FINAL
PURCHASE AND SALE AGREEMENT
BY AND AMONG
MARRIOTT CONTINUING CARE, LLC,
as Seller,
and
MARRIOTT INTERNATIONAL, INC.,
and
CNL RETIREMENT MA3, LP,
as Purchaser
dated as of
DECEMBER __, 2002
CLOSING IN 2003 (QUADRANGLE & FAIRFAX)
Table of Contents
Page
SECTION 1. DEFINITIONS................................................................................2
SECTION 2. PURCHASE-SALE AND LEASE; DILIGENCE.........................................................9
2.1 Purchase-Sale and Lease...........................................................9
2.2 Diligence Inspections.............................................................9
2.3 Title Matters....................................................................10
2.4 Survey...........................................................................11
2.5 Environmental Reports............................................................11
2.6 Taking and Casualty..............................................................12
2.7 Material Adverse Changes.........................................................13
2.8 MSLS Purchaser...................................................................14
SECTION 3. PURCHASE AND SALE.........................................................................14
3.1 Closing..........................................................................14
3.2 Purchase Price...................................................................15
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.............................................15
4.1 Property Transferees.............................................................15
4.2 Closing Documents................................................................15
4.3 Condition of Properties..........................................................17
4.4 Title Policies and Surveys.......................................................17
4.5 FF&E Schedule....................................................................17
4.6 Permit Transfers.................................................................17
4.7 Other............................................................................18
4.8 Five-Pack Unwind Agreement.......................................................18
4.9 MA2 - 2002 Purchase Agreement....................................................19
4.10 MA2 - 2003 Purchase Agreement....................................................19
4.11 MA3 - 2002 Purchase Agreement....................................................19
4.12 MA3 - 2003 Purchase Agreement....................................................19
4.13 SPA Conditions...................................................................19
4.14 Quadrangle Board.................................................................19
4.15 Assumption and Reimbursement Agreement...........................................19
4.16 Mortgages........................................................................19
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE................................................20
5.1 Purchase Price...................................................................20
5.2 Closing Documents................................................................20
5.3 Five-Pack Unwind Agreement.......................................................20
5.4 MA2 - 2002 Purchase Agreement....................................................20
5.5 MA2 - 2003 Purchase Agreement....................................................20
5.6 MA3 - 2002 Purchase Agreement....................................................20
5.7 MA3 - 2003 Purchase Agreement....................................................20
5.8 SPA Conditions...................................................................21
5.9 Quadrangle Board.................................................................21
5.10 Assumption and Reimbursement Agreement...........................................21
5.11 Mortgages........................................................................21
SECTION 6. REPRESENTATIONS AND WARRANTIES OF MI......................................................21
6.1 Status and Authority of Seller...................................................22
6.2 Status and Authority of MI.......................................................22
6.3 Employees........................................................................22
6.4 Existing Agreements..............................................................22
6.5 Tax Returns......................................................................23
6.6 Action of MI and Seller .........................................................23
6.7 No Violations of Agreements......................................................23
6.8 Litigation.......................................................................23
6.9 Not A Foreign Person.............................................................24
6.10 Construction Contracts: Mechanics' Liens.........................................24
6.11 Permits, Licenses................................................................24
6.12 Hazardous Substances.............................................................24
6.13 Insurance........................................................................24
6.14 Financial Information............................................................25
6.15 Contracts........................................................................25
6.16 Title to FF&E....................................................................25
6.17 FF&E.............................................................................25
6.18 No Proffers......................................................................25
6.19 No Violations....................................................................25
6.20 Separate Tax Parcel..............................................................25
6.21 No Defaults......................................................................25
6.22 American with Disabilities Act...................................................26
6.23 Intentionally omitted............................................................26
6.24 Medicare Certification...........................................................26
6.25 Cost Reports.....................................................................26
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................................27
7.1 Status and Authority of Purchaser................................................28
7.2 Action of Purchaser..............................................................28
7.3 No Violations of Agreements......................................................28
7.4 Litigation.......................................................................28
SECTION 8. COVENANTS OF MI AND SELLER................................................................29
8.1 Compliance with Laws.............................................................29
8.2 Construction.....................................................................29
8.3 Insurance........................................................................29
8.4 Cost Reports; Medicare Receivables and Liabilities...............................29
SECTION 9. APPORTIONMENTS............................................................................29
9.1 Apportionments...................................................................29
9.2 Closing Costs....................................................................30
SECTION 10. LIMITATIONS ON LIABILITY..................................................................31
10.1 Default by Seller................................................................31
10.2 Default by Purchaser.............................................................32
10.3 Intentionally omitted............................................................32
10.4 Limitations on Liability.........................................................32
SECTION 11. MISCELLANEOUS.............................................................................33
11.1 Agreement to Indemnify...........................................................33
11.2 Brokerage Commissions............................................................34
11.3 Publicity........................................................................35
11.4 Notices..........................................................................35
11.5 Waivers, Etc.....................................................................37
11.6 Assignment; Successors and Assigns...............................................37
11.7 Severability.....................................................................37
11.8 Counterparts, Etc................................................................37
11.9 Governing Law; Jurisdiction; Waiver of Jury Trial................................38
11.10 Performance on Business Days.....................................................38
11.11 Attorneys' Fees..................................................................38
11.12 Relationship.....................................................................38
11.13 Section and Other Headings.......................................................38
11.14 Disclosure.......................................................................39
11.15 Acknowledgment of the Financial Condition of the Parties.........................39
xxii
LIST OF SCHEDULES
Schedule A Description of Properties
Schedule B Permitted Encumbrances
Schedule C Allocation of Purchase Price
Schedule D Venture Organizational Chart
Schedule E-1 Description of The Quadrangle, PA Property
Schedule E-2 Description of Fairfax Marriott LifeCare, VA Property
Schedule F Title Commitments
Schedule G Surveys
Schedule H List of Environmental Reports
Schedule I Form of Special Warranty Deed
Schedule J Form of Assignment of Contracts
Schedule K Form of Assignment of Intangible Property
Schedule L Form of Assignment of Purchase Contract to Applicable Property Transferee
Schedule M Form of Warranty Xxxx of Sale
Schedule N Form of Substitute Architect's Certificate
Schedule O Form of Substitute Engineer's Certificate
Schedule P FF& E Schedule
Schedule Q Purchaser's Title and Survey Objections
Schedule R Purchaser's Environmental Report Objections
Schedule S List of Litigation Matters
Schedule T Term Sheet for Lease
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of
December ___, 2002 (the "Effective Date"), by and among (i) MARRIOTT CONTINUING
CARE, LLC, a Delaware limited liability company ("Seller"), (ii) CNL RETIREMENT
MA3, LP, a Delaware limited partnership, or assigns ("Purchaser"), (iii)
MARRIOTT INTERNATIONAL, INC., a Delaware corporation ("MI") and (iv) CNL
RETIREMENT PROPERTIES, INC., a Delaware corporation ("CNL Parent").
W I T N E S S E T H:
WHEREAS, the Seller (this and other capitalized terms used and not
otherwise defined herein having the meanings ascribed to such terms in Section
1) is the owner of the two (2) assisted living/senior living/continuing care
facilities more particularly described on Schedule A attached hereto and by this
reference made a part hereof (each a "Property" and together, the "Properties");
and
WHEREAS, Purchaser is a limited partnership (the "Master LP") in which
CNL Retirement Partners, LP, a Delaware limited partnership ("CNL RP") or its
Affiliates own a 1.0% general partnership interest and a 99% limited partnership
interest, respectively, which Master LP and its Affiliates own a 100% interest
in each of two (2) separate limited partnerships (each a "Property Transferee")
that will each purchase one of the Properties and thereby acquire all of the
Seller's right, title and interest in and to the Properties, with each Property
Transferee, as landlord, entering into a lease with the Seller, as tenant, with
respect to each of the two (2) Properties; and
WHEREAS, the Seller, MSLS (as predecessor of the Seller) and Marriott
Retirement Communities - Haverford, Inc. (as predecessor to MSLS), have from
time to time issued and may continue to issue to residents of the Pennsylvania
Property and to certain other Persons in connection with continuing care
arrangements at the Pennsylvania Property obligations known as "Lifecare Bonds"
to be further described in the Assumption and Reimbursement Agreement (the
"Quadrangle Lifecare Bonds"); and
WHEREAS, the Seller, MSLS (as predecessor of the Seller) and Marriott
Retirement Communities - Fairfax, Inc. (as predecessor to MSLS), have from time
to time issued and may continue to issue to residents of the Virginia Property
and to certain other Persons in connection with continuing care arrangements at
the Virginia Property obligations known as "Lifecare Bonds" to be further
described in the Assumption and Reimbursement Agreement (the "Fairfax Lifecare
Bonds" and collectively with the Quadrangle Lifecare Bonds, the "Lifecare
Bonds"); and
WHEREAS, pursuant to certain Lifecare Agreements of Undertaking and a
certain Host Marriott Indemnity Agreement (collectively, the "Parent Lifecare
Obligations") to be further described in the Assumption and Reimbursement
Agreement, MI has agreed to provide all financial and other support that Seller
may require to comply with its obligations under the Lifecare Bonds and related
to certain continuing care agreements relating to the Properties; and
WHEREAS, the parties desire that Seller and MI assign their obligations
under the Lifecare Bonds and the Lifecare Undertakings (as such term is to be
defined in the Assumption and Reimbursement Agreement), respectively, and any
and all other obligations of MI and the Seller and their Affiliates relating to
residents at the Properties, to the Applicable Property Transferees and to CNL
Parent, and the Applicable Property Transferees and CNL Parent agree to, jointly
and severally, assume and perform all of such obligations of MI and the Seller
and any of their Affiliates; and
WHEREAS, the parties desire that simultaneously with the Closing of the
transactions contemplated under this Agreement, each Applicable Property
Transferees enter into a Mortgage and Security Agreement or Deed of Trust, as
applicable, for the benefit of MI and such other parties to the Mortgage dated
as of the Closing Date (each a "Mortgage") granting such first priority
mortgagee or mortgagees a lien on and security interest in the Properties, as
applicable as security for their obligations to MI and/or Seller under the
Assumption and Reimbursement Agreement; and
WHEREAS, the Seller desires to sell to the Property Transferees the
Properties and thereby convey all right, title and interest in the Properties,
upon the terms and conditions hereinafter set forth; and
WHEREAS, Seller desires to lease the Properties back from the Property
Transferees.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Seller, MI, and Purchaser
hereby agree as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used in this Agreement and not defined elsewhere
herein shall have the meanings set forth below, in the Section of this Agreement
referred to below, or in such other document or agreement referred to below:
"Act of Bankruptcy" shall mean: (i) if a party hereto or any general
partner thereof or Tenant shall (a) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or all of or a substantial part of its property; (b) admit in writing its
inability to pay its debts as they become due; (c) make a general assignment for
the benefit of its creditors; (d) file a voluntary petition or commence a
voluntary case or proceeding under the Federal Bankruptcy Code (as now or
hereafter in effect); (e) be adjudicated a bankrupt or insolvent; (f) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts;
(g) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case or proceeding
under the Federal Bankruptcy Code (as now or hereafter in effect); or (h) take
any corporate or partnership action for the purpose of effecting any of the
foregoing; or (ii) if the proceeding or case shall be commenced, without the
application or consent of a party hereto or any general partner thereof or
Tenant in any court of competent jurisdiction seeking (1) the liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of
debts, of such party or general partner or Tenant; (2) the appointment of a
receiver, custodian, trustee or liquidator for such party or general partner or
Tenant or all or any substantial part of its assets; or (3) other similar relief
under any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed; or (iii) an order (including an order for relief entered in an
involuntary case under the Federal Bankruptcy Code, as now or hereinafter in
effect), judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of sixty (60)
consecutive days.
"Affiliate" shall mean any Person owned by, under common control with
or controlled, directly or indirectly, by another Person. For the purposes of
this Agreement, an "Affiliate" shall also mean and include a parent Entity, or
the Person which controls (directly or indirectly) another Person. The plural of
Affiliate is "Affiliates".
"Agreement" shall mean this Purchase and Sale Agreement, together with
the Schedules attached thereto, as it and they may be amended from time to time
as herein provided.
"Applicable Property Transferee" shall mean, with respect to each
Property, the Property Transferee that acquires title to such Property at the
Closing. The Applicable Property Transferee for each Property shall be as
follows: (i) the Applicable Property Transferee with respect to the Pennsylvania
Property shall be CNL Retirement MA3 Pennsylvania, LP, a Delaware limited
partnership; and (ii) the Applicable Property Transferee with respect to the
Virginia Property shall be CNL Retirement MA3 Virginia, LP, a Delaware limited
partnership.
"As-Built Drawings" shall mean, with respect to each Property, the
final "as-built" plans and specifications for the Improvements located on such
Property, which are to be furnished by the Seller to Purchaser pursuant to
Section 4.2 of this Agreement.
"Assets" shall mean, with respect to each Property, all of the FF&E,
the Contracts and the Intangible Property, collectively, owned as of the Closing
Date by Seller in connection with or relating to such Property, other than any
Excluded Assets.
"Assumption and Reimbursement Agreement" shall mean that certain
Assumption and Reimbursement Agreement to be negotiated by the parties and dated
as of the Closing Date pursuant to which, among other things, (i) the Seller
shall assign all of its obligations under the Lifecare Bonds to the Applicable
Property Transferees and/or its Affiliate, such Applicable Property Transferees
and/or its Affiliate shall accept such assignment, shall irrevocably assume such
obligations and shall unconditionally agree to pay or otherwise discharge such
assumed obligations assigned to such Applicable Property Transferees and/or its
Affiliate when and as the same may be due, (ii) MI shall assign the obligations
of MI, Host Marriott Corporation and any of their Affiliates under the Parent
Lifecare Obligations and any other obligations of MI, Host Marriott Corporation
and any of their Affiliates relating to the continuing care arrangements at the
Properties to CNL Parent, the CNL Parent shall accept such assignment, shall
irrevocably assume such obligations and shall unconditionally agree to pay or
otherwise discharge such obligations when and as the same may be due and (iii)
CNL Parent shall have assumed any and all other commitments and obligations of
the Seller, MI, Host Marriott Corporation or their Affiliates relating to the
Lifecare Bonds and the Parent Lifecare Obligations.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banking institutions in the State of Maryland are authorized
by law or executive action to close.
"Closing" shall have the meaning given such term in Section 3.1.
"Closing Date" shall have the meaning given such term in Section 3.1.
"CNL Guaranty" shall mean, that certain Guaranty to be entered into by
CNL RP for the benefit of Tenant, in respect of the Lease and guarantying the
landlord's obligations under the Lease, in form substantially similar to the
form of the CNL Guaranty as defined in the MA3 - 2003 Purchase Agreement as it
may be adjusted to reflect the provisions of the Lease.
"Contracts" shall mean, with respect to each Property, (a) equipment
leases relating to telephone switches and voice mail benefiting the Property and
to which Seller or its Affiliates is a party, (b) any other equipment leases to
which Seller or its Affiliates is a party that benefit the Property, are
disclosed in writing to Purchaser on or before the Closing, are reasonably
acceptable to Purchaser and are to survive the Closing, and (c) any Medicare
provider agreements.
"Controlling Interest" shall mean: (a) as to a corporation, the right
to exercise, directly or indirectly, more than fifty percent (50%) of the voting
rights attributable to the shares of the Entity (through ownership of such
shares or by contract), and (b) as to an Entity not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the Entity.
"Cost Report" shall mean the Medicare cost report required to be filed,
as of the end of a provider cost year or for any other required period,
including, without limitation, a terminating cost report, with the Centers for
Medicare & Medicaid Services.
"Effective Date" shall have the meaning set forth in the preamble to
this Agreement.
"Entity" shall mean any corporation, general or limited partnership,
limited liability company, partnership, stock company or association, joint
venture, company, trust, bank, trust company, land trust, business trust,
cooperative, any government or agency or political subdivision thereof or any
other entity.
"Environmental Reports" shall have the meaning given such term in
Section 2.5.
"Excluded Assets" shall mean, with respect to each Property: (i) any
right, title or interest in any name containing any of the names "Marriott,"
"Brighton Gardens," "Maple Ridge, "Hearthside," and other marks used, or that
may in the future be used, by MI, Tenant or their Affiliates (and MI and/or
Tenant shall have the right to remove any such name or xxxx appearing on any
signage or other property pursuant to the terms of the Lease); (ii) all property
owned by the Seller or any of its Affiliates, not normally located at the
Property and used, but not exclusively, in connection with the operation of such
Property; (iii) any FAS associated with the Property; (iv) any Inventories
located at the Property; (v) all items, tangible or intangible, consisting of
Proprietary Information; (vi) computer software; (vii) all books, ledger sheets,
files and records; (viii) all contracts pertaining to the operation of the
Property other than the Contracts; and (ix) any software, manuals, brochures or
directives used by the Seller or any of its Affiliates, in the operation of the
Property.
"Fairfax Lifecare Bonds" shall have the meaning assigned to that term
in the Recitals.
"FAS" shall mean "fixed asset supply," which are generally understood
as supply items included within "Property and Equipment" under GAAP, including,
but not limited to, linen, china, glassware, silver, uniforms, and similar
items, whether used in connection with public space or in resident rooms.
"FF&E" shall mean, with respect to each Property, all appliances,
machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings
and articles of tangible personal property of every kind and nature whatsoever
owned by the Seller or any of its Affiliates, and located in or at, or used in
connection with the ownership, operation or maintenance of, such Property, other
than motor vehicles, but in any event excluding any Excluded Assets.
"FF&E Schedule" shall have the meaning given such term in Section 4.5.
"Financing" shall mean the initial first mortgage financing for the
Properties obtained by the Applicable Property Transferees after the Closing
Date. All amounts due and payable under the Financing, together with all costs
associated therewith, shall be a Purchaser expense.
"Five Pack Unwind Agreement" shall mean the Purchase Agreement
Regarding Limited Partnership Interest in CNL Retirement MA1, LP, a Delaware
limited partnership ("MA1"), entered into by and between MSLS and CNL RP with
respect to the purchase of a twenty-three and one quarter percent (23.25%)
limited partnership interest in MA1 from MSLS.
"Improvements" shall mean, with respect to each Property, all
buildings, fixtures, walls, fences, landscaping and other structures and
improvements situated on, affixed or appurtenant to the Real Property,
including, but not limited to, all pavement, access ways, curb cuts, parking,
kitchen and support facilities, meeting and conference rooms, swimming pool
facilities, recreational amenities, office facilities, drainage system and
facilities, air ventilation and filtering systems and facilities and utility
facilities and connections for sanitary sewer, potable water, irrigation,
electricity, telephone, cable television and natural gas, if applicable, to the
extent the same form a part of such Property and all appurtenances thereto
acquired by the Applicable Property Transferee in connection with Applicable
Property Transferee's acquisition of such Property pursuant to the terms of this
Agreement.
"Intangible Property" shall mean, with respect to each Property, all
transferable or assignable (a) Permits, and (b) certificates, licenses,
warranties, guarantees and Contracts held by Seller and/or its Affiliates, other
than (x) the Excluded Assets and (y) such Permits which are to be held by,
acquired by, or transferred to, the Tenant in order to permit the Tenant to
operate such Property in accordance with the terms of the Lease.
"Inventories" shall mean "Inventories" as defined by GAAP such as, but
not limited to, provisions in storerooms, refrigerators, pantries and kitchens;
medical supplies; other merchandise intended for sale; fuel; mechanical
supplies; stationery; and other expensed supplies and similar items.
"Lease" shall mean, with respect to each Property, the "triple net"
lease agreement to be entered into at the Closing by the Applicable Property
Transferee and the Tenant, in the form substantially similar to the Lease dated
April 20, 2000 by and between CNL RP, as landlord and BG Orland Park, LLC, as
tenant, relating to the senior living facility in Orland Park, Illinois as
adjusted to reflect the provisions of this Agreement and the lease term sheet
described in Schedule T. "Lifecare Agreements of Undertaking" shall mean,
collectively, the Lifecare Agreements of Undertaking pursuant to which MI has
agreed to provide all financial and other support that Seller may require to
comply with its obligations under the Lifecare Bonds and related Continuing Care
Agreements as to be further described in the Assumption and Reimbursement
Agreement.
"Lifecare Bonds" shall mean collectively, the Fairfax Lifecare Bonds
and the Quadrangle Life Care Bonds.
"MA2 - 2002 Purchase Agreement" shall mean that certain Purchase and
Sale Agreement dated as of December 20, 2002 by and among MSLS and
MSLS-MapleRidge, Inc., a Delaware corporation, (collectively, as the sellers),
MI, Eight Pack Management Corp., a Delaware corporation, as tenant, CNL RP and
CNL Retirement MA2, LP, a Delaware limited partnership (as purchaser).
"MA2 - 2003 Purchase Agreement" shall mean that certain Purchase and
Sale Agreement dated as of December 20, 2002, by and among MSLS (as the seller),
MI, Eight Pack Management Corp., a Delaware corporation, as tenant, and CNL
Retirement MA2, LP, a Delaware limited partnership (as purchaser).
"MA3 - 2002 Purchase Agreement" shall mean that certain Purchase and
Sale Agreement dated as of December 20, 2002, by and among MSLS and ROCK
Lynnwood/Snohomish Partners, LP, a Delaware limited partnership (collectively,
as the sellers), MI, Eleven Pack Management Corp., a Delaware corporation, as
tenant, and CNL Retirement MA3, LP, a Delaware limited partnership (as
purchaser).
"MA3 - 2003 Purchase Agreement" shall mean that certain Purchase and
Sale Agreement dated as of December 20, 2002, by and among MSLS and
MSLS-MapleRidge, Inc., a Delaware corporation (collectively, as the sellers),
MI, Eleven Pack Management Corp., a Delaware corporation, as tenant, and CNL
Retirement MA3, LP, a Delaware limited partnership (as purchaser).
"Mortgages" shall have the meaning assigned to that term in the
Recitals, and each of the Mortgages shall also be referred to individually as a
"Mortgage."
"MSLS" shall mean Marriott Senior Living Services, Inc., a Delaware
corporation.
"MSLS Purchaser" shall mean any operator in the business of managing
and operating senior living residence facilities and communities which operator
is mutually agreeable to Purchaser and MI to purchase the stock of MSLS from MI
and/or its Affiliates.
"Operator's Standards" shall mean the (A) operational standards (for
example, staffing levels, resident care and health care policies and procedures)
and (B) physical standards (for example, quality of FF&E, frequency of FF&E
replacement) of a first class continuing care facility of comparable type, size,
age and market orientation as the Properties.
"Pennsylvania Property" shall mean the Property located in Haverford,
PA, more specifically described on Schedule E-1.
"Permits" shall mean, with respect to each Property, all governmental
permits and approvals, including licenses and authorizations, required for the
construction, ownership and operation of the assisted living/senior
living/continuing care facilities within and on the Improvements, including
without limitation healthcare regulatory licenses, skilled nursing facility
licenses, residential care for the elderly licenses, assisted living licenses,
continuing care retirement community permits, continuing care provider permits,
occupational licenses and/or qualifications to do business, Medicare and/or
Medicaid certifications, certificates of need, certificates of authority,
certificates of occupancy, building permits, signage permits, site use
approvals, zoning certificates, environmental and land use permits, and any and
all necessary approvals from state or local authorities and other approvals
granted by any public body or by any private party pursuant to a recorded
instrument relating to such Property and such assisted living/senior
living/continuing care facilities.
"Permitted Encumbrances" shall mean, with respect to each Property: (a)
any and all matters affecting title to the Property as shown on Schedule B
hereto; (b) liens for taxes, assessments and governmental charges with respect
to the Property not yet due and payable or due and payable but not yet
delinquent; (c) applicable zoning regulations and ordinances and other
governmental laws, ordinances and regulations provided the same do not prohibit
or impair in any material respects the use of the Property as an assisted
living/senior living/continuing care facility, as contemplated by this
Agreement; (d) such other nonmonetary encumbrances which do not, in Purchaser's
reasonable opinion, impair marketability, prohibit or impair in any material
respect the use of the Property as a fully functioning assisted living/senior
living/continuing care facility as contemplated by this Agreement, or impose any
additional material costs or expenses on the Tenant, or Purchaser; (e) any
utility, drainage or other easements which are customary in connection with (or
which reasonably serve) the Improvements (provided that the same do not lie
under any building unless the easements are not necessary for the Property and
can be vacated) and with respect to which there are no material violations as of
the Closing Date; (f) the Lease for the Property; (g) such other nonmonetary
encumbrances with respect to the Property which are not objected to by Purchaser
in accordance with Sections 2.3 and 2.4; and (h) such matters as are disclosed
by the Surveys.
"Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
"Pooling Agreement" shall mean a Pooling Agreement to be entered into
at the Closing by the Applicable Property Transferee and Tenant in a form
substantially similar to the Pooling Agreement attached as a schedule to the
XX0-0000 Xxxxxxxx Agreement as adjusted to reflect the provisions of this
Agreement.
"Property" shall mean any of the Real Property, Improvements and
Assets, inclusive, with respect to each of the two (2) continuing care
facilities identified in Schedule A hereto, as the case may be and/or the
context shall require. For the purposes of this Agreement, the term "Properties"
shall mean and refer to all of the foregoing collectively.
"Property Transferee" shall mean each entity that acquires title at the
Closing to one or more of the Properties.
"Proprietary Information" shall mean (a) all computer software and
accompanying documentation (including all future upgrades, enhancements,
additions, substitutions and modifications thereof), other than that which is
commercially available, which are used by MI, the Seller, the Tenant or any
Affiliate thereof in connection with the property management system and all
future electronic systems developed by MI, the Seller, the Tenant or any
Affiliate thereof for use with respect to any Property, (b) all manuals,
brochures and directives used by MI, the Seller, the Tenant or any Affiliate
thereof with respect to the procedures and techniques to be used in operating
any Property, (c) customer lists, and (d) employee records which must remain
confidential either under applicable legal requirements or under reasonable
corporate policies of MI, the Seller, the Tenant or any Affiliate thereof.
"Purchaser" shall mean CNL Retirement MA3, LP, a Delaware limited
partnership, and its permitted successors and assigns.
"Purchase Price" shall mean the amount to be paid by Purchaser to
Seller for the Properties, set forth on Schedule C hereto. The Purchase Price
also shall be subject to adjustments, credits and prorations as provided herein.
"Quadrangle Lifecare Bonds" shall have the meaning assigned to such
term in the Recitals.
"Real Property" shall mean, with respect to each Property, the real
property described in the applicable Schedules E-1 through E-2 hereto, together
with all easements, rights of way, privileges, licenses and appurtenances which
the Seller may now own or hereafter acquire with respect thereto, less any
portion or portions thereof taken by way of an Immaterial Taking.
" Seller " shall mean MCC.
"SPA" shall mean any Stock Purchase Agreement by and between (i) MI,
and any applicable Affiliates and (ii) a MSLS Purchaser for the purchase and
sale of the stock of MSLS.
"SPA Conditions" shall mean the conditions precedent to the obligations
of MSLS Purchaser to purchase the stock of MSLS pursuant to the terms of the SPA
and the conditions precedent to the obligations of MI and/or its Affiliates to
sell the stock of MSLS to MSLS Purchaser pursuant to the terms of the SPA.
"Tenant" shall mean MCC, or an Affiliate of MCC which is directly or
indirectly wholly owned by MSLS.
"Title Commitments" shall have the meaning given such term in Section
2.3.
"Title Company" shall mean First American Title Insurance Company or
such other title insurance company as shall have been approved by Purchaser and
the Seller.
"Virginia Property" shall mean the Property located in Ft. Belvoir, VA,
more specifically described in Schedule E-2.
SECTION 2. PURCHASE-SALE AND LEASE; DILIGENCE.
2.1 Purchase-Sale and Lease. Purchaser hereby agrees to purchase from
Seller and Seller hereby agrees to sell to Purchaser, the Properties for the
Purchase Price, subject to and in accordance with the terms and conditions of
this Agreement. Also in consideration of the mutual covenants herein contained,
upon, and subject to, acquisition by Purchaser of the Properties, Purchaser
hereby agrees to simultaneously lease to the Tenant, and MI hereby agrees to
cause Tenant to simultaneously lease from Purchaser, each of such Properties
purchased by Purchaser, on the terms and conditions of the Lease applicable
thereto, and in accordance with the terms of this Agreement. Also in
consideration of the mutual covenants herein contained, Seller hereby agrees to
convey to Purchaser the existing FAS associated with the Properties and the
existing Inventories located at the Properties, on the terms and conditions set
forth herein, together with the working capital associated with or set aside
associated with the Properties at the Closing.
2.2 Diligence Inspections.
(a) Except as otherwise expressly provided to the contrary in this
Agreement, Purchaser has approved (or are deemed to have approved for purposes
of this Agreement) the Properties in each of its "AS IS, WHERE IS" condition as
of the Effective Date.
(b) Purchaser has approved (or shall be deemed to have approved
for purposes of this Agreement) each Property in its "as is, where is" condition
as of the Effective Date and as of the Closing Date, subject to the
representations, warranties, terms and conditions of this Agreement. Prior to
the Closing, and on the terms and conditions set forth below, Purchaser shall
have the right to inspect the Properties and investigate the conditions of the
Properties, including without limitation, the environmental, geotechnical,
physical, market and economic conditions thereof. To the extent that, in
connection with such investigations, the Purchaser, or its agents,
representatives or contractors, damages or disturbs any of the Properties, the
Purchaser shall return the same to substantially the same condition which
existed immediately prior to such damage or disturbance. The Purchaser shall
indemnify, defend and hold harmless the Seller from and against any and all
expense, loss or damage (including, without limitation, reasonable attorneys'
fees) which the Seller may incur as a result of any act or omission of the
Purchaser or its representatives, agents or contractors in connection with any
such inspections and investigations, other than any expense, loss or damage
arising from any act or omission of the Seller. The foregoing indemnification
agreement shall, with respect to each Property, survive the termination of this
Agreement or the Closing hereunder for a period of twelve (12) months.
2.3 Title Matters.
(a) Prior to the date hereof, Purchaser has obtained a current
title commitment for an ALTA extended owner's policy and ALTA leasehold policy
of title insurance with respect to each Property, together with complete and
legible copies of all instruments and documents referred to as exceptions to
title (collectively, the "Title Commitments"), and has given the Seller notice
of all title exceptions to which the Purchaser objects, which notice is more
particularly described on Schedule Q attached hereto and by this reference
incorporated herein. If, for any reason, the Seller is unable or unwilling to
take such actions as may be required to cause such exceptions to be removed from
the Title Commitments, the Seller shall give the Purchaser notice thereof; it
being understood and agreed that the failure of the Seller to give such notice
within twentieth (20) days after the Effective Date shall be deemed an election
by the Seller not to remedy such matters. If the Seller shall be unwilling or
unable to remove any title defects to which the Purchaser has objected, the
Purchaser may elect (i) to terminate this Agreement, in which event this
Agreement shall be of no further force and effect, except with respect to
provisions hereof which by their express terms survive a termination of this
Agreement and each party to this Agreement shall pay for its own out of pocket
expenses incurred in respect of the Properties, or (ii) to consummate the
transactions contemplated hereby, notwithstanding such title defect(s), without
any abatement or reduction in the Purchase Price on account thereof. The
Purchaser shall make any such election by written notice to the Seller given on
or prior to the twentieth (20th) day after the Seller's notice of its inability
or unwillingness to cure such defect. Failure of the Purchaser to give such
notice of its election in accordance with clause (i) above shall be deemed an
election by the Purchaser to proceed in accordance with clause (ii) above.
Notwithstanding the foregoing, the Seller shall cause all mortgages, deeds of
trust and other monetary liens encumbering the Properties to be released at or
prior to the Closing; provided, however, such liens may continue to encumber the
Property at Closing if the Title Company is willing to insure over such liens in
a manner acceptable to Purchaser and such liens are released promptly following
the Closing. The Seller's obligation to cause the release of any such liens
pursuant to the immediately preceding sentence shall survive Closing. Upon
completion of the procedures set forth in this paragraph for resolving
objections to matters concerning title, endorsements to the Title Commitments
shall be issued by the Title Company in substance consistent with the provisions
of this paragraph.
(b) In the event that the Seller decides to encumber its Property
with an additional title matter, the Seller shall give Purchaser notice thereof
together with a copy of the document, instrument or other matter to be imposed
against or on the Property ("Additional Exception"). Within five (5) Business
Days after receipt of a notice (and a copy) of any Additional Exception with
respect to any Property, the Purchaser shall give the Seller notice of its
approval or disapproval thereof. Purchaser shall not withhold its approval of
any such Additional Exception which would be a Permitted Encumbrance specified
in clauses (a) through (h), inclusive of the definition of Permitted
Encumbrance, and neither shall unreasonably withhold, delay or condition its
approval of any other Additional Exception. If Purchaser fails to respond within
said five (5) Business Day period, Purchaser shall be deemed to have approved
such Additional Exception. If Purchaser unreasonably disapproves of any
Additional Exception, the Seller shall be excused from performing any term or
condition (or any portion or aspect of a term or condition) of this Agreement
which the Seller is unable or unwilling to perform as a result of its inability
to enter into and/or impose such Additional Exception. Notwithstanding anything
herein to the contrary, an Additional Exception shall not include any monetary
encumbrance, the Seller shall discharge all such encumbrances on or before the
Closing Date. No consent or approval to any Additional Exception by Purchaser
shall constitute an agreement by Purchaser to pay any special assessment or
other tax or levy arising under such Additional Exception that would otherwise
be payable by the Seller under this Agreement.
2.4 Survey. Prior to the date hereof, Purchaser has obtained current
as-built ALTA surveys with respect to each Property (individually, a "Survey"
and collectively, the "Surveys"), by a licensed surveyor in the jurisdiction in
which each such Property is located and has given the Seller notice of all
matters shown thereon (other than Permitted Encumbrances) to which the Purchaser
objects, which notice is more particularly described on Schedule Q attached
hereto and by this reference incorporated herein. If, for any reason, the Seller
is unable or unwilling to take such actions as may be required to remedy the
objectionable matters, the Seller shall give the Purchaser prompt notice
thereof; it being understood and agreed that the failure of the Seller to give
such notice within five (5) days after the Effective Date shall be deemed an
election by the Seller not to remedy such matters. If the Seller shall be unable
or unwilling to remove any survey defect to which the Purchaser and has
objected, the Purchaser may elect (i) to terminate this Agreement, in which
event this Agreement shall terminate and be of no further force or effect,
except with respect to provisions hereof which by their express terms survive a
termination of this Agreement and each party to this Agreement shall pay for its
own out of pocket expenses incurred in respect of the Properties, or (ii) to
consummate the transactions contemplated hereby, notwithstanding such defect,
without any abatement or reduction in the Purchase Price on account thereof. The
Purchaser shall make any such election by written notice to the Seller given on
or prior to the fifth (5th) day after the Seller's notice of its inability or
unwillingness to cure such defect and time shall be of the essence with respect
to the giving of such notice. Failure of the Purchaser to give such notice of
its election in accordance with clause (i) above shall be deemed an election the
Purchaser to proceed in accordance with clause (ii) above.
2.5 Environmental Reports. Prior to the date hereof, Purchaser has
obtained Phase I environmental reports in respect of the Properties as more
particularly described on Schedule H attached hereto (collectively,
"Environmental Reports") and has given the Seller notice of all matters therein
as to which the Purchaser objects, which notice is more particularly described
on Schedule R attached hereto and by this reference incorporated herein. If, for
any reason, the Seller is unable or unwilling to take such actions as may be
required to cause such matters to be remedied to the reasonable satisfaction of
the Purchaser, as the case may be, the Seller shall give the Purchaser notice
thereof, it being understood and agreed that the failure of the Seller to give
such notice within five (5) days after the Effective Date shall be deemed an
election by the Seller not to remedy such matters. If the Seller shall be
unwilling or unable to remedy any matters to which the Purchaser has objected,
the Purchaser may elect (i) to terminate this Agreement, in which event this
Agreement shall be of no further force and effect, except with respect to
provisions hereof which by their express terms survive a termination of this
Agreement and each party to this Agreement shall pay for its own out of pocket
expenses incurred in respect of the Properties, or (ii) to consummate the
transactions contemplated hereby, notwithstanding such defect, without any
abatement or reduction in the Purchase Price on account thereof. The Purchaser
shall make any such election by written notice to the Seller given on or prior
to the fifth (5th) day after the Seller's notice of its inability or
unwillingness to cure such defect. Failure of the Purchaser to give such notice
within the time prescribed by the preceding sentence shall be deemed an election
by the Purchaser to proceed in accordance with clause (ii) above.
2.6 Taking and Casualty. (a) If prior to Closing, any Property is the
subject of a condemnation, the Seller shall promptly notify Purchaser of the
same. If such condemnation does not, in Seller's reasonable opinion, affect any
material part of the Improvements and does not materially adversely affect
access to the Improvements or compliance with applicable zoning or building
requirements, including parking or the projected net cash flow from the Property
(an "Immaterial Taking"), Seller shall so notify Purchaser and this Agreement
will remain in full force and effect in respect of the purchase and sale of such
Property, but with an abatement of the Purchase Price equal to the amount of the
award paid to Seller on account of such taking, less the amount of Seller's
costs and expenses, including reasonable attorneys' fees and expenses, in
establishing and collecting such award. If such condemnation is not an
Immaterial Taking, then the Purchaser shall have the right to terminate this
Agreement with respect to the Property subject to such condemnation (the
"Condemned Property") by providing written notice of such termination to Seller
within ten (10) days of receipt of Seller's notice advising Purchaser of such
condemnation, in which event this Agreement shall be of no further force and
effect with respect to the Condemned Property except with respect to provisions
hereof which by their express terms survive a termination of this Agreement. The
Purchase Price shall be reduced by the amount of the Purchase Price allocated to
the Condemned Property as set forth on Schedule C hereto.
(b) If prior to the Closing, any Property is damaged or destroyed
by fire or other casualty (the "Damaged Property"), Seller shall promptly notify
Purchaser of the same (the "Casualty Notice"). If the cost of restoring the
damage is, in the reasonable judgment of Seller, Two Million Dollars
($2,000,000) or greater, Seller shall provide in the Casualty Notice whether it
is exercising its option to terminate this Agreement with respect to the Damaged
Property, in which event, this Agreement with respect to the Damaged Property
shall be of no further force or effect except with respect to provisions hereof
which by their express terms survive a termination of this Agreement. The
Purchase Price shall be reduced by the amount of the Purchase Price allocated to
the Damaged Property as set forth on Schedule C hereto. If the cost of restoring
the damage is, in the reasonable judgment of Seller, Two Million Dollars
($2,000,000) or greater and Seller did not exercise its option to terminate this
Agreement with respect to the Damaged Property in the Casualty Notice, Purchaser
shall have the right, upon notice to the other parties in writing within ten
(10) days of receipt of the Casualty Notice, to terminate this Agreement with
respect to the Damaged Property, in which event, this Agreement with respect to
the Damaged Property shall be of no further force or effect except with respect
to provisions hereof which by their express terms survive a termination of this
Agreement with respect to the Damaged Property. The Purchase Price shall be
reduced by the amount of the Purchase Price allocated to the Damaged Property as
set forth on Schedule C hereto.
(c) If neither Seller nor Purchaser elects to terminate this
Agreement with respect to the Damaged Property pursuant to Section 2.6(b), or if
the cost of restoring the damage is, in the reasonable judgment of Seller, less
than Two Million Dollars ($2,000,000), then Seller shall undertake and pursue
the restoration of such damage in a commercially reasonable fashion, and shall
repair and/or replace the damaged portion of the Damaged Property to the same
condition as existed immediately prior to such casualty. The Closing as it
relates to the Damaged Property shall be extended for such period of time as may
be reasonably necessary or appropriate to permit Seller to complete such
restoration. The parties agree that Seller's obligations to repair and/or
replace pursuant to the provisions of this Section shall be limited to the
extent of available casualty insurance proceeds (plus the amount of any
applicable deductibles) and if casualty insurance proceeds are insufficient to
repair and/or replace the damaged portion of the Damaged Property to the same
condition as existed immediately prior to such casualty and Seller is unable or
unwilling to make such repairs or replacements, Seller shall promptly notify
Purchaser that it is exercising its right to terminate this Agreement with
respect to the Damaged Property, in which event, this Agreement with respect to
the Damaged Property shall be of no further force or effect except with respect
to provisions hereof which by their express terms survive a termination of this
Agreement. The Purchase Price shall be reduced by the amount of the Purchase
Price allocated to the Damaged Property as set forth on Schedule C hereto.
(d) The risk of loss to each Property shall remain with Seller
until the Closing.
2.7 Material Adverse Changes.
(a) Seller's Obligation to Notify. Seller shall provide the
Purchaser with prompt written notice of any material adverse changes affecting
any of the Properties, to the Seller's knowledge, occurring or discovered by
Seller after the Effective Date.
(b) Purchaser's Obligation to Notify. The Purchaser may, but shall
not be obligated to, obtain updated Title Commitments, Surveys and Environmental
Reports with respect to any or all of the Properties at any time prior to
Closing. The Purchaser shall provide the Seller with prompt notice of any
material adverse changes in the condition of any of the Properties as may have
been discovered by the Purchaser after the Effective Date through updated Title
Commitments, Surveys, Environmental Reports, or otherwise; it being understood
and agreed that if the Purchaser fails to give such notice then it shall be
deemed that no such material adverse change has been discovered by the
Purchaser.
(c) Right to Cure; Adjournment. If Purchaser gives notice of any
material adverse change pursuant to Section 2.7(b) or if Seller has notified the
Purchaser of any material adverse change pursuant to Section 2.7(a), then the
Seller shall have the right to cure or remove such material adverse changes
prior to the Closing Date, and upon such removal and upon the satisfaction of
the other conditions to closing set forth in this Agreement, the closing shall
occur on the Closing Date set forth in Section 3.1. If Seller, in its reasonable
judgment, determines that such material adverse changes are not curable or
removable prior to the Closing Date, then the Seller shall have the right to
adjourn the closing for up to thirty (30) Business Days beyond the Closing Date
(the "Adjournment") by notifying the Purchaser in writing (the "Adjournment
Notification") prior to the Closing Date of such adjournment. If Seller shall
have not cured or removed such material adverse changes as of the Closing Date
and shall have not delivered the Adjournment Notification, then the Purchaser
may elect (i) to terminate this Agreement as of the Closing Date, in which event
this Agreement shall be of no further force and effect, except with respect to
provisions hereof which by their express terms survive a termination of this
Agreement and each party to this Agreement shall pay for its own out of pocket
expenses incurred in respect of the Properties, or (ii) consummate the
transactions contemplated hereby, on the Closing Date, or if there is an
Adjournment, on the adjourned Closing Date specified in the Adjournment
Notification, notwithstanding such material adverse changes to any of the
Properties, without any abatement or reduction in the Purchase Price on account
thereof. Notwithstanding the foregoing, the Seller shall cause all mortgages,
deeds of trust and other monetary liens or encumbrances encumbering the
Properties and revealed by the updated Title Commitments, Surveys and
Environmental Reports to be released at or prior to the Closing; provided,
however, such liens may continue to encumber any of the Properties at Closing if
the Title Company is willing to insure over such liens in a manner acceptable to
Purchaser and such liens are released promptly following the Closing. Seller's
obligation to cause the release of any such liens pursuant to the immediately
preceding sentence shall survive Closing. Upon completion of the procedures set
forth in this paragraph for resolving objections to matters revealed by the
updated Title Commitments, Surveys and Environmental Reports, endorsements to
the Title Commitments shall be issued by the Title Company in substance
consistent with the provisions of this paragraph.
2.8 MSLS Purchaser. Prior to entering into a SPA, MI shall provide
Purchaser with written notice ("Desired Purchaser Notice") of the identity of
the desired purchaser of the MSLS stock ("Desired Purchaser") and if Purchaser
does not object in writing (the "MSLS Purchaser Objection Notice") as to the
identity of the Desired Purchaser within two (2) Business Days after receiving
the Desired Purchaser Notice, such Desired Purchaser shall be deemed an approved
MSLS Purchaser. If Purchaser timely objects to MI selling the MSLS stock to the
Desired Purchaser, then any party to this Agreement may elect to terminate this
Agreement by sending written notice to the other parties within five (5)
Business Days after receiving the MSLS Purchaser Objection Notice of its
election to terminate this Agreement, in which event this Agreement shall be of
no further force and effect, except with respect to the provisions hereof which
by their express terms survive a termination of this Agreement and each party to
this Agreement shall pay for its own out of pocket expenses incurred in respect
of the Properties. In addition, if MI does not enter into a SPA on or prior to
March 18, 2003 or such other date as mutually agreed to by Seller and Purchaser
in their sole discretion (the "Ten Day Notice Deadline"), then any party to this
Agreement may elect to terminate this Agreement by sending written notice to the
other parties within twenty (20) days after the Ten Day Notice Deadline of its
election to terminate this Agreement, in which event this Agreement shall be of
no further force and effect, except with respect to the provisions hereof which
by their express terms survive a termination of this Agreement and each party to
this Agreement shall pay for its own out of pocket expenses incurred in respect
of the Properties.
2.9.Expansion of Virginia Property. Seller and Purchaser agree to
cooperate with each other in developing plans to enable the Purchaser to expand
the facilities at the Virginia Property after the Closing which expansion is
estimated to cost approximately One Million Eight Hundred Thousand Dollars
($1,800,000).
SECTION 3. PURCHASE AND SALE.
3.1 Closing.
(a) MI or the Seller shall deliver a ten (10) day prior written
notice to the Purchaser notifying the Purchaser of the date that the SPA
Conditions are anticipated to be satisfied and the anticipated closing date of
the SPA, and the purchase, sale and lease of the Properties and other
transactions contemplated hereby shall be consummated on the same Business Day
(the "Closing Date") as the purchase and sale of MSLS's stock pursuant to the
terms of the SPA, or such other time as may be mutually agreeable to the
Purchaser and the Seller, but no later than March 28, 2003 (the "Closing")
unless mutually agreeable to Seller and Purchaser in their sole discretion, or
as such Closing may be adjourned pursuant to Section 2.7.
(b) The Closing shall be held in escrow with the Title Company at
the offices of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC, 0000 Xxxxxxxxxxx Xxxxxx,
XX, Xxxxxxxxxx, XX 00000, or at such other location as the Seller and the
Purchaser may agree.
3.2 Purchase Price. At the Closing, the Purchase Price shall be payable
by Purchaser by wire transfer of immediately available funds on the Closing Date
to an account or accounts to be designated by Seller prior to the Closing,
subject to any adjustments and apportionments made pursuant to this Agreement.
SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.
The obligation of Purchaser to acquire the Properties on the Closing
Date shall be subject to the satisfaction or waiver of the following conditions
precedent on and as of the Closing Date:
4.1 Property Transferees. For the purposes of effectuating the
transactions contemplated by this Agreement, on or before the Closing Date,
Purchaser or its Affiliates shall form each of the Property Transferees. With
respect to the actual acquisition and fee simple ownership of each Property,
each Property will be acquired and owned at the Closing by the Applicable
Property Transferee. Each Property Transferee will be the landlord under the
applicable Lease. The organizational chart for the limited partnerships
described in this Section 4.1 is attached hereto as Schedule D. On and as of the
Closing Date, the limited partnerships described in this Section 4.1 shall have
been created and be in full force and effect. The Seller hereby acknowledges and
agrees that the Purchaser shall have the right to assign this Agreement with
respect to each Property to the Applicable Property Transferee as may be
necessary in order to effectuate the intent of this Section 4.1.
4.2 Closing Documents. Seller, MI, the Tenant or their respective
Affiliates, as applicable, shall have delivered (or cause to be delivered) to
Purchaser, with respect to each Property:
(a) A Special Warranty Deed, duly executed by the Seller,
conveying to the Applicable Property Transferee good and marketable title to
such Property, free from all liens, encumbrances, security interests, options
and adverse claims of any kind or character, subject to the Permitted
Encumbrances, in the forms set forth in Schedule I attached hereto;
(b) An Assignment of Contracts (including any construction related
contracts) in the form set forth in Schedule J hereto, an Assignment of
Intangible Property in the form set forth in Schedule K hereto, each duly
executed by the Seller (or its Affiliate, as applicable), transferring and
assigning to the Applicable Property Transferee all rights, title and interest
of Seller (or its Affiliate, as applicable) in the Assets (other than any
existing FAS, any existing FF&E or any existing Inventories) related to such
Property, together with, to the extent the same are in Seller's or its
Affiliate's (or their agent's) possession, original (or copies certified by
Seller as true and correct), fully executed copies of all agreements
constituting any of the same;
(c) A Warranty Xxxx of Sale in the form set forth in Schedule M
hereto, duly executed by Seller, transferring to the Applicable Property
Transferee all rights, title and interest of Seller in any existing FAS
associated with such Property, any FF&E associated with such Property and any
existing Inventories located at such Property;
(d) Intentionally omitted;
(e) Intentionally omitted;
(f) The Lease for such Property duly executed by the Tenant and
the Applicable Property Transferee for such Property;
(g) Intentionally omitted;
(h) Intentionally omitted;
(i) A Substitute Architect's Certificate in respect of the
Improvements to such Property in the form attached hereto as Schedule N;
(j) A Substitute Engineer's Certificate in respect of the
Improvements to such Property in the form attached hereto as Schedule O;
(k) Certified copies of applicable resolutions and certificates of
incumbency with respect to Seller, MI, Tenant and such other Persons as
Purchaser may reasonably require;
(l) A certificate of a duly authorized officer of MI, on behalf of
itself and Seller, confirming the continued truth and accuracy of its
representations and warranties in this Agreement (subject to such changes as
Seller has given notice of to Purchaser pursuant to Section 6 and subject to
Section 4.3(b));
(m) The "As-Built" Drawings and an original (or if not available,
a copy) of the final certificate of occupancy for such Property;
(n) Copies of the Permits (certified by Seller as true and
correct);
(o) Copies of the Contracts (certified by Seller as true and
correct);
(p) The original (or if not available, copies) of any and all
warranties and guarantees pertaining to the Improvements, specifically including
the manufacturer's roof membrane warranty issued with respect to the buildings
comprising the Improvements;
(q) The FF&E Schedule;
(r) An owner's affidavit executed by Seller in the form mutually
agreeable to Seller and Title Company for the purpose of satisfying any request
for the same in the applicable Title Commitments;
(s) A settlement statement;
(t) Pooling Agreement;
(u) Intentionally omitted;
(v) Assignments of Purchase Contract by Purchaser to each of the
Applicable Property Transferees as it relates to the applicable Property in the
form of Schedule L;
(w) Intentionally omitted;
(x) Such other documents, certificates and other instruments as
may be reasonably required to consummate the transaction contemplated hereby.
4.3 Condition of Properties.
(a) No action shall be pending or threatened for the condemnation
or taking by power of eminent domain of all or any material portion of any
Property.
(b) All material and applicable Permits and other authorizations
necessary for the current use, occupancy and operation of the Properties shall
be in full force and effect; however, in the event that the Seller fails to
obtain any such Permits or other authorizations and discloses same to Purchaser,
Purchaser may, but shall not be required to, waive the Seller's compliance with
Section 6.11 (Permits, Licenses) of this Agreement and proceed with the Closing.
4.4 Title Policies and Surveys.
(a) The Title Company shall be prepared, subject only to
payment of the applicable premium and delivery of all conveyance documents, to
issue the title policies pursuant to the Title Commitments.
(b) Purchaser shall have received the Surveys in accordance with
Section 2.4.
4.5 FF&E Schedule. Attached hereto as Schedule P is a schedule (the
"FF&E Schedule") of all FF&E at each Property owned by the Seller and which FF&E
is intended to be part of the Assets to be transferred to and owned by the
Applicable Property Transferees upon and following the Closing. Upon reasonable
prior notice to the Seller, Purchaser shall be entitled to inspect the FF&E at
the applicable Property prior to the Closing in order to confirm and verify the
FF&E Schedule.
4.6 Permit Transfers.
(a) Non-Healthcare Permits. To the extent permitted or required by
applicable laws, rules and regulations, Seller shall have completed the transfer
and assignment of all of the Permits (other than the Permits necessary for the
operation of the Properties as assisted living/senior living/continuing care
facilities) to the Applicable Property Transferee of each Property at or prior
to the Closing. To the extent that any such Permits are not transferable or
assignable, Seller shall cooperate with the Applicable Property Transferee in
obtaining such Permits at or prior to Closing. If any of such Permits cannot be
transferred or assigned by the Seller or obtained by the Applicable Property
Transferee at or prior to the Closing, alternative arrangements that are
satisfactory to Purchaser and Seller shall have been implemented to assure that
the Applicable Property Transferee shall, to the extent permitted by applicable
laws, rules and regulations, have the benefit of such Permits, and Seller and
the Applicable Property Transferees shall, at the expense of the Applicable
Property Transferee, cooperate and use their respective commercially reasonable
efforts to obtain such Permits for the Applicable Property Transferee or
complete the transfer and assignment of such Permits by Seller, whichever is
applicable, as contemplated in the foregoing sentences promptly after the
Closing. This Section 4.6(a) shall survive the Closing for a period of twelve
(12) months.
(b)Healthcare Permits. To the extent permitted or required by
applicable laws, rules and regulations, Seller or Tenant, as applicable, shall
have obtained any and all approvals, consents and permits of certain
governmental and non-governmental agencies in connection with the transactions
contemplated by this Agreement in order for the Seller and the Tenant, as
applicable, to preserve the Permits necessary for the operation of the
Properties as assisted living/senior living/continuing care facilities, and CNL
RP, the Applicable Property Transferees and their Affiliates, as necessary,
hereby agree to fully cooperate with Seller, Tenant and their Affiliates, and
use their respective commercially reasonable efforts, to obtain such approvals,
consents and permits prior to, at, or after Closing. This Section 4.6 (b) shall
survive the Closing or a period of twelve (12) months.
4.7 Other.
(a) The representations and warranties of MI, on its own behalf or
on behalf of the Seller set forth in Section 6 hereof (as the same may have been
changed by notice from MI as provided therein) shall be true, correct and
complete in all material respects on and as of the Closing Date;
(b) No Act of Bankruptcy on the part of the Seller or MI shall
have occurred and remain outstanding as of the Closing Date;
(c) The Seller shall be the sole owner of good and marketable
title to the Properties free and clear of all liens, encumbrances, restrictions,
conditions and agreements (other than the Permitted Encumbrances and this
Agreement);
(d) There shall be no unsatisfied state or Federal tax liens
against or affecting the Seller which is due and payable, or any tax audit of
the Seller in process, which could result in a lien against any Property; and
(e) There shall be no outstanding, unsettled claim against the
Seller arising under any insurance policies in respect of the Seller or the
Properties which could result in a lien against either the Property.
4.8 Five-Pack Unwind Agreement. The closing contemplated by the Five
Pack Unwind Agreement shall have been consummated.
4.9 MA2 - 2002 Purchase Agreement. The closing contemplated by the MA2
- 2002 Purchase Agreement shall have been consummated.
4.10 MA2 - 2003 Purchase Agreement. Simultaneously or prior to the
Closing contemplated by this Agreement, the MA2 - 2003 Purchase Agreement shall
have been consummated.
4.11 MA3 - 2002 Purchase Agreement. The closing contemplated by the MA3
- 2002 Purchase Agreement shall have been consummated.
4.12 MA3 - 2003 Purchase Agreement. Simultaneously or prior to the
Closing contemplated by this Agreement, the MA3 - 2003 Purchase Agreement shall
have been consummated.
4.13 SPA Conditions. The applicable SPA Conditions shall have been
satisfied by all parties to the SPA and the documents and funds contemplated to
be delivered pursuant to the SPA shall have been placed into escrow and subject
to a binding escrow agreement, with the sole condition to the release of said
funds and documents relating to the SPA being the consummation of the
transaction contemplated hereunder; provided however, that the failure of the
parties to the SPA (i) to enter into the SPA or (ii) for the MSLS Purchaser to
satisfy the SPA Conditions and purchase the MSLS stock shall not be deemed as an
event of default under this Agreement.
4.14 Quadrangle Board. Any right of first negotiation, first offer,
right of first refusal or any similar right of the Quadrangle Board or any
related Person ("Quad Board Rights") under any prior agreements between the
Quadrangle Board and/or any related Person, on one hand, and MI, the Seller or
an affiliate of MI or the Seller, on the other hand, shall have been
extinguished, by (i) a written waiver of such rights by the Quadrangle Board in
a form satisfactory to Seller and Purchaser or (ii) the lapse of time allowed
for such rights to be exercised or consummated and for MI to send the Quadrangle
Board written notice that such Quad Board Rights has expired.
4.15 Assumption and Reimbursement Agreement. Simultaneously with the
Closing under this Agreement, the Assumption and Reimbursement Agreement shall
have been executed on terms and conditions mutually agreeable to MI and
Purchaser.
4.16 Mortgages. Simultaneously with the Closing under this Agreement,
the Applicable Property Transferees shall have executed the Mortgages in a form
mutually agreeable to MI, the Seller and the Applicable Property Transferees.
Each of such Mortgage shall provide, among other things, that: (i) the
Applicable Property Transferee may from time to time, place a mortgage or deed
of trust against the Property securing a loan made to the Applicable Property
Transferee by a third party lender (the "Third Party Mortgage"), and (ii) MI
will subordinate the lien of the Mortgage encumbering such Property to a Third
Party Mortgage upon receipt of an intercreditor agreement in a form reasonably
satisfactory to MI; provided, however, that no Third Party Mortgage shall total
a ratio of more than fifty percent loan to value (50%) of the Property's current
fair market value provided that there shall be no more than one Third Party
Mortgage encumbering such Property at any one time. For purposes of this
definition the Property's current fair market value means the dollar amount
resulting by multiplying the total Operating Profit (to be defined in the Lease
and which shall not include any proceeds relating to the Life Care Bonds) during
the thirteen (13) full Accounting Periods (to be defined in the Lease)
immediately preceding the Accounting Period in which this calculation is made,
by 10.
SECTION 5. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.
The obligation of Seller to convey and transfer to Purchaser the
Properties on the Closing Date is subject to the satisfaction or waiver of the
following conditions precedent on and as of the Closing Date:
5.1 Purchase Price. Purchaser shall deliver to Seller the Purchase
Price as provided in Section 3.2.
5.2 Closing Documents. Purchaser or the Applicable Property Transferee,
as the case may be, shall have delivered to Seller:
(a) Duly executed and acknowledged counterparts of the documents
described in Subsections 4.2(b), (c), (f), (s), (t), (v), and (x);
(b) The CNL Guaranty duly executed by CNL RP;
(c) A certificate of a duly authorized officer of the Purchaser
confirming the continued truth and accuracy of the representations and
warranties of the Purchaser in this Agreement;
(d) Certified copies of applicable resolutions, certificates of
good standing, and certificates of incumbency with respect to the Purchaser, the
Applicable Property Transferees, and such other Persons as the Seller may
reasonably require; and
(e) Such other documents, certificates and other instruments as
may be reasonably required to consummate the transaction contemplated hereby.
5.3 Five-Pack Unwind Agreement. The closing contemplated by the Five
Pack Unwind Agreement shall have been consummated.
5.4 MA2 - 2002 Purchase Agreement. The closing contemplated by the MA2
- 2002 Purchase Agreement shall have been consummated.
5.5 MA2 - 2003 Purchase Agreement. Simultaneously or prior to the
Closing contemplated by this Agreement, the MA2 - 2003 Purchase Agreement shall
have been consummated.
5.6 MA3 - 2002 Purchase Agreement. The closing contemplated by the MA3
- 2002 Purchase Agreement shall have been consummated.
5.7 MA3 - 2003 Purchase Agreement. Simultaneously or prior to the
Closing contemplated by this Agreement, the MA3 - 2003 Purchase Agreement shall
have been consummated.
5.8 SPA Conditions. The applicable SPA Conditions shall have been
satisfied by all parties to the SPA and the documents and funds contemplated to
be delivered pursuant to the SPA shall have been placed into escrow and subject
to a binding escrow agreement, with the sole condition to the release of said
funds and documents relating to the SPA being the consummation of the
transaction contemplated hereunder; provided however, that the failure of the
parties to the SPA (i) to enter into the SPA or (ii) for the MSLS Purchaser to
satisfy the SPA Conditions and purchase the MSLS stock shall not be deemed as an
event of default under this Agreement.
5.9 Quadrangle Board. Any Quad Board Rights shall have been
extinguished by (i) a written waiver of such rights by the Quadrangle Board in a
form satisfactory to Seller and Purchaser or (ii) the lapse of time allowed for
such rights to be exercised or consummated and for MI to send the Quadrangle
Board written notice that such Quad Board Rights has expired.
5.10 Assumption and Reimbursement Agreement. Simultaneously with the
Closing under this Agreement, the Assumption and Reimbursement Agreement shall
have been executed on terms and conditions mutually agreeable to MI and
Purchaser.
5.11 Mortgages. Simultaneously with the Closing under this Agreement,
the Applicable Property Transferees shall have executed the Mortgages in a form
mutually agreeable to MI, the Seller and the Applicable Property Transferees.
Each of such Mortgage shall provide, among other things, that: (i) the
Applicable Property Transferee may from time to time, place a mortgage or deed
of trust against the Property securing a loan made to the Applicable Property
Transferee by a third party lender (the "Third Party Mortgage"), and (ii) MI
will subordinate the lien of the Mortgage encumbering such Property to a Third
Party Mortgage upon receipt of an intercreditor agreement in a form reasonably
satisfactory to MI; provided, however, that no Third Party Mortgage shall total
a ratio of more than fifty percent loan to value (50%) of the Property's current
fair market value provided that there shall be no more than one Third Party
Mortgage encumbering such Property at any one time. For purposes of this
definition the Property's current fair market value means the dollar amount
resulting by multiplying the total Operating Profit (to be defined in the Lease
and which shall not include any proceeds relating to the Life Care Bonds) during
the thirteen (13) full Accounting Periods (to be defined in the Lease)
immediately preceding the Accounting Period in which this calculation is made,
by 10.
5.12. Healthcare Permits. To the extent permitted or required by
applicable laws, rules and regulations, Seller or Tenant, as applicable, shall
have obtained any and all approvals, consents and permits of certain
governmental and non-governmental agencies in connection with the transactions
contemplated by this Agreement in order for the Seller and the Tenant, as
applicable, to preserve the Permits necessary for the operation of the
Properties as assisted living/senior living/continuing care facilities, and CNL
RP, the Applicable Property Transferees and their Affiliates, as necessary,
hereby agree to fully cooperate with Seller, Tenant and their Affiliates, and
use their respective commercially reasonable efforts, to obtain such approvals,
consents and permits prior to, at, or after Closing. This Section 5.12 shall
survive the Closing or a period of twelve (12) months.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF MI.
To induce Purchaser to enter into this Agreement, MI represents and
warrants on behalf of itself and Seller to Purchaser as follows:
6.1 Status and Authority of Seller. Seller is, or will be at or before
the Closing, a limited liability company, or other Entity, duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
and has all requisite power and authority under the laws of such state and its
respective charter documents to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. Seller is
duly qualified to transact business and is in good standing in the state in
which its Property is located.
6.2 Status and Authority of MI. MI is a corporation duly organized,
validly existing and in corporate good standing under the laws of its state of
incorporation, and has all requisite power and authority under the laws of such
state and its respective charter documents to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
6.3 Employees. Seller shall be responsible for payment of all wages and
salaries payable to, and all vacation pay, pension and welfare benefits and
other fringe benefits accrued with respect to all individuals employed by Seller
at the Properties relating to the period prior to the Closing, and Tenant shall
be responsible for payment of all wages, salaries and vacation pay, pension,
welfare and other benefits relating to the period commencing on and from and
after the Closing. All of the employees at each Property prior to the Closing
Date are employees of the Seller, or its Affiliate and Tenant or its Affiliate
shall continue to employ such employees immediately after the Closing Date
except for those employees which may be terminated in the ordinary course of
business unrelated to the sale of the Property. At no time hereunder, upon the
Closing or under the applicable Lease, shall any of the employees at the
Property, including employees of Seller, the Tenant or its Affiliates, be or be
deemed to be the employees of Purchaser, and upon and after the Closing, be or
be deemed to be transferred to Purchaser. If required, the Seller or Tenant, as
appropriate, will comply with the notice and other requirements under the Worker
Adjustment Retraining and Notification Act ("WARN Act"), the Consolidated
Omnibus Budget Reconciliation Act ("COBRA") or any similar state or local
legislation with respect to such employee matters, and such obligation shall
survive the Closing, notwithstanding anything to the contrary in the WARN Act.
Because Purchaser at no time will be or be deemed to be the employer of
employees at any Property, it is expressly understood and agreed that Purchaser
is not and shall not be responsible or liable, directly or indirectly, for
payment of any benefits, severance liability, compensation, pay or other
obligations, of whatever nature, due or alleged to be due to any employee at any
Property including employees of Seller or Tenant attributable to any time period
up to, upon and after the Closing Date. Similarly, there shall be no union
agreements, pension plans, health plans, benefit plans, deferred compensation
plans, bonus plans or vacation plans or similar agreements for or concerning
such employees which shall be binding upon Purchaser.
6.4 Existing Agreements. There are no (or will not be at the Closing)
service contracts, maintenance agreements, leasing commissions or brokerage
agreements, repair contracts, property management contracts, contracts for the
purchase or delivery of labor, services, materials or goods, supplies or
equipment, leases, licensees or occupancy agreements, or similar agreements
entered into by or on behalf of Seller with respect to any Property which will
be obligations of Purchaser after the Closing, other than (i) the Permitted
Encumbrances, (ii) the documents to be assigned to Purchaser pursuant to the
terms hereof, (iii) the Contracts, (iv) the Lease, and (v) any other document or
instrument given or entered into in connection with the Closing. Notwithstanding
the foregoing, if Seller does not obtain the consent from the applicable lessor
necessary to assign to Purchaser any equipment leases with respect to its
Property (each an "Equipment Lease"), Seller shall sublease such equipment to
Purchaser pursuant to the terms of the applicable Equipment Lease provided that
such subletting is not prohibited under such Equipment Lease; if subletting is
prohibited under such Equipment Lease, Seller or its parent shall provide an
alternative arrangement for Purchaser to have use of such equipment or for
Purchaser to enter into a new agreement for use of such or similar equipment on
comparable terms.
6.5 Tax Returns. All privilege, gross receipts, excise, sales and use,
personal property and franchise taxes with respect to each Property resulting
from its operations prior to the Closing will be paid by Seller as and when due
and payable, and all tax returns for such taxes shall be prepared and duly filed
by Seller prior to the Closing Date, or will be prepared and duly filed by
Seller prior to the due date (including extensions thereof) under applicable
law. All taxes, if any, shown on the returns described in this Section 6.5 or
otherwise, determined to be due prior to the Closing, together with any interest
or penalties thereon, will be paid by Seller prior to the Closing, or allowance
made therefor at the Closing.
6.6 Action of MI and Seller . Seller and MI have taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and upon the execution and delivery of any document to be delivered by MI or
Seller on or prior to the Closing Date, such document shall constitute the valid
and binding obligation and agreement of MI and/or Seller, as applicable,
enforceable against MI and/or Seller, as applicable, as the case may be, in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors and general
principles of equity. The person or persons executing and delivering this
Agreement or any other document to be delivered by MI or Seller on or prior to
the Closing Date is or shall have been prior to the Closing Date, duly
authorized to execute and deliver such documents on behalf of MI Seller as
applicable.
6.7 No Violations of Agreements. Neither the execution, delivery or
performance of this Agreement by Seller, and/or MI, nor compliance with the
terms and provisions hereof, will result in any breach of the terms, conditions
or provisions of, or conflict with or constitute a default under, or result in
the creation of any lien, charge or encumbrance upon any Property pursuant to
the terms of any indenture, mortgage, deed of trust, note, evidence of
indebtedness or any other agreement or instrument by which Seller and/or MI, as
the case may be, is bound.
6.8 Litigation. Except as set forth on Schedule S attached hereto,
neither Seller nor MI have received written notice of and, to the Sellers and
MI's knowledge, no investigation, action or proceeding is pending or, to the
Seller's and MI's knowledge, threatened, and the Seller have not received
written notice of and, to the Seller's ' and MI's knowledge, no investigation
looking toward such an action or proceeding has begun, which (a) questions the
validity of this Agreement or any action taken or to be taken pursuant hereto,
or (b) may result in or subject any Property to a material liability which is
not covered by insurance, whether or not Purchaser is indemnified by any of the
Seller and/or MI with respect to the same, or (c) involves condemnation or
eminent domain proceedings against any material part of any Property.
6.9 Not A Foreign Person. Seller is not a "foreign person" within the
meaning of Section 1445 of the United States Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
6.10 Construction Contracts: Mechanics' Liens. At the Closing, there
will be no outstanding contracts made by Seller for the construction or repair
of any Improvements relating to its Property which have not been fully paid for
or provision for the payment of which has not been made by Seller and Seller
shall discharge and have released of record or bonded all mechanics' or
materialmen's liens, if any, arising from any labor or materials furnished to
its Property prior to the Closing to the extent any such lien is not insured
over by the Title Company or bonded over pursuant to applicable law. If after
the Closing a mechanics' or materialmen's lien is filed arising from any labor
or materials furnished to any Property prior to the Closing, Seller shall
discharge and have released of record or bonded any such mechanics' or
materialmen's lien within thirty (30) days from the date Seller has notice that
such mechanics' or materialmen's lien was filed.
6.11 Permits, Licenses. As of the Closing, there will be in effect all
material Permits and other authorizations necessary for the then current use,
occupancy and operation of each Property, unless failure to obtain any such
Permits and other authorizations is disclosed to Purchaser in writing, and
Purchaser waives compliance herewith in accordance with Section 4.3(b) of this
Agreement.
6.12 Hazardous Substances. Except as otherwise disclosed to Purchaser,
including without limitation any matters described in the Environmental Reports,
to the knowledge of MI and Seller, Seller, since the date that Seller acquired
title to its Property, has not stored or disposed of (or engaged in the business
of storing or disposing of, or authorized the storage or disposal of) nor has
released nor caused nor authorized the release of any hazardous waste,
contaminants, oil, radioactive or other material on such Property, or any
portion thereof, the removal of which is required or the maintenance of which is
prohibited or penalized by any applicable Federal, state or local statutes,
laws, ordinances, rules or regulations, and which has not as of the Closing Date
been removed from such Property in accordance with such applicable statutes,
laws, ordinances, rules or regulations. To Seller's and MI's actual knowledge,
except as otherwise disclosed to Purchaser, including, without limitation, any
matters described in the Environmental Reports, each Property is free from any
such hazardous waste, contaminants, oil, mold or other biocontaminants,
radioactive and other materials, except for reasonable amounts of any such
materials necessary for the maintenance, repair and operation of the Property as
an assisted living/senior living/continuing care facility and stored, maintained
and used in accordance with applicable law.
6.13 Insurance. Seller have received no written notice from any
insurance carrier of defects or inadequacies in any Property which, if
uncorrected, would result in a termination of insurance coverage or a material
increase in the premiums charged therefor.
6.14 Financial Information. Financial information, including, without
limitation, all books and records and financial statements relating to each
Property, which have been provided to Purchaser by MI and the Seller are true,
correct and complete in all material respects.
6.15 Contracts. Seller has performed in all material respects all of
its obligations under each Contract to which Seller is a party or is subject and
no fact or circumstance has occurred, which by itself or with the passage of
time or the giving of notice or both would constitute a default under any such
Contract and Seller has the right to assign all of the Contracts which it is
assigning to Purchaser or its designee pursuant to this Agreement. Further, to
Seller's knowledge, all other parties to such Contracts have performed all of
their obligations thereunder in all material respects and are not in default
thereunder.
6.16 Title to FF&E. Seller has good and marketable title to the FF&E
described on the FF&E Schedule. Subject to any Equipment Leases as described in
Section 6.4 which can not be assigned by Seller, the FF&E that is leased rather
than owned by Seller is included in the Contracts.
6.17 FF&E. The FF&E Schedule accurately describes in all material
respects the FF&E owned by Seller and located at the Property. As of the Closing
Date, the FF&E shall comply in all material respects with the requirements of
the Operator's Standards.
6.18 No Proffers. As of the Closing Date, Seller and/or MI shall have
paid (or the provision for the payment of which has been made by Seller ) and/or
performed, as applicable, all proffers, exactions, development fees, tap fees,
connection charges, impact fees, improvements (including off-site improvements)
and other requirements imposed by applicable law of any federal, state or local
governmental or quasi-governmental authority in connection with the construction
and development of the Property.
6.19 No Violations. Except as previously disclosed in writing to
Purchaser , Seller has complied in all material respects with all laws,
regulations, orders or other requirements issued by any governmental authority
against or affecting the Property. Except as previously disclosed in writing to
Purchaser, Seller has not received any written notice or order from any
governmental authority requiring any repairs, maintenance or improvements to the
Property which have not been fully performed. Neither Seller nor MI have
received written notice of, and, to the Seller's and MI's knowledge, no
investigation, inquiry, administrative proceeding, or other governmental audit
or inquiry is pending or, to the Seller's and MI's knowledge, threatened by, any
governmental authority with regard to any of the Properties.
6.20 Separate Tax Parcel. Each Property constitutes a separate parcel
for purposes of ad valorem real property taxes, and is not subject to a lien for
non-payment of real property taxes relating to any other property.
6.21 No Defaults. There exists no material default on the part of
Seller or MI with respect to any Permitted Encumbrance affecting each Property,
other than those defaults which can be cured or discharged by the payment of
money and for which an allowance for the payment thereof has been made at the
Closing. Notwithstanding anything to the contrary contained in this Section 6
regarding the survival period for the representations and warranties made
hereunder, the representation and warranty made in this Section 6.21 by Seller
and MI shall survive the Closing for an unlimited period of time.
6.22 American with Disabilities Act. As of the Closing Date, each
Property shall comply in all material respects with the Americans with
Disabilities Act and all related and applicable laws, rules, regulations and/or
orders governing or relating to accessibility.
6.23 Intentionally omitted.
6.24 Medicare Certification. Each of the Properties is certified for
participation in the Medicare program, and is a party to a current and valid
Medicare provider agreement. Neither Seller nor MI have received notice of and,
to the Seller's and MI's knowledge, there is no pending, threatened or possible
investigation by, or loss of participation in, the Medicare program with respect
to either of the Properties.
6.25 Cost Reports. Seller has duly filed with respect to each Property
all Cost Reports for all periods required to be filed as of the Effective Date.
To the Seller's and MI's knowledge, all of such Cost Reports accurately reflect
the information included therein. Neither Seller nor MI have received any notice
of any dispute, audit, or investigation regarding such Cost Reports.
The representations and warranties made in this Agreement by MI, on
behalf of itself and the Seller, in Section 6.1 through Section 6.9, inclusive,
are made as of the Effective Date and shall be deemed remade by MI, on behalf of
itself and Seller, as of the Closing Date, with the same force and effect as if
made on, and as of, the Closing Date; and the representations and warranties
made in this Agreement by MI, on behalf of itself and Seller, in Section 6.10
through Section 6.25, inclusive, shall be made as of the Closing Date, provided,
however, that, MI, on behalf of itself and Seller, shall have the right, from
time to time prior to the Closing Date, to modify the representations and
warranties made in Section 6.7 (No Violations of Agreements), Section 6.8
(Litigation), Section 6.13 (Insurance), and Section 6.19 (No Violations) as a
result of changes in applicable conditions beyond the control of MI or Seller,
by notice to Purchaser, and, in such event, the representations and warranties
shall be deemed modified to the extent required by such changes, and (a) if MI,
on behalf of itself and Seller, agrees to indemnify Purchaser against any loss
that may be suffered by Purchaser as a result of such changes, then Purchaser
will be required to close hereunder without any abatement of Purchase Price or
changes in any other condition, and (b) if MI, on behalf of itself and Seller,
elects not to so indemnify Purchaser, Purchaser shall have the option to either
accept the change and close, or reject the change, in which case, if Purchaser
rejects such change, Purchaser's obligation to purchase the Properties shall
terminate. Except as specifically provided otherwise, all representations and
warranties made in this Agreement by MI, on behalf of itself and Seller, shall
survive the Closing for a period of twelve (12) months. Any action, suit or
proceeding with respect to the truth, accuracy or completeness of any such
representation or warranty shall be commenced and served promptly, if at all, on
or before the date which is twelve (12) months after the Closing Date and, if
not commenced on or before such date, thereafter shall be void and of no force
or effect.
Prior to the Closing, Purchaser will have had the opportunity to
investigate independently all physical aspects of each Property, and to make all
such independent inspections and/or investigations of any Property that
Purchaser deems necessary or desirable including, without limitation, review of
the building permits, certificates of occupancy, environmental audits and
assessments, toxic reports, surveys, investigation of land use and development
rights, development restrictions and conditions that are or may be imposed by
governmental agencies, agreements with associations or other private parties
affecting or concerning such Property, the condition of title, soils and
geological reports, engineering and structural certificates, tests and
third-party reports (if any), governmental agreements and approvals and
architectural plans and site plans. Purchaser represents and warrants that, in
entering into this Agreement, it has not relied on any representation, warranty,
promise or statement, express or implied, of Seller or MI or anyone acting for
or on behalf of Seller or MI, other than as expressly set forth in this
Agreement; AND THAT, AS A MATERIAL INDUCEMENT TO THE EXECUTION AND DELIVERY OF
THIS AGREEMENT BY SELLER, MI, AND PURCHASER, EACH ACKNOWLEDGES THAT THE
PROPERTIES WILL, UPON THE ACQUISITION BY THE APPLICABLE PROPERTY TRANSFEREES OF
THEIR RESPECTIVE INTERESTS IN SUCH PROPERTY, BE IN THEIR "AS IS" CONDITION AND
IN THEIR "AS IS" STATE OF REPAIR, WITH ALL FAULTS SUBJECT ONLY, HOWEVER, TO THE
EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER AND MI FOR
THE BENEFIT OF PURCHASER EXPRESSLY SET FORTH IN THIS AGREEMENT.
Except as otherwise expressly provided in this Agreement or any
documents executed and delivered by Seller or MI to Purchaser at the Closing,
Seller and MI disclaim the making of any representations or warranties, express
or implied, regarding any Property or matters affecting the same, whether made
by Seller or MI, on Seller's behalf or on MI's behalf, or otherwise, including,
without limitation, the physical condition of the Property, title to, the
boundaries or other survey matters of, the Real Property, pest control matters,
soil conditions, the presence, existence or absence of hazardous wastes, toxic
substances or other environmental matters, compliance with building, health,
safety, land use and zoning laws, regulations and orders, structural and other
engineering characteristics, traffic patterns, market data, economic conditions
or projections, and any other information pertaining to such Property or the
market and physical environments in which the Property is located. Purchaser
acknowledges that it has entered into this Agreement with the intention of
making and relying upon its own investigation or that of third parties with
respect to the physical, environmental, economic and legal condition of each
Property, except as expressly provided in this Agreement. Purchaser further
acknowledges that it has not received from or on behalf of Seller or MI, any
accounting, feasibility, marketing, economic, tax, legal, architectural,
engineering, property management or other advice with respect to this
transaction and is relying solely upon the advice of third party accounting,
tax, legal, architectural, engineering, property management and other advisors.
As used in this Agreement, the phrases "to Seller's knowledge," "MI's
knowledge," and "to Seller's and MI's knowledge" or words of similar import
shall mean the actual (and not constructive or imputed) knowledge, without
independent investigation or inquiry, of Xxxxxxx X. Xxxxxxx, Xxxxx Xxxxxxx and
Xxxxx Xxxxxxx.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
To induce MI and Seller to enter into this Agreement, Purchaser
represents and warrants to MI and Seller as follows: 7.1 Status and Authority of
Purchaser. Purchaser is duly organized and validly existing under the laws of
the jurisdiction in which it was formed, and has all requisite power and
authority under the laws of such state and under its charter documents to enter
into and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. Purchaser is, or will be by the Closing Date,
duly qualified and in good standing in the state in which each Property is
located.
7.2 Action of Purchaser. Purchaser has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and upon
the execution and delivery of any document to be delivered by Purchaser on or
prior to the Closing Date, such document shall constitute the valid and binding
obligation and agreement of Purchaser, enforceable against Purchaser in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors and general
principles of equity. The person or persons executing and delivering this
Agreement or any other document to be delivered by Purchaser on or prior to the
Closing Date is or shall have been prior to the Closing Date, duly authorized to
execute and deliver such documents on behalf of Purchaser.
7.3 No Violations of Agreements. Neither the execution, delivery or
performance of this Agreement by Purchaser, nor compliance with the terms and
provisions hereof, will result in any breach of the terms, conditions or
provisions of or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any Property or assets of
Purchaser, pursuant to the terms of any indenture, mortgage, deed of trust,
note, evidence of indebtedness or any other agreement or instrument by which
Purchaser is bound.
7.4 Litigation. Purchaser has received no written notice of and, to
Purchaser's knowledge, no investigation, action or proceeding is pending and, to
Purchaser's knowledge, no action or proceeding is threatened and Purchaser have
received no notice of, and to Purchaser's knowledge, no investigation looking
toward such an action or proceeding has begun, which (a) questions the validity
of this Agreement or any action taken or to be taken pursuant hereto, or (b) may
result in or subject any Property to a material liability which is not covered
by insurance, whether or not Purchaser is indemnified by Seller and/or MI with
respect to the same, or (c) involves condemnation or eminent domain proceedings
against any material part of any Property.
The representations and warranties made in this Agreement by Purchaser
are made as of the Effective Date and shall be deemed remade by Purchaser as of
the Closing Date with the same force and effect as if made on, and as of, such
date. Except as specifically provided otherwise herein, all representations and
warranties made in this Agreement by Purchaser shall survive the Closing for a
period of twelve (12) months. Any action, suit or proceeding with respect to the
truth, accuracy or completeness of any such representation or warranty shall be
commenced and served promptly, if at all, on or before the date which is twelve
(12) months after the Closing Date and, if not commenced on or before such date,
thereafter shall be void and of no force or effect.
As used in this Agreement, the phrase "to Purchaser's knowledge," or
words of similar import shall mean the actual (and not constructive or imputed)
knowledge, without independent investigation or inquiry, of Xxxxxxx X. Xxxxxxxx
and Xxxx Xxxx.
SECTION 8. COVENANTS OF MI AND SELLER.
The Seller and MI hereby covenants with Purchaser as follows:
8.1 Compliance with Laws. From the Effective Date to the Closing Date,
Seller shall use commercially reasonable efforts to comply in all material
respects with (i) all laws, regulations and other requirements affecting its
Property, from time to time applicable, of every governmental body having
jurisdiction of such Property or the use or occupancy of any Improvements
located thereon, and (ii) all terms, covenants and conditions of instruments of
record affecting such Property.
8.2 Construction. Seller agrees to cooperate with the Purchaser in
enforcing any applicable warranties or guaranties with respect to any defects in
the Improvements that are discovered after the Closing. The provisions of this
Section 8.2 shall survive any Closing under this Agreement.
8.3 Insurance. Seller shall, at no expense to Seller, reasonably
cooperate with Purchaser or Tenant in connection with Purchaser's or Tenant's
obtaining any insurance which may be required to be maintained by Purchaser or
Tenant under the terms of each Lease.
8.4 Cost Reports; Medicare Receivables and Liabilities. Seller shall be
responsible for filing the Cost Reports for each Property for the cost reporting
periods ending before or on the Closing Date, and Seller shall accept full
responsibility for such Cost Reports. Tenant shall be entitled to any and all
receivables, claims, rights or other amounts due, or which may become due, to
the Seller as reimbursement or other payments from the Medicare program, which
in any case relate to the operations or the business of the Properties at any
time prior to or on the Closing Date.
SECTION 9. APPORTIONMENTS.
9.1 Apportionments.
(a) All real estate taxes (including special assessments
attributable to the period prior to the Closing) and items of income and expense
with respect to each Property shall be adjusted between Seller and Purchaser as
of the Closing Date. All items of revenue, cost and expense of each Property
with respect to the period prior to the Closing Date shall be for the account of
Seller. All items of revenue, cost and expense of each Property with respect to
the period from and after the Closing Date shall be for the account of Tenant
according to the terms of the Lease. The adjustments hereunder shall be
calculated or paid in an amount based upon a fair and reasonable estimated
accounting performed and agreed to by representatives of Seller, Tenant and
Purchaser at the Closing. Subsequent final adjustments and payments shall be
made in cash or other immediately available funds as soon as practicable after
the Closing Date, and in any event within ninety (90) days after the Closing
Date (provided that such ninety day period shall be extended up to an additional
thirty (30) days after the necessary information becomes available for the
parties to calculate any necessary adjustments relating to payments of real
estate taxes or special assessments), based upon an accounting performed by the
Tenant and acceptable to Seller, Tenant and Purchaser. In the event the parties
have not agreed with respect to the adjustments required to be made pursuant to
this Section 9.1 within such 90 day period, upon application by any such party,
a certified public accountant reasonably acceptable to the parties to such
disputed adjustment shall determine any such adjustments which have not
theretofore been agreed to between such parties. The charges of such accountant
shall be borne equally by the parties to such disputed adjustment; provided that
Tenant shall not be responsible for the charges of such accountant unless Tenant
made an application to resolve such dispute. All adjustments to be made as a
result of the final results of the adjustments shall be paid to the party
entitled to such adjustment within thirty (30) days after the final
determination thereof.
(b) The provisions of this Section 9.1 shall survive the Closing.
9.2 Closing Costs.
(a) All Third-Party Costs (hereinafter defined) shall be borne one
hundred percent (100%) by Purchaser. As used herein, the term "Third-Party
Costs" shall include the following costs and expenses which are incurred by
Seller, Tenant, Purchaser, or their respective Affiliates: (i) Environmental
Reports prepared in connection with the purchase and sale of the Properties;
(ii) the Surveys prepared pursuant to Section 2.4; (iii) premiums for the title
insurance policies and endorsements to be provided at the Closing pursuant to
the terms of this Agreement; (iv) any closing or escrow charges or other
expenses payable on the Closing Date to the Title Company conducting the
Closing; (v) property appraisals prepared in connection with the purchase and
sale of the Properties pursuant to this Agreement; (vi) local counsel fees
incurred in connection with the consummation of the Closing in connection with
the transfer of Permits pursuant to Section 4.6 or in connection with the
consummating of the closing of the Financing (which fees shall be limited to
those incurred in connection with usual and customary local counsel services in
similar commercial real estate transactions); (vii) fees and expenses charged by
any governmental entity relating to obtaining the Permits pursuant to Section
4.6 ; (viii) the third-party market assessment reports obtained by Purchaser;
(ix) the third-party architectural and engineering inspection reports of the
Properties obtained by the Purchaser; (x) the third-party audited Special
Purpose Financing Statement for each Property obtained by Purchaser, (xi) any
other separate out-of-pocket costs and expenses incurred by Seller or Purchaser
or Tenant or their respective Affiliates in connection with the consummation of
the Closing or incurred in connection with the consummation of the closing of
the Financing (included those of a type referred to in the preceding clauses of
this paragraph), including but not limited to the fees and expenses of outside
counsel of Purchaser and its Affiliates (and outside counsel of the lender
providing the Financing to the extent required by the loan documents executed by
the Purchaser) in connection with the preparation and negotiation of this
Agreement and all other documents and instruments in connection with the
consummation of the Closing or in connection with the consummating of the
Financing; and (xii) Transfer Taxes incurred on the Closing Date or in
connection with the consummation of the Financing. Notwithstanding the
foregoing, MI shall be responsible for the fees and expenses of the outside
counsel of Seller, Tenant, MI and their respective Affiliates in connection with
the preparation and negotiation of this Agreement and all other documents and
instruments in connection with the consummation of the Closing. Third-Party
Costs may be advanced by either Seller or CNL Retirement Properties, Inc. or
their respective Affiliates or any Affiliate of Seller prior to the Closing (but
shall be reimbursed by Purchaser to the party incurring the same at the
Closing). All amounts payable by Purchaser under this Section 9.2(a) shall be
paid by the Applicable Property Transferees in the event that the Closing is
consummated hereunder, which amounts (i) shall be allocated to the Applicable
Property Transferee if and to the extent that any amount specifically relates
only to the Property acquired by such Applicable Property Transferee (as is the
case, for example, with respect to title insurance and Transfer Taxes) or (ii)
shall be allocated among all the Applicable Property Transferees in proportion
to the allocation of the Purchase Price among the Applicable Property
Transferees set forth in Schedule C if and to the extent that any amount does
not specifically relate only to the Property acquired by an Applicable Property
Transferee. To the extent that the Third-Party Costs are known and have or shall
be paid on or prior to the Closing Date, within two Business Days prior to the
Closing Date, Seller shall provide Purchaser with written notice and a copy of
the calculations of any amounts due to Seller pursuant to this Section and
Purchaser shall reimburse the applicable Seller on the Closing Date for such
costs and expenses. No later than thirty (30) days after the sixth month
anniversary of the Closing Date, Seller shall provide Purchaser with written
notice and a copy of the calculations of any amounts due to Seller pursuant to
this Section which were not paid by Purchaser on the Closing Date and Purchaser
shall promptly reimburse the applicable Seller for such costs and expenses.
(b) As used herein, the term "Transfer Taxes" shall mean any
transfer, sales, use, recordation or other similar taxes, impositions, expenses
or fees incurred in connection with the Closing and the consummation of the
Financing and/or the recordation or filing of any documents or instruments in
connection therewith or the sale, transfer or conveyance of the Properties from
Seller to Purchaser or the lease of each Property from Purchaser to Tenant.
Transfer Taxes shall not include, and Seller shall be solely responsible for any
taxes due in respect of its income, net worth or capital, if any, and any
privilege, sales and occupancy taxes, due or owing to any governmental entity in
connection with the operation of its Property for any period of time prior to
the Closing, and Purchaser and Tenant, as applicable, shall be solely
responsible for all such taxes for any period from and after the Closing, and
provided further that any income tax arising as a result of the sale and
transfer of any Property by Seller to Purchaser shall be the sole responsibility
of Seller.
(c) The obligations of the parties under this Section 9 shall
survive the Closing.
SECTION 10. LIMITATIONS ON LIABILITY.
10.1 Default by Seller. If MI, on behalf of itself or Seller, shall
have made any representation or warranty herein with respect to any Property
which shall be untrue in any material respect when made or updated as herein
provided and Purchaser has knowledge of such default prior to or on the Closing
Date, or if Seller or MI shall fail to perform any of the material covenants and
agreements contained herein with respect to any Property and such condition or
failure continues for a period of ten (10) days (or such additional period as
may be reasonably required to effectuate a cure of the same) after written
notice thereof from Purchaser, Purchaser's sole remedy shall be (A) to terminate
this Agreement with respect to such Property affected by Seller's and/or MI's
breach (the "Terminated Property") and this Agreement shall be of no further
force and effect with respect to the Terminated Property, except with respect to
provisions hereof which by their express terms survive a termination of this
Agreement in which event MI shall reimburse to Purchaser an amount equal to (x)
the Purchaser's direct, out of pocket expenses incurred in respect of the
Properties, not to exceed a combined total of $300,000 payable to Purchaser,
multiplied by (x) a fraction with the numerator equal to the Purchase Price
allocated to the Terminated Property and the denominator equal to the total
Purchase Price of all of the Properties; or (B) to consummate the transactions
contemplated hereby, notwithstanding such default, without any abatement or
reduction in the Purchase Price on account thereof. It is understood and agreed
that for purposes of this Section 10.1, if a default results from a false
representation or warranty, such default shall be deemed cured if the events,
conditions, acts or omissions giving rise to the falsehood are cured within the
applicable cure period even though, as a technical matter, such representation
or warranty was false as of the date actually made.
10.2 Default by Purchaser. If Purchaser shall have made any
representation or warranty herein which shall be untrue in any material respect
when made or updated as herein provided and Seller have knowledge of such
default prior to or on the Closing Date, or if Purchaser shall fail to perform
any of the material covenants and agreements contained herein and such condition
or failure continues for a period of ten (10) days (or such additional period as
may be reasonably required to effectuate a cure of the same) after written
notice thereof from Seller, Seller's sole remedy shall be (A) to terminate this
Agreement with respect to such Property affected by Purchaser's breach (the
"Terminated Property") and this Agreement shall be of no further force and
effect with respect to the Terminated Property, except with respect to
provisions hereof which by their express terms survive a termination of this
Agreement in which event Purchaser shall reimburse to Seller and MI an amount
equal to (x) Seller's and MI'sdirect, out of pocket expenses incurred in respect
of the Properties, not to exceed a combined total of $300,000 payable to Seller
and MI as they may direct, multiplied by (x) a fraction with the numerator equal
to the Purchase Price allocated to the Terminated Property and the denominator
equal to the total Purchase Price of all of the Properties; or (B) to consummate
the transactions contemplated hereby, notwithstanding such default, without any
abatement or reduction in the Purchase Price on account thereof. It is
understood and agreed that for purposes of this Section 10.2, if a default
results from a false representation or warranty, such default shall be deemed
cured if the events, conditions, acts or omissions giving rise to the falsehood
are cured within the applicable cure period even though, as a technical matter,
such representation or warranty was false as of the date actually made.
10.3 Intentionally omitted.
10.4 Limitations on Liability.
(a) The parties hereto confirm and agree that in each instance
herein where a party or its Affiliates is entitled to payment or reimbursement
for damages, costs or expenses pursuant to the terms and conditions of this
Agreement, any payment or reimbursement made to such party shall be conclusively
deemed to be for the account of both such party and its Affiliates, it being
acknowledged and agreed that a payment or reimbursement made to such party for
damages, costs or expenses shall be sufficient to satisfy all claims for payment
or reimbursement of such party and its Affiliates. The parties further confirm
and agree that no party hereto (a "Non-Performing Party") will be deemed to be
in default hereunder or be liable for any breach of its representations and
warranties under this Agreement if its failure to perform an obligation
hereunder is based solely on the non-performance of another party to this
Agreement (which other party is not an Affiliate of the Non-Performing Party) or
where all conditions precedent to the obligation of such Non-Performing Party to
consummate the Closing under Section 4 have not been fulfilled.
(b) To the maximum extent permitted by applicable law, no
shareholder, director, officer or employee of any party to this Agreement shall
have any personal liability with respect to the liabilities or obligations of
such party under this Agreement or any document executed by such party pursuant
to this Agreement.
SECTION 11. MISCELLANEOUS.
11.1 Agreement to Indemnify.
(a) From and after the Closing Date (i) MI shall indemnify, defend
and hold harmless Purchaser from and against any and all obligations, claims,
losses, damages, liabilities, and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and disbursements) arising out of
(v) any termination of employment of employees at the Property prior to or upon
the Closing Date resulting from the termination of employment of such employees
by Seller, Seller's Affiliate or their respective operator and/or the failure of
the Tenant to hire such employees (including, without limitation, severance pay,
wrongful discharge claims, and claims and/or fines under Federal, state or local
statutes or regulations, including, without limitation, the Worker Adjustment
and Retraining Notification Act), (w) the employment of such individuals prior
to the Closing Date, including, without limitation, employment-related claims;
COBRA-related claims; disability claims; vacation; sick leave; wages; salaries;
payments due (or allocable) to any medical, pension, and health and welfare
plans, and any other employee benefit plan established for the employees at each
Property; and employee-related tax obligations such as, but not limited to,
social security and unemployment taxes accrued as of the Closing Date, (x)
events, acts, or omissions of Seller that occurred in connection with their
respective ownership or operation of each Property prior to the Closing Date or
obligations accruing prior to the Closing Date under any Contract of Seller
(except to the extent of any adjustment made in respect of such Contract at the
Closing ), (y) any material breach of a representation or warranty made by MI,
on its own behalf or on behalf of Seller under Section 6 of which Purchaser did
not have knowledge of such breach prior to or on the Closing Date (as such
representations and warranties may be modified pursuant to said Section 6 and
subject to the twelve (12) month limitation period set forth therein, if
applicable), or (z) any claim against Purchaser for damage to property of others
or injury to or death of any person or any debts or obligations of or against
Seller and arising out of any event occurring on or about or in connection with
any Property or any portion thereof, at any time or times prior to the Closing
Date, and (ii) Purchaser shall indemnify, defend and hold harmless Seller and MI
from and against any and all obligations, claims, losses, damages, liabilities
and expenses (including, without limitation, reasonable attorneys' and
accountants' fees and disbursements) arising out of (x) events, acts, or
omissions of Purchaser that occur in connection with its ownership or operation
of each Property from and after the Closing Date or obligations accruing from
and after the Closing Date under any Contract of Seller (or any contract of the
Tenant executed on behalf of Seller) (except to the extent of any adjustment
made in respect of such Contract at the Closing ), provided that any provision
of any Lease that applies to such event, act or omission shall take precedence
over the indemnity provided for in this clause (x), or (y) any material breach
of a representation or warranty made by Purchaser under Section 7 as such
representations and warranties may be modified pursuant to said Section 7 (and
subject to the twelve (12) month limitation period set forth therein).
(b) The provisions of this Section 11.1 shall not apply to any
liabilities or obligations with respect to hazardous substances, the liabilities
of the parties with respect thereto being governed by the representation and
warranty of MI set forth in Section 6.12. The indemnity provided for in this
Section 11.1 shall not extend to any consequential damages or punitive damages.
(c) Whenever it is provided in this Agreement that an obligation
will continue after the Closing as an obligation of Purchaser or be assumed by
Purchaser after the Closing, Purchaser shall be deemed to have also agreed to
indemnify and hold harmless Seller and MI and their respective successors and
assigns from and against any claims, losses, damages, liabilities, costs, and
expenses (including, without limitation, reasonable attorneys' and accountants'
fees and expenses) arising from any failure of Purchaser to perform the
obligation so continued or assumed after the Closing (but not with respect to
any act or omission which occurred prior to the Closing).
(d) Whenever any party shall learn through the filing of a claim
or the commencement of a proceeding or otherwise of the existence of any
liability for which another party is or may be responsible under this Agreement,
the party learning of such liability shall notify the other party promptly and
furnish such copies of documents (and make originals thereof available) and such
other information as such party may have that may be used or useful in the
defense of such claims and shall afford said other party full opportunity to
defend the same in the name of such party and shall generally cooperate with
said other party in the defense of any such claim.
(e) The provisions of this Section 11.1 shall survive the Closing
hereunder subject to the limitations set forth in this Section 11.1. Except as
specifically provided otherwise herein, all representations and warranties made
in this Agreement shall survive the Closing for a period of twelve (12) months
after the Closing Date. With respect to all representations and warranties made
in this Agreement which survive the Closing for a period of twelve (12) months
after the Closing Date, any action, suit or proceeding with respect to the
truth, accuracy or completeness of any such representation or warranty shall be
commenced, if at all, on or before the date which is twelve (12) months after
the Closing Date and served promptly (but in no event later than sixty (60) days
after commencement) and, if not commenced on or before such date and so served,
thereafter shall be void and of no force or effect.
11.2 Brokerage Commissions. Each of the parties hereto represents to
the other parties that it dealt with no broker, finder or like agent in
connection with this Agreement or the transactions contemplated hereby, and that
it reasonably believes that there is no basis for any other person or entity to
claim a commission or other compensation for bringing about this Agreement or
the transactions contemplated hereby. MI shall indemnify and hold harmless
Purchaser and its successors and assigns from and against any loss, liability or
expense, including, reasonable attorneys' fees, arising out of any claim or
claims for commissions or other compensation for bringing about this Agreement
or the transactions contemplated hereby made by any broker, finder or like
agent, if such claim or claims are based in whole or in part on dealings with
Seller. Purchaser shall indemnify and hold harmless Seller and MI and their
successors and assigns from and against any loss, liability or expense,
including, reasonable attorneys' fees, arising out of any claim or claims for
commissions or other compensation for bringing about this Agreement or the
transactions contemplated hereby made by any broker, finder or like agent, if
such claim or claims are based in whole or in part on dealings with Purchaser.
Nothing contained in this section shall be deemed to create any rights in any
third party. The provisions of this Section 11.2 shall survive the Closing
hereunder and any termination of this Agreement.
11.3 Publicity. The parties agree that no party shall, with respect to
this Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated hereby to any third party without the consent of the
other party, which consent shall not be unreasonably withheld, conditioned or
delayed, except as may be required by law or as may be reasonably necessary, on
a confidential basis, to inform any rating agencies, potential sources of
financing, financial analysts, or to entities involved with a sale of a
Controlling Interest in Seller, MSLS, Purchaser, or Tenant or any of their
Affiliates or to receive legal, accounting and/or tax advice; provided, however,
that, if such information is required to be disclosed by law, the party so
disclosing the information will use reasonable efforts to give notice to the
other parties as soon as such party learns that it must make such disclosure.
Notwithstanding the foregoing, if such information is required to be disclosed
to any governmental authority to facilitate the transfer of Permits pursuant to
Section 4.6(a) or the acquisition of Permits pursuant to Section 4.6(b), the
disclosing party may disclose such information without the consent of the other
parties and shall promptly give written notice to the other parties of such
information which was disclosed.
11.4 Notices.
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this Agreement
shall be deemed adequately given if in writing and the same shall be delivered
either in hand, or by mail or Federal Express or similar expedited commercial
carrier, addressed to the recipient of the notice, postpaid and registered or
certified with return receipt requested (if by mail), or with all freight
charges prepaid (if by Federal Express or similar carrier).
All notices required or permitted to be sent hereunder shall be deemed to have
been given for all purposes of this Agreement upon the date of acknowledged
receipt, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(b) All such notices shall be addressed,
if to MI, Tenant or Seller, to:
Marriott International, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
with a copy to:
Marriott International, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
and
Marriott International, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Treasurer
and
Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxx, Esq.
if to Purchaser, to:
c/o CNL Retirement Corp.
CNL Center at City Commons
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Chief Operating Officer
with a copy to:
Lowndes, Drosdick, Doster, Xxxxxx & Xxxx, P.A.
000 Xxxxx Xxxx Xxxxx
Post Office Box 2809
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
(d) By notice given as herein provided, the parties hereto and
their respective successors and assigns shall have the right from time to time
and at any time during the term of this Agreement to change their respective
addresses effective upon receipt by the other parties of such notice and each
shall have the right to specify as its address any other address within the
United States of America.
11.5 Waivers, Etc. Any waiver of any term or condition of this
Agreement, or of the breach of any covenant, representation or warranty
contained herein, in any one instance, shall not operate as or be deemed to be
or construed as a further or continuing waiver of any other breach of such term,
condition, covenant, representation or warranty or any other term, condition,
covenant, representation or warranty, nor shall any failure at any time or times
to enforce or require performance of any provision hereof operate as a waiver of
or affect in any manner such party's right at a later time to enforce or require
performance of such provision or any other provision hereof. This Agreement may
not be amended nor shall any waiver, change, modification, consent or discharge
be effected, except by an instrument in writing executed by or on behalf of the
party against whom enforcement of any amendment, waiver, change, modification,
consent or discharge is sought.
11.6 Assignment; Successors and Assigns. Except as otherwise provided
herein, this Agreement and all rights and obligations hereunder shall not be
assignable by any party without the written consent of the other parties. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement is
not intended and shall not be construed to create any rights in or to be
enforceable in any part by any other persons.
11.7 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
11.8 Counterparts, Etc. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and shall supersede and take the place of any other
instruments purporting to be an agreement of the parties hereto relating to the
subject matter hereof. This Agreement may not be amended or modified in any
respect other than by the written agreement of all of the parties hereto.
11.9 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be interpreted, construed, applied and
enforced in accordance with the laws of the State of Maryland.
(b) To the maximum extent permitted by applicable law, any action
to enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement shall be brought and prosecuted in such court or courts located
in the State of Maryland as is provided by law; and the parties consent to the
jurisdiction of said court or courts located in the State of Maryland and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
(c) EACH PARTY HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
AGREEMENT, THE LEASE OR ANY OTHER DOCUMENT RELATED TO THIS AGREEMENT, OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. ANY PARTY IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY EACH PARTY HERETO.
11.10 Performance on Business Days. In the event the date on which
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time for payment or performance shall automatically be
extended to the first Business Day following such date.
11.11 Attorneys' Fees. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees, incurred in connection therewith, in preparation therefor and
on appeal therefrom, which amounts shall be included in any judgment therein.
11.12 Relationship. Nothing herein contained shall be deemed or
construed by the parties hereto, nor by any third party, as creating the
relationship of principal and agent or of partnership or joint venture between
the parties hereto, it being understood and agreed that (except as and to the
extent specifically provided for herein) no provision contained herein, nor any
acts of the parties hereto shall be deemed to create the relationship between
the parties hereto other than the relationship of seller and purchaser and
landlord and prospective tenant, as the case may be.
11.13 Section and Other Headings. The headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
11.14 Disclosure. From and after Closing Date, and at the written
request of Purchaser, Seller shall provide such financial statements in respect
Seller's operations relating to its Property from the date of Seller's
commencement of business to the Closing Date to the extent such financial
statements are required by applicable securities laws and regulations and the
SEC's interpretation thereof; provided, however, that (i) Seller reserves the
right, in good faith, to challenge, and require Purchaser to use commercially
reasonable efforts to challenge, any assertion by the SEC, any other applicable
regulatory authority, or Purchaser's independent public accountants that
applicable law or regulations require the provision of such financial
statements, (ii) Purchaser shall not, without Seller's consent (which consent
shall not be unreasonably withheld, delayed or conditioned), acquiesce to any
such challenged assertion until Purchaser has exhausted all reasonable available
avenues of administrative review, and (iii) Purchaser shall consult with Seller
in pursuing any such challenge and will allow Seller to participate therein if
and to the extent that Seller so elects. Any and all costs and expenses incurred
by Seller, including, without limitation, reasonable attorneys' fees and
expenses, in connection with providing such financial statements to Purchaser or
in connection with any challenge to an SEC assertion (including Seller's
consultation or participation with Purchaser in respect of same) shall be
reimbursed to Seller by Purchaser within ten (10) days following written demand
by Seller.
11.15 Acknowledgment of the Financial Condition of the Parties. Seller
and Purchaser (by their signatures below) and each Applicable Property
Transferee (by executing the Assignment of Purchase Contract between the
Purchaser and the Applicable Property Transferees) hereby (i) acknowledge that
they have received information concerning the financial condition of each of the
parties hereto, and (ii) agree that, in light of the obligations of the
respective parties under the Purchase Agreement and all other documents executed
pursuant to the Purchase Agreement (collectively the "Transaction Documents"),
the financial condition of each party hereto and the Applicable Property
Transferees is acceptable to all such entities for the carrying out of each such
entity's respective obligations under the Transaction Documents.
[SIGNATURES APPEAR ON THE FOLLOWING PAGES]
IN WITNESS WHEREOF, the parties have caused this Purchase and Sale Agreement
(MA3 - 2003 - Quadrangle/Fairfax) to be executed as a sealed instrument as of
the Effective Date.
SELLER:
MARRIOTT CONTINUING CARE, LLC,
a Delaware limited liability company
By: Marriott Senior Living Services, Inc.,
A Delaware corporation, sole Member
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx
Authorized Signatory
MI:
MARRIOTT INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx
Authorized Signatory
[SIGNATURES FOR PURCHASE AGREEMENT CONTINUE
ON THE FOLLOWING PAGES]
PURCHASER:
CNL RETIREMENT MA3, LP, a Delaware limited
partnership
By: CNL Retirement MA3 GP Holding, LLC,
a Delaware limited liability company,
Its sole general partner
By: /s/ Xxxxxxx X. Xxxx
--------------------------
Xxxxxxx X. Xxxx
Senior Vice President
Schedule A
Description of the Properties
Property Number of Resident Rooms
The Quadrangle, Haverford, PA 542
The Fairfax Marriott LifeCare, Ft. Belvoir, VA 487
Schedule B
Permitted Encumbrances
Schedule C
Allocation of Purchase Price
(MA3, 2003 - Quadrangle/Fairfax)
The Purchase Price shall be One Hundred Three Million Seven Hundred
Sixty Eighty Thousand Two Hundred Five Dollars ($103,768,205) allocated among
the Properties as follows:
Purchase Price
Facility Location Purchase Price ($) Allocation Percentage
-------- -------- ------------------ -----------
Quadrangle Haverford, PA 45,950,200 44.28%
Fairfax Marriott Ft. Belvoir, VA 57,818,005 55.72%
LifeCare
------------------ ------------------------------ -------------------------- -----------------------
Total 103,768,205 100.00%
Schedule D
Venture Organizational Chart
[GRAPHIC OMITTED]
Schedule X-0
Xxxxxxxxxxx xx Xxxxxxxxxx, Xxxxxxxxx, XX Property
Schedule E-2
Description of Fairfax Marriott LifeCare, Ft. Belvoir Property
Schedule F
Title Commitments
------------------------------- ---------------------------- -------------------------- ---------------------------
Commitment or
Effective Date Property City and State
Order Number
------------------------------- ---------------------------- -------------------------- ---------------------------
XX 00000 September 30, 0000 Xxxxxxxxxx Xxxxxxxxx, XX
------------------------------- ---------------------------- -------------------------- ---------------------------
XX 00000 October 4, 0000 Xxxxxxx Xx. Xxxxxxx, XX
------------------------------- ---------------------------- -------------------------- ---------------------------
Schedule G
Surveys
----------------------------- ---------------------------- -------------------------- ---------------------------
The Xxxxxxxx Company Date of Survey Property City and State
Job Number
----------------------------- ---------------------------- -------------------------- ---------------------------
23832 November 18, 0000 Xxxxxxxxxx Xxxxxxxxx, XX
----------------------------- ---------------------------- -------------------------- ---------------------------
23826 November 26, 0000 Xxxxxxx Xx. Xxxxxxx, XX
----------------------------- ---------------------------- -------------------------- ---------------------------
Schedule H
Environmental Reports
------------------ ----------------- --------- ------------------- ---------------- ----------------- ----------------
Property City and State Pool Provider Effective Date Objection Letter CI Project No.
------------------ ----------------- --------- ------------------- ---------------- ----------------- ----------------
Fairfax Ft. Belvoir MSL3 Commercial November 25, N/A - No 0154-0017-CNL
Inspectors, LLC 2002 objections
------------------ ----------------- --------- ------------------- ---------------- ----------------- ----------------
Quadrangle Haverford, PA MSL3 Commercial November 25, N/A - No 0154-0018-CNL
Inspectors, LLC 2002 objections
------------------ ----------------- --------- ------------------- ---------------- ----------------- ----------------
Schedule I
Special Warranty Deed
Schedule J
Form of Assignment of Contracts
Schedule K
Form of Assignment of Intangible Property
Schedule L
Form of Assignment of Purchase Contract to Applicable Property Transferee
Schedule M
Form of Warranty Xxxx of Sale
SCHEDULE N
FORM OF SUBSTITUTE ARCHITECT'S CERTIFICATE
SCHEDULE O
FORM OF SUBSTITUTE ENGINEER'S CERTIFICATE
Schedule P
FF&E Schedule
Haverford, PA Location:
Fixed Asset Detail Schedule (BU/Product Dept: 54/54802.6049); For 0000
Xxxx Xxxxxxx, XX Location:
Fixed Asset Detail Schedule (BU/Product Dept: 54/54801.6049); For 2003
Schedule Q
Purchaser's Title and Survey Objections
Survey Objection Letters
---------------- ------------------- -------------------- -------------------------- ------------------------ ----------------
The Xxxxxxxx Date of Survey Property City and State Date of Objection Document No.
Company
Job Number Letter
---------------- ------------------- -------------------- -------------------------- ------------------------ ----------------
23832 November 18, 0000 Xxxxxxxxxx Xxxxxxxxx, XX December 7, 2002 607217
---------------- ------------------- -------------------- -------------------------- ------------------------ ----------------
23826 November 26, 0000 Xxxxxxx Xx. Xxxxxxx, XX December 11, 2002 608491
---------------- ------------------- -------------------- -------------------------- ------------------------ ----------------
Title Objection Letters
------------------- ---------------- -------------------- -------------------------- ------------------------ ----------------
Commitment or Effective Date Property City and State Date of Objection Document No.
Order Number Letter
------------------- ---------------- -------------------- -------------------------- ------------------------ ----------------
XX 00000 September 00, Xxxxxxxxxx Xxxxxxxxx, XX December 7, 2002 607217
2002
------------------- ---------------- -------------------- -------------------------- ------------------------ ----------------
XX 00000 October 4, 0000 Xxxxxxx Xx. Xxxxxxx, XX December 11, 2002 608491
------------------- ---------------- -------------------- -------------------------- ------------------------ ----------------
Schedule R
Purchaser's Environmental Report Objections
------------------ ----------------- ------------------------ ------------------ --------------------- ---------------------
Property City and State Provider Effective Date Objection Letter CI Project No.
------------------ ----------------- ------------------------ ------------------ --------------------- ---------------------
Fairfax Ft. Belvoir Commercial Inspectors, November 25, 2002 N/A - No objections 0154-0017-CNL
LLC
------------------ ----------------- ------------------------ ------------------ --------------------- ---------------------
Quadrangle Haverford, PA Commercial Inspectors, November 25, 2002 Dec. 17, 2002 0154-0018-CNL
LLC (Document # 609955)
------------------ ----------------- ------------------------ ------------------ --------------------- ---------------------
Schedule S
List of Litigation Matters
None.
Schedule T
Term Sheet for Lease
Tenant
o Tenant will be Marriott Continuing Care, LLC o There will be a lease
between the CNL and the Tenant.
o A 4.5% marketing fee will be allowed to Tenant on the proceeds
generated from the sale of refundable life care bonds. o Tenant will
be responsible for maintaining statutory reserves for the properties.
Lease Structure
o Initial Lease Rate of 10.25% with three-percent (3%) increases
annually. Credit against this amount will be granted for the proceeds
from the sale of non-refundable bonds. Look back owner's second
priority of 15% on property basis.
o Through the lease, tenant will assign 100% of refundable life care
bond (net of the 4.5% marketing fee) revenue as percentage rent.
o Landlord will retire liabilities for terminated life care bonds in
accordance with assignment and assumption agreement, to be negotiated
between MCC, Sunrise and CNL.
o Pennsylvania: 15-year term with a ten year renewal, followed by a
five year eleven month renewal
o Virginia: 15-year term with two ten year renewals
o Triple net lease
o The two leases will be pooled.
Cash Flow Waterfall
From Operations
1.Operating expenses, including provision for what would equate to a
six percent management fee on gross revenues, which would exclude all
entrance fees or life care bonds.
2. Capital reserve for FF&E equal to 5%.
3. Lease payment
4.Distributions to owner, up to a cumulative, non-compounding 15%
return on property basis.