OPERATIONS TRANSFER AGREEMENT
(OUTLOOK POINTE AT ROANOKE
ROANOKE, VIRGINIA)
THIS AGREEMENT is dated as of the 30th day of April, 2003 (the "EXECUTION
DATE"), by and among ALCO X, LLC ("TENANT"), BCC at Roanoke, Inc. ("MANAGER")
and Balanced Care Corporation ("PARENT", and together with Tenant and Manager,
collectively, "TRANSFEROR") and Emeritus Corporation ("NEW OPERATOR") and HRT
Holdings, Inc. ("OWNER").
RECITALS
A. Tenant is the licensed operator of a 118 licensed bed residential
care facility ("RCF") commonly known as Outlook Pointe at Roanoke and located at
3585 Brambleton Avenue, Roanoke, VA 24018 ("FACILITY"), which Facility is
leased pursuant to the terms of a Lease Agreement dated as of June 15, 1998
(together with any amendments, the "LEASE"), between Owner, as landlord, and
Tenant, as tenant.
B. Tenant and Manager have entered into that certain Management
Agreement dated as of June 15, 1998 (together with any amendments, the
"MANAGEMENT AGREEMENT"), whereby Tenant engaged Manager as the exclusive manager
and operator of the Facility.
C. New Operator and Owner have agreed to enter into a Lease and
Security Agreement with respect to the Facility ("NEW LEASE") to be effective on
and as of May 1, 2003 ("EFFECTIVE DATE"), assuming (i) receipt of approval for
the change in ownership from the Department of Social Services ("DH"), (ii) New
Operator is satisfied with the results of its Due Diligence Review (as
hereinafter defined) and (iii) receipt by New Operator prior to the end of the
Due Diligence Review Period (as hereinafter defined) of the approval of its
Board of Directors of the transaction contemplated herein and by the New Lease.
D. Assuming receipt of DH approval, subject to the provisions of that
certain Settlement Agreement dated as of May 1, 2003 and the other documents
contemplated therein (collectively, the "TERMINATION AGREEMENT"), executed among
Tenant, Owner, Manager and the other parties named therein, the respective
obligations of the parties under the Lease and any other documents described in
the Termination Agreement shall be terminated as of the Effective Date.
E. In order to facilitate an orderly transfer of Facility operations
and financial responsibility from Transferor to New Operator, Transferor and New
Operator desire to document certain terms and conditions relevant to the
transfer of operational and financial responsibility for the Facility.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, and intending to be legally bound hereby, New
Operator and Transferor hereby agree as follows.
AGREEMENT
1. Surrender. On the Effective Date, Transferor shall surrender to New
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Operator possession of the Facility in AS IS, WHERE IS condition.
2. Conveyance of Tenants' Personal Property, Inventory and Prepaid
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Expenses; Excluded Assets.
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2.1. Transferor acknowledges that Owner owns all right, title and
interest in and to substantially all of the furniture, machinery, equipment,
appliances, fixtures and other tangible personal property used in connection
with the Facility excluding (i) the personal property and vehicle(s) listed on
Schedule 1 that are owned by Transferor or Parent (collectively, "TENANT'S
PERSONAL PROPERTY"), (ii) the personal property of the residents, which shall be
and remain at the Facility on the Effective Date and (iii) all consumable
inventories of every kind and nature whatsoever (specifically including, but not
limited to, all pharmacy supplies, medical supplies, office supplies, other
supplies and foodstuffs) owned by Transferor as of the Effective Date and
located at the Facility (the "INVENTORY"). Transferor has agreed with Owner to
sell, transfer and convey to Owner all of Transferor's right, title and interest
in and to all Tenant's Personal Property, except for the items designated on
Schedule 1 as "EXCLUDED PERSONAL PROPERTY," the Inventory, and in the telephone
and facsimile numbers of the Facility (the "PHONE AND FAX NUMBERS"), and Owner
has agreed to concurrently therewith sell, transfer and convey the same to New
Operator. The Tenant's Personal Property, excluding the Excluded Personal
Property, the Inventory and the Phone and Fax Numbers shall hereinafter be
referred to as the "TRANSFERRED TENANT'S PERSONAL PROPERTY." It is understood
and agreed that the presence of the Transferred Tenant's Personal Property at
the Facility on the Effective Date shall constitute delivery thereof; provided,
however, Transferor shall be required to ensure that on the Effective Date there
is sufficient Inventory present at the Facility to operate the Facility at its
then current occupancy for a period of one (1) week after the Effective Date.
Transferor shall execute and deliver to Owner and New Operator on the Effective
Date a Bill of Sale in the form attached hereto as Exhibit A confirming the
conveyance of the Transferred Tenant Personal Property to Owner or New Operator,
as applicable, as provided herein free and clear of all liens, charges and
encumbrances (except for existing purchase money security interests in favor of
third party vendors to the extent New Operator agrees to assume the same
pursuant to Section 2.5).
2.2 Attached hereto as Exhibit B is a list of any and all prepaid
expenses with respect to the Facility (the "PREPAID EXPENSES") for which
Transferor is seeking reimbursement from New Operator on the Effective Date (the
"PREPAID EXPENSE SCHEDULE"). For and in partial consideration of the Transfer
Consideration, as of the Effective Date, Transferor shall sell, transfer and
convey to New Operator all of Transferor's right, title and interest in and to
the Prepaid Expenses. Transferor shall have the right during the fifteen (15)
days after the Effective Date to provide New Operator with an updated Prepaid
Expense Schedule (the "UPDATED PREPAID EXPENSE SCHEDULE"); provided, however,
New Operator shall have no obligation to pay Transferor for any new Prepaid
Expenses included in the Updated Prepaid Expense Schedule (the "ADDITIONAL
PREPAID EXPENSES") unless and until New Operator approves such Additional
Prepaid Expenses which approval shall be granted or denied in writing within two
(2) business days after New Operator's receipt of the Updated Prepaid Expense
Schedule. For and in partial consideration of the Transfer Consideration, as of
the Effective Date, Transferor shall sell, transfer and convey to New Operator
all of Transferor's right, title and interest in and to the Prepaid Expenses.
If and to the extent any Additional Prepaid Expenses are approved by New
Operator after the Effective Date in accordance with this Section 2.2, then New
Operator shall reimburse Transferor therefore as part of the Post Closing
Adjustment Process (as defined below). Transferor shall execute and deliver to
New Operator on the Effective Date an Assignment Agreement in the form attached
hereto as Exhibit C confirming the conveyance of the Prepaid Expenses and, if
applicable, any Additional Prepaid Expenses, as provided herein.
2.3 Notwithstanding anything to the contrary contained herein,
Transferor shall not sell, transfer or convey to New Operator any of
Transferor's right, title and interest in and to (i) the technical systems,
methods, policies, processes, procedures and controls, and the information and
materials compiled or prepared in connection therewith, (ii) the trade or
service names, associated marks and other intellectual property and related
collateral marketing materials, including without limitation the names "Outlook
Pointe," "Balanced Gold" and "Treasures," in each case used by Transferor in
connection with the marketing and/or operation of the Facility (collectively,
the "INTANGIBLE PROPERTY") or (iii) the petty cash maintained at the Facility as
of the Effective Date (the "PETTY CASH") (hereinafter, the Excluded Personal
Property, the Intangible Property and the Petty Cash may be collectively
referred to as the "EXCLUDED ASSETS"); provided, however, that for a period of
ninety (90) days after the Effective Date, New Operator shall have the
non-exclusive right to use certain names used by Transferor in connection with
the operation of the Facility, including the names "Outlook Pointe," "Balanced
Gold" and "Treasures" and certain related collateral marketing materials which
are located at the Facility on the Effective Date, solely in connection with its
operation of the Facility. New Operator shall execute and deliver to Transferor
on the Effective Date a License Agreement in the form attached hereto as Exhibit
D confirming New Operator's right to use the name of the Facility.
2.4. Prior to the Execution Date, Transferor has delivered to New
Operator litigation, tax, bankruptcy and lien searches conducted in the name of
Transferor and the Facility in the States in which the Facility is located,
Transferor is incorporated and Transferor maintains its principal place of
business (the "LITIGATION AND LIEN SEARCHES"). New Operator shall have a period
of ten (10) business days after the Effective Date in which to advise Transferor
in writing of any liens, judgments or other matters reflected in the results of
the Litigation and Lien Searches to which New Operator objects (the "OBJECTION
NOTICE"), it being understood and agreed that New Operator shall have no right
to object to any such lien unless the same affects or relates to the Facility,
the Inventory or the Transferred Tenant's Personal Property. Transferor shall
have a period of thirty (30) days after receipt of the Objection Notice to cause
the liens, judgments or other matters described therein (the "OBJECTIONABLE
LIENS") to be released/resolved; provided, however, in the event Transferor has
not caused all of the Objectionable Liens to be released/resolved within such
thirty (30) day period but Transferor is diligently pursuing the same,
Transferor shall have an additional period of thirty (30) days in order to
complete the release/resolution of the Objectionable Liens.
3. Transfer Consideration.
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The total consideration (the "TRANSFER CONSIDERATION") to be paid to
Transferor by New Operator for the Prepaid Expenses (collectively, the
"TRANSFERRED ASSETS") shall be an amount equal to the Prepaid Expenses set forth
in the Prepaid Expense Schedule and any Approved Additional Prepaid Expenses set
forth in the Updated Prepaid Expense Schedule.
4. Resident Property.
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4.1. Transferor hereby represents to New Operator that there are
no resident trust funds.
4.2. Within five (5) business days after the Effective Date,
Transferor shall provide New Operator with a schedule (the "RENTS AND FEES
SCHEDULE") of all of the (i) prepaid rents/move in deposits (the "PREPAID
RENTS") and (ii) the unearned portion of any entrance/community fees (as
hereinafter more fully described) (the "ENTRANCE FEES") being held in trust by
Transferor for the residents or prospective residents of the Facility
(collectively, the "RENTS AND FEES"), which schedule shall set forth the name of
each resident or prospective resident for whom such Rents and Fees are being
held and the amount of the Rents and Fees being held for each such resident or
prospective resident. Concurrently with the delivery of the Rents and Fees
Schedule, Transferor shall remit the Rents and Fees to New Operator and New
Operator shall accept the same and shall assume Transferor's obligation to apply
them to the rent due from, or to return them to, as applicable, the applicable
resident/prospective resident. New Operator shall indemnify, defend and hold
harmless Transferor for any claims or liabilities arising out of New Operator's
assumption and application of the Rents and Fees (including any costs, losses,
expenses and reasonable attorneys fees). Notwithstanding the foregoing, nothing
herein shall be construed as releasing Transferor from liability in the event
the amount of the Rents and Fees remitted by Transferor to New Operator is less
than the amount of the Rents and Fees delivered to Transferor by the
residents/prospective residents of the Facility, as to which liability
(including any costs, losses and expenses, including, but not limited to,
reasonable attorneys fees incurred by New Operator) Transferor shall indemnify,
defend and hold harmless New Operator. Transferor shall execute and deliver to
New Operator on the Effective Date an Assignment Agreement in the form attached
hereto as Exhibit C confirming the conveyance of the Rents and Fees as provided
herein. For purposes hereof, the unearned portion of any entrance/community fees
shall mean the portion of such fees which Transferor could be required to return
to the applicable resident during any period from and after the Effective Date.
4.3. Within thirty (30) days after the Effective Date, Transferor shall
return to the residents of the Facility any and all security deposits being held
by Transferor (the "SECURITY DEPOSITS") after deducting therefrom any amounts
which Transferor claims as being due from such residents to Transferor (the
"RETURNED SECURITY DEPOSITS"). Transferor shall use its good faith efforts to
deliver to New Operator, within thirty (30) days after the Effective Date, a
written acknowledgement signed by each resident of the Facility confirming the
amount of the Security Deposit delivered by such resident to Transferor and the
amount of the Returned Security Deposit received by such resident from
Transferor or evidence that Transferor has advised each resident that by cashing
the check provided by Transferor with the Returned Security Deposit, such
resident has acknowledged receipt and the accuracy of the amount thereof.
Transferor acknowledges and agrees that New Operator shall have no liability to
Transferor or the residents of the Facility with respect to the Security
Deposits or the Returned Security Deposits and shall indemnify, defend and hold
harmless New Operator from and after the Effective Date from and against any and
all claims which may be asserted against it related to the Security Deposits and
the Returned Security Deposits, including any claims that amounts are owing to a
resident in excess of the amount of the Returned Security Deposit received by
such resident.
5. Employees.
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5.1 New Operator acknowledges and agrees that prior to the Execution
Date, Transferor has delivered to New Operator a schedule which reflects the
following for the Facility: (i) the names of all of Transferor's employees and
(ii) such employees' positions and rates of pay (the "EMPLOYEE SCHEDULE").
Transferor shall deliver an updated version of the Employee Schedule within five
(5) business days after the Effective Date.
5.2 On the Effective Date, New Operator shall have the right, in
its sole and absolute discretion, but not the obligation, to offer to employ
Transferor's employees that work at the Facility. Upon request, Transferor
shall assist New Operator in its efforts to employ any of Transferor's
employees. On the Effective Date, Transferor shall terminate the employment of
all employees at the Facility. New Operator agrees to cooperate with Transferor
to provide information concerning which employees, if any, are being offered
employment by New Operator (collectively, the "RETAINED EMPLOYEES"). In
connection with the termination of the employee of the Facility employees,
Transferor shall indemnify, defend and hold harmless New Operator from any
liability, loss, costs and expenses, including, but not limited to, reasonable
attorneys fees, which it may incur under the WARN Act or any equivalent State
law.
5.3 Transferor shall remain liable for all Employee Liabilities (as
defined below) relating to all employees for the period prior to the Effective
Date (whether or not the same arise or accrue prior to or after the Effective
Date), including without limitation (i) payroll through the day immediately
preceding the Effective Date, which will be paid by Transferor on May 2, 2003,
with respect to pay period ended April 26, 2003 and on May 16, 2003 with respect
to pay period ending April 30, 2003 (THE "APRIL PAYROLL") and (ii) any Employee
Liabilities relating to the termination of any employees on the Effective Date.
Transferor shall pay all earned or accrued vacation, holiday or sick pay through
the day immediately preceding the Effective Date to all employees as part of the
April Payroll. New Operator shall be responsible for all Employee Liabilities
relating to the Retained Employees that relate to the period from and after the
Effective Date. For the purposes of this Agreement, "EMPLOYEE LIABILITIES"
shall mean all wages, salaries, commissions, earned or accrued vacation, holiday
or sick pay, severance pay (if any), any contributions required or costs
associated with any employee welfare benefit plan as defined by Section 3(1) of
ERISA, any contributions required or costs associated with any employee pension
benefit plan as defined by Section 3(2) of ERISA, any contributions required or
costs associated with any non-qualified employee benefit plan, federal, state
and/or local payroll taxes, unemployment insurance costs, any contributions
required or costs associated with workers' compensation liabilities, and any
claims made by any employee arising out of or connected with his or her
employment or the termination thereof.
5.4 Transferor shall offer and provide, as appropriate, group
health plan continuation coverage pursuant to the requirements of Section 601,
et seq. of ERISA and Section 4980B of the Internal Revenue Code ("COBRA") to all
of the employees of the Facility to whom it is required to offer the same under
applicable law up through and including the day immediately preceding the
Effective Date. New Operator agrees to cooperate with Transferor in providing
information concerning the Retained Employees, if any, from and after the
Effective Date, and the nature of the benefits offered to each such employee.
As of the Effective Date, all Retained Employees shall be eligible for
participation in a group health plan (as defined for purposes of Internal
Revenue Code Section 4980B) established and maintained by New Operator for the
general benefit of its employees and their dependents in accordance with the
terms and conditions of New Operator's employment policies.
5.5. Transferor represents and warrants that none of the employees of
the Facility are members of a labor union in connection with their employment at
the Facility and that there are no union organizing activities currently pending
at the Facility.
6. Accounts Receivable.
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6.1 Transferor shall retain its right, title and interest in and
to all unpaid trade accounts receivable with respect to the Facility that relate
to the period up through and including the day immediately preceding the
Effective Date. New Operator acknowledges and agrees that prior to the
Execution Date, Transferor has provided New Operator with a schedule setting
forth by resident its outstanding trade accounts receivable as of the day
immediately preceding the Effective Date.
6.2 Payments received by New Operator or Transferor from and after
the Effective Date from third party payors and private pay residents shall be
handled as follows:
6.2.1 If such payments either specifically indicate on the
accompanying remittance advice, or if the parties agree, that they relate to the
period prior to the Effective Date, they shall be retained or forwarded to
Transferor, along with the applicable remittance advice, in accordance with the
provisions of Section 6.2.5 below.
6.2.2 If such payments indicate on the accompanying
remittance advice, or if the parties agree, that they relate to the period from
and after the Effective Date, they shall be forwarded or retained by New
Operator, along with the applicable remittance advice, in accordance with the
provisions of Section 6.2.5 below.
6.2.3 If such payments indicate on the accompanying
remittance advice, or if the parties agree, that they relate to periods for
which both parties are entitled to reimbursement under the terms hereof, the
portion thereof which relates to the period from and after the Effective Date
shall be forwarded to or retained by New Operator and the balance shall be
retained by or remitted to Transferor in accordance with the provisions of
Section 6.2.5 below.
6.2.4. Any payments received by New Operator from and after the
Effective Date from or on behalf of private pay patients with outstanding
balances as of the Effective Date which fail to designate the period to which
they relate, will first be applied by New Operator to reduce the patients'
post-Effective Date balances, with any excess applied to reduce any balances due
for services rendered by Transferor prior to the Effective Date.
6.2.5 All amounts owing to Transferor or New Operator under
this Section 6.2 shall be settled within thirty (30) days after the end of each
month in which the payment was received.
6.3 In the event the parties mutually determine that any third
party payors or private pay residents are entitled to a refund of payments, the
portion thereof that relates to the period from and after the Effective Date
shall be paid by New Operator and the portion thereof that relates to the period
prior to the Effective Date shall be paid by Transferor to such third party
payor or private pay resident.
6.4 In the event the parties mutually determine that any payment
hereunder was misapplied by the parties, the party which erroneously received
said payment shall remit the same to the other within fifteen (15) business days
after said determination is made.
6.5 For the six (6) month period following the Effective Date or
until Transferor receives payment of all accounts receivable attributed to the
operation of the Facility prior to the Effective Date, whichever is sooner, New
Operator shall provide Transferor with an accounting by the 30th day of each
month setting forth all amounts received by New Operator during the preceding
month with respect to the accounts receivable of Transferor which are set forth
in the schedule provided by Transferor pursuant to Section 6.1. New Operator
shall deliver such accounting to the following address: Kathy Evans, Balanced
Care Corporation, 1215 Manor Drive, Mechanicsburg, PA 17055.
6.6. Upon request, for a period of six (6) months after the
Effective Date, Transferor shall provide New Operator with an accounting setting
forth all amounts received by Transferor during the preceding month with respect
to payments from the residents of the Facility which are due and owing to New
Operator in accordance with the terms of this Section 6.
6.7. Each of Transferor and New Operator shall have the right to inspect all
cash receipts of the other party during weekday business hours on
reasonable prior notice in order to confirm such party's compliance with the
obligations imposed on it under this Section 6.
7. Prorations; Liabilities.
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7.1 As between New Operator and Transferor, revenues and expenses,
utility charges for the billing period in which the Effective Date occurs, real
and personal property taxes, liabilities under the Assumed Contracts (as defined
in Section 9 below), vendor payables for the billing period in which the
Effective Date occurs, and other related items of revenue or expense
attributable to the Facility (other than the Prepaid Expenses which are included
in the Transfer Consideration and accordingly shall inure fully to the benefit
of New Operator after the Effective Date) shall be prorated between Transferor
and New Operator as of the Effective Date. In general, such prorations shall be
made so that as between New Operator and Transferor, Transferor shall be charged
for unpaid expenses to the extent that the same are attributable to periods
prior to the Effective Date. The intent of this provision shall be implemented
by New Operator remitting to Transferor any invoices that describe goods or
services provided to or expenses incurred by the Facility prior to the Effective
Date and by New Operator assuming responsibility for the payment of any invoices
that describe goods or services provided to or expenses incurred by the Facility
from and after the Effective Date.
7.2 All such prorations shall be made on the basis of actual days
elapsed in the relevant accounting or revenue period and shall be based on the
most recent information available to Transferor. Utility charges that are not
metered and read on the Effective Date shall be estimated based on prior
charges, and shall be re-prorated upon receipt of statements therefor.
7.3 All amounts owing from one party hereto to the other party
hereto that require adjustment after the Effective Date shall be settled within
sixty (60) days after the Effective Date or, in the event the information
necessary for such adjustment is not available within said sixty (60) day
period, then as soon thereafter as practicable (the "POST CLOSING ADJUSTMENT
PROCESS").
8. Due Diligence Review/Access to Records.
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8.1. New Operator and Transferor acknowledge and agree that for the
thirty (30) days prior to the date hereof (the "DUE DILIGENCE REVIEW PERIOD"),
Transferor has provided New Operator and its agents with access to the Facility
and the books and records thereof in order to enable New Operator, at its own
cost and expense, to complete its investigations with respect to the Facility
and the operation thereof as it deems to be reasonably necessary in connection
with the transaction contemplated by this Agreement. Such due diligence has
included, but has not been limited to, zoning investigations, soil studies,
environmental assessments, seismic assessments, wetlands reports, appraisals,
investigations of Transferor's and the Facility's books and records and
operations, dry rot and termite inspections and structural and property
condition inspections, including personal property inspections, provided any
investigations which were physically intrusive on the Facility were consented to
in advance by Transferor (the "DUE DILIGENCE REVIEW"). New Operator shall
maintain the confidentiality of any documents or information obtained by it
during the course of its Due Diligence Review and to the extent any such
documents or information are obtained from Transferor, New Operator shall return
the same to Transferor in the event the transaction fails to close for any
reason whatsoever. Transferor and New Operator acknowledge and agree that New
Operator had the right to advise Transferor on or before the end of the Due
Diligence Review Period if New Operator was not satisfied for any reason
whatsoever with the results of its Due Diligence Review and New Operator has not
done so and accordingly that New Operator has elected to proceed with the
transaction provided for herein as of the Effective Date. Notwithstanding
anything to the contrary contained in this Agreement, pursuant to the provisions
of that certain Letter of Intent dated as of February 17, 2003, executed among
Parent and its affiliates and Owner and its affiliates (the "LOI"), in the event
New Operator and Transferor do not consummate the transfer of the Facility in
accordance with this Agreement on or before May 31, 2003, Owner shall have the
obligation to proceed with, and to accept the assumption of, the transfer of the
Facility without any further obligation or liability on the part of Transferor.
8.2. On the Effective Date, Transferor shall deliver to New
Operator possession of all of the books and records of the Facility maintained
at the Facility, including resident and employee records but specifically
excluding Transferor's corporate and regional accounting and proprietary and
confidential books and records. In addition on such date or dates prior to the
Effective Date as may be agreed upon by Transferor and New Operator, Transferor
shall provide to New Operator in an agreed electronic format such information
with respect to (i) the vendors serving the Facility, (ii) employee payroll and
(iii) resident billing as New Operator may reasonably deem to be necessary in
connection with its operation of the Facility from and after the Effective Date.
8.3. Transferor shall be entitled, at its sole cost and expense,
to remove the originals of any records delivered to New Operator, for purposes
of litigation involving a resident or employee to whom such record relates, if
an officer of or counsel for Transferor certifies that such original must be
produced in order to comply with applicable law or the order of a court of
competent jurisdiction in connection with such litigation. Any record so
removed shall promptly be returned to New Operator following its use, and
nothing herein shall be interpreted to prohibit New Operator from retaining
copies of any such documents.
8.4. New Operator agrees to use good faith efforts to maintain
such books, records and other material comprising records of the Facility's
operations that have been received by New Operator from Transferor, including,
but not limited to, resident records, to the extent required by law, but in no
event less than two (2) years, and shall allow Transferor and its agents and
representatives to have reasonable access to (upon reasonable prior notice and
during normal business hours), and, at Transferor's sole cost and expense, to
make copies thereof, and shall, at Transferor's request, allow Transferor a
reasonable opportunity to remove such documents, at Transferor's expense, at
such time after such record retention period as may be required by law as New
Operator shall decide to dispose of such documents; provided, however, absent
gross negligence or willful misconduct by New Operator, nothing herein shall be
construed as imposing any liability on New Operator to Transferor or any third
party in the event such books, records and other material are not available as
and when access thereto is requested by Transferor.
8.5. From and after the Effective Date, Transferor shall allow New
Operator and its agents and representatives to have reasonable access to (upon
reasonable prior notice and during normal business hours and at New Operator's
sole cost and expense), and to make copies of, the books and records and
supporting material relating to the Facility which are not included in the books
and records delivered to New Operator pursuant to Section 8.2, to the extent
reasonably necessary to enable New Operator to among other things investigate
and defend malpractice, employee or other claims, to file or defend cost reports
and tax returns, to complete/revise, as needed, any patient assessments which
may be required for New Operator to seek reimbursement for services rendered
from and after the Effective Date, to verify accounts receivable collections due
New Operator, to defend wage and hour audits and to prepare audited financial
statements for the periods prior to and/or from and after the Effective Date, if
and to the extent such audited financial statements are required to be filed by
New Operator under applicable securities laws.
9. Contracts.
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9.1. Transferor and New Operator acknowledge and agree that prior to
the date hereof (i) Transferor has provided New Operator with a list (the
"OPERATING CONTRACT SCHEDULE") and copies of all vendor, service and other
agreements, other than the Master Operating Contracts (as hereinafter defined)
relating to the Facility (the "OPERATING CONTRACTS") and with a list of the
Master Operating Contracts (the "MASTER OPERATING CONTRACT SCHEDULE") and (ii)
New Operator has informed Transferor in writing of any Operating Contract which
New Operator wishes to have assigned to it as of the Effective Date (the
"DESIGNATED OPERATING CONTRACTS"). A list of the Designated Operating Contracts
is attached hereto as Schedule 2.
9.2. New Operator acknowledges and agrees that the Operating Contracts shall
not include the Master Operating Contracts, that the Master Operating
Contract Schedule is being provided for informational purposes only and that in
no event will the New Operator have the right to designate a Master Operating
Contract to be assigned to New Operator. For purposes hereof a Master Operating
Contract shall be a contract in the name of Balanced Care or any affiliate
thereof and which covers equipment or services located at or provided to
facilities operated by Transferor or its affiliates in addition to the Facility,
and which prohibits the equipment or services relating to the Facility from
being assigned or assumed without the assignment and assumption of all of the
equipment and services covered by the contract.
9.3. Transferor shall use its commercially reasonable efforts, with
cooperation by New Operator, to secure any third party consents which may be
required in connection with the assignment of the Designated Operating Contracts
to New Operator, it being understood and agreed that there can be no
assurances that Transferor will be able to secure any third party consents
needed to assign to New Operator any or all of the Designated Operating
Contracts. New Operator agrees to provide and execute and deliver such
documents as are reasonably necessary in order to secure any third party
consents with respect to the Designated Operating Contracts, including, without
limitation, New Operator's financial statements, vendor credit applications, and
vendor assignment and assumption agreements.
9.4. Transferor shall terminate all of the Operating Contracts not assigned
to New Operator and shall have the right to remove from the Facility any
equipment which is subject to such unassigned Operating Contracts or to a Master
Operating Contract; provided, however, New Operator and Transferor
acknowledge and agree that certain of the Operating Contracts not assigned to
New Operator relate to the copiers, fax machines and/or phone system (excluding
the nurse call system which shall remain at the Facility and not be removed
despite removal of the phone system) at the Facility (the "DESIGNATED
EQUIPMENT") and that Transferor shall leave the Designated Equipment at the
Facility until New Operator advises Transferor that the Designated Equipment may
be removed from the Facility and during the period that the Designated Equipment
remains in the Facility, which period shall not exceed sixty (60) days from the
Effective Date (the "DESIGNATED EQUIPMENT USE PERIOD"), New Operator shall be
required to pay to Transferor the amounts set forth in Exhibit E hereto for the
use thereof (the "DESIGNATED EQUIPMENT PAYMENTS"). New Operator and Transferor
agree that the amount due from New Operator to Transferor for the Designated
Equipment Payments shall be settled through the Post Closing Adjustment Process.
In the event New Operator has not advised Transferor by the end of the
Designated Equipment Use Period that it desires to have the Designated Equipment
removed from the Facility, Transferor shall have the right in any event to
remove the same from the Facility during normal business hours and on reasonable
advance notice to New Operator. Transferor shall be solely responsible for any
costs incurred by it in removing the Designated Equipment from the Facility.
9.5. Nothing herein shall be construed as imposing any liability on New
Operator with respect to any obligations under Designated Operating Contracts
which relate to the period prior to the Effective Date even if the same are not
payable until after the Effective Date, it being specifically understood and
agreed that New Operator's liability shall be limited to its acts and omissions
thereunder from and after the Effective Date.
9.6. In addition to the foregoing rights granted to New Operator with
respect to the Designated Operating Contracts, Transferor agrees that upon
request and to the extent permitted or required by applicable law, from and
after the Effective Date New Operator shall have the right to provide services
to the residents located at the Facility and to bill for such services under any
applicable third party payor provider numbers or provider agreements held by
Transferor (the "Provider Agreement") until such time as a new Provider
Agreement is issued to, and in the name of, New Operator.
10. Representations and Warranties of Transferor. Transferor
------------------------------------------------
represents and warrants to New Operator as follows:
10.1. Transferor has all necessary power and authority to enter
into this Agreement and to execute all documents and instruments referred to
herein or contemplated hereby and to consummate the transactions provided for
herein and all necessary action has been taken to authorize the individuals
executing this Agreement to do so. This Agreement has been duly and validly
executed and delivered by Transferor and is enforceable against Transferor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy laws and general principals of equity. This Agreement
does not conflict with Transferor's Articles of Incorporation or Bylaws or any
contract, document or instrument to which Transferor is a party or by which
Transferor or any of its assets may be bound or affected. Transferor is not
required to secure the consent of any third party to enter into this Agreement
or to carry out the terms hereof, other than the consents from Owner and the
consents specifically contemplated by the terms hereof with respect to the
assignment of the Designated Operating Contracts. Transferor is not in default
under any of the Operating Contracts or the Master Operating Contracts.
10.2. Transferor has not received any notice that the transaction
provided for herein has been challenged by any governmental agency or any other
person, nor does Transferor know or have reasonable grounds to know, of any
basis for any such actions, suits or proceedings.
10.3. Transferor has not received any notice from any governmental
body claiming a violation of any licensure, certification, building, zoning or
environmental laws or ordinances with respect to the Facility ("VIOLATION
NOTICES"), which would have a material adverse effect on the leasing or
operation of the Facility or which would prevent the consummation of the
transactions contemplated by the terms of this Agreement. Transferor has
delivered to New Operator prior to the Execution Date copies of any Violation
Notices received by Transferor within the twelve (12) months immediately
preceding the Execution Date.
10.4. To Transferor's knowledge, (v) during the time in which
Transferor has leased and operated the Facility, Transferor has not used,
generated, transported, treated, constructed, deposited, stored, disposed,
placed or located at, on, under or from the Facility any flammable explosives,
radioactive materials, hazardous or toxic substances, materials or wastes,
pollutants or contaminants defined, listed or regulated by any local, state or
federal environmental laws other than hazardous wastes used/generated in the
ordinary course of the operation of the Facility, all of which have been used,
generated, handled, stored, transported and/or disposed of by Transferor in
compliance with applicable law.
10.5. Transferor has not received any notice that (vi)
there is presently pending or contemplated or threatened, condemnation of the
Facility or any part thereof.
10.6. There is no litigation, investigation or other proceeding
pending or, to Transferor's knowledge, threatened against or relating to
Transferor, its properties or business (the "PENDING/THREATENED LITIGATION"),
which would have a material adverse effect on the leasing or operation of the
Facility or which would prevent the consummation of the transactions
contemplated by the terms of this Agreement. Transferor has delivered to New
Operator prior to the Execution Date a summary of all Pending/Threatened
Litigation and will update such list as additional litigation is filed or
threatened between the Execution Date and the Effective Date. Upon request,
Transferor will also provide New Operator with copies of any and all pleadings
related to the Pending/Threatened Litigation.
10.7. No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization, or other
proceedings are pending or, to Transferor's knowledge, threatened against
Transferor, nor are any such proceedings contemplated by Transferor.
10.8 Transferor has not received any notices of violation or
advisory action by regulatory agencies regarding environmental control matters
or environmental permit compliance with respect to the Facility.
10.9 Transferor has not received any notice of any proceedings,
governmental administrative actions, or judicial proceedings pending or
contemplated under any federal, state or local laws regulating the discharge of
hazardous or toxic materials or substances into the environment relating to the
Facility.
10.10 Transferor has no actual knowledge of any material physical plant
deficiencies with respect to the Facility, which, for purposes hereof, shall
include but not be limited to, roof leaks, settling, structural defects or
malfunctioning HVAC systems (the "MATERIAL PHYSICAL PLANT DEFECTS"). Nothing in
this Section 10.10 shall be construed as imposing liability on Transferor for
Physical Plant Defects other than those which were actually known to Transferor
and not disclosed to New Operator prior to the Effective Date, it being
understood and agreed that (i) New Operator has specifically agreed that
Transferor shall have no liability for any matters which New Operator asserts
Transferor "should have" had knowledge about prior to the Effective Date as long
as Transferor did not, in fact, have actual knowledge thereof prior to the
Effective Date and (ii) New Operator has been advised that Transferor did not
conduct any inspections of the Facilities prior to making the foregoing
representation and warranty with respect to the Physical Plant Defects.
10.11 Transferor agrees to cooperate with New Operator and Owner from
and after the Effective Date to cause the liens on title described in Exhibit F
to be released. The matters set forth in this Section 10.11 are hereinafter
referred to as the "Title and Survey Issues."
10.12. As of the Effective Date, Transferor has not billed, and
shall not bill, the residents of the Facility for their occupancy of the
Facility during the month of May, 2003 and as of the Effective Date Transferor
maintains, and at all times prior to the Effective Date Transferor has
maintained, the Security Deposits in a segregated account established solely for
the purpose of depositing therein and releasing therefrom resident security
deposits and such account is maintained by Transferor fully separate from
Transferor's general working capital account(s).
11. Representations and Warranties of New Operator. New Operator
---------------------------------------------------
represents and warrants to Transferor as follows:
11.1 New Operator has all necessary power and authority to enter
into this Agreement and to execute all documents and instruments referred to
herein or contemplated hereby and to consummate the transactions provided for
herein and all necessary action has been taken to authorize the individuals
executing this Agreement to do so. This Agreement has been duly and validly
executed and delivered by New Operator and is enforceable against New Operator
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy laws and general principals of equity. This Agreement does
not conflict with New Operator's Articles of Incorporation or Bylaws or any
contract, document or instrument to which New Operator is a party or by which
New Operator or any of its assets may be bound or affected. New Operator is not
required to secure the consent of any third party to enter into this Agreement
or to carry out the terms hereof, other than the consents by Owner and the
consents specifically contemplated by the terms hereof with respect to the
assignment of the Designated Operating Contracts.
11.2 There is no litigation, investigation or other proceeding
pending or, to New Operator's knowledge, threatened against or relating to New
Operator, its properties or business, which would prevent the consummation of
the transactions contemplated by the terms of this Agreement
11.3 No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization, or other
proceedings are pending or, to New Operator's knowledge, threatened against New
Operator, nor are any such proceedings contemplated by New Operator.
12. Indemnification.
----------------
12.1 Transferor hereby indemnifies and agrees to defend and hold
harmless New Operator and its directors, officers, employees, agents, successors
and assigns from and against any and all demands, claims, causes of action,
fines, penalties, damages (but specifically excluding lost profits and
consequential damages), losses, liabilities (including strict liability),
judgments, and expenses (including, without limitation, reasonable attorneys'
and other professionals' fees and court costs) (collectively, a "Loss") incurred
in connection with or arising from: (i) a breach by Transferor of its
representations, warranties and obligations under this Agreement which is not
cured within ten (10) days after receipt of written notice from New Operator
setting forth in reasonable detail the nature of such breach, (ii) the acts or
omissions of Transferor under the Operating Contracts prior to the Effective
Date, (iii) the leasing, occupancy or operation of the Facility prior to the
Effective Date, (iv) any acts, omissions or negligence of Transferor or any
person claiming under Transferor, or the contractors, agents, employees,
invitees or visitors of Transferor with respect to the Facility prior to the
Effective Date, (v) any failure by Transferor to pay any liabilities in
connection with the Facility attributable to periods prior to the Effective Date
whether they arise prior to or after the Effective Date or (vi) the Title and
Survey Issues even if, in the case of the Title and Survey issues, such Loss
does not arise from a breach of Transferor's representations and warranties with
respect to the Title and Survey Issues, it being understood and agreed that
Transferor's representations and warranties with respect to the Title and Survey
Issues are limited, in certain instances, to Transferor's knowledge but its
indemnity with respect to the Title and Survey Issues is intended to be without
such limitation.
12.2 New Operator hereby indemnifies and agrees to defend and hold
harmless Transferor and its directors, officers, employees, agents, successors
and assigns from and against any and all Losses incurred in connection with or
arising from: (i) a breach by New Operator of its representations, warranties
and obligations under this Agreement which is not cured within ten (10) days
after receipt of written notice from Transferor setting forth in reasonable
detail the nature of such breach, (ii) the acts or omissions of New Operator
under the Designated Operating Contracts or the Provider Agreement, if
applicable, from and after the Effective Date, (iii) the leasing, occupancy or
operation of the Facility from and after the Effective Date, (iv) any acts,
omissions or negligence of New Operator or any person claiming under New
Operator, or the contractors, agents, employees, invitees or visitors of New
Operator with respect to the Facility from and after the Effective Date or (v)
any failure by New Operator to pay any liabilities in connection with the
Facility attributable to periods from and after the Effective Date.
12.3 The foregoing indemnification obligations shall survive this
Agreement. All matters arising from an indemnified party's negligence, gross
negligence or willful misconduct are excluded from the scope of the
indemnification owing to such party set forth in Sections 12.1 and 12.2.
13. RESERVED
--------
14. Further Assurances. Each of the parties hereto agrees to execute
-------------------
and deliver any and all further agreements, documents or instruments reasonably
necessary to effectuate this Agreement and the transactions referred to herein
or contemplated hereby or reasonably requested by the other party to perfect or
evidence their rights hereunder.
15. Notices and Demands. All notices and demands, requests, consents,
--------------------
approvals, and other similar communications under this Agreement shall be in
writing and shall be sent by personal delivery or by either (a) United States
certified or registered mail, return receipt requested, postage prepaid, or (b)
Federal Express or similar generally recognized overnight carrier regularly
providing proof of delivery or (c) facsimile transmission, addressed as follows:
To Transferor or BCC:
Balanced Care Corporation
1215 Manor Drive
Mechanicsburg, PA 17055
Attention: Legal Department
Facsimile: (717) 796-6294
With Copy To:
Kirkpatrick & Lockhart, LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, PA 15222
Attention: Steven Adelkoff, Esq.
Facsimile: (412) 355-6501
To New Operator:
c/o Emeritus Corporation
3131 Elliott Avenue, Suite 500
Seattle, WA 98121
Attention: Chief Financial Officer
Facsimile: (206) 301-4500
With Copy To:
The Nathanson Group PLLC
1520 Fourth Avenue
Sixth Floor
Seattle, WA 98101
Attention: Randi S. Nathanson
Facsimile: (206) 623-1738
Any notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier's proof of delivery or the facsimile
transmission report, as the case may be, whether accepted or refused. Any such
notice not so given shall deemed given upon receipt of the same by the party to
whom the same is to be given. Any party hereto may designate a different
address for itself by notice to the other party in accordance with this Section
15.
16. Payment of Expenses. Each party hereto shall bear its own legal,
---------------------
accounting and other expenses incurred in connection with the preparation and
negotiation of this Agreement and the consummation of the transaction
contemplated hereby, whether or not the transaction is consummated.
17. Entire Agreement; Amendment; Waiver. This Agreement constitutes
--------------------------------------
the entire understanding between the parties hereto with respect to the subject
matter hereof, superseding all negotiations, prior discussions and preliminary
agreements between the parties hereto. This Agreement may not be modified or
amended except in writing signed by the parties hereto. No waiver of any term,
provision or condition of this Agreement in any one or more instances shall be
deemed to be or be construed as a further or continuing waiver of any such term,
provision or condition of this Agreement. No failure to act shall be construed
as a waiver of any term, provision, condition or rights granted hereunder.
18. Assignment. Neither this Agreement nor the rights, duties or
----------
obligations arising hereunder shall be assignable or delegable by Transferor or
New Operator without the prior written consent of the other party, which may be
granted, denied or conditioned in such party's reasonable discretion; provided,
however, New Operator may assign this Agreement to a wholly owned subsidiary
with notice to, but without the need to secure the consent of, Transferor
provided further such assignment shall not relieve New Operator of any of its
duties or obligations under this Agreement. This Agreement shall be binding
upon, and inure to the benefit of, the respective successors and permitted
assigns of Transferor and New Operator.
19. Joint Venture; Third Party Beneficiaries. Nothing contained herein
----------------------------------------
shall be construed as forming a joint venture or partnership between the parties
hereto with respect to the subject matter hereof. The parties hereto do not
intend that any third party shall have any rights under this Agreement.
20. Announcements. The parties hereto acknowledge and agree that any
-------------
communications to the employees of the Facility regarding the terms of this
Agreement and the transactions contemplated hereunder shall be mutually
acceptable to the parties hereto unless required to made pursuant to court order
or law.
21. Captions. The section headings contained herein are for
--------
convenience only and shall not be considered or referred to in resolving
questions of interpretation.
22. Counterparts. This Agreement may be executed and delivered via
------------
facsimile and in one or more counterparts and all such counterparts taken
together shall constitute a single original Agreement.
23. Governing Law. This Agreement shall be governed in accordance with
-------------
the laws of the Commonwealth of Pennsylvania without regard to the conflict of
rules of such State.
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURE PAGE FOR OUTLOOK POINTE AT ROANOKE
OPERATIONS TRANSFER AGREEMENT]
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and year first set forth above.
TRANSFEROR: ALCO X, LLC
By: BCC AT ROANOKE, INC., its sole member and manager
By: /s/ Robin L. Barber
----------------------
Robin L. Barber
Vice President and Secretary
MANAGER: BCC AT ROANOKE, INC.
By: /s/ Robin L. Barber
----------------------
Robin L. Barber
Vice President and Secretary
OWNER: HRT HOLDINGS, INC.
By: /s/ John M. Bryant, Jr.
----------------------
Name: John M. Bryant, Jr.
----------------------
Its: Vice President
---------------
NEW OPERATOR: EMERITUS CORPORATION
By: /s/ Raymond R. Brandstrom
----------------------------
Raymond R. Brandstrom
-----------------------
Its: Chief Financial Officer
-------------------------
PARENT: BALANCED CARE CORPORATION
By: /s/ Robin L. Barber
----------------------
Robin L. Barber
Senior Vice President, Legal Counsel
And Secretary
EXHIBIT A
FORM OF BILL OF SALE
BILL OF SALE, BLANKET CONVEYANCE
AND ASSIGNMENT
This Bill of Sale, Blanket Conveyance and Assignment (this "Assignment") is
----------
executed by [INSERT NAME OF APPLICABLE BCC TENANT], a Delaware corporation
--------------------------------------------
("Tenant") and ______________[insert name of applicable BCC manager], a Delaware
---
corporation ("Manager", and together with Tenant, collectively, "Assignor"), to
------- --------
and for the benefit of, a [insert name of applicable HCRT Landlord]("HCRT
----
Assignee") and Emeritus Corporation, a Washington corporation ("Emeritus
-- --------
Assignee", and together with HCRT Assignee, collectively, "Assignee").
-- --------
RECITALS
WHEREAS, Tenant leases the property described on Exhibit "A" attached
-----------
hereto (the "Property") from HCRT Assignee pursuant to the Lease Agreement dated
--------
as of,, (as the same has been amended from time to time, collectively, the
"Lease"); and
-
WHEREAS, Tenant operates an assisted living facility (the "Facility") located on
--------
the Property, which Facility is managed by Manager; and
WHEREAS, Tenant desires HCRT Assignee to terminate the Lease and HCRT Assignee
desires for Assignor to sell, assign and convey unto HCRT Assignee or Emeritus
Assignee, as the case may be, the Assigned Properties (as defined below).
NOW, THEREFORE, in consideration of the foregoing and Ten and No/100 Dollars
($10.00) and other good and valuable consideration in hand paid by Assignee to
Assignor, the receipt and sufficiency of which are hereby acknowledged and
confessed by Assignor, Assignor and Assignee hereby act and agree as follows:
1. CONVEYANCE TO HCRT ASSIGNEE. Assignor does hereby GRANT, BARGAIN, SELL,
----------------------------
CONVEY, ASSIGN, TRANSFER, SET OVER and DELIVER to and VEST in HCRT Assignee, its
successors and assigns, the following properties (collectively, the "HCRT
----
Assigned Properties"), excluding, however, (i) the items set forth on Exhibit
-------------- -------
"B" attached hereto (collectively, the "Emeritus Assigned Properties" and
- ------------------------------
together with the HCRT Assigned Properties, collectively, the "Assigned
- --------
Properties"), which Emeritus Assigned Properties shall be transferred to
- --
Emeritus Assignee in accordance with Section 2 below, and (ii) the items set
-
forth on Exhibit C attached hereto, which shall be retained by Assignor:
- ----------
(a) Any and all personal property, tangible and intangible, equipment,
appliances, furniture, furnishings, building materials, improvements, and other
personalty of whatever kind or character owned by Assignor, lying and being
situated at, incidental to, appurtenant to, or associated or used in connection
with the ownership, use, operation, repair and maintenance of the Property,
including all fixtures and other property affixed thereto, all heating, air
conditioning, plumbing, lighting, communications, elevators and kitchen,
medical, dental or rehabilitation fixtures, all gas and electric fixtures,
appliances and wiring, engines, boilers, elevators, escalators, incinerators,
motors, dynamos, heating and air conditioning equipment, sinks, water closets,
basins, pipes, electrical systems, faucets, fire prevention and extinguishing
apparatus, central music and public address systems, burglar alarms, security
systems and equipment, and other furnishings and decor equipment, spare parts,
materials, and supplies for the ownership, use, operation, maintenance, and
repair of the Property or the personal property referred to herein or both,
tools, supplies, and all other personal property owned by Assignor that is
located on or is used in connection with the ownership, use, operation,
maintenance, or repair of the Property or the personal property referred to
herein or both, whether tangible or intangible, paving, curbing, trees, shrubs,
plants and other improvements, and landscaping of every kind and nature
(collectively, the "Personalty").
----------
(b) To the extent assignable, all of Assignor's rights in and to (i) all
licenses, permits, approvals and similar documents relating to the Property,
(ii) all plans, drawings, specifications, surveys, engineering reports, and
other technical descriptions relating to the Property, (iii) all warranties and
guaranties (express or implied) issued in connection with or arising out of (a)
the purchase or repair of all fixtures, fittings, appliances, apparatus,
equipment, machinery and other personal property owned by Assignor, if any, and
affixed or attached to or placed or situated upon, or used or acquired in
connection with the Property, or (b) the construction, alteration, maintenance
and repair of any of the improvements located on the Property, and (iv) all
other property (real, personal or mixed), owned or held by Assignor which relate
in any way to the design, construction, use, leasing, maintenance, service or
operation of the Property or the Personalty.
2. CONVEYANCE TO EMERITUS ASSIGNEE. Assignor does hereby GRANT,
----------------------------------
BARGAIN, SELL, CONVEY, ASSIGN, TRANSFER, SET OVER and DELIVER to and VEST in
Emeritus Assignee, its successors and assigns, the Emeritus Assigned Properties.
3. REPRESENTATION REGARDING TITLE. Assignor hereby represents and warrants
-------------------------------
to Assignee that Assignor is the owner of all right, title and interest in and
to the Assigned Properties, that the Assigned Properties are free and clear of
all liens, charges and encumbrances other than those created in favor of
Assignee and those created in favor of Town and Country Leasing, LLC and GE
Capital (previously Phoenixcor, Inc.) in connection with motor vehicle financing
and that Assignor has full right, power and authority to sell the Assigned
Properties Property and to make this Assignment. Assignor shall warrant and
forever defend title to the Property unto Assignee.
4. ACKNOWLEDGMENTS OF ASSIGNEE. Notwithstanding the warranty as to
-----------------------------
merchantable title, Assignor sells and conveys the Assigned Properties hereunder
-
to Assignee in its present condition, AS IS, WHERE IS, AND WITHOUT ANY
REPRESENTATION OR WARRANTY WHATSOEVER.
5. COUNTERPARTS; GOVERNING LAW; SUCCESSORS AND ASSIGNS; AUTHORITY. This
------------ ---------------------------------------------------
Assignment may be executed in any number of counterparts, and each counterpart
hereof shall be deemed to be an original instrument, but all such counterparts
shall constitute but one instrument. This Assignment shall be construed and
enforced in accordance with and governed by the internal laws of the state or
commonwealth where the Property is located. This Assignment shall bind and
inure to the benefit of Assignor and Assignee and their respective successors
and assigns. Each of Assignor and Assignee represents and warrants to the other
that it is fully empowered and authorized to execute and deliver this
Assignment, and the individuals signing this Assignment each represent and
warrant that he or she is fully empowered and authorized to do so.
6. FURTHER ASSURANCES. The parties agree to take all such further actions
-------------------
and execute, acknowledge and deliver all such further documents that are
reasonably necessary or useful in carrying out the purposes of this Assignment.
IN WITNESS WHEREOF, this Assignment is executed by the parties as of, 2003.
ASSIGNOR:
- ---------
WITNESSES: [TENANT], INC.
By:
Name:
Title:
WITNESSES: [MANAGER], INC.
By:
Name:
Title:
HCRT ASSIGNEE:
- ---------------
By
J.D. Carter Steele
Senior Vice President
EMERITUS ASSIGNEE:
- -------------------
By
Name:
Title:
EXHIBIT "A" TO BILL OF SALE
LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT "B" TO BILL OF SALE
EMERITUS ASSIGNED PROPERTIES
1. List year, make, model, VIN# of van
2. All consumable inventories of every kind and nature whatsoever
(including, without limitation, all pharmacy supplies, medical supplies, office
supplies, other supplies and foodstuffs) owned by Assignor and located at the
Facility.
3. Telephone and facsimile numbers of the Facility.
4. All books and records of the Facility maintained at the Facility,
including resident and employee records but specifically excluding Assignor's
corporate and regional accounting and proprietary and confidential books and
records.
EXHIBIT "C" TO BILL OF SALE
ITEMS EXCLUDED FROM THE ASSIGNED PROPERTIES
1. All accounts receivable, petty cash, minute books, stock records,
corporate seals, provider or vendor billing numbers, tax, corporate and regional
accounting and financial books and records, technical systems, methods,
policies, processes, procedures, controls, policy and procedure manuals, and
trade or service names, associated marks and other intellectual property used in
connection with the marketing and/or operation of the Property by Balanced Care
Corporation, including the names "Balanced Care", "Outlook Pointe", "Balanced
Gold" and "Treasures".
2. All phone systems (excluding Nurse Call System(s)) located at the
Facility leased by Assignor.
3. All photocopiers located at the Facility leased by Assignor.
4. All facsimile machines located at the Facility leased by Assignor.
5. All computer equipment located at the Facility, including software.
6. All collateral marketing materials located at the Facility.
EXHIBIT B
PREPAID EXPENSE SCHEDULE
EXHIBIT C
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTIONAGREEMENT
----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made as of April
___________, 2003 by and among _____________ (the "Tenant"), _______________
(the "Manager", and together with the Tenant, collectively, the "Assignor"), and
Emeritus Corporation (the "Assignee").
RECITALS:
WHEREAS, Assignor, Balanced Care Corporation, a Delaware corporation (the
"Parent"), Assignee and ________________[need to insert name of HCRT
landlord]entered into that certain Operations Transfer Agreement dated as of
April 30, 2003 (the "OTA"), under which Assignor agreed to transfer to Assignee
the operational and financial responsibility of the Facility as of the Effective
Date. Any term used but not defined in this Agreement shall have the meaning
ascribed to such term in the OTA.
NOW THEREFORE, for and in consideration of the Transfer Consideration and
other valuable consideration to Assignor in hand paid by Assignee, and the
mutual covenants herein contained, the receipt and sufficiency of the foregoing
consideration being hereby acknowledged, the parties hereto agree as follows:
1. ASSIGNMENT: Assignor hereby assigns, transfers, sets over and
----------
conveys to Assignee all of Assignor's right, title and interest in and to (A)
the Prepaid Expenses and (B) the Rents and Fees. Assignor represents to Assignee
that it is the holder of interest in and to the Prepaid Expenses and the Rents
and Fees and Assignor has not assigned, hypothecated, pledged or otherwise
transferred all or any portion of its interest in and to the Designated Prepaid
Expenses or the Rents and Fees; provided, however, nothing herein shall be
construed as releasing Assignor from any liability with respect to the Prepaid
Expenses and the Rents and Fees to the extent such liability relates to or
arises from the acts or omissions of Assignor prior to the date hereof and
whether or not a claim with respect thereto is asserted prior to or after the
date hereof.
2. ASSUMPTION: Assignee does hereby assume and agree to perform all of
----------
Assignor's obligations with respect to the Prepaid Expenses and the Rents and
Fees; provided, however, nothing herein shall be construed as imposing any
liability on Assignee with respect to the Prepaid Expenses or the Rents and Fees
to the extent such liability relates to or arises from the acts or omissions of
Assignor prior to the date hereof.
3. SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and
------------------------
inure to the benefit of Assignor and Assignee and their respective successors
and permitted assigns.
4. COUNTERPARTS: This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5. CAPTIONS: The captions of this Agreement are for convenience and
--------
reference only, and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provisions hereof.
6. JOINT EFFORT: The preparation of this Agreement has been the joint
-------------
effort of the parties, and the resulting document shall not be construed more
severely against one of the parties than the other.
7. PARTIAL INVALIDITY: If any provision of this Agreement shall be
-------------------
invalid or unenforceable, the remainder of this Agreement shall not be affected
thereby. Notwithstanding the foregoing, it is the intention of the parties
hereto that if any provision of this Agreement is capable of two (2)
constructions, one of which would render the provision void and the other of
which would render the provision valid, then such provision shall be construed
in accordance with the construction which renders such provision valid.
8. AMENDMENTS: This Agreement may not be amended in any respect
----------
whatsoever except by a further agreement, in writing, fully executed by all of
the parties.
9. GOVERNING LAW: This Agreement including the validity thereof and
--------------
the rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
10. TIME OF THE ESSENCE: Time is of the essence of each and every
-----------------------
term, condition, covenant and warranty set forth herein.
11. NO THIRD PARTY BENEFICIARIES: This Agreement is solely for the
-------------------------------
benefit of Assignee and Assignor and their respective successors and permitted
assigns and nothing contained herein shall confer upon any person other than
such parties any right to insist upon or to enforce the performance or
observance of any of the obligations relating to the Prepaid Expenses and the
Rents and Fees.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have executed this Agreement on and as of the date first written above.
ASSIGNOR:
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[ ]
By:
Name:
Title:
[ ]
By:
Name:
Title:
ASSIGNEE:
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EMERITUS CORPORATION
By:
Name:
Title:
Assignment and Assumption Agreement.2
EXHIBIT D
FORM OF LICENSE AGREEMENT
LICENSE AGREEMENT
THIS AGREEMENT, effective as of the _____ day of __________, 2003, is
entered by and between Balanced Care Corporation, a Delaware corporation
(hereinafter "Balanced Care"), and Emeritus Corporation (hereinafter, "New
Operator").
RECITALS:
WHEREAS, Balanced Care is the owner of the registered trademarks and
service marks listed on Schedule B-1: Master Marks (hereinafter the "Master
Marks"), attached hereto and made a part hereof, together with certain
collateral marketing materials using the Master Marks (hereinafter the
"Collaterals" and, together with the Master Marks, collectively, the "Master
Materials"); and
WHEREAS, New Operator is desirous of using the Master Materials at the
Facilities listed (and defined) on Schedule B-1 attached hereto and made a part
hereof, in connection with its business at the indicated Facilities only.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
1. GRANT OF TRADEMARK AND/OR SERVICE MARK LICENSE
Balanced Care hereby grants to New Operator a license to use the
Master Materials in connection with New Operator's business at the respective
indicated Facilities, and New Operator accepts such license subject to the
following terms and conditions. New Operator acknowledges and agrees that
Balanced Care will continue to use the Master Materials in connection with its
other business operations but Balanced Care acknowledges and agrees that it will
not grant to any other party the right to use the Master Materials in connection
with the operation of the Facilities.
2. OWNERSHIP
New Operator acknowledges the ownership of the Master Materials
in Balanced Care, agrees that it will do nothing inconsistent with such
ownership and that all rights arising from or relating to such use of the Master
Materials by New Operator shall inure to the benefit of and be binding on behalf
of Balanced Care. New Operator agrees that nothing in this Agreement shall give
New Operator any right, title or interest in the Master Materials other than the
right to use the Master Materials in accordance with this Agreement, and New
Operator agrees that it will not attack the title of Balanced Care to the Master
Materials or attack the validity of this Agreement.
3. QUALITY STANDARDS AND MAINTENANCE
a. New Operator agrees that the nature and quality of all
services rendered and/or goods sold by New Operator in connection with the
Master Materials shall conform to prudent and customary practice and standards
applicable to the assisted living/personal care industry.
b. New Operator agrees, at no cost or expense to New
Operator, upon receipt of a request from Balanced Care setting forth in
reasonable detail the action requested, to cooperate with Balanced Care in
protecting the nature and quality of the Master Materials and to supply Balanced
Care with specimens of use of the Master Materials upon request to permit
reasonable inspection by Balanced Care from time to time.
5. FORM OF USE
New Operator agrees to use the Master Materials only in the form
and manner and with appropriate legends as prescribed by Balanced Care, and New
Operator agrees not to alter the Master Materials and use the Master Materials
in combination with any other trademark or service mark in such manner that may
disparage or cause confusion with respect to the Master Materials.
5. REPRESENTATIONS AND WARRANTIES
To Balanced Care's knowledge, Balanced Care has the right to
grant the license to use the Master Materials, as set forth in this Agreement.
7. TERM
a. This Agreement shall continue in force and effect for a
period of 90-days from the date hereof (unless terminated earlier in accordance
with the provisions of the Agreement).
b. Balanced Care shall have the right to terminate this
Agreement upon ten (10) days prior written notice to New Operator (i) in the
event of any breach of this Agreement by New Operator which is not cured within
ten (10) days after receipt of written notice from Balanced Care setting forth
in reasonable detail the nature of such breach or upon the taking by New
Operator of any affirmative act of insolvency, or (ii) upon the appointment of
any receiver or trustee to take possession of the properties of New Operator or
upon the winding-up, sale, consolidation, merger or any sequestration by
governmental authority of New Operator.
9. EFFECT OF TERMINATION
Upon termination of this Agreement whether upon expiration of the
term provided for herein or sooner termination pursuant to Section 6(b) hereof,
New Operator agrees to immediately discontinue, or cause the immediate
discontinuance of, all use of the Master Materials and any term confusingly
similar thereto, to cooperate with Balanced Care or its appointed agent to apply
to the appropriate authorities to cancel recording of this Agreement from all
government records, to destroy all printed and other materials, goods, and
advertising bearing the Master Materials other than any unused Collaterals,
which shall be returned to Balanced Care at New Operators cost and expense, and
that all rights in the Master Materials and the goodwill connected therewith
shall remain the property of Balanced Care. In the event upon the termination of
this Agreement whether upon expiration of the term provided for herein or sooner
termination pursuant to Section 6(b) hereof Balanced Care advises New Operator
that it wants to retain any of the signage located at any of the Facilities, it
shall be required within a reasonable time thereafter to remove the same at its
sole cost and expense. If Balanced Care does not elect to remove such signage or
if it fails to do so within a reasonable time after electing to do so, New
Operator shall be entitled to remove and dispose of the same in such manner as
it deems appropriate.
8. REMEDIES
In addition to any other remedies set forth in this Agreement, in the event
of any breach by New Operator of the terms of the Agreement, Balanced Care shall
be entitled to any and all remedies available to it at law or in equity,
including without limitation injunctive relief. The parties hereto acknowledge
and agree that in the event of any breach of this Agreement by New Operator,
Balanced Care will be harmed and unable to be made whole by monetary damages and
it is accordingly agreed that Balanced Care shall be entitled to an injunction
or injunctions to remedy breaches of this Agreement and/or compel specific
performance of this Agreement.
9. ASSIGNABILITY
This Agreement is freely transferable and assignable by Balanced
Care. This Agreement is not transferable or assignable by New Operator except
to a wholly-owned subsidiary of New Operator; provided, however, notwithstanding
any assignment, New Operator will remain obligated hereunder.
10. INDEMNIFICATION
New Operator hereby indemnifies and agrees to defend and hold
harmless Balanced Care and its directors, officers, employees, agents,
successors and assigns from and against any and all demands, claims, causes of
action, fines, penalties, damages (including consequential damages), losses,
liabilities (including strict liability), judgments, and expenses (including,
without limitation, reasonable attorneys' and other professionals' fees and
court costs) incurred in connection with or arising from: (iv) a breach by New
Operator of its obligations under this Agreement or (ii) the transfer or
sublicense of New Operator's rights under this Agreement.
11. SEVERABILITY
In the event any provision of this Agreement (or any portion
thereof) is determined by a Court of competent jurisdiction to be invalid,
illegal, or otherwise unenforceable, such provision shall be deemed to have been
deleted from this Agreement, while the remainder of this Agreement shall remain
in full force and effect according to its terms.
12. COUNTERPARTS
This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which taken together shall
constitute but one and the same instrument.
I.
CAPTIONS
The section headings are included for convenience of reference
only and shall not be construed so as to define or limit any of the terms or
provisions hereof.
II. GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
III. ENTIRETY
This Agreement represents the entire and final agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior negotiations, discussions or writings with respect thereto. This Agreement
may not be amended nor may any provision hereof be waived except by written
instrument signed by the parties hereto, in the case of an amendment, or by the
party granting the waiver, in the case of a waiver.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by and through their duly authorized representatives.
NEW OPERATOR:
BALANCED CARE:
Emeritus Corporation, a Washington corporation
Balanced Care Corporation, a Delaware corporation
By:
By:
Title:
Title:
Date: ___________
------------------
Date:
SCHEDULE B-1: MASTER MARKS
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The following Master Marks may be used only at the Facilities set forth in the
Table below:
SERIAL DATE REGISTRATION
MARK DATE FILED NUMBER REGISTERED NUMBER
------- ----------- -------
Balanced Gold June 25, 1997 75/314,967 May 12, 1998 2,156,972
- -------------- --------------- ---------- ------------ ---------
Outlook Pointe September 13, 1996 75/165,341 August 11, 1998
- --------------- -------------------- ---------- -----------------
2,181,226
- ---------
Treasures September 24, 1999 75/808,191 October 9, 2001
- --------- -------------------- ---------- -----------------
2,496,986
- ---------
MARK FACILITIES USING MARK
- ----- ------------------------
Balanced Gold NC - Greensboro; OH - Ravenna; PA - Bloomsburg, Creekview,
- -------------- -------------------------------------------------------------
Harrisburg, VA - Danville, Harrisonburg, Roanoke
- -----------------------------------------------------
Outlook Pointe NC - Greensboro; OH - Ravenna; PA - Bloomsburg, Creekview,
- --------------- ------------------------------------------------------------
Harrisburg, VA - Danville, Harrisonburg, Roanoke
- -----------------------------------------------------
Treasures PA - Creekview
- --------- ----------------
EXHIBIT E
DESIGNATED EQUIPMENT PAYMENTS
EXHIBIT F
TITLE AND SURVEY ISSUES
Creekview, Harrisburg, Bloomsburg - Capstone Capital of Pennsylvania, Inc.
Harrisonburg, Danville, Roanoke - Capstone Capital of Virginia, Inc.
Greensboro, Ravenna - HR Acquisition I Corporation