EXHIBIT 10.115
PARTNERSHIP INTEREST PURCHASE AGREEMENT
This Partnership Interest Purchase Agreement (this "Agreement"), dated
as of March 25, 2003, is entered into by and among Triad Partners II, Inc., a
Texas corporation ("TPII"), as general partner (the "General Partner") and as a
limited partner, and Capital Senior Living Properties, Inc., a Texas corporation
("Capital").
Recitals
WHEREAS, the parties hereto are parties to that certain Agreement of
Limited Partnership, dated as of September 23, 1998 (as amended, the
"Partnership Agreement"), of Triad Senior Living II, L.P., a Texas limited
partnership (the "Partnership");
WHEREAS, the Partnership is the owner of certain Facilities (as defined
herein) that were developed by Capital or one of its Affiliates (as defined
herein) pursuant to a series of Development Agreements between the Partnership
and Capital relating to said Facilities (collectively, the "Development
Agreements"), and since their development have been managed by Capital Senior
Living, Inc., an Affiliate of Capital, pursuant to a series of Management
Agreements between the Partnership and Capital Senior Living, Inc. relating to
said Facilities (collectively, the "Management Agreements");
WHEREAS, pursuant to the terms of the Partnership Agreement, Capital
has the right (the "Option"), but not the obligation, to purchase all, but not
less than all, of the interests in the Partnership ("Partnership Interests")
owned by TPII as the General Partner and as a limited partner in the
Partnership; and
WHEREAS, Capital desires to exercise the Option and to purchase, on the
terms and conditions hereinafter set forth, all of the Partnership Interests
owned by TPII as the General Partner and as a limited partner in the
Partnership.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean (i) any Person that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with the Person in question, (ii) any Person owning or
controlling directly or indirectly through one or more intermediaries 10% or
more of the outstanding voting stock, partnership interests, member interests or
other
ownership interests of the Person in question, (iii) any officer, director or
member of the Person in question, (iv) if such Person is an individual, any
entity for which such Person acts as an officer, director, partner or member or
(v) any entity in which the Person in question, together with the members of his
family (i.e., spouse, siblings, ancestors and lineal descendants) if the Person
in question is an individual, owns, directly or indirectly through one or more
intermediaries a beneficial interest of 10% or more. For purposes of this
definition, "control" when used with respect to a Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of Dallas, Texas are authorized
or required by law or executive order to close.
"Facilities" shall mean, collectively, the facilities and properties
set forth on the attached Schedule 1.
"Fail" means Blake N. Fail, an individual residing in Dallas County,
Texas.
"Governmental Authority" shall mean the government of any nation,
state, city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Governmental Requirements" shall mean all laws, ordinances, statutes,
codes, rules, regulations, orders and decrees of the United States, the state,
the county, the city, or any other political subdivision in which any Facility
is located, and any other political subdivision, agency or instrumentality
exercising jurisdiction over the Partnership or any Facility.
"Hazardous Materials" shall mean (i) any "hazardous waste" as defined
by the Resource Conservation and Recovery Act of 1976(42 U.S.C. Section 6901 et
seq.), as amended from time to time, and regulations promulgated thereunder
("RCRA"); (ii) any "hazardous substance" as defined by the Comprehensive
Environmental Response Compensation and Liability Act of 1980(42 U.S.C. Section
9601, et seq.), as amended from time to time, and regulations promulgated
thereunder ("CERCLA") (including petroleum-based products as described therein);
(iii) other petroleum and petroleum based products; (iv) asbestos in any
quantity or form which would subject it to regulation under any applicable
Hazardous Materials Law, (v) polychlorinated biphenyls; (vi) any substance, the
presence of which in or on the Facility is prohibited by any Hazardous Materials
Law; (vii) any "extremely hazardous substance" or "hazardous chemical" as those
terms are defined in the Emergency Planning and Community Right-to-Know Act (42
U.S.C. Section 11001 et seq.), as amended from time to time, and regulations
promulgated thereunder ("EPCRA"); (viii) any "chemical substance" as that term
is defined in the Toxic Substance Control Act (15 U.S.C. Section 2601), as
amended from time to time, and regulations promulgated thereunder ("TSCA"), (ix)
any hazardous substance identified under the law of any state in which a
Facility is located; and (x) any other substance which by
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any Hazardous Materials Law requires special handling in its collection,
storage, treatment, management or disposal, but excluding, cleaning, office
supplies and other similar products used in connection with the routine conduct
of business and for routine maintenance or repair of any Facility, provided such
products are stored and used in compliance with Hazardous Materials Laws.
"Hazardous Materials Contamination" shall mean the presence of Hazardous
Materials at any Facility, its soil, groundwater, air or other elements thereof,
or the presence of Hazardous Materials at the buildings, facilities, soil,
groundwater, air or other elements of any other property as a result of
Hazardous Materials.
"Hazardous Materials Laws" shall mean all Governmental Requirements,
including, without limitation, RCRA and CERCLA, relating to of or otherwise
regulating any Hazardous Materials relating to the removal or remediation of
Hazardous Materials.
"Hazardous Substance Activity" shall mean any actual, proposed, or
threatened use, storage, holding, existence, location, or release, in each case
in violation of Hazardous Materials Laws, including, without limitation, any
spilling, leaking (not to include oil, transmission, or other fluid leaks from
automobiles), leaching, pumping, pouring, emitting, emptying, dumping, disposing
into the environment, and the continuing migration into or through soil, surface
water, groundwater or any body of water, discharge, deposit, placement,
generation, processing, construction, treatment, abatement, removal, disposal,
disposition, handling, or transportation of any Hazardous Materials from, under,
in, into, or on any Facility, including, without limitation, the movement or
migration of any Hazardous Materials from surrounding property, surface water,
groundwater or any body of water under, in, into, or any onto any Facility and
any residual Hazardous Materials Contamination in, on, or under any Facility.
"Knowledge of TPII" or words of similar import refer to the actual
knowledge of Fail on the date of this Agreement, without having conducted any
investigation, verification or analysis.
"Lien" shall mean any option, charge, adverse claim, mortgage, deed of
trust, pledge, hypothecation, assignment, encumbrance, burden, lien (statutory
or other) or other security interest or encumbrance.
"Paden" means Jon Paden, an individual residing in Dallas County,
Texas.
"Permitted Encumbrances" means (a) the TPII Note Liens (as defined
herein), (b) Liens, if any, created or arising in connection with the financing
of the acquisition or development of the Facilities, (c) the Option set forth in
the Partnership Agreement, and (d) the rights granted to Capital pursuant to
this Agreement.
"Person" shall mean any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of any such
entity.
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"Requirements of Law" shall mean, as to any Person, any law, treaty,
rule or regulation or determination of a court or other Governmental Authority,
in each case applicable or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"TPII Notes" means (a) that certain Promissory Note dated September 25,
1998, in the original principal amount of $156,000.00, issued by TPII, as Maker,
payable to Dallas Theological Seminary Scholarship Fund, and (b) that certain
Promissory Note dated September 25, 1998, in the original principal amount of
$156,000.00, issued by TPII, as Maker, payable to the Foundation of the Jewish
Federation of Greater Dallas. By virtue of a Security Agreement dated September
25, 1998, TPII has granted the holders of the TPII Notes a security interest in
its General Partner and limited partner interests in the Partnership, and Fail
has granted the holders of the TPII Notes a security interest in his shares of
TPII stock, to secure the indebtedness represented by the TPII Notes.
"TPII Note Liens" means the security interests (a) in TPII's interests
in the Partnership granted by TPII, and (b) in Fail's stock in TPII granted by
Fail, in each case in favor of the holders of the TPII Notes to secure the
indebtedness represented by the TPII Notes.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase Price and Closing. Subject to the terms and conditions set
forth herein, TPII, as the General Partner and as a limited partner, agrees that
it will sell to Capital, and Capital agrees that it will purchase from TPII, the
Partnership Interests for a total Purchase Price as of June 30, 2003, as
allocated below, of $567,205.02, as follows: (a) $79,698.61 for the Partnership
Interests of TPII held as the General Partner and (b) $487,506.41 for the
Partnership Interests of TPII held as a limited partner (the amounts to be paid
pursuant to clauses (a) and (b) are hereinafter referred to, collectively, as
the "Purchase Price", such amounts to be reduced or increased, respectively, by
$196.23, $93.65 and $102.58, respectively, for each day that the Closing occurs
prior to or after June 30, 2003, as applicable). The closing of the purchase and
sale of the Partnership Interests hereunder (the "Closing") shall be held at
9:00 a.m. local time on the date that is not later than ten (10) Business Days
subsequent to the date that TPII has satisfied all the conditions to Capital's
obligations to consummate the transactions contemplated herein, at the offices
of Jenkens & Gilchrist, a Professional Corporation, 1445 Ross Avenue, Suite
3200, Dallas, Texas unless the parties hereto otherwise agree. All transactions
occurring at the Closing shall be deemed to have occurred simultaneously as of
the Closing Date, and no one transaction shall be complete until all
transactions have been completed.
2.2 Assignment of Partnership Interests. Upon the terms and subject to
the conditions herein set forth, TPII shall assign and Capital shall purchase,
acquire and accept from TPII at the Closing, the Partnership Interests of TPII,
free and clear of all Liens, other than Permitted Encumbrances set out in (b),
(c) and (d) of the definition of Permitted Encumbrances. Subject to the terms
and conditions of this Agreement, in consideration of the assignment of the
Partnership Interests to Capital, Capital shall pay to TPII the Purchase Price
at the Closing, by wire transfer of immediately available funds to an account
designated in a notice delivered to Capital not later than one (1) Business Day
prior to the Closing Date. TPII and Capital
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acknowledge that Capital may designate an Affiliate of Capital to which Capital
directs TPII to assign and convey some or all of the Partnership Interests.
ARTICLE 3
CONDITIONS TO THE OBLIGATION
OF CAPITAL TO CLOSE
The obligation of Capital to purchase the Partnership
Interests, to pay the Purchase Price at the Closing, and to perform any of its
obligations hereunder shall be subject to the satisfaction or waiver of the
following conditions on or before the Closing Date:
3.1 Representations and Warranties True. (a) The representations and
warranties of TPII contained in this Agreement that are qualified as to
materiality shall be true and correct in all respects as of the date of this
Agreement and as of immediately prior to the Closing Date (other than
representations and warranties which address matters only as of a particular
date, in which case such representations and warranties shall be true and
correct, on and as of such particular date), with the same force and effect as
if then made and (b) the representations and warranties of TPII contained in
this Agreement that are not qualified as to materiality shall be true and
correct as of the date of this Agreement and as of immediately prior to the
Closing Date (other than representations and warranties which address matters
only as of a particular date, in which case such representations and warranties
shall be true and correct, on and as of such particular date), with the same
force and effect as if then made, except where the failure of such
representations and warranties to be true could not, individually or in the
aggregate, have a material adverse effect on the financial condition, assets,
liabilities, business, property or prospects of the Partnership or any of the
Facilities.
3.2 Compliance with this Agreement. TPII shall have performed and
complied with all of its obligations set forth or contemplated herein that are
required to be performed or complied with by TPII on or before the Closing Date.
3.3 No Material Adverse Effect. There shall have been no event or
circumstance which could reasonably be expected to result in a material adverse
effect on the financial condition, assets, liabilities, business, property or
prospects of the Partnership or any of the Facilities.
3.4 No Litigation. No third-party investigation, suit, action, or other
proceeding that questions the validity or legality of the transactions
contemplated hereby or that seeks restraint or prohibition in connection with
this Agreement or the consummation of the transactions contemplated hereby shall
be pending before any Governmental Authority or threatened, and there shall not
be in effect any order, decree or injunction (whether preliminary, final or
appealable) of a federal or state court of competent jurisdiction which
prohibits consummation of the transactions contemplated hereby.
3.5 Assignment and Assumption Agreement. TPII shall have executed and
delivered to Capital an Assignment of Partnership Interests in substantially the
form attached
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hereto as Exhibit A (the "Assignment") for the assignment of the Partnership
Interests owned by TPII.
3.6 Consents. TPII shall have delivered to Capital evidence, in form
and substance reasonably satisfactory to Capital, that all necessary consents to
the consummation of the transactions contemplated herein from Persons with which
TPII has a contractual or other relationship have been obtained.
3.7 TPII Entity Documents. TPII shall have delivered to Capital (a)
documents evidencing the authority of TPII to enter into and consummate the
transactions contemplated by this Agreement, (b) a copy of the certificate of
limited partnership and limited partnership agreement for the Partnership,
including all amendments or corrections thereto, certified by TPII as the
General Partner as true and correct as of the date of delivery, (c) a
certificate of TPII certifying the names and signatures of the officers of TPII
authorized to sign this Agreement, the documents to which it is a party and the
other documents to be delivered by TPII hereunder, and (d) a good standing
certificate for TPII.
3.8 Fairness Opinion. Capital shall have received the written opinion
of its financial advisor to the effect that, in its opinion, the purchase of the
Partnership Interests is fair to the Company from a financial point of view.
3.9 Lender Approval. Upon Capital's determination that consent or
approval is necessary to avoid any breach or default pursuant to any agreements
between and among the Partnership and its lender or lenders as a result of the
purchase and sale of the Partnership Interests contemplated by this Agreement,
such lender or lenders shall have delivered to Capital the requisite consent or
approval.
3.10 Delivery of Notes; Release of Claims. TPII shall have received (a)
from the holders of TPII Notes a release of all claims relating to the TPII
Notes and the TPII Note Liens, in form and substance reasonably satisfactory to
Capital, (b) appropriate UCC-3 Termination Statements terminating, or
appropriate authorization to terminate, any filed UCC-1 Financing Statements
relating to the TPII Note Liens, and (c) the return of the TPII Notes and any
collateral owned by TPII or Fail and pledged to secure the indebtedness
represented by the TPII Notes; or the holders of the TPII Notes shall have
executed payoff letters to the same effect in form and substance satisfactory to
Capital.
ARTICLE 4
CONDITIONS TO THE OBLIGATION
OF TPII TO CLOSE
The obligations of TPII to sell the Partnership Interests and
to perform any of its obligations hereunder, shall be subject to the
satisfaction or waiver of the following conditions on or before the Closing
Date:
4.1 Representations and Warranties True. (a) The representations and
warranties of Capital contained in this Agreement that are qualified as to
materiality shall be true and correct in all respects as of the date of this
Agreement and as of immediately prior to the
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Closing (other than representations and warranties which address matters only as
of a particular date, in which case such representations and warranties shall be
true and correct, on and as of such particular date), with the same force and
effect as if then made and (b) the representations and warranties of Capital
contained in this Agreement that are not qualified as to materiality shall be
true and correct as of the date of this Agreement and as of immediately prior to
the Closing (other than representations and warranties which address matters
only as of a particular date, in which case such representations and warranties
shall be true and correct, on and as of such particular date), with the same
force and effect as if then made, except where the failure of such
representations and warranties to be true could not, individually or in the
aggregate have a material adverse effect on the financial condition, assets,
liabilities, business, property or prospects of Capital.
4.2 Compliance with this Agreement. Capital shall have performed and
complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by Capital on or
before the Closing Date.
4.3 Assignment and Assumption Agreement. Capital (or its designee as
provided in Section 2.2 hereof) shall have executed and delivered to TPII the
Assignment for the assignment of the Partnership Interests owned by TPII.
4.4 Capital Corporate Documents. Capital shall have delivered to TPII
(a) a certificate of the Secretary or an Assistant Secretary of Capital
certifying the names and signatures of the officers of Capital authorized to
sign this Agreement, the documents to which it is a party and the other
documents to be delivered by Capital hereunder and (b) a good standing
certificate for Capital.
4.5 Payment of Purchase Price. At Closing, Capital (or its designee as
provided in Section 2.2 hereof) shall pay to TPII the Purchase Price.
4.6 Consents. Capital shall have delivered to TPII evidence,
in form and substance reasonably satisfactory to TPII, that all necessary
consents to the consummation of the transactions contemplated herein from
Persons with which Capital has a contractual or other relationship have been
obtained.
4.7 Delivery of TPII Notes; Release of Claims. TPII shall have
received (a) from the holders of the TPII Notes a release of all claims relating
to the TPII Notes and the TPII Note Liens, in form and substance reasonably
satisfactory to TPII, (b) appropriate UCC-3 Termination Statements terminating,
or appropriate authorization to terminate, any filed UCC-1 Financing Statements
relating to the TPII Note Liens, and (c) the return of the TPII Notes and any
collateral owned by TPII or Fail and pledged to secure the indebtedness
represented by the TPII Notes; or the holders of the TPII Notes shall have
executed payoff letters to the same effect in form and substance satisfactory to
TPII.
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ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF TPII
5.1 Existence, Authority. The Partnership is a duly organized and
validly existing limited partnership under the laws of the State of Texas and
has all requisite partnership power and authority to own and lease its
properties and to carry on its business as it is currently being operated and in
the places where the Facilities owned by the Partnership are owned or leased and
such business is conducted.
5.2 No Default. To the Knowledge of TPII, neither the entry into, nor
the performance of, nor the compliance with this Agreement or other agreements
executed or to be executed in connection herewith, has resulted or will result
in any violation of, or invalidate, cancel or make inoperative, or constitute a
default under, result in the creation of a Lien or other charge upon any
Facility or create any rights of termination, cancellation or acceleration in
any Person under, any charter, bylaw, partnership or joint venture agreement,
trust agreement, mortgage, deed of trust, contract, indenture, credit agreement,
franchise, permit, judgment, injunction, decree, order, ordinance, statute,
rule, regulation, easement, restriction, or other charge, right, or interest
applicable to TPII, the Partnership or any Facility.
5.3 Litigation. Except as set forth in Schedule 5.3, to the Knowledge
of TPII, there is no pending or threatened litigation or administrative
proceedings to which TPII and/or the Partnership is a party and which could (a)
adversely affect title to any Facility or any part thereof or the ability of any
of the parties hereto to perform any of its obligations hereunder or the ability
of the Partnership to conduct the business or operations presently conducted by
the Partnership or the use of any Facility by the Partnership in the manner
currently being used by the Partnership; (b) result in a material and adverse
change in the financial condition, assets, liabilities, business, property of
prospects of the Partnership; or (c) otherwise affect any Facility in any
material respect. To the Knowledge of TPII, the Partnership is not subject to
any continuing court or agency order, writ, injunction or decree applicable to
any Facility or the business property or prospects of the Partnership, and the
Partnership is not in default with respect to any order, writ, injunction or
decree of any court or agency with respect to any Facility or its operations.
5.4 Zoning. To the Knowledge of TPII, it has not received any written
notice of a violation by any Facility of any applicable zoning ordinances, rules
and regulations, deed restrictions, restrictive covenants, building codes or any
other land use controls to which any Facility is subject.
5.5 No Brokers or Commissions. TPII has not dealt with any broker,
arranger, consultant, agent or finder to whom any commissions or other fees are
still owing and there are no commissions or other fees payable to any such party
in connection with the transactions contemplated hereunder as a result of the
actions of TPII. Other than for finders fees or referral fees payable in the
ordinary course of operations of the Facilities, to the Knowledge of TPII, there
are no commissions payable to any party in connection with any purchase or lease
of any of
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the Facilities, or otherwise relating to the Facilities and there are no
agreements to pay such commissions with respect to any future transaction.
5.6 Correct Copies. All copies of all certificates and permits, and all
other contracts or documents delivered or made available by either Fail or Paden
on behalf of TPII to Capital in connection with the transactions contemplated
hereby, the Partnership or any Facility are true, correct and, to the extent
they purport to be complete, complete copies.
5.7 Financial Information. To the Knowledge of TPII, all financial
statements and other financial information concerning the Facilities, the
Partnership or TPII delivered to Capital by either Fail or Paden on behalf of
TPII fairly and accurately reflect the information purported to be represented
thereby. To the Knowledge of TPII, there exists no material liabilities or
obligations affecting the Facilities, the Partnership or the operation thereof
which are not disclosed in the balance sheets attached hereto as Schedule 5.7,
except for such liabilities and obligations that are adequately covered by
insurance or with respect to which adequate reserves have been made.
5.8 Employment Arrangements. The Partnership has no employees. There
exists no union contracts, collective bargaining agreements, employment
contracts, employee benefit plans or arrangements, or similar employment-related
contracts or agreements, oral or written, pertaining to the Partnership or under
which the Partnership will be obligated.
5.9 No Untrue Statement. No document or certificate prepared by or
under the supervision of either Fail or Paden on behalf of TPII and, to the
Knowledge of TPII, no document or certificate furnished or to be furnished by
TPII pursuant hereto and relating to the Partnership or the Facilities contains
or will contain, as of the date furnished, any untrue statement of material
facts or omits or will omit, as of the date furnished, to state material facts
necessary to make the statements or facts contained therein not misleading.
5.10 Bankruptcy. There is not pending or, to the Knowledge of TPII,
threatened against TPII or the Partnership a petition in bankruptcy, whether
voluntary or otherwise, any assignment for the benefit of creditors, any
petition seeking reorganization or arrangement under the federal bankruptcy laws
of the United States or of any state thereof, or any other action brought under
the aforesaid bankruptcy laws.
5.11 Financial Condition. To the Knowledge of TPII, there has been no
material adverse change in the financial condition, assets or liabilities of the
Partnership since the date of the financial statements of the Partnership
described on Schedule 5.7.
5.12 Governmental Action. To the Knowledge of TPII, it has not received
any written notice of any change in, nor to the Knowledge of TPII, is any change
contemplated in, any Governmental Requirements applicable to any Facility or the
Partnership; and, to the Knowledge of TPII, neither it nor the Partnership has
received any written notice of any judicial or administrative action applicable
to any Facility or any action by adjacent landowners affecting any Facility, or
any natural or artificial conditions upon any Facility (or any significant
adverse fact or condition relating to any Facility or its present use); which in
any such case has not been
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disclosed in writing to Capital and which would prevent or limit, impede or
materially render more costly the use of such Facility as it is presently being
used.
5.13 Condition of Facilities. To the Knowledge of TPII, each Facility
is undamaged by fire or other hazards not covered by insurance.
5.14 Defects; Violations; Condemnation Proceedings. To the Knowledge of
TPII, neither it nor the Partnership has received, with respect to any Facility,
any notice from any insurance company agency or any other party of, nor, to the
Knowledge of TPII, are there any facts or circumstances which give rise to, (a)
any condition, defect, or inadequacy affecting such Facility that, if not
corrected, would result in termination of insurance coverage or increase its
cost, (b) any violation of any restrictive covenant or deed restriction
affecting such Facility, (c) any pending or threatened condemnation proceedings,
or (d) any proceedings that could or would cause the change, redemption, or
other modification of the zoning classification or other legal requirements,
applicable to such Facility or any part thereof. To the Knowledge of TPII, there
does not exist any court order or any restriction or restrictive covenant
(recorded or otherwise) or other private or public limitation which might
adversely affect the use of any Facility as it is presently being used except as
set forth in the Owner's Title Policies (as hereinafter defined).
5.15 Mechanic's Liens. As of the date of this Agreement, to the
Knowledge of TPII, there are no mechanics' or materialmen's or other statutory
liens against any of the Facilities that are not adequately reserved for by the
Partnership, other than those listed on Schedule 5.15.
5.16 Utilities. To the Knowledge of TPII, all water, sewer, electric,
natural gas, telephone, drainage facilities and all other utilities required for
the use of each Facility are installed to such Facility, are connected with
valid permits, comply in all material respects with all Governmental
Requirements and are adequate to service such Facility for its current use. To
the Knowledge of TPII, all utilities lines servicing each Facility (other than
internal lines located within such Facility) are (a) located either within the
boundaries of such Facility or within lands dedicated to the public use, or
within recorded easements for such purpose and (b) are serviced and maintained
by the appropriate public or quasi-public entity. To the Knowledge of TPII, all
bonds, deposits, and initial charges for such utilities have been paid in full.
5.17 Streets and Highways. To the Knowledge of TPII, neither TPII nor
the Partnership has received any notice of (a) any existing and, except as set
forth in Schedule 5.17, there are no proposed plans to widen, modify or realign
any street adjoining any Facility or (b) any pending or threatened governmental
proceeding, or any other fact or condition which would limit or result in the
termination of any Facility's access to and from public roads.
5.18 Permits and Deposits. To the Knowledge of TPII, all permit,
deposit or initial charges have been paid in full.
5.19 Waste Disposal. To the Knowledge of TPII, all garbage, trash or
other solid waste from or relating to each Facility is being collected on a
regular basis and, is being properly disposed of in accordance with all
applicable Governmental Requirements. To the Knowledge of TPII, all drains have
been properly connected to the municipal storm or sanitary
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sewer lines with the approval of each municipality or the state highway
department, as applicable.
5.20 No Nuisance. To the Knowledge of TPII, there is no public or
private nuisance condition created by TPII or the Partnership currently existing
on any Facility, and, no other public or private nuisance condition currently
exists on any Facility.
5.21 Compliance with Governmental Requirements. To the Knowledge of
TPII, all buildings, improvements, utilities and fixtures (including all
streets, curbs, sidewalks, sewers and other utilities) forming a part of the
Facilities and existing on the date of this Agreement have been installed in
compliance in all material respects with all Governmental Requirements (other
than those pertaining to parking). To the Knowledge of TPII, permanent
certificates of occupancy, all licenses, permits, authorizations and approvals
required by all Governmental Authorities having jurisdiction over the Facilities
which are completed, and the requisite certificates of the local board of fire
underwriters (or other body exercising similar functions) have been issued for
the completed buildings and improvements that comprise a part of the Facilities
and have been paid for and all of the foregoing are in full force and effect, or
if not issued, such failure will not have a material adverse effect on the
Facilities which are completed.
5.22 Parking. To the Knowledge of TPII, the parking available on each
of the Facilities is in accordance with all current Governmental Requirements,
or TPII or the Partnership shall have obtained all necessary variances or other
relief from such Governmental Requirements.
5.23 Rents and Leases. To the Knowledge of TPII, the Partnership has
good title to the leases and rents for each of the Facilities and no other
person or entity has any right, title or interest therein, except the rights of
the existing lienholders.
5.24 Obligations to Tenants under Leases. Except in the ordinary course
of ongoing activities, to the Knowledge of TPII, there are no unperformed
obligations to provide any tenant under any lease with any painting, repair,
alteration, carpeting, appliance or any other equipment or work of any kind,
under any lease or under any other oral or written agreement whatsoever that
would excuse such tenant from accepting its premises under the terms of its
lease.
5.25 Enforceability of Leases. To the Knowledge of TPII, each of the
leases is in full force and effect in accordance with its terms, provisions and
conditions and constitutes the legal, valid, binding and enforceable obligation
of the tenant thereunder. To the Knowledge of TPII, no tenant is in material
default thereunder. To the Knowledge of TPII, no tenant under any lease has any
pending litigation, offsets or counterclaims against the Partnership which, if
successfully asserted, would reduce the rent payable thereunder or result in the
cancellation or termination thereof.
5.26 Agreements to Acquire or Possess the Facility. To the Knowledge of
TPII, no person, firm, corporation or other entity except Capital has any right
or option to acquire any Facility, or any part thereof, from the Partnership.
Except as reflected on Schedule
11
5.26, to the Knowledge of TPII, the Partnership has not entered into any
agreement with any person, firm, corporation or entity granting the right to
possess all or any portion of any Facility, other than tenants in possession
pursuant to leases.
5.27 Unfulfilled Binding Commitments. TPII has no Knowledge of any
commitments made by the Partnership or TPII to any Governmental Authority,
utility company, school board, church or other religious body, or any homeowners
or homeowners' association, or any other organization, group or individual,
relating to any Facility which would impose an obligation upon the Partnership
or its successors or assigns to make any contribution or dedications of money or
land or to construct, install or maintain any improvements of a public or
private nature on or off such Facility. To the Knowledge of TPII, no
Governmental Authority has imposed any requirement that any developer of any
Facility pay directly or indirectly any fees or contributions relating to a
specific Facility or incur any expenses or obligations in connection with any
development of such Facility or any part thereof. The provisions of this Section
shall not apply to any regular or nondiscriminatory local real estate or school
taxes assessed against any Facility.
5.28 Service Contracts, Leases, etc. To the Knowledge of TPII, TPII has
provided Capital with complete and correct copies of all service contracts,
leases and personal property leases, in each case that involve payments by or to
the Partnership of more than $10,000 per year or that have a term of more than
12 months at the time of the determination.
5.29 Environmental Representations and Warranties.
(a) To the Knowledge of TPII, no Hazardous Materials have been
released into the environment, or deposited, discharged, placed or disposed of
at, on, from or under any Facility by the Partnership, TPII, or, by any other
party in violation of Hazardous Materials Laws, and to the Knowledge of TPII,
there has occurred no such release, deposit, discharge, placement or disposal in
violation of Hazardous Materials Laws. Since the Partnership acquired any
Facility, to the Knowledge of TPII, no portion of the Facility has been used for
the disposal, storage, treatment, processing or other handling of Hazardous
Materials and no Hazardous Materials have been placed or located on any Facility
by TPII, the Partnership or by any other party. To the Knowledge of TPII, prior
to its acquisition by the Partnership, no part of any Facility has ever been
used for the disposal, storage, treatment, processing, manufacturing or other
handling of Hazardous Materials. To the Knowledge of TPII, no Hazardous
Materials Contamination or Hazardous Substance Activity has occurred on any
Facility since its acquisition by the Partnership, or to the Knowledge of TPII,
prior to its acquisition by the Partnership.
(b) To the Knowledge of TPII, (i) no property adjoining any
Facility has been used for the disposal, storage, treatment, processing,
manufacturing or other handling of Hazardous Materials, and (ii) no property
adjoining any Facility is affected by Hazardous Materials Contamination.
(c) To the Knowledge of TPII, no asbestos or
asbestos-containing materials have been placed on or in any Facility by the
Partnership or TPII, by any other party
12
and to the Knowledge of TPII, no asbestos or asbestos-containing materials are
present on or in any Facility.
(d) To the Knowledge of TPII, no polychlorinated biphenyls
have been placed on any Facility by the Partnership or TPII and no
polychlorinated biphenyls are present on any Facility.
(e) To the Knowledge of TPII, no underground storage tanks
have been placed on or under any Facility by the Partnership or TPII, and no
underground storage tanks are present on or under any Facility.
(f) To the Knowledge of TPII, neither it nor the Partnership
has received any written notice of any administrative order or notice, consent
order and agreement, litigation or settlement with respect to Hazardous
Materials or Hazardous Materials Contamination or Hazardous Substance Activity
with respect to any Facility, nor to the Knowledge of TPII, is any such action
proposed or threatened with respect to any Facility. To the Knowledge of TPII,
neither it nor the Partnership has received any written notice nor does TPII
have any Knowledge of any such action regarding any property adjacent to any
Facility. To the Knowledge of TPII, no investigation with respect to the
Hazardous Materials or Hazardous Materials Contamination is proposed, threatened
or anticipated with respect to any Facility. To the Knowledge of TPII, neither
it nor the Partnership has violated any Governmental Requirement relating to
Hazardous Materials with respect to any Facility and, to the Knowledge of TPII,
neither it nor the Partnership has received any written notice that any other
party has violated any Governmental Requirements relating to Hazardous Materials
with respect to any Facility. To the Knowledge of TPII, no condition occurred on
any Facility prior to its acquisition date which is or was in violation of any
applicable Governmental Requirements relating to Hazardous Materials. To the
Knowledge of TPII, neither it nor the Partnership has received any communication
from or on behalf of any Governmental Authority or any other person or entity
indicating that any applicable Governmental Requirements relating to Hazardous
Materials have been or may have been violated with respect to any Facility. To
the Knowledge of TPII, none of the Facilities is anticipated or threatened to be
placed on any federal or state "Superfund" or "Superlien" list. To the Knowledge
of TPII, neither it nor the Partnership has received any notice of any third
party claims regarding damage to property or persons resulting from any
Hazardous Materials Contamination or Hazardous Substance Activity affecting any
Facility.
(g) To the Knowledge of TPII, neither it nor the Partnership
has received any written notice from any tenants regarding the existence of
Hazardous Materials on any Facility. To the Knowledge of TPII, neither it nor
the Partnership has received any written notice of a threat of release of
Hazardous Materials from or into any Facility.
(h) To the Knowledge of TPII, the Partnership has obtained all
governmental approvals required by any applicable Hazardous Materials Laws for
the operation of the Facilities owned by the Partnership.
(i) To the Knowledge of TPII, neither it nor the Partnership
has received any notice that either the Partnership or TPII (i) has any
liability for response or corrective action, natural resource damage, or other
liability pursuant to CERCLA, RCRA or any other
13
Hazardous Materials Laws, and (ii) is currently subject to or is currently
required to give any notice of any environmental claim or release of Hazardous
Materials involving the Partnership or its Facilities.
(j) To the Knowledge of TPII, none of the Facilities is
subject to any restriction on the ownership, occupancy, use or transferability
of the Facility in connection with any (i) Hazardous Materials Laws or (ii)
release, threatened release, treatment, management, storage, handling, recycling
or disposal of a Hazardous Material.
5.30 Due Organization and Qualification of TPII. TPII is a corporation
duly organized and validly existing under the laws of the State of Texas.
5.31 Power and Authority. The execution, delivery and performance by
TPII and its Affiliates of this Agreement and all of the other agreements
contemplated hereby that have been executed and delivered on or before the date
of this Agreement ("TPII Transaction Documents"), and the consummation by TPII
and its Affiliates of the transactions contemplated hereby and thereby, have
been duly authorized and no further action or approval by TPII or its Affiliates
will be required in order to permit TPII and its Affiliates to perform such
obligations and consummate the transactions contemplated hereby and thereby.
This Agreement constitutes, and all other TPII Transaction Documents, when
executed and delivered in accordance with the terms thereof, will constitute the
legal, valid and binding obligations of TPII and its Affiliates, enforceable in
accordance with their terms. TPII has full power, authority and legal right to
enter into this Agreement and all other TPII Transaction Documents, to perform
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and all other TPII Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof will not (a) violate any order, writ, injunction or decree to which
TPII is a party or, to the Knowledge of TPII, by which any of the Facilities is
bound or affected or (b) to the Knowledge of TPII, result in the violation of
any provisions of law applicable to TPII or the Partnership.
5.32 Title. TPII has made available to Capital full and complete copies
of all existing policies of title insurance in its files that were issued in the
name of the Partnership for each Facility, including all riders, schedules
supplements and endorsements thereto describing all Encumbrances on each
Facility and all exceptions, limitations and qualifications with respect to such
title insurance.
5.33 Partnership Interests. TPII holds of record and beneficially all
of the Partnership Interests set forth on Schedule 5.33, free and clear of any
restrictions on transfer, taxes, Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands, other than the Permitted
Encumbrances. TPII is not are a party to any option, warrant, purchase right, or
other contract or commitment that could require TPII to sell, transfer, or
otherwise dispose of any Partnership Interests (other than the Permitted
Encumbrances). TPII is not a party to any voting trust, proxy, or other
agreement or understanding with respect to any of the Partnership Interests.
14
ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF CAPITAL
Capital hereby represents and warrants to TPII as follows:
6.1 Existence, Authority. Capital is a duly organized and validly
existing corporation under the laws of the State of Texas and has all requisite
corporate power and authority to own and lease its properties and to carry on
its business as it is currently being operated.
6.2 No Default. Neither the entry into, nor the performance of, nor the
compliance with this Agreement or other agreements executed in connection
herewith, has resulted or will result in any violation of, or invalidate, cancel
or make inoperative, or constitute a default under, or create any rights of
termination, cancellation or acceleration in any Person under, any charter,
bylaw, partnership or joint venture agreement, trust agreement, mortgage, deed
of trust, contract, indenture, credit agreement, franchise, permit, judgment,
injunction, decree, order, ordinance, statute, rule, regulation, easement,
restriction, or other charge, right, or interest applicable to Capital, which
could reasonably be expected to have a material and adverse effect upon Capital.
No Brokers or Commissions. Capital has not
dealt with any broker, arranger, consultant,
agent or finder to whom any commissions or
other fees are still owing and there are no
commissions or other fees payable to any
such party in connection with the
transactions contemplated hereunder.
Power and Authority. The execution, delivery
and performance of this Agreement and all
other agreements by and among Capital and
other parties contemplated hereby that have
been executed and delivered on or before the
date of this Agreement ("Capital Transaction
Documents"), and the consummation by Capital
of the transactions contemplated hereby and
thereby, have been duly authorized and no
further action or approval will be required
in order to permit Capital to perform such
obligations and consummate the transactions
contemplated hereby and thereby. This
Agreement constitutes, and all other Capital
Transaction Documents, when executed and
delivered in accordance with the terms
thereof, will constitute the legal, valid
and binding obligations of Capital,
enforceable in accordance with their terms.
Capital has full power, authority and legal
right to enter into this Agreement and all
other Capital Transaction Documents, to
perform its obligations hereunder and
thereunder, and to consummate the
transactions contemplated hereby and
thereby. The execution, delivery and
performance of this Agreement and all other
Capital Transaction Documents, and the
consummation
15
of the transactions contemplated hereby and
thereby in accordance with the terms hereof
and thereof will not (a) violate any order,
writ, injunction or decree to which Capital
is a party or (b) result in the violation of
any provisions of law applicable to Capital.
ARTICLE 7
CERTAIN MATTERS
PENDING CLOSING
TPII covenants to Capital, that from and after the date of this
Agreement and until the Closing Date, without Capital's prior written consent:
7.1 Carry on in Regular Course. Except as specifically contemplated by
this Agreement, TPII shall cause the business of the Partnership to be conducted
in the ordinary course, consistent with past practice and in compliance with the
terms of the Partnership Agreement, and shall use all reasonable efforts to
preserve intact the Partnership's advantageous business relationships, to keep
available the services of the Partnership's agents and to maintain satisfactory
relationships with the Partnership's customers and other persons having a
business relationship with the Partnership.
7.2 Access. Upon reasonable prior written notice received by TPII, TPII
will permit representatives of Capital to (a) have reasonable access during
normal business hours, to the premises, properties, personnel, books, records,
contracts and documents of or pertaining to the Partnership, and (b) have
reasonable access during normal business hours to customers, suppliers,
resellers and representatives of the Partnership (including accountants and
counsel) pertaining to the Partnership.
7.3 Publicity. All notices, releases, statements and communications to
employees, suppliers, distributors and customers and any person other than the
respective officers, directors, stockholders, representatives or agents of TPII
or Capital and to the general public and the press relating to the transactions
contemplated by this Agreement shall be made only at such times and in such
manner as may be mutually agreed upon in writing by TPII and Capital; provided,
however, that any party shall be entitled to make a public announcement or
statement or other public disclosure relating to the transactions contemplated
hereby if such announcement or statement or other public disclosure is required
to comply with law (including, without limitation, federal securities laws) or
any subpoena or other process.
7.4 Material Breach. TPII shall immediately inform Capital in writing
of the occurrence of any event causing a material breach of any representations
and warranties made in Article 5.
7.5 Approvals of Governmental Authorities and Third Parties. As soon as
practicable after the execution of this Agreement, but in any event prior to the
Closing Date, TPII, on the one hand, and Capital, on the other hand, will use
their reasonable best efforts (provided that TPII shall not be required to
expend any of its funds) to secure all necessary approvals and consents of all
governmental authorities and other third parties required on the part
16
of TPII, on the one hand, and Capital, on the other hand, for the consummation
of the transactions contemplated by this Agreement.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned as follows:
(a) at any time prior to the Closing by mutual written
agreement of TPII and Capital; or
(b) by Capital, if Capital is not in material breach of its
obligations under this Agreement, and if (i) at any time that any of the
representations and warranties of TPII herein become untrue or inaccurate such
that Section 3.1 would not be satisfied (treating such time as if it were the
Closing time for purposes of this Section 8.1(b)) or (ii) there has been a
breach on the part of TPII of any of its covenants or agreements contained in
this Agreement such that Section 3.2 would not be satisfied (treating such time
as if it were the Closing time for purposes of this Section 8.1(b)), and, in
both case (i) and case (ii), such breach (if curable) has not been cured within
thirty (30) days after notice to TPII; or
(c) by TPII, if it is not in material breach of its
obligations under this Agreement, and if (i) at any time that any of the
representations and warranties of Capital become untrue or inaccurate such that
Section 4.1 would not be satisfied (treating such time as if it were the Closing
time for purposes of this Section 8.1(c)) or (ii) there has been a breach on the
part Capital of any of its covenants or agreements contained in this Agreement
such that Section 4.2 would not be satisfied (treating such time as if it were
the Closing time for purposes of this Section 8.1(c)), and such breach (if
curable) has not been cured within thirty (30) days after notice to Capital, as
applicable; or
(d) by Capital on or after June 30, 2003, if by that
date the Closing has not taken place (provided, however, that Capital shall not
be entitled to terminate this Agreement pursuant to this Section 8.1(d) if
Capital is in material breach of this Agreement at such time); or
(e) by TPII on or after June 30, 2003, if by that
date the Closing has not taken place (provided, however, that TPII shall not be
entitled to terminate this Agreement pursuant to this Section 8.1(e) if TPII is
in material breach of this Agreement at such time); or
(f) by any party if any court of competent
jurisdiction in the United States or other governmental body of the United
States shall have issued an order, decree, or ruling or taken other action
restraining, enjoining or otherwise prohibiting the purchase and sale of the
Partnership Interests contemplated hereby.
8.2 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 8.1, all further obligations of the parties under or
pursuant to this Agreement shall
17
terminate without further liability of any party to the other parties, except
for the obligations under Section 7.3 and this Article 8; provided, however,
that termination pursuant to clauses (b) or (c) of Section 8.1 shall not relieve
any defaulting or breaching party from liability to the other parties hereto.
Upon any termination of this Agreement, each party will return all documents,
work papers and other material (including all copies thereof) of the other
parties hereto relating to the transactions contemplated hereby. Upon
termination of this Agreement, Capital's right to exercise the Option shall
remain unchanged.
ARTICLE 9
RELEASES, INDEMNITIES AND CONSENTS
9.1 Release of TPII by Capital. Capital, on behalf of itself
and its Affiliates, hereby releases and discharges TPII and its Affiliates from
all claims, liabilities and obligations arising out of or related to the
Partnership or one or more of the Facilities, except for:
(a) claims arising out of or incident to the fraud,
bad faith or willful misconduct of TPII or its Affiliates; and
(b) claims for breach of this Agreement or any
agreement, document or instrument executed in connection herewith.
9.2 Release of Capital by TPII. TPII, on behalf of itself and its
Affiliates, hereby releases and discharges Capital and its Affiliates from all
claims, liabilities, and obligations arising out of or related to the
Partnership or one or more of the Facilities, except for:
(a) claims arising out of or incident to the fraud,
bad faith or willful misconduct of Capital or its Affiliates; and
(b) claims for breach of this Agreement or any
agreement, document or instrument executed in connection herewith.
9.3 Indemnification Provisions for Benefit of Capital. Subject to
Section 9.6, following the Closing, TPII shall indemnify and save and hold
Capital and its Affiliates (the "Capital Indemnified Parties") harmless from and
against any losses, claims, damages, liabilities and expenses (including,
without limitation, attorneys fees) (collectively, "Losses") suffered or
incurred by any Capital Indemnified Party arising out of or resulting from:
(a) the inaccuracy in any representation or the
breach of any warranty made by TPII in this Agreement or any agreement, document
or instrument executed in connection herewith (for purposes of this Article 9,
TPII shall be deemed to have made the representations and warranties immediately
prior to the Closing time (other than representations and warranties which
address matters only as of a particular date, in which case such representations
and warranties shall be deemed to have been made on and as of such particular
date)); and
(b) the failure of TPII duly to perform or observe
any covenant or agreement in this Agreement, or any agreement, document or
instrument executed in connection
18
herewith, required on the part of TPII to be performed or observed by it prior
to, at or after the Closing Date.
9.4 Indemnification Provisions for Benefit of TPII. Following the
Closing, Capital shall indemnify and save and hold harmless TPII and its
Affiliates (the "TPII Indemnified Parties") from and against Losses suffered or
incurred by any TPII Indemnified Party arising out of or resulting from:
(a) the inaccuracy in any representation or the
breach of any warranty made by Capital in this Agreement or any agreement,
document or instrument executed in connection herewith (for purposes of this
Article 9, Capital shall be deemed to have made the representations and
warranties immediately prior to the Closing time (other than representations and
warranties which address matters only as of a particular date, in which case
such representations and warranties shall be deemed to have been made on and as
of such particular date));
(b) the failure of Capital duly to perform or observe
any covenant or agreement in this Agreement, or any agreement, document or
instrument executed in connection herewith, required on the part of Capital to
be performed or observed prior to, at or after the Closing Date; and
(c) indemnification obligations of Capital or its
Affiliates pursuant to the Development Agreements, the Management Agreements or
any other written agreements between TPII or any of its Affiliates, on the one
hand, and Capital or any of its Affiliates, on the other hand, pursuant to the
terms of any such agreements if, as a result of the consummation of the
transactions contemplated by this Agreement, such indemnification obligations of
Capital or its Affiliates under any such agreements would cease.
9.5 Survival. Except as otherwise provided above, the indemnities
provided in this Article 9 shall survive for a period of one (1) year after the
Closing Date, unless a written claim for breach thereof is delivered to the
indemnifying party by one or more of the indemnified parties on or before such
one (1) year anniversary.
9.6 Indemnification Limitations. In no event shall the total liability
of TPII for all claims hereunder exceed the Purchase Price. TPII shall not be
liable for any Losses pursuant to Section 9.3(a) if such Losses were the result
of an inaccuracy in a representation or warranty of which Capital or any of its
Affiliates had actual knowledge of as of the Closing Date.
ARTICLE 10
POST CLOSING OBLIGATIONS
10.1 Post Closing Assistance. For a period of ninety (90) days
following the Closing, TPII shall provide Capital with reasonable transition
assistance through its key personnel who were involved in the development,
operation or financing of the Facilities. Any reasonable third party expenses
incurred by TPII in the performance of such services during such ninety-day
period shall be paid by Capital within thirty (30) days after delivery of an
invoice therefor.
19
10.2 Delivery of Funds, Books and Records. Immediately after the
Closing Date, TPII shall deliver to Capital all funds held by or under the
control of TPII which are funds of the Partnership (e.g. operating accounts,
security deposits). TPII shall cooperate with Capital in transferring any other
assets of the Partnership held by or under the control of TPII. At the Closing
Date, TPII shall deliver to Capital all books and records (other than those
maintained by Capital or its Affiliates) in its possession relating to the
operation of the Partnership. Capital shall make such books and records
available to TPII at all reasonable times during Capital's regular business
hours after the Closing Date, upon TPII's request.
10.3 Further Assurances. Upon and subject to the conditions contained
herein, each of the parties hereto agrees, both before and after the Closing,
(a) to use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
(b) to execute any documents, instruments or conveyances of every kind which may
be reasonably necessary or advisable to carry out any of the transactions
contemplated hereby, and (c) to cooperate with each other in connection with the
foregoing; provided, however, that TPII shall not be required to incur any
expenses in satisfying the foregoing commitment.
10.4 Tax Matters. Without limiting the generality of Section 10.3, TPII
and Capital shall cooperate with one another after Closing in the timely
preparation of all state and federal tax returns of the Partnership and its
partners relating to the year ended December 31, 2002 and the period between
January 1, 2003 and the date of Closing, with TPII bearing the cost of
preparation of any tax return(s) of the Partnership's partners and the
Partnership bearing the cost of preparation of any tax return(s) of the
Partnership. No tax return of the Partnership or its partners relating to a
period ending on or before the Closing Date shall be amended in any manner that
adversely impacts TPII without Fail's prior written consent, which shall not be
unreasonably withheld. Should any taxing authority propose to amend or adjust
involuntarily a tax return of the Partnership or its partners relating to a
period ending on or before the Closing Date in any manner that adversely impacts
TPII, (a) Fail shall be permitted to participate and be represented at his own
expense, to such degree as he shall reasonably request, in all meetings,
discussions, hearings and other communications regarding such proposed
involuntary amendment or adjustment, and (b) neither Capital nor any of its
Affiliates shall consent to any such amendment or adjustment without Fail's
prior written consent, which shall not be unreasonably withheld. TPII and
Capital agree to have the Partnership make an election under Section 754 of the
Internal Revenue Code of 1986, as amended (the "Code") to adjust the basis of
the property of the Partnership if so requested by Capital. The decision whether
the Partnership should make an election under Code Section 754 shall be made at
the sole discretion of Capital.
10.5 Non-Solicitation. For a period of three (3) years following
Closing, neither TPII nor any of its Affiliates, nor any entity that either TPII
or any of its Affiliates has an interest in, will (a) employ, engage or solicit
any person who was the Executive Director or the Marketing Director of any of
the Facilities or (b) directly and knowingly solicit any resident in the
Facilities to relocate to a facility owned, developed or managed by TPII nor any
of its Affiliates.
20
ARTICLE 11
MISCELLANEOUS
11.1 Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by certified
first-class mail, return receipt requested, telecopier, nationally-recognized
overnight delivery services or personal delivery to the following addresses, or
to such other addresses as shall be designated from time to time by a party in
accordance with this Section 11.1:
(a) if to Capital:
Capital Senior Living, Inc.
14160 Dallas Parkway
Suite 300
Dallas, Texas 75254
Attention: David Brickman, Esq.
Telecopier: (972) 980-4602
with copy to:
Jenkens & Gilchrist
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: Winston W. Walp II, Esq.
Telecopier: (214) 855-4300
(b) if to TPII:
Triad Partners II, Inc.
4312 Mockingbird Lane
Dallas, TX 75205
Attention: Blake N. Fail, President
Telecopier: (972) 386-4442
with a copy to:
Scheef & Stone, L.L.P.
5956 Sherry Lane
Suite 1400
Dallas, TX 75225
Attention: Bill Stone, Esq.
Telecopier: (214) 706-4242
21
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered to a
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
11.2 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns and permitted
transferees of the parties hereto. Except as provided in Section 2.2 hereof, no
party hereto may assign this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other party
hereto.
11.3 Amendment and Waiver. Any amendment, supplement or modification of
or to any provision of this Agreement shall be effective only if it is made or
given in writing and signed by TPII and Capital.
11.4 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.5 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.6 Governing Law. This Agreement has been delivered in the State of
Texas and shall be governed by and construed in accordance with the internal
laws of the State of Texas, without regards to its conflicts of laws principles.
11.7 Severability. In the event that any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
11.8 Rules of Construction. Unless the context otherwise requires, "or"
is not exclusive, and references to sections or subsections refer to sections or
subsections of this Agreement.
11.9 Entire Agreement. This Agreement and the documents referred to
herein of even date herewith are intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings among
the parties with respect to such subject matter.
22
11.10 Publicity. Except as may be required by applicable securities
laws, no party hereto shall issue a publicity release or announcement or
otherwise make any public disclosure concerning this Agreement or the
transactions contemplated hereby, without prior written approval by the other
parties hereto.
11.11 Expenses. Each party to this Agreement shall pay any and all
expenses incurred by such party in connection with the negotiation, execution
and delivery of this Agreement. All transfer fees, expenses and costs (if any)
imposed by any Governmental Authority shall be paid as follows: (i) 50% of such
costs shall be paid by TPII and (ii) 50% of such costs shall be paid by Capital.
11.12 Arbitration. In the event of any dispute, claim or controversy of
any kind between the parties, concerning this Agreement, the matter shall be
submitted to binding arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association. The parties jointly shall agree
on an arbitrator. If the parties are unable to agree, in good faith, on the
selection of an arbitrator within 30 days, any party may request appointment of
an arbitrator chosen by the American Arbitration Association who shall be the
selected arbitrator. Such arbitrator shall be limited in his decision to a
choice between the final position as requested by each party. Said arbitration
shall be held in Dallas, Texas or such other place as is mutually agreeable. The
arbitration decision shall be final and binding on all parties unless the
arbitration is fraudulent or so grossly erroneous as to necessarily imply bad
faith. Costs of arbitration are to be shared by all parties equally, provided
that the arbitrator may choose to award the fees, costs and expenses of
arbitration against the losing party if the arbitrator determines that the final
position urged by any losing party was not reasonable.
11.13 Prevailing Party. Subject to Section 11.12 above, In any action
to enforce or interpret this Agreement or any agreement ancillary hereto, the
substantially prevailing party or parties shall be entitled to recover from the
other party or parties all costs and expenses incurred in connection with such
proceedings, including without limitation reasonable attorney's fees and costs,
all as determined by the court.
23
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective officers or partners
hereunto duly authorized as of the date first above written.
TPII:
Triad Partners II, Inc.,
a Texas corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CAPITAL:
Capital Senior Living Properties, Inc.,
a Texas corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXHIBIT A
ASSIGNMENT OF PARTNERSHIP INTEREST
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Triad Partners
II, Inc., a Texas corporation ("Seller"), for and in consideration of the
payment of such good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and pursuant to the terms of that certain
Partnership Interest Purchase Agreement, dated as of March 25, 2003 ("Purchase
Agreement"), by and between Seller and Capital Senior Living Properties, Inc., a
Texas corporation ("Buyer"), does hereby transfer, grant, bargain, sell, assign
and deliver to Buyer, its successors and assigns, all of Seller's direct and
indirect right, title and interest in and to its general partner interest and
limited partner interest in Triad Senior Living II, L.P., a Texas limited
partnership, all as the same shall exist as of the date hereof (collectively,
the "Interests").
TO HAVE AND TO HOLD, all and singular, the said Interests hereby
conveyed, transferred, granted, bargained, sold and delivered to Buyer, its
successors and assigns, to and for their own use and benefit forever.
Seller, for itself, its successors and assigns, further covenants and
agrees that Seller and its successors and assigns shall do or cause to be done
all such further acts and shall execute, acknowledge and deliver, or shall cause
to be executed, acknowledged and delivered, any and all such further deeds,
assignments, transfers and conveyances, powers of attorney and assurances as
Buyer, its successors and assigns, may reasonably require (i) for the better
assuring, assigning, transferring and conveying unto Buyer, its successors and
assigns, all and singular, the Interests; (ii) to protect the right, title and
interest of Buyer, its successors and assigns, in and to, and their enjoyment
of, all and singular, the Interests as against third parties claiming by,
through or under Seller, but not otherwise; and (iii) as may be appropriate
otherwise to carry out the transactions contemplated by the Purchase Agreement.
This instrument shall be binding upon the parties hereto, their
successors and assigns, and shall inure to the benefit of the parties hereto,
and their successors and assigns. All capitalized terms used herein and not
defined shall have the meanings ascribed to such terms in the Purchase
Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and together shall constitute one and the same
instrument.
This Agreement shall be governed by, and construed and interpreted in
accordance with, the substantive laws of the State of Texas, without giving
effect to any conflict-of-laws rule or principle that might result in the
application of the laws of another jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
_____ day of _______________, 2003.
SELLER:
Triad Partners II, Inc.,
a Texas corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BUYER:
Capital Senior Living Properties,
Inc., a Texas corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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