements implementing such Interim Structures following
Closing, for no additional compensation until such time as such Third Party
Approvals are obtained. Without limiting the foregoing, promptly following the
Effective Date Seller shall deliver to Buyer the documents and/or information
set forth on Schedule S-1 attached hereto (the "Required Licensure
Information"), to the extent not previously delivered to Buyer.
Promptly following the Effective Date, each Seller of an assisted living or
senior care licensed Property located in California shall provide a letter in
the form of Schedule S-2 to each resident of the Property (or their responsible
party), a letter in the form of Schedule S-3 to each person employed at the
Property, and a letter notifying the California Department of Social Service of
the impending transaction. Each such Seller shall provide to Buyer an executed
sample of each such letter for inclusion in Buyer's applications for the
Third-Party Approvals for the Properties. Buyer shall also execute each such
letter in the form of Schedule S-2 and S-3 promptly following the Effective Date
and prior to delivery to the residents and employees.
Subject to the provisions of Section 8.07(b), Buyer shall pay all fees and
costs (including, without limitation, application, processing and review fees,
assumption fees, issuance fees and attorneys' fees and costs) charged or
incurred in connection with obtaining (and applying for) the Third Party
Approvals, as and when the same are due, whether or not the Third Party
Approvals are obtained or Closing or the Second Tarzana Closing occurs, provided
that Buyer shall not be required to pay any penalties or fees on account of
operations during the period prior to Closing.
(b) Capital Expenditures. Notwithstanding the anything to the contrary
in this Agreement, (1) at the simultaneous Closing for all Properties other than
the Glenwood Gardens (SNF) Property, the applicable Sellers shall deposit in
escrow with Title Company out of the Purchase Price for such Properties the
aggregate total sum of $900,000 for all Sellers of such Properties combined (the
"Primary Cap Ex Holdback Amount") pursuant to a form of escrow holdback
agreement to be reasonably agreed upon by Seller and Buyer prior to the Closing
(the
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"Cap Ex Escrow Holdback Agreement"), and (2) at the Closing for the Glenwood
Gardens (SNF) Property, the Seller thereof shall deposit in escrow with the
Title Company out of the Purchase Price for such Property the aggregate total
sum of $100,000 (the "SNF Cap Ex Holdback Amount") pursuant the Cap Ex Escrow
Holdback Agreement. The funds (including earnings thereon) (the "Cap Ex Escrow
Funds") in the escrow account pursuant to the Cap Ex Escrow Holdback Agreement
shall be held and disbursed by Title Company as follows:
(i) Except as set forth on Schedule U-1 attached hereto or
otherwise set forth in the environmental and property condition (including
engineering) reports obtained by Buyer and listed on Schedule U-2 attached
hereto (being all of such reports obtained by Buyer), if any Property is
not in compliance with any applicable law or regulation in effect on
Closing Date, including any fire, life-safety, building code or other law
or regulation governing the use and operation of such Property as an
independent living for seniors, assisted living for seniors or
Alzheimer's/dementia care or skilled nursing for seniors, to the extent
such Property is currently operated for such use (but specifically
excluding any requirements imposed by the Americans With Disabilities Act
or changes in applicable law occurring after the Effective Date), and at
any time prior to the Closing for such Property or within 90 days following
such Closing (a "Claim Period") any applicable governmental agency (or any
one acting on behalf of such governmental agency), including without
limitation, any applicable health care agency, requires in writing that a
capital improvement, repair or replacement (a "Capital Item") be made to
eliminate such violation whether as a condition to granting any Third Party
Approval or other governmental license required to permit the operation or
continued operation of such Property or in connection with any survey of
such Property regulating the operation and continued use of such Property
(a "Capital Requirement"), then Buyer shall be obligated to pay the first
$50,000, in the aggregate with respect to all Properties (including the
Glenwood Gardens (SNF) Property) combined, of the cost of all such Capital
Items, and thereafter Buyer shall be entitled to receive out of the Cap Ex
Escrow Funds all such costs in excess of the $50,000 funded by Buyer (up to
the full amount of the Primary Cap Ex Holdback Amount, in the aggregate
with respect to all Properties combined, excluding the Glenwood Gardens
(SNF) Property, and up to the full amount of the SNF Cap Ex Holdback Amount
in the case of the Glenwood Gardens (SNF) Property); provided that prior to
any expenditure being made or cost incurred, Buyer shall provide Seller
written notice thereof within ten (10) days following receipt of written
notice thereof. Such notice is for information purposes only, and Buyer
shall be the sole party entitled to contest, in Buyer's sole discretion,
the imposition of any Capital Requirement. Subject to Seller's obligations
pursuant to Section 10.07 hereof, it is not a condition to Closing that any
applicable Capital Item has been commenced, completed or paid for,
regardless of when the Capital Requirement is imposed. The provisions of
this Section merely allocate financial responsibility for Capital
Requirements among the parties and shall not be construed in a manner so as
to delay or prevent Closing unless delay is provided for in Section 8.07(a)
due to a failure to obtain a Third Party Approval (or the Washington
Interim Structure approval). Buyer's rights hereunder to receive all or any
portion of the Cap Ex Escrow Funds shall in no way be deemed or construed
to limit any damages to which Buyer might otherwise be entitled under this
Agreement for a breach of any express representation or warranty of Seller
hereunder; provided that no
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Seller shall have any liability to Buyer under this Section 8.07(b) in
excess of its obligation to deposit its share of the Primary Cap Ex
Holdback Amount or SNF Cap Ex Holdback Amount, as applicable, with the
Title Company at Closing as set forth above.
(ii) Upon the expiration of the Claim Period for all Properties
other than the Glenwood Gardens (SNF) Property, the applicable Sellers
shall be entitled to receive the balance of the Primary Cap Ex Escrow
Amount, including any interest earned thereon, and upon the expiration of
the Claim Period for the Glenwood Gardens (SNF) Property, the applicable
Seller shall be entitled to receive the balance of the SNF Cap Ex Escrow
Amount, including any interest earned thereon; in each case, less any
amounts thereof as to which Buyer has made a claim in writing to Seller and
Title Company prior to the expiration of the Claim Period (a "Pending
Claim"). Upon final resolution of each Pending Claim, if any, the balance,
if any, of the Cap Ex Escrow Funds reserved therefor shall be released to
the applicable Seller(s).
(c) Survival. The provisions of this Section 8.07 shall survive the
Closing or earlier termination of this Agreement.
8.08 Loan Assumption and Payoff.
(a) Buyer's obligations under this Agreement shall not be subject to
any contingency for financing. Subject to securing the Lender Consent, Buyer
shall be required to assume at the Second Tarzana Closing the loan with respect
to the Tarzana Property listed on Schedule K as the "Assumed Loan" (the "Assumed
Loan"), provided that the Assumed Loan is not in default, beyond any applicable
notice and grace period, as of the date of the Second Tarzana Closing, due to a
default caused by Seller, its Manager and/or their respective affiliates. In
connection therewith, and subject to the provisions of Section 8.08(h) below,
Buyer shall as soon as reasonably practicable, but in no event more than
fourteen (14) days after the Effective Date, (i) submit any required application
for consent by the lender with respect to the Assumed Loan, together with any
fees or other payments required by the such lender or in connection therewith
(but subject to Section 8.08(i)), (ii) provide the applicable Seller with a copy
of such application simultaneously with the submission thereof to the lender,
and (iii) thereafter shall use commercially reasonable efforts to obtain the
written consent of such lender to the transfer of the Tarzana Property to Buyer
(or its designee or assignee) and the assumption of the Assumed Loan
(collectively, the "Lender Consent"). Without limiting the foregoing, to the
extent reasonably required by the lender, Buyer shall provide a recourse
carve-out guarantee, environmental indemnification or other guarantee to such
lender under the Assumed Loan from the Buyer, provided the same has a net worth
of at least ten million dollars ($10,000,000) or if at the Second Tarzana
Closing such entity does not have the required net worth, then from other
guarantors and indemnitors having creditworthiness and operational control with
respect to the subject Properties equal to or greater than ten million dollars
($10,000,000) (the "Replacement Guarantor(s)"). In its initial applications for
the Lender Consent, Buyer shall provide such materials and information
concerning the financial and other qualifications of Buyer (or its designee or
assignee) and if applicable the Replacement Guarantor(s) as is required by the
applicable loan documents or as such lender may otherwise reasonably require.
Buyer shall (i) provide Seller with copies of all material correspondence
received by Buyer from such lender or their agents with respect to the proposed
loan assumption and otherwise keep Seller reasonably
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informed with respect to the status of the proposed assumption and (ii) not
request any changes to the terms of the loan documents other than as set forth
on Schedule T.
(b) It shall be a condition to the applicable Seller's obligation to
close the Second Tarzana Closing and assign the Assumed Loan that either (i) the
lender issue a release (the "Releases") to the applicable Seller and any
existing guarantor(s) or indemnitor(s) thereunder in form reasonably acceptable
to such Seller and existing guarantors or indemnitor(s) releasing the same from
all liability under the Assumed Loan (including, without limitation, any
recourse carve-out guarantees, environmental indemnifications and other
guarantees) to the extent that such liabilities first accrue from and after the
Second Tarzana Closing (or such earlier date specified in the Tarzana Interim
Structure documents), or (ii) Buyer provide such Seller and existing
guarantor(s) or indemnitor(s) indemnification at such Second Tarzana Closing, in
form and substance reasonably satisfactory to Seller, from any entity with a
minimum net worth to be maintained during the term of the guaranty of at least
ten million dollars ($10,000,000), determined on a fair market value basis, from
and against any claim against such Seller or existing guarantor(s) or
indemnitor(s) to the extent such claim would have been released by the Releases
contemplated hereby (the "Buyer Loan Indemnification"). Buyer and Seller shall
use commercially reasonable efforts to obtain the Release, with any required
out-of-pocket expenses to be borne by Buyer (subject to Section 8.08(i)). If the
Buyer is unable to obtain the Release, Buyer shall be required to provide and
deliver at the Second Tarzana Closing the Buyer Loan Indemnification.
(c) [Intentionally Deleted].
(d) Subject to Section 8.08(i) hereof, Buyer shall pay all fees and
costs (including, without limitation, application, processing and review fees,
assumption fees and attorneys' fees and costs) charged or required by the lender
in connection with the assumption of (and any request to assume) the Assumed
Loan, as and when the same are due; provided, however, that Seller shall be
responsible for such costs, and shall reimburse Buyer for any such costs
incurred if the Second Tarzana Closing does not occur for any reason other than
Buyer's default, and, provided further, that in no event shall Buyer be
obligated to pay (i) Seller's attorney's fees and costs in connection therewith
or (ii) any fees, charges, accrued interests, reimbursement, or other cost or
amount due such lender on account of the period prior to the Second Tarzana
Closing (or such earlier date specified in the Tarzana Interim Structure
documents) to the extent such amount does not relate to and arise by virtue of
the proposed assignment or assumption of such Assumed Loan.
(e) Subject to Section 8.08(i), Seller shall promptly contact all
Pay-Off Loan lenders and use commercially reasonable efforts to secure pay-off
letters and, if applicable, the consent (the "Pay-Off Loans Lender Consent") of
such lenders to the early prepayment of such Pay-Off Loans as contemplated
hereby. Buyer shall pay and pre-pay at each Closing or provide sufficient funds
at each Closing for Seller to pay and pre-pay at Closing all sums due or to come
due under the loans listed on Schedule K hereof as the "Pay-Off Loans" (the
"Pay-Off Loans") encumbering the applicable Properties, including without
limitation all prepayment fees and costs (including, without limitation, any
application, processing and review fees, prepayment fees, future interest, yield
maintenance and attorneys' fees and costs) as may be necessary to release the
applicable Property from the lien of the existing mortgages and pay off the
Pay-Off
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Loans, including the then outstanding principal balance as of the applicable
Closing and interest accrued and unpaid; provided that in no event shall Buyer
be obligated to pay (i) Seller's attorney's fees and costs in connection
therewith or (ii) any fees, charges, accrued interests, reimbursement, or other
cost or amount due such lenders on account of the period prior to Closing to the
extent such amount does not relate to and arise by virtue of the proposed
prepayment of such Pay-Off Loans.
(f) For the Assumed Loan, Buyer shall receive a credit against the
Purchase Price for the Tarzana Property (including against the loan required to
be funded by Buyer in connection with the Tarzana Interim Structure at the first
Closing as provided therein, and so long as it does not result in a double
counting of the credit, against the Purchase Price payable at the Second Tarzana
Closing) encumbered by the Assumed Loan in an amount equal to the outstanding
principal balance of the Assumed Loan assumed as of each the applicable closing
for the Tarzana Property together with accrued, but unpaid interest thereon as
of such date of closing. Buyer will likewise receive a credit against the
Purchase Price for each Property encumbered by a Pay-Off Loan which is pre-paid
in full by Buyer and discharged, in an amount equal to the outstanding principal
balance of the Pay-Off Loan as of the applicable Closing plus all interest
accrued and unpaid for the period ending immediately prior to said Closing and
pre-payment. In the event Buyer shall pay any amounts that are to be payable by
Seller pursuant to Section 8.08(i) hereof, Buyer shall also be entitled to a
credit for such amounts against the Purchase Price unless the Seller has
previously reimbursed Buyer for such disbursements.
(g) Except as may be set forth on Schedule T, Buyer agrees that it
will not request a modification to the terms and provisions of the Assumed Loan
prior to the Second Tarzana Closing. Seller agrees to reasonably cooperate with
Buyer in connection with the effort to obtain the Lender Consent and Release.
The obligations of this Section 8.08 shall survive Closing or the earlier
termination of this Agreement.
(h) The parties acknowledge that in order for the Buyer to acquire the
Tarzana Property and assume the Assumed Loan encumbering the Tarzana Property,
the Buyer will need to go through the TPA ("transfer of physical assets")
process and obtain the consent of the lender and the US Department of Housing
and Urban Development to the sale of such Property to Buyer, assumption of the
Assumed Loan by Borrower and the modifications to the loan set forth on Schedule
T (the "TPA Approval"), which is anticipated to take an extended period of time.
In order to permit Seller to receive the benefits of the Purchase Price while
the TPA process is being completed, the parties will implement the structure
described on, and execute documents contemplated by, the term sheet attached as
Schedule Y (the "Tarzana Interim Structure"). It is agreed that the Deposit
allocated to the Tarzana Property will at the first Closing of the Tarzana
Property pursuant to the Tarzana Interim Structure at Buyer's election be either
returned to Buyer or applied to the Purchase Price of the other Properties.
Prior to Closing, Buyer and Seller will cooperate in good faith to have the
Tarzana Interim Structure approved by the lender (it being agreed that failure
by such lender to object to the interim loan component of the Tarzana Interim
Structure shall be deemed such lender's approval thereof) for the Assumed Loan
(including the Department of Housing and Urban Development), to the extent
required by the applicable loan documents.
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(i) Notwithstanding anything herein to the contrary and excluding
Seller's legal fees and out-of-pocket expenses incurred in connection therewith,
which shall be borne by Seller, the aggregate out-of-pocket expenditure charged
by the lenders (including, without limitation, all fees, penalties, expense
reimbursements, yield maintenance provisions, or other amounts due or payable
with respect to such matters) and required to be paid by Buyer hereunder in
connection with the assumption of the Assumed Loan, the securing of the Lender
Consent, securing the Release, and prepaying the Pay-Off Loans (the
"Assumption/Payoff Costs") shall be limited to One Million Eight Hundred
Thousand Dollars ($1,800,000.00) (plus the application of a portion of the
Purchase Price for the Assumed Loan and Pay-Off Loans as contemplated by Section
8.08(f)). In the event such Assumption/Payoff Costs exceed One Million Eight
Hundred Thousand Dollars ($1,800,000.00), Seller agrees to pay and contribute
(or, if applicable, reimburse Buyer) up to and additional One Million Dollars
($1,000,000.00) towards the Assumption/Payoff Costs in excess of such One
Million Eight Hundred Thousand Dollars ($1,800,000.00) required to be paid by
Buyer hereunder.
8.09 [Intentionally Deleted].
8.10 Natural Hazard Disclosure. This Section 8.10 shall apply only to
Property located within the State of California. Buyer and Seller acknowledge
that Seller is required to disclose if any of the Property lies within the
following natural hazard areas or zones: (i) a special flood hazard area
designated by the Federal Emergency Management Agency; (ii) an area of potential
flooding; (iii) a very high fire hazard severity zone; (iv) a wild land area
that may contain substantial forest fire risks and hazards; (v) an earthquake
fault or special studies zone; or (vi) a seismic hazard zone. Buyer and Seller
acknowledge that Seller has employed the services of Disclosure Source ("Natural
Hazard Expert") to examine the maps and other information specifically made
available to the public by government agencies for the purposes of enabling
Seller to fulfill its disclosure obligations with respect to the natural hazards
referred to above and to report the results of its examination to Buyer and
Seller in writing. The written report prepared by the Natural Hazard Expert
regarding the results of its examination has been delivered to Buyer and fully
and completely discharges Seller from its disclosure obligations referred to
herein, and, for the purposes of this Agreement, the provisions of Civil Code
Section 1103.4 regarding the non-liability of Seller for errors and/or omissions
not within its personal knowledge shall be deemed to apply, and the Natural
Hazard Expert shall be deemed to be an expert dealing with matters within the
scope of its expertise with respect to the examination and written report
regarding the natural hazards referred to above.
8.11 Employees.
(a) On each Closing Date, the applicable Seller(s) shall (or shall
cause its Managers to) terminate all employees employed at each Property for
which Closing is occurring (including, without limitation, the executive
directors of each Property), and take such other action as may be required by
any applicable laws, rules, regulations and orders such that, except as set
forth in Section 8.11(c) below, no Buyer shall have any liability for any matter
concerning any employee which accrued prior to Closing except for accrued
vacation and other accrued paid time off ("Accrued Employee Benefits") related
to any employee hired by Buyer at Closing with respect to which Buyer receives a
credit in accordance with the provisions of Section 13 hereof. Except for any
Accrued Employee Benefits for which Buyer receives a credit at Closing as
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aforesaid, and except as otherwise set forth herein, no Buyer is assuming
liability attributable to any employee of Seller or its Managers other than
liabilities arising after the Closing for employees that are in fact employed by
Buyer. Seller shall be solely liable to pay (or shall cause its Managers to pay)
to its employees (and to its Manager's employees) all severance and Accrued
Employee Benefits to which such employees are entitled as a result of their
employment by Seller or Manager, except for any Accrued Employee Benefits for
which Buyer receives a credit at Closing as aforesaid and except as set forth in
Section 8.11(c) below. Seller shall indemnify, defend and hold harmless Buyer
and its assigns from and against any and all losses, damages, costs and
expenses, including, without limitation, attorneys' fees and costs, arising from
any claim made by any such employee relating to matters occurring prior to
Closing or otherwise arising out of their employment by Seller or any Manager,
except for any claim by any employee hired by Buyer for Accrued Employee
Benefits for which Buyer receives a credit at Closing as aforesaid and as set
forth in Section 8.11(d) below. Buyer shall indemnify, defend and hold harmless
Seller and Managers, and their assigns, from and against any and all losses,
damages, costs and expenses, including without limitation, attorneys' fees and
costs, arising from any claim made by any employee of Buyer or its property
managers relating to Accrued Employee Benefits for which Buyer receives a credit
at Closing or relating to matters occurring after closing or otherwise out of
their employment by Buyer or its property managers.
(b) Buyer shall have the right to meet with the executive directors
and all other employees of the Properties at any time after the Effective Date
in each case to discuss operational and other issues concerning the Properties
and to discuss employment arrangements with any employee. Buyer may make offers
of employment to any employee contingent upon Closing occurring hereunder and
otherwise upon such terms and conditions of employment, compensation and
benefits as Buyer shall determine in its sole discretion. Seller shall cause its
Managers to (A) consent to the hiring of any employee by Buyer, if Closing
occurs for such Seller's Property, and (B) waive, with respect to the employment
by Buyer of any employee, any claims or rights that Seller or Managers may have
against Buyer or any employee under any non-competition or employment agreement
if Closing occurs for such Seller's Property. Seller shall, and shall cause its
Managers to, cooperate with Buyer's process of interviewing the employees and
transitioning operation of the Properties to Buyer.
(c) Notwithstanding anything to the contrary, for each Facility for
which Closing occurs, prior to Closing Buyer shall make bona fide offers of
employment commencing at Closing to that number or percentage of employees set
forth on Schedule AA attached hereto (or if Seller provides an updated Schedule
at least fifteen (15) days prior to Closing the number or percentage set forth
in such updated Schedule so long as such revised number or percentage is within
the permitted range set forth on Schedule AA) with respect to each Property,
which Seller has prepared in its good faith effort so as to avoid applicability
of the Worker Adjustment Retraining and Notification Act (the "WARN Act") and/or
any applicable state or local laws or regulations requiring notice prior to
plant or facility closings or a mass layoff, due to this transaction. Subject to
Buyer's obligations as set forth herein, Seller shall be responsible for giving
any notifications that may be required by the WARN Act, as amended, and/or any
applicable state or local laws or regulations requiring notice prior to plan or
facility closings or a mass layoff, and the rules and regulations thereunder,
with respect to any employees of Seller whose employment is terminated by Seller
on the Closing Date in connection with this
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transaction and who are not employed by Buyer following the Closing Date. Buyer
agrees to indemnify, defend and hold harmless Seller from and against any loss,
damage, liability, claim, cost or expense (including reasonable attorneys' fees,
and also including any amounts payable by Seller, whether by contractual
indemnity or otherwise, and also including any loss, damage, liability, claim,
cost or expense arising out of the WARN Act, as amended, and/or any applicable
state or local laws or regulations) that may be incurred by, or asserted
against, Seller arising out of or relating to Buyer's failure, if any, to comply
with its obligations pursuant to this Section 8.11(c).
(d) Buyer hereby agrees to be responsible for any obligation that
Seller and its affiliates might otherwise have had to provide continuing health
benefit coverage pursuant to Sections 601 through 608 of ERISA and Section 4980B
of the Code for any person who has become an M&A qualified beneficiary (as
defined in IRS Regulation Section 54.4980B-9 Q&A 4(a)) as a result of the
Closing of this transaction (the "Former Employees"). Seller shall reimburse
Buyer for the third party, out of pocket cost to Buyer, as reasonably determined
by Buyer, of providing such continuing health care benefit coverage to such
Former Employees (specifically excluding any costs or incremental cost increases
for current or future employees of Buyer), in all cases only to the extent such
costs are not covered by payments made by such Former Employees.
(e) Except as set forth in subsection (d) above, Buyer specifically
shall not assume, honor or accept any employee benefit plan of Seller or Manager
or its parent or affiliates, including but not limited to any "employee benefit
plan" within the meaning of Section 3(3) of ERISA and Seller shall be solely
responsible for satisfying all obligations (whether arising under federal, state
or local law or pursuant to contract) which may arise or which may have arisen
prior to the Closing Date in connection with the employment by Seller or Manager
of employees or the creation, funding, operation or termination of any of the
employee benefit plans that cover any such employees.
(f) [Intentionally Deleted].
(g) The provisions of this Section 8.11 shall survive Closing.
SECTION 9
INSURANCE; RISK OF LOSS
9.01 Maintenance of Insurance. Until the Closing for its Property (or in
the case of the Tarzana Property, the Second Tarzana Closing), each Seller shall
maintain its present insurance on its Property which insurance in respect of
fire and casualty shall be covered by a standard All-Risk Policy in the amounts
as currently insured. Subject to the provisions of Section 9.02, the risk of
loss in and to the Property shall remain vested in the Seller owning the
Property until the Closing. Buyer will obtain its own insurance on the Property
at Closing (or in the case of the Tarzana Property, the Second Tarzana Closing).
9.02 Casualty or Condemnation. If, prior to the Closing therefor, any
Property owned by any Seller or any portion thereof is damaged or destroyed by
fire or casualty, or any part of
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such Property is taken by eminent domain by any governmental entity and the
portion of such Property that is damaged, destroyed or taken either (i)
materially interferes with the operation of the Property and conduct of its
usual business or (ii) has a replacement cost equal to or in excess of five
percent (5%) of the Purchase Price for such Property set forth in Section 2.01,
and Buyer does not elect to close the transaction pursuant to the terms of the
next grammatical paragraph notwithstanding the casualty or taking, then this
Agreement will terminate with respect to all Properties for which Closing has
not previously occurred and the Deposit allocated to such terminated Properties
will be returned to Buyer.
If (i) such damage or destruction or taking does not materially interfere
with the operation of the Property and conduct of its usual business and has a
replacement cost or is in an amount of less than five percent (5%) of the
Purchase Price or (ii) Buyer nevertheless elects to purchase the impaired
Property, Buyer shall proceed with the purchase of all the Properties without
reduction or offset of the Purchase Price except as set forth below, and in such
case, unless the applicable Seller shall have previously restored its Property
to its condition prior to the occurrence of any such damage or destruction, the
Seller shall pay over or assign to Buyer all amounts received or due from, and
all claims against, any insurance company or governmental entity as a result of
such destruction or taking, and Buyer shall receive a credit against the
Purchase Price for the damaged Property in the amount of the deductible under
the applicable insurance policy, if any and for the amount of any uninsured
loss.
9.03 Tarzana Property Risk of Loss. After the Closing with respect to the
Tarzana Property, the risk of loss due to damage or destruction or taking shall
be borne exclusively by Buyer. However, pursuant to the documents implementing
the Tarzana Interim Structure, Seller will assign to Buyer all amounts received
or due from, and all claims against, any insurance company or governmental
entity as a result of such destruction or taking with respect to the Tarzana
Property with respect to matters arising after Closing.
SECTION 10
SELLER'S OBLIGATIONS PRIOR TO CLOSING
Each Seller covenants that, with respect to its Property, between the
Effective Date (or such later date as specified below) and the Closing for such
Property (the parties agreeing that the Seller's obligations with respect to the
Tarzana Property during the period from Closing to the Second Tarzana Closing,
shall be addressed in the definitive agreements implementing the Tarzana Interim
Structure):
10.01 No Lease Amendments. Such Seller shall not, without Buyer's prior
written consent, (a) enter into any new Residency Agreement for a unit with a
first-time tenant unless the Residency Agreement is for a period of no more than
one year (or thirty (30) days in the case of Alzheimer's and skilled nursing
units) and has an effective rental rate consistent with Seller's current
practice; or (b) enter into, amend, renew or extend any Residency Agreement with
an existing tenant unless the Residency Agreement is for a period of not more
than one year and has an effective rental rate for the amended, renewal or
extension term consistent with Seller's current practice; or (c) terminate any
Residency Agreement except by reason of a default by the tenant thereunder or by
reason of the provisions contained in the Residency Agreement.
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10.02 Continuation of Service Contracts and Equipment Leases; Commercial
Leases. No Seller shall, without Buyer's prior written consent, not to be
unreasonably withheld, modify or amend any Assumed Service Contract, Equipment
Lease or Commercial Lease, or enter into any new Service Contract, Equipment
Lease or Commercial Lease, unless the same is terminable without penalty by the
then owner of the Property upon not more than thirty (30) days' notice. Any such
new agreements will be assumed by Buyer at Closing to the same extent as the
existing Service Contracts, Equipment Leases and Commercial Leases.
10.03 Replacement of Personal Property. No personal property included as
part of the Property shall be removed from the Property unless the same becomes
obsolete and is replaced with similar items of at least equal quality prior to
the Closing.
10.04 Tax Proceedings. The Seller shall not withdraw, settle or otherwise
compromise any protest or reduction proceeding affecting real estate taxes or
personal property taxes assessed against its Property for any fiscal period in
which the Closing is to occur or any subsequent fiscal period without the prior
written consent of Buyer. Real estate tax and personal property tax refunds and
credits received after the Closing which are attributable to the fiscal tax year
during which the Closing occurs shall be apportioned between the applicable
Seller and Buyer, after deducting the expenses of collection thereof, based upon
the relative time periods each owns the Property, which obligation shall survive
the Closing.
10.05 Access. The Seller shall allow Buyer or Buyer's representatives
access to the Property, the Leases and other documents required to be delivered
under this Agreement upon reasonable prior notice at reasonable times; provided
Buyer agrees that the original leases and all other original documents shall
remain on-site at the Property and Seller agrees to provide copies of all such
documents as Buyer may reasonably request.
10.06 [Intentionally Deleted].
10.07 Continued Operations. The Seller will operate and maintain its
Property substantially in accordance with the Seller's current practices with
respect to the Property, including with respect to the maintenance of inventory
and consumables and maintenance of the Property (including, without limitation,
with respect to making capital improvements and repairs), normal wear and tear
and casualty and condemnation damage excepted. With respect to the Glenwood
Gardens (SNF) Property, the foregoing shall require Seller to expend, on an
annualized basis, at least $500 per bed, on capital expenditures between the
Effective Date and the Closing for the Glenwood Gardens (SNF) (and any shortfall
in such annualized $500 per bed expenditure as of the Closing of such Property
shall be credited against the applicable Purchase Price, on a pro-rata basis
based on the portion of the year that has elapsed as of such Closing Date).
10.08 Cooperation; Entry Access. Seller agrees to cooperate with the Buyer,
and to cause Manager to cooperate with Buyer, to effect an orderly transfer of
the operation of the Property at Closing. Furthermore, Seller hereby agrees to
allow representatives of Buyer to have on-site access to the Property and to the
employees of Seller and its Managers at least one week in advance of any
scheduled Closing of such Property in order to arrange for the orderly
transition of operations (including, without limitation, billing, payroll,
accounts payable and
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accounting systems) and Property level employees and in order to allow Buyer to
install systems and equipment to be utilized by Buyer in operating the Property,
including, without limitation, time clocks and data lines. Such items shall be
installed at the expense of Buyer and in a manner so as to not materially
interfere with the operation of the Property.
10.09 Transfer of Records.
(a) Resident Records. At Closing and to the extent permitted by law
(and to the extent in Seller's or Manager's possession), Seller shall deliver
possession to Buyer of any and all records (including those in electronic form)
or written documents relating to the residents of the Facility at Closing,
including but not limited to, all contracts, applications, billing records,
regulatory records, health records, assessments and correspondence relating to
the residents. Seller may deliver copies in lieu of originals to the extent law
requires Seller to retain originals. After Closing, Buyer will retain all such
materials for such prudent period as Buyer retains its own such records and
documents and will provide Seller and Manager with copies of, and with access to
originals of, all such materials, to the extent permitted by law (it being
agreed that the parties will enter into a business associates agreement or
similar arrangement, on customary terms reasonably acceptable to the parties, if
and only to the extent necessary to allow such copies or access). The provisions
of this Section will survive Closing.
(b) Employee Records. At Closing and to the extent permitted by law
(and to the extent in Seller's or Manager's possession), Seller shall or shall
cause Managers to deliver possession to Buyer at the Property of any and all
records (including those in electronic form) or written documents physically
located at the Property and relating to employees of the Property who are
actually employed by Buyer on the Closing Date. Seller may deliver copies in
lieu of originals to the extent law requires Seller to retain originals. After
closing, Buyer will retain all such materials for such prudent period as Buyer
retains its own such records and documents and will provide Seller and Manager
with copies of, and with access to originals of, all such materials, to the
extent permitted by law. The provisions of this Section will survive Closing.
(c) Sales Data and Referrals. At Closing and to the extent permitted
by law (and to the extent in Seller's or Manager's possession), Seller shall or
shall cause Managers to deliver possession to Buyer at the Property of any and
all records (including those in electronic form) or written documents located at
any location of all sales data, referral sources, and other sales and marketing
materials used with respect to sales and marketing of the Property during the
period commencing one (1) year prior to the Effective Date.
10.10 Final Cost Report. For the Glenwood Gardens (SNF) Facility, Seller
shall prepare (or cause its Manager to prepare) and file, pursuant to and within
the time frame required by applicable law and regulation and in any event within
120 days following the Closing for such Property, the cost reports or portions
of cost reports, if any, required or permitted by governmental or third party
payors for the stub period ending on the Closing Date on account of the
assignment of the Provider Numbers or sale of the Facility. Seller shall provide
Buyer an opportunity to review such cost reports prior to their submission, but
the reports will not be subject to Buyer's consent or approval.
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10.11 Tail Insurance. On or prior to Closing, Seller shall obtain tail
insurance coverage in the amount of its existing insurance coverages, and
lasting for a period of two (2) years after Closing, with respect to their prior
operations at the Facilities.
10.12 Employees. With respect to the Glenwood Gardens (SNF) Property, (a)
Seller or its Manager shall provide Buyer with notice upon the firing of any
employees of the Property (and prior to such firing if practicable given the
circumstances), and (b) Seller and its Manager will not hire any employees for
the Property at or above the grade of department head without the consent of
Buyer to the identity of such new employee, not to be unreasonably withheld,
conditioned or delayed.
10.13 Operating Statements. With respect to the Glenwood Gardens (SNF)
Property, Seller will deliver to Buyer copies of the monthly operating
statements prepared by Seller promptly following the completion thereof.
10.14 Cross Easement and Shared Services. Prior to the first Closing, the
parties shall agree upon and implement any cross easements and shared service
agreements as are reasonably necessary to operate the Glenwood Gardens (SNF)
Property separately from the Glenwood Gardens (IL/AL) Property. Neither party
will unreasonably withhold its consent to any such easement or agreement. Buyer
and Seller will advise each other within ten (10) days following the date hereof
whether they believe any such cross easements or shared service agreements will
be required under this Section. If any such instruments are required, the form
thereof will be agreed upon within twenty (20) days following the date hereof.
10.15 Owner's Association. Reference is made to that certain Declaration of
Covenants, Conditions and Restrictions and Reservation of Reciprocal Easements
for Glenwood Gardens, dated as of January 27, 1999, recorded March 3, 1999 as
Document Number 0199032567 with the Kern County, California, Recorder (the
"Bakersfield Declaration"). The Bakersfield Declaration contemplates that an
owner's association will be established thereunder (the "Owner's Association").
The Seller of the Glenwood Gardens (IL/AL) Property represents that to such
Seller's knowledge the Owner's Association has not been established. At the
Closing on the Glenwood Gardens (IL/AL) Property, the Seller of such Property,
the Seller of the Glenwood Gardens (SNF) Property and Buyer shall establish the
Owner's Association by filing articles of organization with the California
Secretary of State and adopting by-laws for the Owner's Association. Such
articles of organization and by-laws, and any ancillary votes or certificates,
will be drafted by Buyer, will provide that directors shall be elected by the
vote of the majority of the votes held by all members of the Owner's Association
(and hence Buyer, as owner of the Glenwood Gardens (AL/IL) Property, will have
the voting power to elect all of he members of the board of directors of the
Owner's Association), and shall be subject to Buyer's and Seller's approval (not
to be unreasonably withheld, conditioned or delayed). Buyer and Seller shall
agree upon the forms of such documents within twenty days following the date
hereof.
If it is discovered that an Owner's Association currently exists (a
"Pre-Existing Owner's Association"), then the Seller will, at Seller's expense,
promptly following the discovery thereof: cause the Pre-Existing Owner's
Association to waive any unpaid assessments levied by such Pre-Existing Owner's
Association, pay off and terminate any outstanding contracts to which the
Pre-
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Existing Owner's Association is a party, satisfy or pay off any outstanding
claims or demands received by the Pre-Existing Owner's Association from the City
of Bakersfield as a third party beneficiary under the Bakersfield Declarations,
and wind up and dissolve the Pre-Existing Owner's Association. Buyer, at no cost
to Buyer, will cooperate with Seller in connection with the foregoing.
10.16 Disposition and Development Agreement. Reference is made to that
certain Disposition and Development Agreement by and between the Chino
Redevelopment Agency (the "Agency") and Hillsborough Associates, dated December
16, 1986, amended March 13, 1989, notice of which is given in Memorandum of
Agreement Containing Covenants Affecting Real Property dated March 13, 1989,
recorded March 16, 1989 as Document Number 89094332 with the San Bernardino
County, California, Recorder (the "DDA"). The Seller of the Property encumbered
by such instrument will use commercially reasonable efforts prior to Closing
(and as soon after the date hereof as practical) to obtain and deliver to Buyer:
(1) a copy of the DDA, and (2) an estoppel certificate executed by the Agency
stating that the conditions set forth in the DDA have been satisfied, there are
no current defaults under the DDA, the current use of the Property complies with
the provisions of the DDA and there are no payments currently due or outstanding
under the DDA. Buyer acknowledges that Seller may not be able to obtain such
documents and obtaining and delivering the same will not be a condition to
Closing or entitle Buyer to a reduction in the Purchase Price..
SECTION 11
SELLER'S CLOSING OBLIGATIONS
11.01 Closing, Deliveries and Obligations. At the Closing for its Property
(and, except as set forth to the contrary in Section 11.03 below, at the Second
Tarzana Closing with respect to the Tarzana Property), each Seller shall deliver
(and, if applicable, cause its Manager to deliver) the following to Buyer with
respect to such Seller and its Property (and it is a condition to Buyer's
obligation to close that the same are delivered):
(a) Deed. A deed, in the form attached as Schedule F (each, a "Deed"),
which conveys the applicable Real Property owned by the Seller to Buyer, subject
only to Permitted Exceptions. Upon the request of Buyer, each Seller will also
deliver a quitclaim (that is, without warranty of any kind) deed using the legal
description of such Seller's Property set forth in the New Survey for such
Property, if such description differs from the description set forth in Schedule
A-1 attached hereto.
(b) Bill of Sale; Vehicle Titles and General Assignment. A limited
warranty bill of sale and general assignment, in the form attached as Schedule G
(each, a "Bill of Sale"), which conveys all of the Seller's right, title and
interest in and to its tangible and intangible personal property. With respect
to all motor vehicles included in the Property, vehicle titles to the extent in
Manager's possession.
(c) Assignment of Residency Agreements and Security Deposits. An
assignment and assumption of the Residency Agreements and Security Deposits to
which the
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Seller is a party, in the form attached as Schedule H (each, a "Residency
Agreement Assignment").
(d) Assignment of Commercial Leases. An assignment and assumption of
all Commercial Leases and Security Deposits to which the Seller is a party in
the form attached hereto as Schedule J (each, "Commercial Lease Assignment").
(e) Lease Records. Original copies of all Leases and related documents
in the possession or under the control of the Seller. Such records shall include
a schedule of all cash security deposits (and originals, to the extent in
Seller's or Manager's possession or control, of any non-cash security deposit,
including letters of credit, pledge agreements, etc.) and a credit against the
Purchase Price due to such Seller in the amount of such security deposits held
by the Seller at the Closing under the Leases together with appropriate
instruments of transfer or assignment with respect to any lease securities which
are other than cash and a schedule updating the Rent Roll and setting forth all
arrears in rents and all prepayments of rents.
(f) Assignment of Service Contracts, Equipment Leases and Other
Agreements. An assignment and assumption of all Assumed Service Contracts and
all Equipment Leases to which the Seller is a party in the form attached as
Schedule I (each, a "Contract Assignment"). Each Seller will terminate all of
its other Service Contracts. Each Seller will terminate its property management
or operating contract for its Property at its cost and expense at Closing.
(g) Title Affidavits. Such affidavits as the Title Insurer may
reasonably require in order to omit from its title insurance policy for the
subject Property all exceptions for (i) parties in possession other than under
the rights to possession granted under the Leases; and (ii) mechanics' liens. If
required by the Title Insurer, a so-called gap indemnity in form reasonably
acceptable to Seller covering title matters recorded by, through or under
Seller.
(h) Notices of Sales. A standard letter, in a form approved by Buyer,
such approval to not be unreasonably withheld, executed by the Seller, advising
the tenants under the assigned Leases of the sale of the subject Property to
Buyer and directing that all rents and other payments thereafter becoming due
under the assigned Leases be sent to Buyer or as Buyer may direct.
(i) Non-Foreign Affidavit. The Seller shall execute and deliver to
Buyer and Buyer's counsel, at Closing such evidence as may be reasonably
required by Buyer to show compliance by the Seller with the Foreign Investment
and Real Property Tax Act, IRC Section 1445(b)(2), as amended, and any analogous
state statutes (including a so-called "CALFIRPTA").
(j) Seller's Representation Certificate. The Seller's Representation
Certificate duly executed by such Seller as provided in Section 5 hereof in form
reasonably satisfactory to Buyer's and Seller's counsel.
(k) State Law Disclosures. Such disclosures and reports as are
required by applicable state and local law in connection with the conveyance of
the Property.
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(l) Omitted.
(m) Settlement Statement. A settlement statement signed by Seller in
form and substance reasonably acceptable to Seller and Buyer.
(n) Notices. A notice to residents and Commercial Lease tenants in a
form reasonably approved by Buyer, notifying them of the change in ownership of
the Property and directing payment of future rents to Buyer.
(o) The AEW Guaranty. The AEW Guaranty (as defined in Section 18.02).
(p) Medicare/Medicaid Assignment. With respect to the Glenwood Gardens
(SNF) Property only, an assignment and assumption of the Provider Numbers, in
form reasonably agreed upon by Buyer and Seller prior to the applicable Closing
Date, executed by Seller and the guarantor (the "SNF Guarantor") listed on
Schedule W for the Seller of this Facility (the "Medicare/Medicaid Assignment").
The Medicare/Medicaid Assignment shall contain, among other matters, a
reciprocal indemnity in the form attached hereto as Schedule GG. The reciprocal
indemnity will be provided by the applicable Seller and by the SNF Guarantor, on
behalf of Seller, and by Buyer (the "Medicaid/Medicare Assignment Reciprocal
Indemnity"). The SNF Guarantor, as guarantor under the foregoing indemnity, will
maintain its legal existence and a net worth of $2,000,000 until March 29, 2008.
(q) Business Associates Agreement. With respect to the Pacific Gardens
(Tarzana, CA) and The Fairways (Wickliffe, OH) Properties, a "Business Associate
Agreement", executed by Seller, in the form negotiated for the Foundation House
(Federal Way, WA) Property (the "BA Agreement").
(r) Other Documents and Actions. Any other documents, books and
records required by this Agreement to be delivered by Seller, including, without
limitation, any agreements necessary to implement the Interim Structures as
contemplated hereby or to implement the Tarzana Interim Structure at the first
Closing for the Tarzana Property. Each Seller shall also take such other actions
required by this Agreement to be taken by such Seller.
11.02 Expenses. Each Seller shall pay its own counsel fees and all transfer
taxes (including, without limitation, local city or municipal transfer taxes),
deed stamps, state excise tax, sales tax and documentary stamps relating to the
sale of its Property hereunder, if any; and one-half (1/2) of any escrow fees.
11.03 Tarzana Closings. Pursuant to the Tarzana Interim Structure, the
parties intend to transfer operational control of the Tarzana Property (and any
assets, contracts and records that Seller is permitted to transfer at Closing by
the lender of the Assumed Loan) from Seller to Buyer at the Closing, and to
transfer the fee interest in the Tarzana Property and title to the other assets
constituting the Tarzana Property from Seller to Buyer at the Second Tarzana
Closing.
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SECTION 12
BUYER'S CLOSING OBLIGATIONS
At the Closing for each Property (and at the Second Tarzana Closing with
respect to the Tarzana Property (except to the extent specified below to occur
at the Closing)), Buyer shall (and it is a condition to all Sellers' obligations
to close that Buyer shall):
12.01 Payment of Purchase Price. Deliver to each Seller the Purchase Price
for the applicable Properties (and in the case of the Tarzana Interim Structure,
the loan by Buyer to Seller (which shall be in the amount of the Purchase Price
for the Tarzana Property less the amount of the Assumed Loan and all accrued and
unpaid interest thereon) shall be delivered at the Closing for such Property,
and the Purchase Price for the Tarzana Property subject to application as
provided in the Tarzana Interim Structure shall be delivered at the Second
Tarzana Closing), allocated among the Sellers as set forth in Section 2.01, and
as adjusted for (a) apportionments under Section 13, (b) any adjustments thereto
required pursuant to the express provisions this Agreement and (c) to Cap Ex
Escrow Amount pursuant to Section 8.07(b).
12.02 Closing Documents. Deliver to each Seller each of the Bills of Sale,
Residency Agreement Assignments, Commercial Lease Assignments and Contract
Assignments for the applicable Properties signed by Buyer with respect to the
performance by Buyer of the landlord's and owner's obligations from and after
Closing with respect to the Residency Agreements, Assumed Service Contracts and
Equipment Leases and Commercial Leases to which such Seller is a party. Any
Assumed Service Contracts or Equipment Leases that by their terms cannot be
assigned to Buyer (or for which any required consent to assignment is not
obtained) will nevertheless be assigned to Buyer and Buyer shall make the
regular payments due thereunder after Closing, as well as any accelerated
payments on account of such assignment (without reduction in the Purchase
Price), provided Buyer gets the benefit of the subject equipment or service, and
Seller shall pay any penalties (as opposed to accelerated payments) due as a
result of such assignment).
12.03 State Law Disclosures. Such disclosures and reports as are required
by applicable state and local law in connection with the conveyance of the
Property.
12.04 Medicare/Medicaid Assignment. With respect to the Glenwood Gardens
(SNF) Property only, deliver to Seller the Medicare/Medicaid Assignment, signed
by Buyer.
12.05 Business Associates Agreement. With respect to the Pacific Gardens
(Tarzana, CA) and The Fairways (Wickliffe, OH) Properties, deliver to Buyer a BA
Agreement executed by Buyer.
12.06 Other Documents and Actions. Deliver any other documents and take any
other actions required by this Agreement to be delivered or taken by Buyer
(including notices by Seller to residents in California Facilities required by
law).
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12.07 Buyer's Expenses. Pay its own counsel fees, title insurance premiums
and costs, survey costs, recording costs, all costs relating to any mortgage
financing obtained by Buyer and one-half (1/2) of any escrow fees.
12.08 Settlement Statement. Deliver to each Seller a settlement statement
signed by Buyer in form and substance reasonably acceptable to Buyer and such
Seller.
SECTION 13
APPORTIONMENTS AND ADJUSTMENTS TO PURCHASE PRICE
13.01 Apportionment. The apportionments set forth below shall be made
between the parties at the Closing for each Property as of the close of the
business day prior to such Closing (the parties confirming this means the "first
closing" for the Tarzana Property, except for matters to be adjusted at the
Second Tarzana Closing pursuant to Section 13.01(j) below). The apportionments
for the Tarzana Property will be made as if full fee title to the Real Estate
and other Property constituting the Tarzana Property were conveyed to Buyer on
the Closing Date.
(a) Buyer shall receive from each Seller a credit for any rent and
other income, including community fees, under Residency Agreements collected by
such Seller before Closing that applies to any period after Closing. Uncollected
rent and other uncollected income and community fees shall not be prorated at
Closing. After Closing, unless the resident shall specify otherwise, Buyer shall
apply all rent and income collected by Buyer from a tenant under a Residency
Agreement, first to such tenant's current monthly rental (or the next occurring
month, if rent is payable in advance), then to the month in which Closing
occurred, and then to arrearages in the reverse order in which they were due,
remitting promptly to the applicable Seller any balance properly allocable to
the Seller's period of ownership. Buyer shall bill and use commercially
reasonable efforts to collect such rent arrearages in the ordinary course of
business, but shall not be obligated to engage a collection agency or take legal
action to collect any rent arrearages. Any rent or other income received by a
Seller under Residency Agreements after Closing which are owed to Buyer shall be
remitted to Buyer by the Seller promptly after receipt for allocation and
disbursement as provided herein;
(b) all security deposits pursuant to Commercial Leases and pre-paid
rent shown on the Rent Roll shall be transferred (or credited) by Seller to
Buyer at Closing; on the Closing, Buyer shall in writing acknowledge receipt of
and expressly assume all Seller's financial and custodial obligations with
respect to security deposits pursuant to Commercial Leases and pre-paid rent so
transferred, it being the intent and purpose of this provision that, at Closing,
Seller will be relieved of all fiduciary and custodial obligations arising after
the Closing with respect to such transferred funds (to the extent that Buyer has
received a credit at Closing with respect thereto), and that Buyer will assume
all such obligations after Closing and be directly accountable to the residents
of the Property with respect thereto. At Closing, all security deposits pursuant
to the Residency Agreements will be returned to residents, and Buyer and Seller
will jointly execute a letter to residents in form mutually acceptable to the
parties, each acting reasonably, acknowledging the return of the security
deposits to the residents and waiving the requirement to maintain a security
deposit under the Residency Agreements;
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(c) there shall be no adjustment for wages, vacation pay, pension and
welfare benefits and other fringe benefits of all persons employed by any Seller
or its Manager at any Property (other than Accrued Employee Benefits as set
forth in Section 8.11); it being the intent of the parties that simultaneously
with the Closing, each Seller shall terminate any existing property management
or operating agreement and Buyer shall have no liability or obligation with
respect to any employee of Seller or its Manager prior to Closing except as set
forth in Section 8.11;
(d) real estate and personal property taxes, water charges, sewer
charges and charges for all other utilities, on the basis of the fiscal period
for which assessed, except that if there is a utility meter on the Property,
apportionment at the Closing for such utility shall be based on the last
available reading, subject to adjustment after the Closing on a per diem basis,
when the next reading is available. Seller shall seek to obtain readings of such
utility meters as of or shortly prior to Closing;
(e) each Seller shall receive a credit for its utility deposits for
any pre-paid utility accounts, which shall be transferred to Buyer;
notwithstanding the foregoing, in the case of deposits in the form of bonds,
Buyer will post replacement bonds and cooperate with Seller and Manager to
arrange for the return of the current bonds to Seller or Manager;
(f) Buyer shall receive a credit at Closing for Accrued Employee
Benefits related to any employee hired by Buyer at Closing;
(g) prepayments paid by any Seller under assigned Service Contracts
and Equipment Leases shall be prorated as of Closing;
(h) Buyer shall receive from each Seller a credit for any rent or
other income under assigned Commercial Leases collected by such Seller before
Closing that applies to any period after Closing. Any uncollected rent and any
other uncollected income under the assigned Commercial Leases shall not be
prorated at Closing. After Closing, unless the payor shall specify otherwise,
Buyer shall apply all rent and income collected by Buyer from a tenant under an
assigned Commercial Lease first of the payment of the then current and due rent
(or the next occurring month if rent is payable in advance), then to the rental
period in which Closing occurred, and then to arrearages in the reverse order in
which they were due, remitting promptly to the applicable Seller any balance
properly allocable to the Seller's period of ownership. Buyer shall bill and use
and commercially reasonable efforts to collect such arrearages in the ordinary
course of business, but shall not be obligated to engage a collection agency or
take legal action to collect any arrearages. Any rent or other income received
by a Seller under the assigned Commercial Leases after Closing which are owed to
Buyer shall be remitted to Buyer by the Seller promptly after receipt for
allocation and disbursement as provided herein;
(i) current or past due interest under Assumed Loan assumed by Buyer
shall be prorated as of Closing;
(j) at the Second Tarzana Closing, all escrows, reserves and security
deposits held pursuant to the Assumed Loan assumed by Buyer shall be assigned to
Buyer, and the Seller whose Property was encumbered by the Assumed Loan will
receive a credit from Buyer in the
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amount of such escrows, reserves and security deposits as they existed as of the
Closing for such Property (as opposed to the Second Tarzana Closing); any
escrows or reserves held pursuant to any Pay-Off Loans will remain Seller's
property;
(k) [Intentionally Deleted];
(l) Buyer shall receive from each Seller a credit for any and all
revenues and income in connection with the operation of such Seller's Property
not covered above and collected by or on behalf of the Seller before the Closing
and applicable to Buyer's period of ownership. Each Seller shall receive from
Buyer a credit for any and all expenses in connection with the operation of such
Seller's Property not covered above and paid by or on behalf of Seller before
Closing and applicable to Buyer's period of ownership. In addition, each party
shall promptly remit or cause to be remitted to the other any such revenues and
income collected by such party after Closing and applicable to the other party's
period of ownership, except as otherwise provided above.
(m) notwithstanding the other provisions hereof, receivables from
public third party payor programs with respect to the Glenwood Gardens (SNF)
(Bakersfield, CA) Property will be billed and pursued pursuant to the provisions
of the Medicare/Medicaid Assignment, with the intent and understanding that
Seller will receive receivables on account of items or services, including,
without limitation, room and board, provided on dates of service before Closing,
and Buyer will receive receivables on account of items or services, including,
without limitation, room and board, provided on dates of service from and after
Closing. Buyer and Seller shall each deliver to the other any such receivables
actually received by such party and due to the other party pursuant to the
foregoing sentence. Additionally, Seller shall have the right to pursue, after
Closing, any and all receivables on account of items or services, including,
without limitation, room and board, provided on dates of service before Closing.
Buyer will cooperate with such pursuit, and, to the extent reasonably required
based on Buyer being the assignee and holder of the Provider Numbers, Buyer will
either pursue such receivables for Seller or allow Seller to pursue the same as
agent for Buyer.
(n) funds held in trust for residents at the Glenwood Gardens (SNF)
(Bakersfield, CA) Property will be transferred by Seller to Buyer at the Closing
on such Property and at such time Buyer shall post a fidelity bond in the form
and substance required by the California Department of Health Services with
respect to such funds. Concurrent with such transfer, and as a condition
precedent thereto, Buyer shall in writing acknowledge receipt of and expressly
assume all Seller's financial and custodial obligations with respect to such
trust funds so transferred, it being the intent and purpose of this provision
that Seller will be relieved of all fiduciary and custodial obligations arising
thereafter with respect to such transferred funds, and that Buyer will assume
all such obligations thereafter and be directly accountable to the residents of
such Property with respect thereto.
If the Closing shall occur before a new tax rate is fixed for any of the
Property, the apportionment of taxes for such Property at the Closing shall be
upon the basis of the old tax rate for the preceding period applied to the
latest assessed valuation. Promptly after the new tax rate is fixed, the
apportionment of taxes shall be recomputed. Any discrepancy resulting from such
recomputation and any errors or omissions in computing apportionments at the
Closing shall be
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promptly corrected, which obligation shall survive the Closing. If any operating
expenses or other prorations cannot conclusively be determined as of the date of
Closing, then the same shall be adjusted at Closing based upon the most recently
issued bills, and shall be re-adjusted within ninety (90) days after the Closing
occurs.
13.02 Resident Rents and Services Fees. Prior to Closing, Seller shall bill
the residents in the ordinary course of business. From and after Closing,
billing for Medicaid and Medicare will be performed pursuant and subject to the
foregoing provisions and the provisions of the Medicare/Medicaid Assignment. The
parties acknowledge that generally, private pay residents are billed monthly in
advance on or about the 25th of each month (except that certain items and
adjustments in service fees may be billed in arrears), while Medicaid and
Medicare is billed in arrears. Regardless of who bills the residents for
Medicaid or Medicare, the portion of all resident rents and service fees
allocable to the time periods prior to the Closing shall be allocated to Seller
and the portion thereof allocable to the time periods on or after the Closing
shall be allocable to the Buyer and will be accounted for as part of the
reconciliation process set forth in Section 13.03. Delinquent rents and service
fees for the period prior to the Closing Date will remain the property of
Seller.
13.03 Post-Closing Reconciliation Process. Within 60 days after each
Closing Date, representatives of Buyer shall prepare and deliver to Seller a
proposed initial statement of reconciliation itemizing the following with
respect to the subject Properties: (i) all costs, charges and expenses paid by
one party with respect to the Property that are properly allocable to the other
party; and (ii) all resident rents and service fees actually collected by either
party with respect to the Property (the "Initial Reconciliation") and to whom
such fees should be properly allocated. The Initial Reconciliation shall include
appropriate detail to identify the items being adjusted. A final reconciliation
of all expenses, costs, charges, service fees and resident rents shall be
prepared by Buyer and delivered to Seller within 90 days after each Closing Date
(the "Final Reconciliation") with respect to the subject Properties. Throughout
the period leading up to the Initial Reconciliation and the Final
Reconciliation, each party shall provide to the other party any information it
may receive regarding the revenue and expense items described in subparagraphs
(i) and (ii) of this Section. The Final Reconciliation shall appropriately
reflect the net amount owed to Buyer or to Seller as a result of such
reconciliation. After approval by both parties of the Final Reconciliation, the
party determined to owe cash as a result of such Final Reconciliation shall
promptly pay such cash to the other party. This Article 13 will survive the
Closing.
SECTION 14
FAILURE TO PERFORM
14.01 Buyer's Election. In addition to Buyer's other rights herein, if any
Seller is unable to satisfy all of its obligations as set forth in this
Agreement, Buyer shall have the right to elect, in its sole discretion, at the
Closing, to accept such title as Sellers can deliver to all but not less than
all of the Properties in their then condition and to pay therefor the Purchase
Price without reduction or offset, in which case Seller shall convey such title
for such price.
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14.02 Seller's Default. If at the Closing, any Seller is unable to satisfy
all of its obligations as set forth in this Agreement, and Buyer does not elect
to take title as provided in Section 14.01, then Seller may extend the Closing
Date for all (but not less than all) Properties for which closing has not
previously occurred for up to ten (10) days during which period Seller will use
commercially reasonable efforts to cure the default. If Seller does not so
extend the Closing Date or extends the Closing Date but subsequently fails to
cure the defect, then as Buyer's sole and exclusive remedy (except for the
alternative remedy of specific performance set forth below in this Section
14.02), (i) the Deposit allocated to the Properties for which this Agreement is
terminated shall be forthwith returned to Buyer, Seller shall reimburse Buyer
for its actual, out-of-pocket costs reasonably incurred in connection with the
transaction contemplated by this Agreement up to a maximum amount of
$500,000.00, prorated among the Properties in the same proportion as the
Purchase Price is allocated among the Properties, and (ii) this Agreement will
thereupon terminate with respect to all but not less than all of the Properties
for which Closing has not yet occurred. In the alternative to the foregoing, if
Buyer desires to purchase all (but not less than all) the Properties in
accordance with the terms of this Agreement and any Seller intentionally refuses
to perform Seller's obligations hereunder, Buyer, at its option, and as Buyer's
sole and exclusive remedy, shall have the right to compel specific performance
by such Seller hereunder in which event any applicable portion of the Deposit
made hereunder shall be delivered to the applicable Seller at Closing in
accordance with the allocation set forth at Section 2.03 and credited against
the Purchase Price due such Seller.
14.03 Buyer's Default. If at the Closing, Buyer is in default of any
obligation set forth in this Agreement, Buyer shall have the right, provided
that such default is capable of being cured, to extend the date of Closing with
respect to such Property (or at Seller's election all of the Properties) for
such period of time, not to exceed five (5) days with respect to a non-monetary
default and two (2) business days, with respect to a monetary default, as may be
required for Buyer to satisfy its obligations with respect to the applicable
Property. Subject to the immediately preceding sentence, the parties acknowledge
that in the event of Buyer's failure to fulfill its obligations hereunder it is
impossible to compute exactly the damages which would accrue to each Seller in
such event. The parties have taken these facts into account in setting the
amount of the Deposit for such Property required pursuant to Section 2.03 (and
allocated pursuant thereto), and hereby agree that: (a) such amount together
with the interest earned thereon is the agreed upon damages which would accrue
to Seller with respect to such Property; (b) such amount represents damages and
not any penalty against Buyer; and (c) if this Agreement shall be terminated by
Seller by reason of Buyer's failure to fulfill Buyer's obligations hereunder
(which Seller may do with respect to all of the Properties for which Closing has
not occurred, by notice to Buyer), the Deposit applicable to the subject
Property together with the interest thereon, as allocated between the Sellers in
Section 2.03, shall be each Seller's full and liquidated damages in lieu of all
other rights and remedies which any Seller may have against Buyer at law or in
equity.
Because Buyer does not have the right to buy, and Seller does not have the
right to sell, less than all of the Properties (except pursuant to the express
provisions of this Agreement), a default by Buyer or Seller with respect to any
one Property will constitute a default with respect to all Properties for which
Closing has not yet occurred.
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SECTION 15
BROKERAGE FEES
15.01 Brokerage Fees. Each Seller and Buyer mutually represent and warrant
that it has not used a Broker who has claimed or may have the right to claim a
commission in connection with this purchase and sale other than CB Richard Ellis
(the "Broker"). Each Seller and Buyer shall indemnify and defend each other
against any costs, claims or expenses, including attorneys' fees, arising out of
the breach on their respective parts of any representations, warranties or
agreements contained in this Section. The representations and obligations under
this Section shall survive the Closing or, if the Closing does not occur, the
termination of this Agreement. Seller will pay any commission due to Broker in
connection with this Agreement under a separate agreement between Seller and
Broker.
SECTION 16
NOTICES
16.01 Effective Notices. All notices under this Agreement shall be in
writing and shall be delivered personally or shall be sent by Federal Express or
other comparable overnight delivery courier, addressed as set forth below or by
telecopier to the telecopier number as set forth below. Notices shall be deemed
effective, when delivery is first attempted, whether accepted or refused.
Notices to any Buyer shall be sent to Paul Froning, c/o Brookdale Senior Living
Inc., 330 N. Wabash, Suite 1400, Chicago, Illinois 60611, Telecopier No.
866-741-4764, with a copy to Alan C. Leet, Esq., Rogers & Hardin LLP, 2700
International Tower, Peachtree Center, 229 Peachtree Street, N.E., Atlanta,
Georgia 30303-1601, Telecopier No. (404) 525-2224. Notices to Seller shall be
sent to Marc L. Davidson, AEW Capital Management, L.P., Two Seaport Lane, World
Trade Center East, Boston, Massachusetts 02210, telecopier number: 617-261-9555,
and copies of all such notices to Seller shall be sent to Joseph J. Christian,
Esq., Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109, Telecopier No. 617-526-5000.
SECTION 17
INDEMNIFICATION; LIMITATIONS ON SURVIVAL
17.01 Indemnification by Seller.
(a) Subject to the limitations set forth in this Article 17, and the
other provisions of this Agreement, each Seller shall, jointly and severally
with the other Sellers that are a member of its Seller Group, but not any other
Sellers, indemnify, protect, defend, exculpate and hold Buyer, Buyer's assignees
and their partners, directors, members, shareholders, officers, employees and
agents (collectively, "Buyer Indemnified Parties") harmless from and against,
and agree promptly to defend Buyer Indemnified Parties from and reimburse Buyer
Indemnified Parties for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including, without limitation,
costs of investigation, reasonable attorneys' fees and other legal costs and
expenses) (collectively, "Losses") which Buyer Indemnified Parties may at any
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time suffer or incur, or become subject to, to the extent resulting from or
arising out of any third party claims (including by any governmental agency or
any third party payor) asserted or threatened against a Buyer Indemnified Party
resulting from or arising out of the operation of the Property prior to Closing,
meaning and intending matters such as trade payables, contract claims and tort
claims; but specifically excluding losses to the extent resulting from or
arising out of the physical (including environmental) condition of the Property
and matters caused by Buyer;
(b) [Intentionally Deleted].
(c) Claims for Losses by Buyer Indemnified Parties may only be brought
by such Buyer Indemnified Party if the Buyer (or Buyer's permitted assignees, if
applicable) joins in making such claim, it being the parties intent that Buyer
Indemnified Parties other than Buyer (or Buyer's permitted assignees, if
applicable) not have a separate and independent right to assert an
indemnification claim pursuant to this Agreement.
17.02 Indemnification by Buyer.
(a) Subject to the limitations set forth in this Article 17, and other
provisions of this Agreement, Buyer shall indemnify, protect, defend, exculpate
and hold Seller, and their respective stockholders, partners, directors,
members, officers, employees, Managers and agents (collectively, "Seller
Indemnified Parties") harmless from and against, and agree promptly to defend
Seller Indemnified Parties from and reimburse Seller Indemnified Parties for,
any and all Losses which Seller Indemnified Parties may at any time suffer or
incur, or become subject to, to the extent resulting from or arising out of any
third party claims (including by any governmental agency or third party payor)
asserted or threatened against a Seller Indemnified Party resulting from or
arising out of the operation of such applicable Property after Closing, meaning
and intending matters such as trade payables, contract claims and tort claims,
but specifically excluding Losses to the extent resulting from or arising out of
the physical (including environmental) condition of such Property and matters
caused by Seller;
(b) [Intentionally Deleted].
(c) Claims for Losses by Seller Indemnified Parties may only be
brought by such Seller Indemnified Party if the Seller joins in or consents to
making such claim, it being the parties' intent that Seller Indemnified Parties
other than Seller not have a separate and independent right to assert an
indemnification claim pursuant to this Agreement.
17.03 Notification of Claims.
(a) A party entitled to be indemnified pursuant to Section 17.01 or
17.02 (the "Indemnified Party") shall notify the party liable for such
indemnification (the "Indemnifying Party") in writing of any claim or demand (a
"Claim") which gives rise or will likely give rise to a right of indemnification
under this Agreement, as soon as possible after the Indemnified Party becomes
aware of such Claim; provided, however, that the Indemnified Party's failure to
properly give such notice shall not result in the loss of the Indemnified
Party's rights with respect thereto except to the extent the Indemnified Party
is prejudiced by the delay and except as otherwise set forth in this Agreement.
Subject to the Indemnifying Party's right to defend third
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party claims as hereinafter provided, the Indemnifying Party shall satisfy its
obligations under this Section 17 within thirty (30) days after the receipt of
written notice thereon from the Indemnified Party.
(b) If the Indemnified Party notifies the Indemnifying Party of any
Claim, and such Claim relates to a Claim asserted by a third party against the
Indemnified Party which the Indemnifying Party acknowledges is a Claim for which
it must indemnify the Indemnified Party hereunder, the Indemnifying Party shall
have the right to either (i) pay such Claim or (ii) employ counsel reasonably
acceptable to the Indemnified Party to defend any such Claim. The Indemnified
Party shall have the right to participate in the defense of any such Claim at
its own costs and expense. The Indemnifying Party shall notify the Indemnified
Party in writing, as promptly as possible (but in any case reasonably in advance
of the due date for the answer or response to a Claim) of its election to defend
in good faith any such third party Claim. The Indemnified Party shall not settle
or compromise any Claim without the Indemnifying Party's prior written consent.
The Indemnified Party shall make available all records and other materials in
the Indemnified Party's possession reasonably required for use in contesting any
third party Claim and cooperate with the Indemnifying Party in the defense of
the Claim. Regardless of whether the Indemnifying Party elects to defend any
such Claim, the Indemnified Party shall have no obligations to do so.
(c) No Indemnified Party may settle or compromise any Claim or consent
to the entry of any judgment with respect to which indemnification is being
sought hereunder without the prior written consent of the Indemnifying Party. An
Indemnifying Party may not, without the prior written consent of the Indemnified
Party, settle or compromise any Claim or consent to the entry of any judgment
with respect to which indemnification is being sought hereunder unless (i) such
settlement, compromise or consent includes an unconditional release of the
Indemnified Party from all liability arising out of such Claim (other than sums
to be paid by the Indemnifying Party) and (ii) does not contain any equitable
order, judgment or term which in any manner affects, restrains or interferes
with the business of the Indemnified Party or any of the Indemnified Party's
affiliates.
17.04 Survival of Representations, Warranties and Covenants. All of the
representations and warranties of the parties contained in this Agreement shall
survive all Closings and continue in full force and effect as specified in
Sections 5.22 and 7.05. Except for the indemnification provisions of this
Section 17 and the Medicare/Medicaid Assignment Reciprocal Indemnity, which
shall survive indefinitely and not be subject to a limitations period, all of
the covenants of the parties contained in this Agreement to be performed after
Closing shall survive the final Closing hereunder until the earlier of (i) the
date such covenants are fully satisfied or (ii) the applicable statute of
limitations (unless an earlier date is specified in this Agreement).
SECTION 18
MISCELLANEOUS PROVISIONS
18.01 Assignment. Prior to the Closing and so long as Buyer is not in
default hereunder, Buyer shall be entitled to assign its rights and obligations
as Buyer to one or more
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limited liability companies, corporations or other legal entities controlled by,
controlling or under common control with Buyer; provided Buyer shall notify
Seller of such assignment not later than the effective date thereof, such
Assignee(s) shall assume the assigned obligations of Buyer hereunder pursuant to
a written assumption document acceptable to Seller in its reasonable discretion
and such assignee shall affirm to Seller the representations and warranties of
Buyer pursuant to Section 7 hereof, making appropriate allowances for the entity
form of such Assignee. For the purposes of this Agreement and the phrase "known
to Buyer" (or any similar phrase) as it applies to such assignee, a matter will
be deemed "known" to such assignee if it was "known" to the original "Buyer"
named herein pursuant to Section 5. Upon the effective date of such assumption
and affirmation, the assigning Buyer shall be automatically relieved of all
duties, obligations and liabilities hereunder so assigned to such Assignee;
provided that such Buyer shall not be relieved but shall remain liable for any
indemnity obligations on account of the period prior to such assignment. If
pursuant to this Section Buyer elects to assign the right to acquire the Land
and Improvements constituting a Facility to one affiliate and the other
operating assets for that Facility to a separate affiliate, all indemnities
given by Buyer to Seller with respect to that Facility shall be joint and
several obligations of those two assignees of Buyer.
18.02 Limitation of Seller's Liability. Except as expressly set forth in
the AEW Guaranty, Medicare/Medicaid Assignment, Interim Structure documents and
Tarzana Interim Structure documents, with respect to the parties to such
documents (as such capitalized terms are defined in this Agreement), no
shareholders, partners or members of any Seller or Seller Indemnified Parties,
nor any of its or their respective officers, directors, agents, employees,
heirs, successors or assigns shall have any personal liability of any kind or
nature for or by reason of any matter or thing whatsoever under, in connection
with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Buyer for itself and all Buyer Indemnified
Parties (with respect to their rights arising under this Agreement) hereby
waives for itself and anyone who may claim by, through or under Buyer or any
Buyer Indemnified Party any and all rights to sue or recover on account of any
such alleged personal liability. Except as expressly set forth in this Section
18.02, (i) no Seller hereunder shall have any liability to Buyer or any Buyer
Indemnified Party for the action, inaction, breach or default of any other
Seller hereunder, (ii) no Seller will have any liability to Buyer or any Buyer
Indemnified Party for the breach of any representation or warranty by any other
Seller, and (iii) no Seller shall have any liability to Buyer or any Buyer
Indemnified Party for any matters related to or arising out of the Property of
any other Seller or operations of any other Seller.
Notwithstanding anything set forth in this Agreement to the contrary, Buyer
for itself and all Buyer Indemnified Parties agrees that no Seller shall have
liability to Buyer or any Buyer Indemnified Party for any breach of its
representations or warranties hereunder or under any other agreement, document,
certificate or instrument delivered by it to Buyer or any Buyer Indemnified
Party unless the valid claims for all breaches of such Seller collectively
aggregate more than Fifty Thousand and 00/100 Dollars ($50,000.00) ("Seller's
Basket"), in which event the full amount of such valid claims shall be
actionable against it, up to the cap set forth in the following sentence.
Further, Buyer for itself and all Buyer Indemnified Parties agrees that, subject
to the aggregating of certain Seller's Caps as set forth in the next sentence,
any recovery against a Seller for any breach of its representations and
warranties hereunder or under any other agreement, document, certificate or
instrument delivered by it to Buyer or any Buyer
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Indemnified Party, in the aggregate, shall be limited to Buyer's and such
Buyer's Indemnified Party's actual damages (which excludes diminution in value
damages) not in excess of an amount equal to two percent (2%) (or in the case of
the Glenwood Gardens (SNF) Property, five percent (5%)) of the Purchase Price
allocated in Section 2.01 to such Seller's Property, as adjusted pursuant to the
terms of this Agreement or otherwise (the "Seller's Cap"), in the aggregate,
with respect to such Seller, and that in no event shall Buyer or any Buyer
Indemnified Party be entitled to seek or obtain any other damages of any kind,
including, without limitation, consequential, indirect or punitive damages.
Notwithstanding the foregoing or any other provision of this Agreement, the
Seller's Caps within a Seller Group shall be aggregated, so that if a claim is
brought against a Seller within a particular Seller Group, the aggregate amount
of the Sellers' Caps within that Seller Group will be available to satisfy such
claim; provided that Buyer's and all Buyer's Indemnified Party's collective,
aggregate damages against all Sellers in the Seller Group shall be limited to
the aggregate amount of the Sellers' Caps within the Seller Group. Except as set
forth below, the term "Seller Group" shall mean all Sellers that are indirectly
owned by substantially the same persons or entities, such as, by way of example,
the three (3) Sellers of the Pacific Gardens Properties. Notwithstanding the
foregoing, it is agreed that for all purposes, the Glenwood Gardens (SNF)
Property and the Seller thereof will be in and constitute a separate Seller
Group containing no other Sellers or Properties. The Seller Groups are
identified on Schedule W attached hereto. For avoidance of doubt, the parties
acknowledge that recovery by Buyer or any Buyer Indemnified Party against one
Seller may frustrate recovery against another Seller in the same Seller Group.
Each Seller agrees to maintain its legal existence (i.e., not to dissolve) for
two (2) years following the Closing for its Property, and during the first nine
(9) months following such Closing to maintain reserves in an amount not less
than two percent (2%) (or in the case of the Glenwood Gardens (SNF) Property,
five percent (5%)) of the Purchase Price allocated to such Seller's Property in
Section 2.01 (as adjusted pursuant to the terms of this Agreement or otherwise)
(with respect to each Seller, the "Reserve Requirement") less any amounts paid
subsequent to such Closing on account of claims by Buyer or Buyer Indemnified
Parties (and to maintain reserves for the remainder of the first year after such
Closing in an amount not less than fifty percent (50%) of such Seller's Reserve
Requirement, less such amounts paid); provided that for this sentence only, such
two (2) year period (in the case of indemnification claims) and nine (9) month
period (in the case of claims based on representations and warranties) will be
extended until the dismissal, judgment, settlement or other disposition of any
lawsuit based on a breach of a representation or warranty or indemnity contained
in this Agreement filed with a court of competent jurisdiction by Buyer against
such Seller prior to the expiration of the initial two (2) year period, in the
case of indemnities, or the initial nine (9) month period in the case of
representations and warranties. The applicable guarantor listed on Schedule W
hereto for each Seller Group shall deliver at Closing a guaranty of the
obligations of the Sellers within such Seller Group to maintain their existence
and to retain such reserves as set forth in the preceding sentence (the "AEW
Guaranty").
In no event shall Buyer, Seller, Buyer's Indemnified Parties or Seller's
Indemnified Parties be entitled to seek or obtain consequential, indirect or
punitive damages for any breach of any covenant, representation or warranty
hereunder or under any other agreement, document, certificate or instrument
delivered by any party. For avoidance of doubt, Seller and Buyer acknowledge
that the Seller's Basket and the Seller's Cap shall be applicable only to claims
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arising out of a breach of Seller's representations and warranties hereunder or
under any other agreement, document, certificate or instrument delivered by it
to Buyer or any Buyer Indemnified Party, and neither shall be applicable to or
limit any claim by Buyer or any Buyer Indemnified Party against Seller for any
breach by Seller of its covenants (as opposed to representations and warranties)
hereunder or under any other agreement, document, certificate or instrument
delivered by Seller to Buyer or any Buyer Indemnified Party.
18.03 Integration. This Agreement embodies and constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein, and all prior agreements, understandings, representations and
statements, oral or written, is merged into this Agreement. Neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged
or terminated except by an instrument signed by the party against whom the
enforcement of such waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such instrument.
18.04 Governing Law. This Agreement shall be governed by, and construed in
accordance with the laws of the Commonwealth of Massachusetts.
18.05 Captions. The captions in this Agreement are inserted for convenience
of reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions hereof.
18.06 Bind and Inure. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
18.07 Drafts. This Agreement shall not be binding or effective until
properly executed and delivered by both Seller and Buyer. The delivery by Buyer
to each Seller of an executed counterpart of this Agreement shall constitute an
offer which may be accepted by the delivery to Buyer of a duly executed
counterpart of this Agreement and the satisfaction of all conditions under which
such offer is made, but such offer may be revoked by Buyer by written notice
given at any time prior to such acceptance and satisfaction.
18.08 Number and Gender. As used in this Agreement, the masculine shall
include the feminine and neuter, the singular shall include the plural and the
plural shall include the singular, as the context may require.
18.09 Attachments. If the provisions of any schedule or rider to this
Agreement are inconsistent with the provisions of this Agreement, the provisions
of such schedule or rider shall prevail. The Schedules attached are hereby
incorporated as integral parts of this Agreement.
18.10 Like Kind Exchange. Each party agrees to cooperate reasonably with
the other in effecting an exchange transaction which includes the Property
pursuant to Section 1031 of the United States Internal Revenue Code, provided
that any exchange initiated by any party shall be at that party's sole cost and
expense, not cause any other party to actually take title to any property other
than the Property and not delay the Closing. In addition, the requesting party
shall
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indemnify and hold the others harmless from any and all cost, expense or
liability incurred solely as a result of the other accommodating such tax
deferred exchange. The provisions of this paragraph shall survive the Closing
indefinitely.
18.11 No Third-Party Beneficiary. Other than the rights of Buyer
Indemnified Parties and Seller Indemnified Parties pursuant to Article 17
hereof, the provisions of this Agreement and of the documents to be executed and
delivered at Closing are and will be for the benefit of each Seller and Buyer
only and are not for the benefit of any third party, and accordingly, no third
party shall have the right to enforce the provisions of this Agreement or of the
documents to be executed and delivered at Closing.
18.12 Public Disclosure. Buyer agrees to keep confidential and not to use
prior to Closing, other than in connection with its determination whether to
proceed with the purchase of the Property and its preparation for such Closing
in accordance with Section 3 hereof, any of the documents, material or
information regarding the Property supplied to Buyer by any Seller or by any
third party at a Seller's request, including, without limitation any
environmental site assessment reports furnished to Buyer, except to Buyer's
consultants, attorneys, accountants and potential investors or lenders on a
"need to know" basis, unless Buyer is compelled to disclose such documents,
material or information by law or by subpoena. Each Seller agrees to keep
confidential and not disclose prior to Closing this Agreement, the purchase
price or any other terms hereunder, unless the Seller is compelled to disclose
such information by law or by subpoena or reasonably determines that such
disclosure is required by securities laws, and except that Seller may disclose
the same to lenders, residents, employees, vendors, state licensing agencies and
the like to the extent necessary or prudent to carry out and consummate the
transactions contemplated hereby. No party hereto shall issue any press release
or public announcement relating to the subject matter of this Agreement without
the prior written approval of the other parties, which approval shall not be
unreasonably withheld or delayed; provided, however, that any party may make the
following public disclosure (without the consent of the other party): (a) if
prior to Closing, such disclosure it believes in good faith is required by
applicable law, regulation or stock market rule (in which case the disclosing
party shall advise the other parties and provide them with a copy of the
proposed disclosure prior to making the disclosure) or (b) if post-Closing,
disclosure of such of the principal terms of the transaction contemplated by
this Agreement that such party elects to make. Seller acknowledges and agrees
that Buyer shall file a Current Report on Form 8-K with the Securities and
Exchange Commission announcing the transactions contemplated hereby (and shall
issue the press release contemplated thereby, provided the form of such press
release is approved by Seller (not to be unreasonably withheld) to the extent
not previously approved by Seller), and that Buyer shall file this Agreement
with such Current Report on Form 8-K or with a Quarterly Report on Form 10-Q.
The parties acknowledge and agree that Buyer's disclosure in Buyer's Current
Report on Form 8-K with respect to the announcement of this transaction will be
as set forth on Schedule EE.
Buyer and each Seller agree to indemnify and hold harmless one another from
and against any and all losses, damages, claims and liabilities of any kind
(including, without limitation, reasonable attorneys' fees) arising out of the
breach of either of them under this Section 18.12. In the event that the Closing
does not occur in accordance with the terms of this
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Agreement, Buyer shall return to Seller or destroy all of the documents,
material or information regarding the Property supplied to Buyer by Seller or at
the request of Seller. The provisions of this Section 18.12 shall survive the
termination of this Agreement but shall no longer be applicable following
Closing in accordance with the terms of this Agreement.
18.13 Further Assurances. Each party agrees that it will execute and
deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 18.13 shall survive Closing.
18.14 Attorney's Fees. In the event any proceeding or suit is brought to
enforce this Agreement, the prevailing party shall be entitled to all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by such party
in connection with any action, suit or proceeding to enforce the other's
obligations under this Agreement.
[Signatures on the following page]
-56-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the Effective Date above written.
SELLERS:
THE FAIRWAYS SENIOR HOUSING, LLC, a Delaware limited liability company
By: AEW Partners IV, L.P., its sole member
By: AEW IV, L.L.C., its general partner
By: AEW Partners IV, Inc., its managing member
By: /s/ Marc. L. Davidson
--------------------------------
Marc L. Davidson, Vice President
PG SANTA MONICA SENIOR HOUSING, L.P.
By: Pacific Gardens GP, LLC, its general partner
By: Pacific Gardens Senior Housing, LLC, its sole member
By: AEW Partners IV, L.P., a Delaware limited partnership,
its managing member
By: AEW IV, L.L.C., its general partner
By: AEW Partners IV, Inc., its managing member
By: /s/ Marc. L. Davidson
--------------------------------
Marc L. Davidson, Vice President
PG TARZANA SENIOR HOUSING, L.P.
By: Pacific Gardens GP, LLC, its general partner
By: Pacific Gardens Senior Housing, LLC, its sole member
By: AEW Partners IV, L.P., a Delaware limited partnership,
its managing member
By: AEW IV, L.L.C., its general partner
By: AEW Partners IV, Inc., its managing member
By: /s/ Marc. L. Davidson
--------------------------------
Marc L. Davidson, Vice President
[AEW/Brookdale PSA Signature Page 1]
PG CHINO SENIOR HOUSING, L.P.
By: Pacific Gardens GP, LLC, its general partner
By: Pacific Gardens Senior Housing, LLC, its sole member
By: AEW Partners IV, L.P., a Delaware limited partnership,
its managing member
By: AEW IV, L.L.C., its general partner
By: AEW Partners IV, Inc., its managing member
By: /s/ Marc. L. Davidson
--------------------------------
Marc L. Davidson, Vice President
AEW/CAREAGE-BAKERSFIELD, LLC, a Washington limited liability company
By: AEW/Careage-Properties, LLC, its sole member
By: AEW/Careage, LLC, its sole member
By: Eastrich Careage, LLC, its member-manager
By: /s/ Marc. L. Davidson
---------------------------------
Marc L. Davidson
Authorized Signatory
AEW/CAREAGE-FEDERAL WAY, LLC, a Washington limited liability company
By: AEW/Careage-Properties, LLC, its sole member
By: AEW/Careage, LLC, its sole member
By: Eastrich Careage, LLC, its member-manager
By: /s/ Marc. L. Davidson
---------------------------------
Marc L. Davidson
Authorized Signatory
[AEW/Brookdale PSA Signature Page 2]
AEW/CAREAGE-BAKERSFIELD SNF, LLC, a Washington limited liability company
By: AEW/Careage-Properties, LLC, its sole member
By: AEW/Careage, LLC, its sole member
By: Eastrich Careage, LLC, its member-manager
By: /s/ Marc. L. Davidson
---------------------------------
Marc L. Davidson
Authorized Signatory
[AEW/Brookdale PSA Signature Page 3]
BUYER:
BLC ACQUISITION, INC., a Delaware corporation
By: /s/ Mark J. Schulte
---------------------------------
Name: Mark J. Schulte
Title: President
[AEW/Brookdale PSA Signature Page 4]
RECEIPT
The Purchase and Sale Agreement, together with Buyer's Deposit, has been
received by the Escrow Agent on this the _______ day of January, 2006, and the
Escrow Agent acknowledges the terms thereof and agrees to perform as Escrow
Agent in accordance therewith.
ESCROW AGENT:
STEWART TITLE GUARANTY COMPANY
By: /s/ Mark Anderson
------------------------------------
Name: Mark Anderson
Title: National Settlement Counsel
[AEW/Brookdale PSA Signature Page 5]