XXX XXX XXXXXXXX XXXXXXXXX
(XX XX Xxxxxxxx - 00 Operating Facilities
and 5 Development Facilities)
1. PARTIES. This Put and Purchase Agreement ("Agreement") is entered into as of
March ______, 1999 by and between Xxxxxx X. Xxxx, individually and on behalf of
his marital community ("Obligor") and XX XX Holdings LLC, a Delaware limited
liability company ("XX XX Holdings"), AL Investors II LLC, a Delaware limited
liability company ("AL Investors II") and AL Investors Development LLC, a
Delaware limited liability company ("AL Investors Development"). AL Investors II
is executing this Agreement for itself and as the sole managing member on behalf
of fourteen (14) of the Facility Entities which will own an Operating Facility
or in cases where the Facility Entity is a limited partnership, as sole managing
member on behalf of the general partner thereof, and AL Investors Development is
executing this Agreement for itself and as the sole managing member on behalf of
five (5) of the Facility Entities which will own a Development Facility, all as
set forth on and identified on Exhibit A ("Facility Entities" and each a
"Facility Entity"). All capitalized terms not otherwise defined herein shall
have the meaning set forth in Exhibit A.
2. FACTS
2.1 Acquisition of Facilities. Concurrently herewith:
(a) AL Investors II and/or its Affiliates are entering into the following
agreements to acquire the fourteen (14) Operating Facilities:
(i) Purchase and Sale Agreement ("Operating Facilities Purchase
Agreement") with Meditrust Company LLC, successor by merger to Meditrust
Acquisition Corporation (collectively "Meditrust") relating to the acquisition
of the fourteen (14) Operating Facilities identified on Exhibit A (collectively,
the "Operating Facilities").
(ii) Supplemental Purchase Agreement ("Operating Facilities
Supplemental Agreement") with Emeritus Corporation ("Emeritus") and certain of
its Affiliates relating to certain additional terms and conditions in connection
with the purchase of the Operating Facilities.
(iii) Management Agreement with Option to Purchase with Emeritus,
Emeritus Management I LP, Emeritus Management LLC and certain other Emeritus
Affiliates (collectively "Managers") ("XX XX Operating Management Agreement")
pursuant to which the Managers will manage the Operating Facilities and pursuant
to which Emeritus has the option to purchase the Operating Facilities
("Operating Purchase Option") as more particularly set forth therein.
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(iv) Guaranty of Management Agreement ("Operating Facilities Guaranty
Agreement") with Emeritus pursuant to which Emeritus guarantees the obligations
of Managers under the XX XX Operating Management Agreement as more particularly
set forth therein.
(v) Licensing Indemnity Agreement for Operating Facilities.
(b) AL Investors Development and/or its Affiliates are entering into the
following agreements:
(i) Purchase and Sale Agreement ("Development Facilities Purchase
Agreement") with Meditrust relating to the acquisition of the five (5)
Development Facilities identified on Exhibit A (collectively, the "Development
Facilities").
(ii) Supplemental Purchase Agreement ("Development Facilities
Supplemental Agreement") with Emeritus and certain of its Affiliates relating to
certain additional terms and conditions in connection with the purchase of the
Development Facilities.
(iii) Management Agreement with Option to Purchase with Emeritus,
Emeritus Management I LP, Emeritus Management LLC and certain other Emeritus
Affiliates (collectively "Managers") ("XX XX Development Management Agreement")
pursuant to which the Managers will manage the Development Facilities and fund
certain Operating Deficits of the Facilities and pursuant to which Emeritus has
the option to purchase the Development Facilities (together with the Operating
Purchase Option, the "Purchase Options") as more particularly set forth therein.
(iv) Guaranty of Management Agreement and Shortfall Funding Agreement
("Development Facilities Guaranty Agreement") with Emeritus pursuant to which
Emeritus guarantees the obligations of Managers under the XX XX Development
Management Agreement and agrees to fund certain Operating Deficits of the
Facilities as more particularly set forth therein.
(v) Licensing Indemnity Agreement for the Development Facilities.
Collectively, the above-referenced agreements in (a) and (b) are referred to
herein as the "Related Agreements" and the Operating Facilities Purchase
Agreement, the Development Facilities Purchase Agreement, the Operating
Facilities Supplemental Agreement, and the Development Facilities Supplemental
Agreement are collectively referred to herein as the "Purchase Agreements." The
Operating Facilities and the Development Facilities are collectively referred to
herein as the
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Facilities. The XX XX Development Management Agreement and the XX XX Operating
Management Agreement are collectively referred to herein as the Management
Agreements.
2.2 Financing of the Facilities. In connection with the Purchase Agreements, AL
Investors II and AL Investors Development have each created a Facility Entity
for the purpose of taking title to each Facility pursuant to the Purchase
Agreements. The fourteen (14) Operating Facilities to be purchased by the
Facility Entities pursuant to the Purchase Agreements will close simultaneously
and be financed in part by the Initial Senior Loan/Operating Facilities and the
Initial Junior Loan. The five (5) Development Facilities may close as they are
completed and be financed in part by the Initial Senior Loan/Development
Facilities and the Initial Junior Loan.
2.3 Consideration. Obligor acknowledges that he is an officer and major
shareholder of Emeritus and as such he is directly and materially benefited by
XX XX Holdings and its Affiliates entering into the Related Agreements. Obligor
acknowledges that Emeritus is the parent company of the Affiliates of Emeritus
that previously leased the Facilities from Meditrust and owned the Facilities
and is the parent company of the Managers that will manage the Facilities, and
as such, Emeritus is directly and materially benefited by XX XX Holdings, AL
Investors II, AL Investors Development and the Facility Entities entering into
the Related Agreements. In consideration of XX XX Holdings and its Affiliates
entering into the Related Agreements, the mutual covenants herein, and for other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Obligor has entered into this Agreement. Obligor acknowledges and
agrees that XX XX Holdings and its Affiliates would not have entered into the
Related Agreements without Obligor having executed and delivered this Agreement.
3. PUT OF FACILITIES
3.1 Exercise of Put. XX XX Holdings and the applicable Facility Entities shall
have the right to require Obligor to purchase certain of the Facilities
specified by XX XX Holdings and the applicable Facility Entities as provided
below and upon the terms and conditions of this Agreement upon the occurrence of
any of the following events ("Triggering Events" and each a "Triggering Event"):
(a) If Emeritus has not exercised both of the Purchase Options (as defined
in the Management Agreements) to purchase all of the Facilities on or before one
hundred eighty (180) days prior to expiration of the Initial Term of the
Management Agreements as provided for in Section 13 of the Management
Agreements.
(b) If Emeritus timely exercises both of the Purchase Options (as defined
in the Management Agreements) to purchase all of the Facilities but
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thereafter fails to close either or both in accordance with the terms of the
Management Agreements, time being of the essence with respect to such purchase.
(c) If there should be an Event of Default under the terms of either or
both of the Management Agreements by Emeritus or Managers.
(d) If Obligor has failed to satisfy the requirements of Section 3.11
below.
(e) If there has been a Change in Control not approved in writing by XX XX
Holdings and the Initial Junior Lender, which approval may be given or withheld
in their sole discretion.
Obligor shall give written notice of the occurrence of any Triggering Event to
XX XX Holdings, but failure to give such notice shall not affect Obligor's
obligations under this Agreement. Upon occurrence of any one or more of the
Triggering Events, XX XX Holdings may require Obligor to purchase four (4) of
the Facilities with respect to Triggering Events (a), (b), (c) and (d) and six
(6) of the Facilities with respect to Triggering Event (e), all on the terms and
conditions of this Agreement. The designation of which four (4) or six (6)
Facilities Obligor shall be obligated to purchase shall be in XX XX Holdings'
sole, absolute and unfettered discretion and may be selected from the Operating
Facilities, the Development Facilities, or both. Obligor acknowledges that such
designations are likely to include those Facilities that are least desirable or
of the lowest relative value. XX XX Holdings shall provide written notification
to Obligator ("Put Notice") specifying the Facilities Obligor is required to
purchase ("Put Facilities" and each a "Put Facility"), the purchase price for
each Put Facility calculated in accordance with Section 3.4, and the amount of
the Deposit required by Section 3.5. XX XX Holdings may give the Put Notice to
Obligor at any time after the Triggering Event but in any event prior to sixty
(60) days after the later of: (a) XX XX Holdings has acquired actual knowledge
that a Triggering Event has occurred, pursuant to written notice from Obligor or
otherwise, or (b) one hundred eighty (180) days prior to the expiration of
Initial Term of the Management Agreements. The closing on this purchase by
Obligor on the Put Facilities shall occur within ninety (90) days after the
delivery of the Put Notice to Obligor ("Put Purchase Date"). Obligor shall be
absolutely and unconditionally obligated to purchase the Put Facilities in
accordance with the Put Notice on the Put Purchase Date. In the event that
Emeritus has exercised the Purchase Option pursuant to the terms of the AL
Management Agreement, but has not exercised the Purchase Options pursuant to the
Management Agreements, then the number of Put Facilities which XX XX Holdings
shall be entitled to designate pursuant to this Section shall be increased by
four (4), i.e., XX XX Holdings shall be entitled to require Obligor to purchase
eight (8) of the Facilities with respect to Triggering Events (a), (b), (c) and
(d) and ten (10) of the Facilities with respect to Triggering Event (e).
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3.2 Option in Favor of Obligor. If XX XX Holdings has delivered the Put Notice
to Obligor, Obligor shall also be deemed to have an option to purchase from XX
XX Holdings and the Facility Entities all, but not less than all, of the
Facilities (which includes all of the Operating Facilities and the Development
Facilities) then owned by XX XX Holdings and the Facility Entities on the same
terms, conditions and purchase price set as set forth in Section 13 of the
Management Agreements (Obligor's Option"), provided that Obligor exercises
Obligor's Option by written notice and deposit given to XX XX Holdings not later
than twenty (20) days after receipt of the Put Notice pursuant to Section 3.1(a)
or 3.1(b), and not later than sixty (60) days after receipt of the Put Notice
pursuant to Section 3.1(c), 3.1(d) or 3.1(e). Upon exercise of Obligor's Option
pursuant to this Section, Obligor shall nonetheless remain obligated to deliver
the full amount of the deposit set forth in Section 3.5 below, and shall
additionally be obligated to deposit the amount set forth in Section 13.2 of the
Management Agreements. Failure to give such notice and deposit within such
twenty (20) day or sixty (60) day period shall automatically terminate Obligor's
Option. Notwithstanding the Obligor's Option, the Put Notice shall remain
effective until such time that Obligor exercises the Obligor's Option to
purchase all the Facilities then owned by the XX XX Holdings and the Facility
Entities and closes such purchase pursuant to Obligor's Option, except that the
time period to close the purchase of the Put Facilities shall be extended until
ten (10) days after the date on which Obligor's Option is required to close. The
terms and conditions for such purchase and the closing thereof shall be pursuant
to the provisions of Section 13 of the Management Agreements, which are
incorporated herein by this reference. If Obligor fails to close the purchase
pursuant to Obligor's Option, then Obligor shall forfeit its deposit made
pursuant to Section 13.2 of the Management Agreements, and such amount shall not
be credited against Obligor's continuing obligation to purchase the Put
Facilities. Obligor's Option under this Section 3.2 following a Put Notice shall
be subordinate to the rights of Emeritus under the Emeritus Purchase Options
pursuant to Section 13 of the Management Agreements if Emeritus timely exercises
and closes such purchase.
3.3 Title. If a Put Notice is provided to Obligor in accordance with the terms
hereof, each Put Facility shall be conveyed on the Put Purchase Date, or the
next Business Day thereafter, by a quit claim deed ("Deed") subject to all
Permitted Exceptions and other Liens, easements or matters of record (except
only for any Mortgage) and all matters arising through or with the consent of
Managers or Emeritus, a quit claim xxxx of sale and assignment as to all
Personal Property and a quit claim assignment of all Leases, Contracts and
Permits. The form of all such quit claim deeds and assignments shall be as
specified by XX XX Holdings or Facility Entities and consistent with Legal
Requirements for conveyances in the jurisdiction in which each Put Facility is
located. Transfer of all Permits to Obligor or his designee in accordance with
Legal Requirements for each Put Facility shall be the sole responsibility and
cost of Obligor. Other than an obligation to reasonably
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cooperate (at no material out-of-pocket cost) in such transfer, XX XX Holdings
or the Facility Entities shall have no liability or responsibility for the
adequacy or completeness of any transfer of the Permits. No delay in
transferring the Permits shall delay the closing of the purchase of the Put
Facilities by Obligor except only for such necessary time required with all due
diligence to obtain reissuance or transfer of the Permits, but not beyond sixty
(60) days. If such Permits have not been reissued or transferred by such date,
then Obligor shall be deemed to be in default of his obligation to purchase the
Put Facilities and shall be liable for damages as set forth in Section 3.10.
3.4 Calculation of Purchase Price. The price to be paid by Obligor for the
acquisition of each Put Facility shall mean the amount calculated in accordance
with Exhibit B (the "Purchase Price"). XX XX Holdings' calculation of the
Purchase Price shall be final, absent bad faith. The Purchase Price shall be a
net Purchase Price to be received by the respective Facility entity for each
Facility without deduction for due diligence, transfer taxes, title insurance or
other closing costs, all of which shall be paid by Obligor. Neither XX XX
Holdings nor the Facility Entities shall bear any closing costs or prorations of
any kind or nature including, without limitation, with respect to real property
taxes, water or sewer charges, utilities or other operating expenses or income.
3.5 Deposit. Within seven (7) days after delivery of the Put Notice to Obligor,
Obligor shall deliver a cash deposit to XX XX Holdings in an amount equal to
five percent (5%) of the aggregate Purchase Price for the Put Facilities
(together with all interest earned thereon, the "Deposit"). The Deposit shall be
deposited in a money market or similar interest-bearing account with a
commercial bank selected by XX XX Holdings. The Deposit shall be credited
against the Purchase Price. Obligor expressly acknowledges that the Deposit is
not the limit of Obligor's liability and does not otherwise constitute
liquidated damages in the event of a default by Obligor in the purchase of the
Put Facilities as more fully set forth in Section 3.10 below.
3.6 Payment of Purchase Price. The Purchase Price for each Put Facility shall be
paid by Obligor at the Time of Closing in good funds.
3.7 Place and Time of Closing. If the Put Notice is given to Obligor, the
closing shall occur and the Deed for each Put Facility shall be delivered to
Title Company at 12:00 o'clock noon (P.S.T.) on the Put Purchase Date ("Time of
Closing"). It is agreed that time is of the essence with respect to all matters
relating to the purchase of the Put Facilities by Obligor pursuant to a Put
Notice. XX XX Holdings, the Facility Entities and Obligor shall execute such
escrow instructions and other documents as may be customary and reasonably
requested by the Title Company in order to close the purchase of the Put
Facilities in accordance with this Agreement.
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3.8 Condition of Put Facilities. The Put Facilities and each of them shall be
purchased by Obligor "AS IS" and "WHERE IS" as of the Time of Closing. Without
limiting the generality of the foregoing, neither XX XX Holdings, AL Investors
II, AL Investors Development, nor the Facility Entities make and shall not make
any representations or warranties, express or implied, with respect to, and
shall have no liability for: (i) the condition of the Put Facilities or any
Improvements thereon or the suitability, habitability, merchantability or
fitness of the Put Facilities; (ii) compliance with any Legal Requirements;
(iii) the presence of any Hazardous Substances in or about the Put Facilities,
including without limitation asbestos or urea-formaldehyde, or the presence of
any Hazardous Substances on or under the Land associated with any Put Facility;
(iv) the accuracy or completeness of any plans and specifications, reports, or
other materials provided to Obligor; or (v) any other matter relating to the Put
Facilities, including, without limitation, the title thereto or the condition,
value or operating results or prospects thereof. Without limiting the generality
of the foregoing, neither XX XX Holdings, AL Investors II, AL Investors
Development, nor the Facility Entities shall have any liability to Obligor with
respect to the condition, value or operating results or prospects of the Put
Facilities under common law, or under any Legal Requirements and Obligor hereby
waives any and all claims which Obligor have or may have against XX XX Holdings,
AL Investors II, AL Investors Development and/or Facility Entities with respect
to the condition of the Put Facilities. Obligor assumes the responsibility and
risks of all defects and conditions, including such defects and conditions, if
any, that cannot be observed by inspection or examination of records. Obligor
shall indemnify, defend, and hold harmless XX XX Holdings, AL Investors II, AL
Investors Development and/or Facility Entities from and against all claims and
liabilities of any type or kind arising out of or related to the Put Facilities,
from and after the Time of Closing, it being intended that XX XX Holdings, AL
Investors II, AL Investors Development and Facility Entities shall have no
liability from and after the Time of Closing with respect to the Put Facilities.
3.9 Use of Purchase Price to Clear Title. To enable the respective Facility
Entities to make the conveyance as provided in this Section 3, XX XX Holdings
and the Facility Entities may, at the Time of Closing, use the Purchase Price or
any portion thereof to clear the title of any Mortgage, provided that all
instruments so procured are recorded contemporaneously with the Closing or
reasonable arrangements are made for recording subsequent to the Time of Closing
in accordance with customary conveyancing practices.
3.10 Obligor's Default. If XX XX Holdings delivers the Put Notice to Obligor and
Obligor fails to consummate the purchase of the Put Facilities in accordance
with the terms hereof for any reason other than the Facility Entities' willful
and unexcused refusal to deliver the Deed and other assignments provided for
herein, AL Holdings or Facility Entities shall have the option to either (a) xxx
for specific performance compelling Obligor to purchase the Put Facilities as
required by this Agreement or (b) to xxx for damages which shall be measured by
the
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difference between the aggregate Purchase Price for the Put Facilities and the
then fair market value of the Put Facilities, less the transaction costs
(including seller's share of any adjustments and prorations) anticipated to be
incurred by XX XX Holdings or the Facility Entities in connection with the sale
of the Put Facilities to a third party, all as determined by XX XX Holdings. XX
XX Holdings determination of the fair market value shall be final, absent bad
faith or an unreasonable determination.
3.11 Net Worth Covenants of Obligor. Prior to the execution of this Agreement,
Obligor has delivered to XX XX Holdings his signed statement of personal net
worth ("Net Worth Statement") dated as of December 31, 1998. Obligor agrees to
update this Net Worth Statement semi-annually and to deliver to XX XX Holdings
each updated Net Worth Statement promptly following its preparation, together
with a signed letter from Obligor certifying its accuracy. In the event that (a)
the net worth of the Obligor shown on his Net Worth Statement falls below Fifty
Million Dollars ($50,000,000), or (b) Obligor fails to deliver his Net Worth
Statement as set forth above, then within thirty (30) days Obligor shall deliver
to XX XX Holdings a letter of credit in the amount of Three Million Dollars
($3,000,000), in form and substance and from a financial institution meeting XX
XX Holdings' reasonable satisfaction and drawable solely upon XX XX Holdings'
statement that a default under this Agreement has occurred (the "Letter of
Credit"), to secure the timely performance of Obligor under this Agreement. In
no event shall the Letter of Credit constitute liquidated damages or otherwise
limit Obligor's liability hereunder. Failure to satisfy the terms of this
Section 3.11 shall be a Triggering Event as set forth in Section 3.1(d) above.
4. [Intentionally Deleted]
5. CONSENTS AND WAIVERS
5.1 Consent to Modification of Obligations. Without affecting, diminishing or
otherwise impairing the liability of Obligor hereunder and without notice to or
consent of Obligor, XX XX Holdings, its Affiliates, and the Facility Entities
may from time to time grant renewals, extensions, indulgences, releases and
discharges to any Person liable for any obligations under the Related Agreements
(collectively, the "Obligations") and may take security for payment or
performance of such Obligations, and may release any or all security or refrain
from perfecting any interest in any security granted by any guarantor or other
Person liable for any of the Obligations. XX XX Holdings, its Affiliates and the
Facility Entities, may amend or modify the Obligations or any document or
instrument executed to evidence the Obligations and otherwise may deal with any
Person liable for any of the Obligations, without notice to or consent of
Obligor, and without affecting, diminishing, or otherwise impairing the
liability of Obligor under this Agreement.
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5.2 Consent to Waivers. XX XX Holdings, its Affiliates or Facility Entities may
from time to time consent to any action or non-action of any Person liable for
any of the Obligations, which, in the absence of such consent, violates or may
violate the provisions of the Related Agreement or any other instrument
otherwise executed in connection with the Obligations, and such consent may be
granted by XX XX Holdings, its Affiliates or Facility Entities, without notice
to or consent of Obligor and without in any manner affecting, diminishing, or
impairing the liability of Obligor under this Agreement. No waiver,
modification, extension, forbearance, or delay on the part of XX XX Holdings,
its Affiliates or Facility Entities with respect to the Obligations or with
respect to any document, instrument or agreement evidencing such Obligations,
securing repayment of such Obligations or otherwise executed in connection with
the Obligations, and no act or thing which might, but for this provision of this
Agreement, be deemed a legal or equitable discharge of a surety, shall operate
to release the obligations of Obligor under this Agreement, and no delay on the
part of XX XX Holdings, its Affiliates or Facility Entities in exercising any of
its options, powers, or rights under this Agreement, or any partial or single
exercise thereof shall constitute a waiver of any other rights hereunder.
5.3 Continued Effectiveness of Agreement. This Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time payment of all
or any part of the Obligations is rescinded or otherwise must be returned by XX
XX Holdings, its Affiliates or Facility Entities upon the insolvency,
bankruptcy, or reorganization of the Managers, Emeritus, Obligor or any other
Person all as though such payment to XX XX Holdings, its Affiliates or Facility
Entities had not been made.
5.4 Change in Form and Powers. No change in the name, purposes, capitalization,
ownership, form or organization of Managers, Emeritus, any Affiliate of
Emeritus, or any other Person shall in any way affect, diminish, or otherwise
impair the liability of Obligor under this Agreement. XX XX Holdings, its
Affiliates or Facilities Entities shall not be obligated to inquire into the
powers of the Managers, Emeritus, any Affiliate of Emeritus, or any other Person
notwithstanding that any of the Obligations may be in excess of the powers of
the Managers, Emeritus, any Affiliate of Emeritus, or any other Person.
5.5 Effect of Certain Laws. Notwithstanding the provisions of the laws of any
state, this Agreement shall remain in full force and effect and no invalidity,
irregularity, or unenforceability (by reason of any bankruptcy or similar law,
any other law or any order of any Governmental Authorities thereof purporting to
reduce, amend, or otherwise affect any liability or obligation of the Managers
or Emeritus or any Affiliate of Emeritus) and no release or discharge of the
Managers, Emeritus, any Affiliate of Emeritus, or rejection of any of the
Related Agreements by any of the parties thereto other than XX XX Holdings, its
Affiliates or Facility Entities, or any trustee, receiver or similar official on
behalf of such parties
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(whether pursuant to 11 U.S.C. Section 365 or otherwise), in any receivership,
bankruptcy, liquidation, winding-up, reorganization or other proceedings shall
affect, diminish, or otherwise impair or otherwise be a defense to this
Agreement. If Emeritus or any Emeritus Affiliate is stayed by any bankruptcy or
other proceeding with respect to exercising its option to purchase the
Facilities under the Management Agreements, it shall not prevent XX XX Holdings,
its Affiliates or Facility Entities from delivering a Put Notice to Obligor as a
result of the occurrence of any Triggering Event, or if the Triggering Event
would have occurred, but for the effect of the stay created by the bankruptcy or
other proceeding, and enforcing the obligations of Obligor to purchase the Put
Facilities pursuant to such Put Notice.
5.6 No Conditions to Agreement. This Agreement is absolute and unconditional and
has been delivered free of any conditions and no representations have been made
to Obligor affecting or limiting the liability of Obligor under this Agreement.
This Agreement is in addition to and not in substitution for any agreement of
Obligor, in the Related Agreements or in any other document or instrument
executed by Obligor agreeing to perform all or any part of the Obligations.
5.7 Certain Waivers by Obligor. Obligor agrees that no release, delay,
compromise, indulgence, or other action or failure to act by XX XX Holdings, its
Affiliates or Facility Entities with respect to any other Person liable for any
of the Obligations shall in any manner affect, diminish or impair the liability
of Obligor under this Agreement.
5.8 Survival. This Agreement shall survive expiration or sooner termination of
any of the Related Agreements. Without limiting the generality of the foregoing,
no termination of any of the Related Agreements, whether in whole or in part, or
whether by any of the parties thereto, shall terminate any obligation of Obligor
to purchase the Put Facilities pursuant to a Put Notice or the Emeritus
Facilities pursuant to the Purchase Notice and the terms of this Agreement.
6. ARBITRATION
At the sole election of XX XX Holdings, any claim or dispute between the
parties, under this Agreement or otherwise, shall be determined by arbitration
in Portland, Oregon under the American Arbitration Association (AAA) Commercial
Arbitration rules with Expedited Procedures in effect on the date hereof, as
modified by this Agreement. There shall be one arbitrator selected by the
parties within seven (7) days of the arbitration demand or if not, then pursuant
to the AAA rules, who shall be an attorney licensed to practice law in the State
of Washington but residing in Portland with at least fifteen (15) years
commercial law experience. Any issue about whether a claim is covered by this
Agreement shall be determined by the arbitrator. At the request of either party
made not later than thirty (30) days after the arbitration demand, the parties
agree to submit the dispute to
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nonbinding mediation which shall not delay the arbitration hearing date. There
shall be no substantive motions or discovery, except the arbitrator shall
authorize such discovery as may be necessary to insure a fair hearing, which
shall be held within sixty (60) days of the demand; and concluded within two (2)
days. These time limits are not jurisdictional. The arbitrator shall apply
substantive law and may award injunctive relief or any other remedy available
from a judge including attorney fees and costs to the prevailing party, but
shall not have the power to award punitive damages.
7. MISCELLANEOUS
7.1 Notices. Any notice, demand, offer, approval or other writing required or
permitted pursuant to this Agreement shall be in writing, furnished in duplicate
and shall be transmitted by hand delivery, facsimile, certified mail, return
receipt requested, or Federal Express or another nationally recognized overnight
courier service which provides evidence of delivery, postage prepaid, as
follows:
If to AL Holdings, its Affiliates
or Facility Entities: XX XX Holdings LLC
c/o Xxxxx X. Xxxxx
0000 XxXxxxxxxxx Xxxxxx XX, Xxxxx 000
Xxxxx, Xxxxxx 00000
Facsimile: (000)000-0000
Telephone: (503)370-7071 ext. 7143
With copies to: Xxxxxx Pepper & Shefelman PLLC
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Facsimile: (000)000-0000
Telephone: (000)000-0000
Senior Housing Partners I, L.P.
c/o Xx. Xxxx Xxxx
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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Xxxxxxx Xxxxxxx & Xxxx XXX
Xxxxxxxx Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxx Xxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Prudential Real Estate Investors
0 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxx
Facsimile: (000)000-0000
Telephone: (000)000-0000
If to Obligor: c/o Emeritus Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xx. Xxxxxx Xxxx
Facsimile: (000)000-0000
Telephone: (000)000-0000
With copies to: Emeritus Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: President
Facsimile: (000)000-0000
Telephone: (000)000-0000
Any party shall have the right to change the place to which such notice shall be
given or add additional parties to receive notices by similar notice sent in
like manner to all other parties hereto. Any notice, if sent by overnight
courier service, shall be deemed delivered on the earlier of the date of actual
delivery or the next business day and if delivered by hand delivery or facsimile
shall be deemed delivered on the date of the actual delivery and if sent by
mail, shall be deemed delivered on the earlier of the third day following
deposit with the U.S. Postal Service or actual delivery. Any notice sent by
facsimile shall also be sent on the same business day by overnight courier or
mail as set forth above.
7.2 Governing Law. This Agreement has been executed and delivered to XX XX
Holdings, its Affiliates or Facility Entities in the State of Washington.
Obligor agrees that the law of the State of Washington (exclusive of principles
of conflicts of law) shall be applicable for the purpose of construing this
Agreement, determining the validity hereof and enforcing the same. Obligor
hereby consents to the jurisdiction of the courts of the State of Washington or
to any
-00-
xxxxxxx xxxxx sitting in the State of Washington. XX XX Holdings may enforce any
or all of the provisions of this Agreement directly against Obligor and
Obligor's marital community in the State of Washington or any other jurisdiction
in which Obligor does business or at its option may enforce this Agreement on
behalf of any Facility Entity in the state in which such Put Facility is
located.
7.3 No Waiver. No delay or omission to exercise any right, power or remedy
accruing to XX XX Holdings, its Affiliates or the Facility Entities upon any
breach or default of Obligor shall impair such rights, powers or remedies of XX
XX Holdings or its Affiliates or Facility Entities, nor shall it be construed to
be a waiver of any such breach or default, or of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring.
7.4 Assignment. XX XX Holdings reserves the right to transfer or assign any or
all of their right, title and interest under this Agreement, including
assignment to any Mortgagee. Obligor shall not assign this Agreement in whole or
in part to any Person without XX XX Holdings or Facility Entity's prior written
consent, which may be withheld in XX XX Holdings' sole, absolute and unfettered
discretion.
7.5 Captions. Any captions applied to the sections of this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement.
7.6 Invalidity. If any term, condition or provision of this Agreement shall be
held invalid for any reason, such offending term, condition or provision shall
be stricken therefrom, and the remainder shall not be affected.
7.7 Entire Agreement. This Agreement constitutes the complete and final
expression of the entire agreement between the parties pertaining to the subject
matter hereof. This Agreement may be amended only by a written instrument
executed by Obligor and XX XX Holdings.
7.8 Binding Effect. This Agreement shall inure to the benefit of XX XX Holdings
and the Facility Entities, their respective successors and assigns, and shall be
binding upon Obligor and its respective permitted successors and assigns, as the
case may be. This Agreement may be terminated only by means of a written
document duly executed by Obligor and XX XX Holdings. The parties agree that AL
Investors II, AL Investors Development and the Facility Entities are intended
third party beneficiaries of this Agreement.
7.9 Legal Expenses. In the event of any default, or in the event that any
dispute arises relating to the interpretation, enforcement or performance of
this Agreement, the prevailing party shall be entitled to all reasonable fees
and
-13-
expenses incurred in connection therewith, including but not limited to fees of
attorneys, accountants, appraisers, consultants, expert witnesses, arbitrators,
mediators and court reporters. Without limiting the generality of the foregoing,
the prevailing party shall pay all such costs and expenses incurred in
connection with: (a) arbitration or other alternative dispute resolution
proceedings, trial court actions and appeals; (b) bankruptcy or other insolvency
proceedings of Obligor, (c) all claims, counterclaims, cross-claims and defenses
asserted in any of the foregoing whether or not they arise out of or are related
to this Agreement; (d) all preparation for any of the foregoing; and (e) all
settlement negotiations with respect to any of the foregoing.
7.10 Jury Trial Waiver. OBLIGOR, XX XX HOLDINGS, ITS AFFILIATES AND FACILITY
ENTITIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATED TO THIS AGREEMENT.
DATED this ______________ day of March, 1999.
OWNER: XX XX HOLDINGS LLC, a Delaware limited
liability company for itself and as sole
managing member on behalf of each of AL
Investors II LLC and AL Investors
Development LLC
By /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: Manager
AL INVESTORS DEVELOPMENT LLC, a Delaware
limited liability company, for itself and as
sole managing member on behalf of each of
the Facility Entities which owns a
Development Facility
By /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: Manager
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AL INVESTORS II LLC, a Delaware limited
liability company, for itself and as sole
managing member on behalf of each of the
Facility Entities which owns an Operating
Facility, or in cases where the Facility
Entity is a limited partnership, as sole
managing member on behalf of the general
partner of such Facility Entity
By /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: Manager
OBLIGOR:
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx, individually and
on behalf of his marital community
-15-
EXHIBIT A
TO PUT AND PURCHASE AGREEMENT
(XX XX Holdings - 14 Operating Facilities
and 5 Development Facilities)
Certain Defined Terms
XX XX Holdings: XX XX Holdings LLC, a Delaware limited liability company, which
is the sole member of AL Investors II and AL Investors Development
AL Investors II: AL Investors II LLC, a Delaware limited liability company
AL Investors Development: AL Investors Development LLC, a Delaware limited
liability company
XX XX Development Management Agreement: That certain Management Agreement with
Option to Purchase dated on or about the same date as this Put and Purchase
Agreement, among AL Investors Development and Emeritus Corporation and its
Affiliates relating to the management of up to five (5) assisted living
facilities. "Management Agreement" as used herein shall mean the XX XX Operating
Management Agreement if the Facility in question is being managed pursuant to
the XX XX Operating Management Agreement, or the XX XX Development Management
Agreement if the Facility in question is being managed pursuant to the XX XX
Development Management Agreement.
XX XX Operating Management Agreement: That certain Management Agreement with
Option to Purchase dated on or about the same date as this Put and Purchase
Agreement, among AL Investors II and Emeritus Corporation and its Affiliates
relating to the management of fourteen (14) assisted living facilities.
"Management Agreement" as used herein shall mean the XX XX Operating Management
Agreement if the Facility in question is being managed pursuant to the XX XX
Operating Management Agreement, or the XX XX Development Management Agreement if
the Facility in question is being managed pursuant to the XX XX Development
Management Agreement.
AL Management Agreement: That certain Management Agreement With Option to
Purchase dated December 30, 1998 Among AL Investors LLC and Emeritus Corporation
and its Affiliates relating to the management of twenty-five (25) assisted
living facilities.
Affiliate: with respect to any Person (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (ii) any other Person that owns, beneficially, directly or indirectly,
five percent (5%) or more of the outstanding capital stock, shares or equity
interests of such Person or (iii) any officer, director, employee, general
partner or trustee of such Person, or any
A-1
other Person controlling, controlled by, or under common control with, such
Person (excluding trustees and Persons serving in a fiduciary or similar
capacity who are not otherwise an Affiliate of such Person). For the purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, partnership interests or other
equity interests.
Agency Account: The Agency Account to be maintained for each Facility for
payment of Fixed Operating Expenses and Operating Expenses as described in
Section 8.1 of the Management Agreements.
Annual Plan(s): as defined in Section 4.2 of the Management Agreements.
Award: all compensation, sums or anything of value awarded, paid or received on
a total or partial Condemnation.
Base Management Fee: as defined in Section 7.1 of the Management Agreements.
Bankruptcy Event: Any of Emeritus or Managers admit in writing its inability to
pay debts as they become due; or applies for, consents to, or acquiesces in the
appointment of, a trustee, receiver or other custodian or makes a general
assignment for the benefit of creditors, or in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed and
is not discharged within sixty (60) days after such appointment; or an order for
relief is entered or a petition is filed under Xxxxx 00, Xxxxxx Xxxxxx
Bankruptcy Code, with respect to any of them; or any other bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, now or hereafter in effect, is commenced with
respect to any of them.
Business Day: any day which is not a Saturday or Sunday or a public holiday
under the laws of the United States of America or the State of Washington.
Capital Improvements: as defined in Section 12 of the Management Agreements.
Cash Available for Distribution: on any date the amount contained in the Agency
Accounts (as defined in Section 8.1 of the Management Agreements), minus an
amount (to be retained in the Agency Accounts) equal to any reasonably projected
Operating Deficit for the succeeding 30 days, taking into account all Operating
Expenses and Fixed Operating Expenses and all anticipated Total Revenues during
such 30-day period.
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Casualty: the damage or destruction by act of God or otherwise of any portion of
any Facility which Owner reasonably estimates would cost more than $50,000 to
repair or restore.
Change of Control: shall mean the occurrence of any one of the following events
with respect to Emeritus:
(a) any Person or group of Persons (within the meaning of Rule 13d-5 under
the Act as defined below) other than Emeritus, any of its subsidiaries, or any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of Emeritus or any of its subsidiaries, together
with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the "Act")) of such
Person or group, shall become the "beneficial owner" (as such term is defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of Emeritus
representing a greater percentage than that then owned by Xxxxxx X. Xxxx,
together with all "affiliates" and "associates" of Xxxxxx X. Xxxx (as defined
above) of either (A) the combined voting power of Emeritus' then outstanding
securities having the right to vote in an election of Emeritus' Board of
Directors ("Voting Securities") or (B) the then outstanding shares of Stock of
Emeritus; or
(b) Persons who, as of the date hereof, constitute Emeritus' Board of
Directors (the "Incumbent Directors") cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that any
person becoming a director of Emeritus subsequent to the date hereof whose
election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or
(c) the stockholders of Emeritus shall approve (A) any consolidation or
merger of Emeritus or any subsidiary where the shareholders of Emeritus,
immediately prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, shares representing a majority of
the voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), (B) any
sale, lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of Emeritus or (C) any plan or proposal for the
liquidation or dissolution of Emeritus; or
(d) other than by reason of death or legal disability, Xxxxxx Xxxx ceases
to be the chief executive officer of Emeritus.
A-3
Change of Control with respect to any Manager shall mean the occurrence of any
event whereby 100% of the ownership interests in such Manager are no longer
owned by Emeritus.
Closing: the date of closing with respect to any Facility under the Purchase
Agreements.
Code: the Internal Revenue Code of 1986, as amended.
Commencement Date: as defined in Section 2.1 of the Management Agreements.
Compensation: the direct salaries and wages paid to, or accrued for the benefit
of, any employee working and employed at each Facility together with all
reasonably customary fringe benefits payable to, or accrued for the benefit of
such employee, including employer's contribution under FICA., unemployment
compensation, or other employment taxes, pension fund contributions, workmen's
compensation, group life and accident and health insurance premiums, and other
reasonable employee benefits customary in the industry.
Condemnation: with respect to any Facility or any interest therein or right
accruing thereto or use thereof (i) the exercise of the power of condemnation,
whether by legal proceedings or otherwise, by a Condemnor or (ii) a voluntary
sale or transfer to any Condemnor under threat of condemnation.
Condemnor: any public or quasi-public authority, or private corporation or
individual, having the power of condemnation.
Contracts: Collectively, all Provider Agreements, Residency Agreements, Ordinary
Contracts and Major Contracts.
CPA: The certified public accountants retained to provide necessary accounting
services for the Facility or Owner, the selection of which shall be subject to
approval by Owner.
Date of Taking: the date the Condemnor has the right to possession of the
property being condemned.
Environmental Laws: means all federal, state, and local laws, ordinances and
regulations and standards, rules, policies and other governmental requirements,
administrative rulings, and court judgments and decrees in effect now or in the
future and including all amendments, that relate to Hazardous Materials and
apply to the Facilities or to the Land and/or the Improvements. Hazardous
Materials Laws include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the
Resource
A-4
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic
Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33
U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, and their state analogs.
Excluded Expenses: depreciation, amortization and other non-cash expenses; items
to be provided or paid for at Owner's or Managers' sole expense as provided
herein; costs and expenses resulting from or required to cure any matter or
defect which constitutes a breach of warranty, representation or indemnity under
the Purchase Agreements, the Licensing Agreement, or the Management Agreement
which cost or expense shall be the sole responsibility of the breaching party;
unreasonable or excessive charges or expenses.
Escrow Holder: First American Title Insurance Company.
Extension Term: as defined in Section 2.2 of the Management Agreements.
Facility or Facilities: Each of the assisted living facilities, including the
Land, Improvements, and Personal Property associated therewith, located in the
city and state as set forth below which are acquired by a Facility Entity and
made subject to the Management Agreements:
Facility City State Units Beds Facility LLC and LP
Name
Colonial Park
Club Sarasota FL 90 110 AL Investors II
Sarasota LLC
Park Club of
Fort Xxxxx Fort Xxxxx FL 90 100 AL Investors II
Fort Xxxxx LLC
Park Club of
Oakbridge Lakeland FL 77 94 AL Investors II
Lakeland LLC
Park Club of
Xxxxxxx Brandon FL 89 110 AL Investors II
Xxxxxxx LLC
Highland Hills Pocatello ID 49 57 AL Investors II
Pocatello LLC
Ridge Wind Chubbuck ID 110 96 AL Investors II
Chubbuck LLC
Lakewood Inn Coeur d'Alene ID 73 109 AL Investors II
Coeur D'Alene
The Pines of
Tewksbury Tewksbury MA 49 50 AL Investors II
Tewksbury LLC
Meadowbrook Ontario OR 53 82 AL Investors II
Ontario LLC
Xxxxxxxx Place Anderson SC 127 84 AL Investors II
Xxxxxxxx LLC
Elmbrook Estates Lubbock TX 79 100 Lubbock AL
Investors II LP
Fairhaven Estates Bellingham WA 98 110 AL Investors II
Bellingham LLC
Hearthstone Moses Lake WA 50 100 AL Investors II
Moses Lake LLC
Xxxxxxxxx Xxxxx Xxxxxxx Xxx XX 84 92 AL Investors II
Federal Way LLC
Facility City State Units Beds Facility LLC and LP
Name
Loyalton of
Flagstaff Flagstaff AZ 61 61 AL Investors
Development Flagstaff
LLC
Loyalton of
Phoenix Phoenix AZ 100 101 AL Investors
Development Phoenix
LLC
Loyalton of
Hagerstown Hagerstown MD 101 101 AL Investors
Development
Hagerstown LLC
Loyalton of
Lakewood Lakewood NY 83 83 AL Investors
Development Lakewood
LLC
Loyalton of
Staunton Staunton VA 101 101 AL Investors
Development Staunton
LLC
A-5
Facility Accounts: as defined in Section 8.1 of the Management Agreements.
Facility Entity: each of the Facility LLC's or LP's which owns a Facility as set
forth opposite the name of each Facility above and their respective successors
or assigns.
Fixed Operating Expenses: for any period, all fixed costs and expenses of
owning, and operating the Facilities in the aggregate except where the
Management Agreements expressly provide that Fixed Operating Expenses shall be
determined for each Facility to the extent such costs and expenses are not
included in Operating Expenses, including but not limited to (a) Managers' Base
Management Fee (excluding the amount of any Accrued Management Fee accrued
during such period); (b) all amounts to be paid into the Reserve Account and the
cost of Capital Improvements approved by Owners not funded from the Reserve
Account; (c) the debt service on account of the Senior Loan; (d) the real and
personal property ad valorem taxes and assessments; and (e) all costs and
expenses of all property and casualty insurance on or in respect of the
Facilities provided for herein and the amount of all self-insured losses or
deductibles. Fixed Operating Expenses shall not include the Excluded Expenses.
Furnishings and Equipment: all furniture, furnishings, beds, equipment, food
service equipment, apparatus and other personal property used in (or if the
context so dictates, required in connection with), the operation of each
Facility, other than Operating Equipment, Operating Supplies and fixtures
attached to and forming part of the Improvements.
GAAP: means generally accepted accounting principles applied on a consistent
basis.
Governmental Authorities: Collectively, all agencies, authorities, bodies,
boards, commissions, courts, instrumentalities, legislatures, and offices of any
nature whatsoever of any government, quasi-government unit or political
subdivision, whether with a federal, state, county, district, municipal, city or
otherwise and whether now or hereinafter in existence which exercises
jurisdiction over any Facility.
Group Service: as defined in Section 3.2.4 of the Management Agreements.
Hazardous Substances: "Hazardous Substances" shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials, radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or could become
friable; underground storage tanks, whether empty or containing any substance;
A-6
any substance the presence of which on any Facility is prohibited by any
federal, state or local authority; any substance that requires special handling;
and any other material, or substance now or in the future defined as a
"hazardous substance," "hazardous material," hazardous waste," "toxic
substance," "toxic pollutant," "contaminant," or "Pollutant" within the meaning
of any Environmental Law. Provided, however, Hazardous Substances shall not
include the safe and lawful use and storage of quantities of (i) pre-packaged
supplies, medical waste, cleaning materials and petroleum products customarily
used in the operation and maintenance of comparable Facilities, (ii) cleaning
materials, personal grooming items and other items sold in pre-packaged
containers for consumer use and used by occupants of any Facility; and (iii)
petroleum products used in the operation and maintenance of motor vehicles from
time to time located on the Facilities' parking areas, so long as all of the
foregoing are used, stored, handled, transported and disposed of in compliance
with Environmental Laws.
Impositions: collectively, all taxes (including, without limitation, all capital
stock and franchise taxes of AL Investors II, AL Investors Development, XX XX
Holdings, or any Facility Entity, all ad valorem, property, sales and use,
single business, gross receipts, transaction privilege, rent or similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and assessments levied by condominium associations), ground rents,
water and sewer rents other than normal utility charges, excises, tax levies,
fees (including, without limitation, license, permit, inspection, authorization
and similar fees), and all other charges imposed by Governmental Authorities, in
each case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Facility (including all
interest and penalties thereon due to any failure in payment by Manager), which
at any time prior to, during or in respect of the Term of the Management
Agreement may be assessed or imposed on or in respect of or be a Lien upon (a)
Facility Entities' interest in the Facility, (b) the Facility or any rent or
income therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, sales from, or activity conducted
on, or in connection with, the Facility or the leasing or use of the Facility.
Notwithstanding the foregoing, "Impositions" shall not include: (1) any tax
based on net income (whether denominated as a franchise or capital stock or
other tax) imposed on any Owners or Managers, (2) any tax imposed with respect
to the sale, exchange or other disposition of a Facility or the proceeds
thereof, or (3) any principal or interest on any Mortgage; provided, however,
the provisos set forth in clause (1) of this sentence shall not be applicable to
the extent that any real or personal property tax, assessment, tax levy or
charge pursuant to the first sentence of this definition and which is in effect
at any time during the Term hereof is totally or partially repealed, and a tax,
assessment, tax levy or charge set forth in clause (1) is levied, assessed or
imposed expressly in lieu thereof.
A-7
Improvements: the buildings, structures (surface and sub-surface) and other
improvements now or hereafter located on the Land.
Initial Term: as defined in Section 2.1 of the Management Agreements.
Insurance Requirements: all terms of each insurance policy required to be
carried in this Agreement, or agreed to be carried by Owners and Managers, and
all orders, rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions) applicable to
the Facilities or the operation thereof.
Junior Loan: any indebtedness incurred by Owners which is secured by a mortgage,
pledge, and related security instruments against, among other things, the
membership interests of XX XX Holdings in AL Investors II and in AL Investors
Development and in the Facility Entities. Initially, the Junior Loan is
evidenced by that certain Loan Agreement among XX XX Holdings, AL Investors II,
AL Investors Development and its Affiliates and Senior Housing Partners I, L.P.
dated on or about the same date hereof ("Initial Junior Loan").
Land: the parcel or parcels of land on which each of the Facilities is situated,
together with all rights of ingress and egress thereto and parking associated
therewith as legally described in the Purchase Agreements.
Leases: Collectively, the Ordinary Leases and Major Leases.
Legal Requirements: collectively, all statutes, ordinances, by-laws, codes,
rules, regulations, restrictions, orders, judgments, decrees and injunctions
(including, without limitation, all applicable building, health code, zoning,
subdivision, and other land use and assisted living licensing statutes,
ordinances, by-laws, codes, rules and regulations), whether now or hereafter
enacted, promulgated or issued by any Governmental Authority, Accreditation Body
or Third Party Payor affecting a Facility Entity or any Facility or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession or operation thereof or the operation of any programs or
services in connection with a Facility, including, without limitation, any of
the foregoing which may (i) require repairs, modifications or alterations in or
to any Facility, (ii) in any way affect (adversely or otherwise) the use and
enjoyment of any Facility or (iii) require the assessment, monitoring, clean-up,
containment, removal, remediation or other treatment of any Hazardous Substances
on, under or from any Facility. Without limiting the foregoing, the term "Legal
Requirements" includes all Environmental Laws and shall also include all Permits
and Contracts issued or entered into by any Governmental Authority, any
Accreditation Body and/or any Third Party Payor and all Permitted Encumbrances.
Lending Group: GMAC Commercial Mortgage in a debt facility referred to
herein as the Initial Senior Loan secured by the Operating Facilities in the
maximum
A-8
aggregate original principal balance of $68,000,000 and Guaranty Federal Bank
F.S.B. in a debt facility referred to herein as the Initial Senior Loan secured
by the Development Facilities in the maximum aggregate original principal
balance of $31,600,000.
Licensing Indemnity Agreement: those certain Licensing Indemnity Agreements
between Emeritus Corporation and AL Investors II and AL Investors Development
dated on or about the same date hereof.
Lien: with respect to any real or personal property, any mortgage, mechanics' or
materialmen's lien, pledge, collateral assignment, hypothecation, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property which secures or is intended to secure the payment of money, whether or
not inchoate, vested or perfected, other than the Mortgage.
Major Contracts: Any contract for the purchase of goods or services or any other
agreement which requires payments in excess of $50,000 per year for any Facility
or which cannot be terminated without penalty or termination fee on sixty (60)
days notice or in which the provider of the goods or services is Emeritus or an
Affiliate (except pursuant to Group Services approved in connection with an
Annual Plan).
Major Lease: Any Lease which has a noncancellable term in excess of one year or
a rental payment in excess of $10,000 per year or pursuant to which Emeritus or
an Affiliate is the lessee or lessor.
Managed Care Plans: all health maintenance organizations, preferred provider
organizations, individual practice associations, competitive medical plans, and
similar arrangements.
Management Agreements: the XX XX Development Management Agreement and the XX XX
Operating Management Agreement.
Management Fee: the amounts set forth in Section 7.1 and 7.2 of the Management
Agreements.
Medicaid: the medical assistance program established by Title XIX of the Social
Security Act (42 US C xx.xx. 1396 et seq.) and any statute succeeding thereto.
Medicare: the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act (42 USC xx.xx. 1395 et seq.) and any
statute succeeding thereto.
A-9
Mortgage: collectively, the terms and conditions of the Senior Loan and the
Junior Loan.
Mortgagee: the holder or beneficiary of a Mortgage and their respective
successors and assigns.
Operating Deficit and Operating Profit: for any period, the amount, if any, by
which Total Revenues for that period is less than or exceeds, respectively, the
sum of (i) Operating Expenses and (ii) Fixed Operating Expenses for that period
in each case determined on a cash basis.
Operating Equipment: all dishes, glassware, bed coverings, towels, silverware,
uniforms and similar items used in, or held in storage for use in (or if the
context so dictates, required in connection with) the operation of the
Facilities.
Operating Expenses: for any period, all reasonable costs and expenses of owning
and operating the Facilities in the aggregate except where the Agreement
expressly provides that Operating Expenses shall be determined for each Facility
(which costs and expenses do not include the Fixed Operating Expenses or the
Excluded Expenses) including the following:
(a) The cost of all Operating Equipment and Operating Supplies placed in
use, with the exception of the Operating Equipment and Operating Supplies
initially supplied by the Facility Entities. The cost of maintaining and
operating the vans and buses for each Facility (but not any debt service or
lease payments which shall remain the sole expense of Emeritus.
(b) The Compensation of all employees working and employed by Managers at
the Facilities. The Compensation of Managers' or Emeritus' home office or
executive or other personnel not regularly employed at the Facilities shall not
be included in Operating Expenses or Fixed Operating Expenses, but reasonable
out-of-pocket travel expenses of Managers or Owners' executive personnel while
traveling to and from a Facility on business shall be reimbursable as an
Operating Expense; provided, however, that if such business travel relates to
business or properties other than with respect to the Facilities, then such
travel expenses shall be equitably prorated between such other business or
properties and the Facilities.
(c) The cost of all utilities including, without limitation, electricity,
water, gas, heat and other utilities, and office supplies and equipment, and
goods and services purchased under all Contracts, including leasing expenses in
connection with telephone and data processing equipment and such other equipment
as the parties hereto may agree upon in writing.
(d) The cost of repairs to and maintenance of the Facilities whether
performed by Facility employees or contracted to third parties.
A-10
(e) Insurance premiums for all insurance required under this Agreement and
self-insured losses and deductibles with respect to such insurance coverages
(but excluding premiums and self-insured losses and deductibles on property and
casualty insurance which are included in Fixed Operating Costs). Premiums on
policies for more than one year will be prorated over the period of insurance
coverage and premiums under blanket policies will be equitably allocated among
properties covered.
(f) All Impositions (except for real and Personal Property ad valorem taxes
and assessments which shall be a Fixed Operating Expenses).
(g) Except as otherwise provided in Section 6.1 of the Management
Agreements, legal fees and fees of any CPA for services directly related to the
operations of the Facilities (whether incurred by Owners or Managers).
(h) The costs and expenses of technical consultants and specialized
operational experts for specialized services in connection with non-recurring
work on operational, functional, design or construction problems and activities
whether incurred by Owner or Manager; provided, however, that if such costs end
expenses have not been included in the Annual Plan, the same shall be subject to
approval by Owner.
(i) All expenses for marketing the Facilities and all expenses of sales
promotion and public relations activities as set forth in the Annual Plan
(j) The cost of Group Services, as provided in Section 3.2.4 of the
Management Agreement.
(k) Bad debts or uncollectible amounts from residents of the Facilities.
(l) Refund of deposits to residents under Residency Agreements
(m) Owners' reasonable costs and expenses of administering, supervising,
and managing Owners' activities in connection with this Agreement and any
Mortgage, including Owners' reasonable cost and expense of preparing and filing
federal, state and local income tax returns and audits.
(n) All other reasonable expenses and charges incurred in the operation and
management of the Facilities to the extent set forth in the Annual Plan or
otherwise approved by the Owners or as otherwise set forth in the Agreement.
Operating Period: the period beginning with the Commencement Date and ending
upon the expiration of the Initial Term.
A-11
Operating Supplies: consumable items used in, or held in storage for use in (or
if the context so dictates, required in connection with), the operation of the
Facilities, including food, medical supplies, fuel, soap, cleaning materials,
and other similar consumable items.
Operating Year: the Operating Years shall coincide with and be identical with
the calendar years, except that the first Operating Year shall be the period
beginning on the Commencement Date and ending on the following December 31,
1999, and such long or short year, as applicable, shall constitute a full
Operating Year as used herein.
Ordinary Contracts: All agreements and contracts to purchase goods and services
(excluding Major Contracts) in the ordinary course of business of refurbishing,
owning, operating or managing the Facilities, or the operation of any programs
or services in conjunction with the Facility and all renewals, replacement and
substitutions therefor with any Governmental Authority, Accreditation Body or
Third Party Payor or entered into with any third Person, excluding, however, any
agreements pursuant to which money has been or will be borrowed or advanced, the
Leases, any agreement creating or permitting any Lien or other encumbrance on
title (except for the Permitted Exceptions), and any Major Contract.
Ordinary Leases: Collectively, all subleases, licenses, use agreements,
equipment leases, concession agreements, tenancy at will agreements and other
occupancy agreements (but excluding any Residency Agreement, Facility Lease or
Major Lease), whether oral or in writing, entered into by Managers affecting a
Facility.
Overdue Rate: on any date, a rate of interest per annum equal to the greater of:
(i) a variable rate of interest per annum equal to one hundred twenty percent
(120%) of the Prime Rate, or (ii) twelve percent (12%) per annum; provided,
however, in no event shall the Overdue Rate be greater than the maximum rate
then permitted under Legal Requirements.
Permits: collectively, all permits, licenses, approvals, qualifications, rights,
variances, permissive uses, accreditation, certificates, certifications,
consents, agreements, contracts, contract rights, franchises, interim licenses,
permits and other authorizations of every nature whatsoever required by, or
issued under, applicable Legal Requirements relating or affecting a Facility or
the construction, development, maintenance, management, use or operation
thereof, or the operation of any programs or services in conjunction with the
Facility and all renewals, replacements and substitutions therefor, now or
hereafter required or issued by any Governmental Authority, Accreditation Body
or Third Party Payor to Owners or Managers.
Permitted Exceptions: (i) all encumbrances to title present at closing pursuant
to the Purchase Agreements; (ii) liens for Impositions not delinquent; (iii)
easements,
A-12
restrictions on use, zoning laws and ordinances, rights of way and other
encumbrances and minor irregularities in title, whether now existing or
hereafter arising, which are approved by Owner and do not individually or in the
aggregate materially impair the use of any Facility.
Person: any individual, corporation, general partnership, limited partnership,
joint venture, stock company or association, company, bank, trust, trust
company, land trust, business trust, unincorporated organization, unincorporated
association, Governmental Authority or other entity of any kind or nature.
Personal Property: all machinery, equipment, furniture, furnishings, vans,
buses, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, the name of the Facility, and other personal or intangible
property used in the operation of the Facility, including, but not limited to,
all Operating Equipment, Furnishings and Equipment and Operating Supplies.
Notwithstanding the foregoing, title to the vans and buses shall remain in
Emeritus or Managers and be held in trust by them for the benefit of the
respective Owner; provided that legal title to the vans and buses shall be
transferred to the respective Facility Entity upon expiration or sooner
termination of the Management Agreement as provided in Section 9.6 of the
Management Agreement.
Primary Intended Use: the use of the Facility as an assisted living facility and
such ancillary uses as are permitted by applicable Legal Requirements and may be
necessary in connection therewith or incidental thereto.
Prime Rate: the variable rate of interest per annum from time to time set forth
in the Wallstreet Journal as the prime rate of interest and in the event that
the Wallstreet Journal no longer publishes a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any major bank or other financial institution reasonably selected
by AL Investors.
Provider Agreements: all participation, provider and reimbursement agreements or
arrangements, if any, in effect for the benefit of Owners or Managers in
connection with the operation of the Facility relating to any right of payment
or other claim arising out of or in connection with participation in any Third
Party Payor Program.
Put and Purchase Agreement: that certain Put and Purchase Agreement between
Xxxxxx Xxxx and XX XX Holdings dated on or about the same date hereof.
Residency Agreement: all contracts, agreements and consents executed by or on
behalf of any resident or other Person seeking services at the Facility,
including, without limitation, assignments of benefits and guarantees.
A-13
Senior Loan: any indebtedness incurred by Owners which is secured by any
mortgage, deed of trust and related security instruments against a Facility.
Initially, the Senior Debt for the Operating Facilities is evidenced by that
certain Loan Agreement between AL Investors II and its Affiliates and GMAC
Commercial Mortgage Corporation dated on or about the same date hereof ("Initial
Senior Loan/Operating Facilities") and the Senior Loan for the Development
Facilities is evidenced by that certain Loan Agreement between AL Investors
Development and its Affiliates and Guaranty Federal Bank, F.S.B. for itself and
as agent for the Lenders defined therein dated on or about the same date hereof
("Initial Senior Loan/Development Facilities").
Third Party Payor Programs: collectively, all third party payor programs in
which the Emeritus Entities presently or in the future may participate,
including without limitation, Medicare, Medicaid, Blue Cross and/or Blue Shield,
Managed Care Plans, other private insurance plans and employee assistance
programs.
Third Party Payors: collectively, Medicare, Medicaid, Blue Cross and/or Blue
Shield, private insurers and any other Person which presently or in the future
maintains Third Party Payor Programs.
Title Company: First American Title Insurance Company.
Total Revenues: collectively, but without duplication all revenues generated by
reason of the operation of the Facilities in the aggregate, except where the
Agreement expressly provides that Total Revenues shall be determined for each
Facility, directly or indirectly received by any Facility Entity or Managers,
including, without limitation, all resident revenues received or receivable for
the use of, or otherwise by reason of, all rooms, units and other facilities
provided, deposits received from residents under Residency Agreements, meals
served, services performed, space or facilities leased pursuant to the Leases or
goods sold on or from the Facility, all amounts from Third Party Payors, and all
revenues from all ancillary services provided at or relating to any Facility;
provided, however, that Total Revenues shall not include:
(a) federal, state or local sales, use, gross receipts and excise taxes and
any tax based upon or measured by said Total Revenues which is added to or made
a part of the amount billed to the resident or other recipient of such services
or goods, whether included in the billing or stated separately, which is paid to
the Governmental Authority;
(b) proceeds from sale of capital assets, including the sale of the
Facility and proceeds therefrom other than sale of Furnishings and Equipment in
the ordinary course of business,;
(c) proceeds of any insurance other than business interruption insurance;
A-14
(d) proceeds of any financing or capital contributions to Owners;
(e) interest or earnings on the Reserve Account;
(f) any Award resulting from Condemnation;
(g) any other income or proceeds from any source other than in the ordinary
course of business of the Facility.
Except as otherwise specifically indicated, all references to Section and
Subsection numbers refer to Sections and Subsections of this Agreement, and all
references to Exhibits refer to the Exhibits attached hereto. The words
"herein," "hereof", "hereunder", "hereinafter", and words of similar import
refer to this Agreement as a whole and not to any particular Section or
Subsection hereof unless the context otherwise requires.
A-15
EXHIBIT B
TO PUT AND PURCHASE AGREEMENT
(XX XX Holdings - 14 Operating Facilities
and 5 Development Facilities)
Determination of Purchase Price
"Cash Account" means an account maintained with respect to each Facility with an
initial balance of zero, which shall be increased from time to time by any net
proceeds from refinancing such Facility after repayment of its allocable Senior
Loan, and deduction of refinancing costs and reserves, and thereafter decreased
from time to time by any Owner's Deficit Contribution pursuant to the Management
Agreements which is not financed by the proceeds of a Senior Loan, but which
shall not be less than zero.
The "Investment Account" for a Facility shall initially be the allocated Equity
as shown on Exhibit C. The Investment Account shall be increased from time to
time by (a) additional amounts contributed by XX XX Holdings or its Affiliates
with respect to such Facility to pay for Operating Deficits after the Cash
Account balance, if any, for such Facility has been reduced to zero, (b) amounts
contributed by XX XX Holdings or its Affiliates to the Facility Entity to reduce
the Senior Loan allocated to such Facility, (c) any proceeds of XX XX Holdings,
its Affiliates or other Facility Entities applied by the Senior Lender, if
applicable, to reduce the Senior Loan allocated to such Facility, and (d) as
January 1 of each year, the Investment Return as defined below accrued during
the prior calendar year with respect to such Facility.
The "Investment Return" means an eighteen percent (18%) per annum rate of return
which shall accrue on a daily basis on the balance of the Investment Account, as
adjusted from time to time as set forth above.
The "Purchase Price" for a Put Facility shall equal the amount, determined as of
the Put Purchase Date, that is required to repay in full the Senior Loan
allocated to such Facility (including all prepayment penalties and other charges
incurred on such repayment) plus any outstanding Operating Deficit Loan
allocated to such Facility (as defined in the Management Agreements), plus the
Investment Account of such Facility, plus the Investment Return accrued on the
Investment Account for such Facility for the current year through the Put
Purchase Date, plus an amount equal to two percent (2%) of the initial
Investment Account for such Facility, less the Cash Account balance, if any, for
such Facility. The Purchase Price for all Put Facilities shall equal the sum of
the Purchase Prices for each Put Facility calculated as set forth above.
B-1
EXHIBIT C
TO PUT AND PURCHASE AGREEMENT
(XX XX Holdings - 14 Operating Facilities
and 5 Development Facilities)
FACILITY EQUITY
Colonial Park Club $1,662,000
Park Club of Fort Xxxxx $ 000,000
Xxxx Xxxx xx Xxxxxxxxx $1,422,000
Park Club of Xxxxxxx $1,217,000
Highland Hills $ 737,000
Ridge Wind $ 963,000
Lakewood Inn $1,518,000
The Pines of Tewksbury $1,162,000
Meadowbrook $ 648,000
Xxxxxxxx Place $2,277,000
Elmbrook Estates $1,169,000
Fairhaven Estates $ 797,000
Hearthstone $1,300,000
Evergreen Lodge $1,292,000
Loyalton of Flagstaff $1,112,000
Loyalton of Phoenix $1,555,000
Loyalton of Hagerstown $1,741,000
Loyalton of Lakewood $1,488,000
Loyalton of Staunton $1,734,000
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