THE LIMITED PARTNERSHIP INTERESTS EVIDENCED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), AND MAY BE OFFERED OR SOLD
ONLY (1) UPON REGISTRATION OF THE LIMITED PARTNERSHIP INTERESTS UNDER THE ACT
AND THE STATE ACTS OR PURSUANT TO AN EXEMPTION THEREFROM, AND (2) AFTER
COMPLIANCE WITH ALL RESTRICTIONS ON TRANSFER OF SUCH LIMITED PARTNERSHIP
INTERESTS IMPOSED BY THIS AGREEMENT.
* * *
PLAN OF ASSET TRANSFER AND CONTRIBUTION AGREEMENT
THIS PLAN OF ASSET TRANSFER AND CONTRIBUTION
AGREEMENT (this "Agreement") is made and entered into as of September 25, 1997,
by and between ELDERTRUST OPERATING LIMITED PARTNERSHIP, a Delaware limited
partnership ("Transferee"), and SENIOR LIFECHOICE CORP., a Pennsylvania
corporation ("Contributor").
WHEREAS, Contributor is the sole general partner in Senior
LifeChoice of Paoli, L.P., a Pennsylvania limited partnership (the "Paoli
Partnership"), and owns an 88% interest in the Partnership (the "Paoli
Interest");
WHEREAS, Contributor also is the sole general partner in
Senior LifeChoice of Kimberton, L.P., a Pennsylvania limited partnership (the
"Kimberton Partnership") and owns a 90% general partnership interest in the
Kimberton Partnership (the "Kimberton General Partnership Interest"; the Paoli
Partnership and the Kimberton Partnership collectively shall be known as the
"Partnerships");
WHEREAS, Contributor also is a limited partner in the
Kimberton Partnership and owns a 5% limited partnership interest in the
Kimberton Partnership (the "Kimberton Limited Partnership Interest") (the
Kimberton Limited Partnership Interest and the Kimberton General Partnership
collectively shall be known as the "Kimberton Interests"; the Kimberton
Interests and the Paoli Interest collectively shall be known as the
"Interests");
WHEREAS, Contributor desires to contribute the Interests to
Transferee on the terms and conditions set forth;
WHEREAS, the Paoli Partnership owns and operates an assisted
living facility known as Highgate at Paoli Pointe (the "Highgate Facility"),
which Highgate Facility consists of the real property described in Exhibit A
hereto (the "Highgate Real Property"), the improvements thereon and all other
real and personal property associated therewith (collectively,
the "Highgate Property"), all of which other real and personal property is
described in Exhibit A-1 hereto;
WHEREAS, the Kimberton Partnership owns and operates an
assisted living facility known as The Woodbridge (the "Woodbridge Facility"),
which Woodbridge Facility consists of the real property described in Exhibit B
hereto (the "Woodbridge Real Property"), the improvements thereon and all other
real and personal property associated therewith (collectively, the "Woodbridge
Property"), all of which other real and personal property is described in
Exhibit B-1 hereto (the Woodbridge Property and the Highgate Property
collectively shall be known as the "Property"; the Woodbridge Facility and
Highgate Facility collectively shall be known as the "Facilities");
WHEREAS, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III and ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (collectively the
"Stockholders") are the sole stockholders of Contributor and hold the number and
percentage of shares of stock in Contributor as is set forth on Schedule 1.1
hereto;
WHEREAS, Transferee intends to acquire all of the partnership
interests in the Partnerships and thereafter cause the Paoli Partnership to
lease the Highgate Facility to Genesis Health Ventures, Inc. ("Genesis") and
cause the Kimberton Partnership to lease the Woodbridge Facility to Senior
LifeChoice, LLC ("Senior LifeChoice II"), a limited liability company comprised
of certain of the Stockholders (including ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the president of
Contributor); and
WHEREAS, all capitalized terms not otherwise defined herein
shall have the meanings set forth in Article XIII hereof.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises and covenants set forth herein, Transferee and Contributor
hereby agree as follows:
ARTICLE I
THE CONTRIBUTION
1.1 Contribution and Acquisition of Contributed Property.
Subject to the terms and conditions set forth herein, Contributor agrees to
contribute to Transferee and Transferee agrees to acquire and accept from
Contributor, the Interests and all of Contributor's right, title and interest in
and to the Interests (including rights to distributions under each Partnership's
agreement of limited partnership that have accrued as of the Closing Date), in
exchange for units of limited partnership interest in Transferee (the "Units"),
as set forth in Article II hereof, in a transaction intended to qualify for
nonrecognition of gain to Contributor pursuant to Section 721 of the Internal
Revenue Code of 1986, as amended (the "Code") (the "Contribution").
- 2 -
1.2. Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall occur simultaneously with the closing of
the initial public offering (the "IPO") of shares of beneficial interest in
ElderTrust, a Maryland real estate investment trust (the "REIT"); provided, that
if the IPO has not occurred on or before March 31, 1998, this Agreement shall
terminate and none of the parties hereto shall have any further liability to any
other party hereto. The Closing shall occur simultaneously with the delivery of
the following documents:
(a) the Registration Rights Agreement, substantially in the
form attached hereto as Exhibit C, executed by Transferee and Contributor;
(b) the Second Amended and Restated Agreement of Limited
Partnership of Transferee, substantially in the form attached hereto as Exhibit
D (the "Operating Partnership Agreement");
(c) the documents specified in Section 8.1 and Section 8.2
hereof; and
(d) such other documents as the parties may mutually agree.
ARTICLE II
EXCHANGE AMOUNT; LIABILITIES
2.1. Consideration. The total consideration to be paid by
Transferee for the Interests shall consist of the Units calculated in accordance
with Section 2.1(a) below and the cash consideration described in Section 2.1(b)
below.
(a) Units Delivered at Closing. In exchange for the
contribution of the Interests and upon execution and delivery of the Operating
Partnership Agreement by Contributor, Contributor shall receive, at the Closing,
an aggregate number of Units equal to (i) $3,317,000 divided by (ii) the
midpoint of the price range for shares of beneficial interest in the REIT as set
forth in the REIT's preliminary prospectus ("Final Preliminary Prospectus")
related to the IPO rounded up to the nearest whole unit. The rights of holders
of the Units as of the Closing will be as set forth in the Operating Partnership
Agreement.
(b) Cash Consideration. In addition to the Units, at Closing,
Transferee shall pay to Contributor the sum of One Million Two Hundred Sixty-Six
Thousand Dollars ($1,266,000) (the "Cash Consideration"). The Cash Consideration
shall be paid by certified check or wire transfer of immediately available funds
at Closing.
2.2 Issuance of Units. At the Closing, Transferee shall issue
the Units (as determined pursuant to Section 2.1(a) above) to Contributor.
2.3 Assumption of Liabilities. It is the intention of
Contributor and Transferee that, at Closing, the Partnerships shall have no
liabilities other than (i) the Bond Debt,
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(ii) obligations under Contracts (as defined in Section 4.12 below) and Leases
(as defined in Section 4.11 below) and (iii) obligations associated with
Permitted Liens. At or prior to the Closing, Contributor shall or shall cause
the Partnerships to satisfy and discharge all other obligations relating to the
Property, including, without limitation, accounts payable, accrued wages and
payroll taxes and all other liabilities associated with the Property.
2.4 Distribution of Assets.
(a) The parties hereby agree that immediately prior to the
Closing, the Contributor may cause the Paoli Partnership to distribute to the
Contributor and the Paoli Limited Partners (as defined in Section 7.10(a)
below), in accordance with the terms of the Limited Partnership Agreement of the
Paoli Partnership, an aggregate amount of cash equal to (x) the sum of the Paoli
Partnership's ▇▇▇▇▇ cash, operating cash accounts, prepayments, interest
receivables and accounts receivable and other receivables plus (y) the amount by
which any amounts in the Paoli Debt Service Reserve Fund and the Paoli Operating
Reserve Fund (each as defined in Section 4.8 below) exceed $1,115,000 plus (z)
all other amounts held in any other funds established in connection with the
Bond Debt (as hereinafter defined) relating to the Highgate Facility, all such
amounts referred to in clauses (x), (y) and (z) determined as of the Closing
Date (hereinafter defined).
(b) The parties hereby agree that immediately prior to the
Closing, the Contributor may cause the Kimberton Partnership to distribute to
the Contributor and the Kimberton Limited Partners (as defined in Section
7.10(b) below), in accordance with the terms of the Limited Partnership
Agreement of the Kimberton Partnership, an aggregate amount of cash equal to (x)
the sum of the Kimberton Partnership's ▇▇▇▇▇ cash, operating cash accounts,
prepayments, interest receivables and accounts receivable and other receivables
plus (y) the amount by which any amounts in the Kimberton Debt Service Reserve
Fund and the Kimberton Operating Reserve Fund (each as defined in Section 4.8
below) exceed $1,052,000 plus (z) all other amounts held in any other funds
established in connection with the Bond Debt relating to the Woodbridge
Facility, all such amounts referred to in clauses (x), (y) and (z) determined as
of the Closing Date (hereinafter defined).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TRANSFEREE
Transferee hereby represents and warrants to Contributor as
follows:
3.1 Organization, Power and Authority, and Qualification.
Transferee is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. Transferee has the requisite
power and authority to carry on its respective business as it is now being
conducted. Transferee is qualified to do business and is in good standing in
each jurisdiction where the character of its property owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified and
- 4 -
in good standing would not have a material adverse effect on the business or
financial condition of Transferee.
3.2 Authority Relative to this Agreement. All action of
Transferee necessary to authorize the execution, delivery and performance of
this Agreement by Transferee has been taken, and no other proceedings on the
part of Transferee are necessary to authorize the execution and delivery of this
Agreement by Transferee and the consummation by Transferee of the Contribution.
Neither the execution and delivery of this Agreement by
Transferee nor the consummation by Transferee of the Contribution nor compliance
by Transferee with any of the provisions hereof will (i) conflict with or result
in any breach of any provisions of the partnership agreement of Transferee, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Transferee is a party or by which it or
any of its properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Transferee or any
of the properties or assets of Transferee.
3.3 Binding Obligation. This Agreement has been duly and
validly executed and delivered by Transferee to Contributor and constitutes a
valid and binding agreement of Transferee, enforceable against Transferee in
accordance with its terms, except that such enforcement may be subject to
bankruptcy, conservatorship, receivership, insolvency, moratorium or similar
laws affecting creditors' rights generally or the rights of creditors of limited
partnerships and to general principles of equity.
3.4 Brokers. Transferee has not employed any broker or finder,
or incurred any liability therefor, in connection with the Contribution
contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR
Contributor hereby represents and warrants to Transferee as
follows:
4.1 Organization and Qualification. Each Partnership is a
limited partnership organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania. Contributor is the sole general
partner of each Partnership and is a corporation organized, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania. Each of the
Partnerships and Contributor has the requisite power and authority to carry on
its business as it is now being conducted. Contributor has made available to
Transferee complete and correct copies of the organizational documents of each
Partnership and of Contributor, with all amendments as in effect on the date of
this Agreement. Each of the Partnerships and Contributor is qualified to do
business and is in good standing in each jurisdiction where the character of its
property owned or leased or the nature of its activities
- 5 -
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not have a material adverse effect on the business or
financial condition of such Partnership, Contributor or on the Contribution.
4.2 Authority Relative to this Agreement. All action necessary
to authorize the execution, delivery and performance of this Agreement by
Contributor has been taken, and no other proceedings are necessary to authorize
the execution and delivery by Contributor of this Agreement and the consummation
by Contributor of the Contribution.
Neither the execution and delivery of this Agreement by
Contributor, nor the consummation by Contributor of the Contribution nor
compliance by Contributor with any of the provisions hereof as of the date of
the Closing will (i) conflict with or result in any breach of any provisions of
the partnership agreement of Partnership or the articles of incorporation or
bylaws of Contributor, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
permit, contract, agreement, easement, restriction or other instrument or
obligation to which Contributor or either Partnership is a party or by which
Contributor or either Partnership or the Property may be bound, or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Contributor, either Partnership or the Property, except in the case of (ii) or
(iii) for violations, breaches, or defaults (A) which would not in the aggregate
have a material adverse effect on the business or financial condition of
Contributor, the Partnerships, the Contribution or the Property or (B) for which
waivers or consents have been obtained or, as listed on Schedule 4.2, will be
obtained prior to the date of the Closing.
4.3 Binding Obligation. This Agreement has been duly and
validly executed and delivered by Contributor to Transferee and constitutes a
valid and binding agreement of Contributor, enforceable against Contributor in
accordance with its terms, except that such enforcement may be subject to
bankruptcy, conservatorship, receivership, insolvency, moratorium or similar
laws affecting creditors' rights generally or the rights of creditors of
corporations and to general principles of equity.
4.4 Brokers. Contributor has not employed any broker or
finder, or incurred any liability therefor, in connection with the Contribution
contemplated by this Agreement.
4.5 Options to Acquire. Contributor has not granted to any
person any option, warrant or other right to acquire the Interests, and to
Contributor's knowledge, no other person or entity has granted to any person
(other than Transferee) any option, warrant or other right to acquire any
interest in either Partnership.
4.6 Assets. The Paoli Partnership owns no assets other than
the Highgate Property and the Highgate Excluded Property (as defined on Exhibit
A-1 hereto). The Kimberton Partnership owns no assets other than the Woodbridge
Property and the Woodbridge Excluded Property (as defined on Exhibit B-1
hereto).
- 6 -
4.7 Title to Property. Contributor has good and marketable
title to the Interests, free and clear of any Liens (as hereinafter defined). To
Contributor's knowledge, the Paoli Partnership has fee simple title to the
Highgate Real Property and good and valid title to all the Highgate Personal
Property (as defined on Exhibit A-1). To Contributor's knowledge, the Kimberton
Partnership has fee simple title to the Woodbridge Real Property and good and
valid title to all the Woodbridge Personal Property (as defined on Exhibit B-1).
To Contributor's knowledge, the Property is not subject to any imperfections in
title, easements, liens, mortgages, encumbrances, pledges, claims, charges,
options, defects, preferential purchase rights or other encumbrances
(collectively referred to herein as "Liens") except for the following
("Permitted Liens"):
(i) Liens for real property taxes and assessments or for
fire dues, library dues or similar assessments not
yet delinquent;
(ii) Liens that are not material in character, amount, or
extent and do not materially detract from the value,
or interfere with the use of, the applicable
Partnership's assets subject thereto or affected
thereby or otherwise materially impair the business
operations being conducted or proposed to be
conducted thereon;
(iii) the Bond Debt (as hereinafter defined); and
(iv) Liens shown on Schedule 4.7 hereto.
4.8 Debt. The Property is subject to mortgage indebtedness
described on Schedule 4.8 hereto (the "Bond Debt"). Schedule 4.8 correctly sets
forth the interest rate, maturity date and outstanding amount of the Bond Debt
as of the date hereof. Except for the Bond Debt, neither Partnership has
material indebtedness other than indebtedness incurred by it in its ordinary
course of business. There exists no default, or event which with the passage of
time or notice or both would constitute a default with respect to the Bond Debt
or any other debt of the Partnership that has not been cured or that would have
a material adverse effect on the business or financial condition of either
Partnership, the Contribution or the Property. In connection with the Bond Debt
encumbering the Highgate Property, the Trustee thereunder is holding not less
than the sum of $912,000 as a debt service reserve (the "Highgate Debt Service
Reserve Fund") and not less than the sum of $203,000 as an operating reserve
(the "Highgate Operating Reserve Fund"). In connection with the Bond Debt
encumbering the Woodbridge Property, the Trustee thereunder is holding not less
than the sum of $960,000 as a debt service reserve (the "Woodbridge Debt Service
Reserve Fund") and not less than the sum of $92,000 as an operating reserve (the
"Woodbridge Operating Reserve Fund").
4.9 Financial Statements. The financial statements of the
Partnerships attached as Schedule 4.9 hereto (the "Financial Statements") have
been prepared from the books and records of the Partnerships in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods specified. The balance sheets in the Financial Statements
fairly present the financial condition of the Partnerships as of the dates
- 7 -
shown, and the income statements in the Financial Statements fairly present the
results of operations for the periods indicated.
4.10 Financial Condition. Since June 30, 1997, there has been
no material adverse change in the business or financial condition of either
Partnership.
4.11 Leases. Except as set forth on Schedule 4.11 hereto,
there are no leases, tenancies or other rights of occupancy in effect on the
date hereof with respect to the Property. Each of the leases referenced in
Schedule 4.11 (the "Leases") has been delivered to or made available to
Transferee and is presently unamended (or with respect to each such lease that
has been amended, all amendments thereto have been delivered or made available
to Transferee) and in full force and effect without material default.
4.12 Contracts. Except for a management agreement for each
Facility and service contracts entered into in the ordinary course of business
of the operation of the Facilities, neither Partnership is a party to and
neither Partnership nor Contributor is bound by any contracts or other
understandings, written or oral, except for contracts or understandings that are
not material to the business and operations of the Property (collectively, the
"Contracts"). Each of the Contracts is valid and binding on Contributor or the
applicable Partnership, as applicable, and is in full force and effect in all
material respects. Neither Contributor nor the applicable Partnership nor, to
Contributor's knowledge, any other party thereto has breached or defaulted under
the terms of any Contract, except for such breaches or defaults that would not
have a material adverse effect on the business or operations of either
Partnership or the Property.
4.13 Permits. To the knowledge of Contributor, each
Partnership has all such franchises, certificates, licenses, permits and other
authorizations from government political subdivisions, regulatory authorities or
any other person or entity (collectively "Permits") as are necessary for the
ownership, use, operation and licensing of the Property as it is currently being
used, except where the failure to possess such Permits would not have a material
adverse effect on the business or financial condition of either Partnership or
the Property, and to Contributor's knowledge, neither Partnership is in
violation of any Permit in any material respect. No notice to, declaration,
filing or registration with, or Permit or consent from any governmental or
regulatory body or authority, or any other person or entity, is required to be
made or obtained by Contributor or either Partnership in connection with the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated hereby, and no Permits will in any way be affected by,
or terminate or lapse by reason of, the Contribution or any of the other
agreements contemplated hereunder or executed herewith.
4.14. Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to Contributor's knowledge, threatened
against Contributor or either Partnership, or any properties or rights of
Contributor or either Partnership, that would have a material adverse effect on
the business or financial condition of Contributor or either Partnership, the
Contribution or the Property before any court or administrative, governmental or
regulatory authority or body, domestic or foreign. None of Contributor, either
Partnership, the Interests or the Property is subject to any order, judgment,
injunction or decree of any court, tribunal or other
- 8 -
governmental authority (other than generally applicable laws, rules and
regulations) that would have a material adverse effect on the business or
financial condition of either Partnership, the Contribution or the Property.
4.15 Compliance with Laws. To Contributor's knowledge, neither
Partnership has received any written or other actual notice of any violation of
any applicable zoning regulation or ordinance, or of any employment,
environmental, or other regulatory law, order, regulation or requirement,
including applicable subdivision laws, relating to the Property or the business
or operations thereon, which remains uncured, and, to Contributor's knowledge,
there are no such violations which, individually or in the aggregate, would have
a material adverse effect on the business or financial condition of either
Partnership or the Property.
4.16 Taxes. Except for such matters as in the aggregate shall
not result in a material adverse effect on the business or financial condition
of either Partnership, (i) all tax or information returns required to be filed
on or before the date hereof by or on behalf of each Partnership have been filed
through the date hereof or will be filed on or before the date of the Closing in
accordance with all applicable laws, (ii) there is no action, suit or proceeding
pending against, or with respect to, either Partnership or the Property in
respect of any tax nor is any claim for additional tax asserted by any such
authority, and (iii) all taxes (including related penalties, interest and
additional amounts) imposed upon either Partnership and required to be reported
on a return required to be filed (without regard to any applicable extensions)
on or before the date hereof have been paid or will be paid prior to the
delinquency thereof.
4.17 Insurance. To the knowledge of Contributor, each of the
insurance policies with respect to the Property is in full force and effect and
all premiums due and payable thereunder have been fully paid when due. To the
knowledge of Contributor, neither Partnership has received from any insurance
company notice of any material defects or deficiencies affecting the
insurability of the Property or notices of cancellation or intent to cancel any
such insurance.
4.18 Employees. None of the employees of either Partnership is
subject to, and neither Partnership has entered into or is otherwise a party to,
any collective bargaining agreement. Neither Partnership maintains or sponsors
any Plan nor is obligated to make any contributions to any Plan (as defined
below).
4.19 Utilities. Usable public sanitary and storm sewers,
public water, and gas and electrical utilities (collectively, the "Public
Utilities"), of adequate capacity for the operation of the Property, are
installed in, and are duly connected to, the Property and can be used without
any charge except the normal and usual metered charges imposed for such Public
Utilities. Neither Partnership has been notified of any increase or proposed
increase in the charges imposed for such Public Utilities. No amounts due and
owing with respect to the Property in connection with utilities, insurance,
assessments or other charges customarily prorated in real estate transactions
have been outstanding more than 30 days.
4.20 Environmental. Except as may be revealed in the Phase I
Environmental Report prepared for the Highgate Property by ▇▇▇ ▇. ▇▇▇▇▇▇, Inc.,
dated June, 1997, and the Phase I Environmental Report prepared for the
Woodbridge Property by ▇▇▇ ▇. ▇▇▇▇▇▇, Inc.,
- 9 -
dated June, 1997, (i) no Hazardous Substances are present at, on or under, and
there has been no Release of Hazardous Substances from, the Property that
require investigation, notification, remediation or response under applicable
law, (ii) no liability under or violation of any Environmental Laws or condition
that could give rise to such liability or violation exists with respect to the
Property, except for liabilities that would not have a material adverse effect
on the business or financial condition of either Partnership or the Property,
(iii) the Property contains no underground improvements, including but not
limited to treatment or storage tanks, or underground piping associated with
such tanks, used currently or in the past for the management of Hazardous
Materials, and no portion of the Property is or has been used as a dump or
landfill or consists of or contains filled in land or wetlands; (iv) Contributor
has furnished to Transferee accurate and complete information pertaining to the
environmental history of the Property and the operations of the applicable
Partnership thereon, (v) neither PCBs nor asbestos-containing materials are
present on or in the Property, and (vi) no Lien in favor of any person relating
to or in connection with any Claim under any Environmental Law has been filed or
attached to the Property. Neither Partnership has received any notice from any
governmental agency or instrumentality having jurisdiction thereof or from any
other person of any actual or alleged violation of or liability under any
Environmental Laws.
4.21 Condition of Property. Except as set forth in the
structural report prepared for the Property by Burkavage Design, dated June 15,
1997, and in the structural report prepared for the Woodbridge Property by
Burkavage Design, dated June 15, 1997, and from which, to Contributor's
knowledge, there has been no material change, there is no material defect in the
condition of the Property, the improvements thereon, the structural elements
thereof and the mechanical systems therein, nor any material damage from
casualty or other cause, nor any soil condition of the Property that will not
support all of the improvements thereon without the need for unusual or new
subsurface excavations, fill, footings, caissons or other installations, except
for any such defect, damage or condition that has been corrected or will be
corrected in the ordinary course of the business of the Property as part of its
scheduled annual maintenance and improvement program.
4.22 Pending Assessments and Eminent Domain. Contributor has
no knowledge and neither Contributor nor either Partnership has received notice
of any pending proceeding for the imposition of any special assessment, or the
formation of a special assessment district, or for a condemnation proceeding
which would affect in any manner any portion of the Property.
4.23 Securities Matters.
(a) Contributor acknowledges that Transferee intends the offer
and issuance of the Units to be exempt from registration under the Securities
Act and applicable state securities laws by virtue of (i) the status of
Contributor and the Stockholders as accredited investors and (ii) Regulation D
promulgated under Section 4(2) of the Securities Act ("Regulation D").
Transferee will rely in part upon the representations and warranties made by
Contributor and the Stockholders in making a determination that the offer and
issuance of the
- 10 -
Units qualify for exemption under Rule 506 of Regulation D as an offer and sale
only to accredited investors.
(b) Contributor is an Accredited Investor.
(c) Contributor will acquire the Units solely for its own
account, and not with a view to or for sale in connection with any
"distribution" thereof within the meaning of the Securities Act except to the
Stockholders.
(d) Contributor has sufficient knowledge and experience in
financial, tax and business matters to enable it to evaluate the merits and
risks of investment in the Units. Contributor has the ability to bear the
economic risk of acquiring the Units. Contributor acknowledges that (i) the
transactions contemplated by this Agreement involve complex tax consequences for
Contributor, and Contributor is relying solely on the advice of his, her or its
own tax advisors in evaluating such consequences, (ii) Transferee has not made
(or shall be deemed to have made) any representations or warranties as to the
tax consequences of such transaction to Contributor, and (iii) any references in
this Agreement to the intended tax effect of the Contribution and the other
matters described herein shall not be deemed to imply any representation by
Transferee as to a particular tax effect that may be obtained by Contributor.
Contributor remains solely responsible for all tax matters relating to
Contributor.
(e) Contributor has received and reviewed materials containing
certain information regarding Transferee, the REIT and the IPO prior to
executing this Agreement. Contributor has been supplied with, or had access to,
information to which a reasonable investor would attach significance in making
an investment decision to acquire the Units and any other information
Contributor has requested. Contributor has had an opportunity to ask questions
of and receive information and answers from Transferee concerning Transferee,
the REIT and the Units and to assess and evaluate any information supplied to
Contributor by Transferee.
(f) Contributor acknowledges that the Units are not registered
under the Securities Act or any state securities laws and cannot be resold
without registration thereunder or exemption therefrom. Except for transfers to
the Stockholders, Contributor agrees that he, she or it will not transfer all or
any portion of the Units for at least one (1) year after the date of the
Closing, and thereafter only if such transfer has been registered or is exempt
from registration under the Securities Act and any applicable state securities
laws.
4.24 Compliance with Law; Approvals.
(a) The operations of each Partnership have been and, to the
date of Closing, will continue to be conducted in compliance with all applicable
Laws and regulations, including, without limitation, all laws, regulations,
orders and requirements promulgated by any Governmental Authority or relating to
consumer protection, equal opportunity, health, health care industry regulation,
third-party reimbursement (including Medicare, Medicaid, and workers
compensation), environmental protection, fire, zoning and building and
occupational safety matters, except for noncompliance that individually or in
the aggregate would not and, insofar as
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may reasonably be foreseen, in the future will not, have a material adverse
effect on the business or operations of the Property or either Partnership.
(b) Neither of the Partnerships nor Contributor has received
notice of any violation (or of any investigation, inspection, audit, or other
proceeding by any Governmental Authority involving allegations of any violation)
of any applicable Law, or is in material default with respect to any applicable
Law and, to the best knowledge of Contributor, no investigation, inspection,
audit, or other proceeding by any Governmental Authority involving allegations
of violation of any applicable Law is threatened or contemplated.
(c) There are no physician shareholders of Contributor.
4.25 Fraud and Abuse Matters
Neither Partnership nor the officers, directors, employees or
agents of either Partnership or the General Partner, have engaged in any
activities which are prohibited, or are cause for civil penalties or mandatory
or permissive exclusion from Medicare or Medicaid, under ▇▇.▇▇. 1320a-7,
1320a-7a, 1320a-7b, or 1395nn of Title 42 of the United States Code, the federal
Civilian Health and Medical Plan of the Uniformed Services statute ("CHAMPUS"),
or the regulations promulgated pursuant to such statutes or regulation, or
related state or local statutes or which are prohibited by any private
accrediting organization from which either Partnership seeks accreditation or by
generally recognized professional standards of care or conduct, including but
not limited to the following activities:
(a) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment;
(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(c) presenting or causing to be presented a claim for
reimbursement under CHAMPUS, Medicare, Medicaid or other State Health Care
Program as defined in Section 1128(h) of the federal Social Security Act
(together with all regulations promulgated pursuant thereto, the "SSA") or any
Federal Health Care Program (as defined in Section 1128B(f) of the SSA) that is
(i) for an item or service that the person presenting or causing to be presented
knows or should know was not provided as claimed, or (ii) for an item or service
and the person presenting knows or should know that the claim is false or
fraudulent;
(d) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, overtly or covertly, in cash or in kind (i) in return for
referring, or to induce the referral of, an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by CHAMPUS, Medicare or Medicaid, or
other State Health Care Program or any Federal Health Care Program, or (iii) in
return for, or to induce, the purchase, lease, or order, or the arranging for or
recommending of the purchase, lease, or order, of any good, facility, service,
or item for which payment may be made in whole or in part by
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CHAMPUS, Medicare or Medicaid or other State Health Care Program or any Federal
Health Care program; or
(e) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading) or
a material fact with respect to (i) the conditions or operations of a facility
in order that the facility may qualify for CHAMPUS, Medicare, Medicaid or other
State Health Care Program or Federal Health Care Program certification, or (ii)
information required to be provided under SSA ss. 1124A.
4.26 Medicare/Medicaid Participation
Neither Partnership nor any officer, director, agent (as
defined in 42 C.F.R. Section 1001.1001(a)(2)), or managing employee (as defined
in SSA Section 1126(b)) of either Partnership or the General Partner (1) has had
a civil monetary penalty assessed against it under SSA Section 1128A; (2) has
been excluded from participation under the Medicare program or a State Health
Care Program; (3) has been convicted (as that term is defined in 42 C.F.R.
Section 1001.2) of any of the following categories of offenses as described in
SSA Section 1128(a) and (b)(1), (2), (3):
(a) criminal offenses relating to the delivery of an item or
service under Medicare, Medicaid or any other State Health Care Program or any
Federal Health Care Program;
(b) criminal offenses under federal or state law relating to
patient neglect or abuse in connection with the delivery of a health care item
or service;
(c) criminal offenses under federal or state law relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other
financial misconduct in connection with the delivery of a health care item or
service or with respect to any act or omission in a program operated by or
financed in whole or in part by any federal, state or local government agency;
(d) federal or state laws relating to the interference with or
obstruction of any investigation into any criminal offense described in (a)
through (c) above; or
(e) criminal offenses under federal or state law relating to
the unlawful manufacture, distribution, prescription or dispensing of a
controlled substance.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder represents and warrants to Transferee as to
himself or herself only as follows:
5.1 Securities Matters.
(a) Each Stockholder acknowledges that Transferee intends the
offer and issuance of the Units to be exempt from registration under the
Securities Act and applicable state securities laws by virtue of (i) the status
of Contributor and the Stockholders as accredited investors and (ii) Regulation
D. Transferee will rely in part upon the representations and warranties made by
Contributor and the Stockholders in making a determination that the offer and
issuance of the Units qualify for exemption under Rule 506 of Regulation D as an
offer and sale only to accredited investors.
(b) Contributor and each Stockholder is an Accredited
Investor.
(c) Each Stockholder will acquire the Units solely for his or
her own account, and not with a view to or for sale in connection with any
"distribution" thereof within the meaning of the Securities Act.
(d) Each Stockholder has sufficient knowledge and experience
in financial, tax and business matters to enable them to evaluate the merits and
risks of investment in the Units. Each Stockholder has the ability to bear the
economic risk of acquiring the Units. The Stockholders acknowledge that (i) the
transactions contemplated by this Agreement involve complex tax consequences for
the Stockholders, and each Stockholder is relying solely on the advice of his or
her own tax advisors in evaluating such consequences, (ii) Transferee has not
made (or shall be deemed to have made) any representations or warranties as to
the tax consequences of such transaction to any Stockholder, and (iii) any
references in this Agreement to the intended tax effect of the Contribution and
the other matters described herein shall not be deemed to imply any
representation by Transferee as to a particular tax effect that may be obtained
by any Stockholder. Each Stockholder remains solely responsible for all tax
matters relating to such Stockholder.
(e) Each Stockholder has received and reviewed materials
containing certain information regarding Transferee, the REIT and the IPO prior
to executing this Agreement. Each Stockholder has been supplied with, or had
access to, information to which a reasonable investor would attach significance
in making an investment decision to acquire the Units and any other information
any Stockholder has requested. Each Stockholder has had an opportunity to ask
questions of and receive information and answers from Transferee concerning
Transferee, the REIT and the Units and to assess and evaluate any information
supplied to any Stockholder by Transferee.
(f) Each Stockholder acknowledges that the Units are not
registered under the Securities Act or any state securities laws and cannot be
resold without registration thereunder or
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exemption therefrom. Each Stockholder agrees that he, she or it will not
transfer all or any portion of the Units for at least one (1) year after the
date of the Closing, and thereafter only if such transfer has been registered or
is exempt from registration under the Securities Act and any applicable state
securities laws.
ARTICLE VI
COVENANTS AND AGREEMENTS OF CONTRIBUTOR
Contributor hereby covenants and agrees with Transferee that
prior to the date of the Closing:
6.1 Actions Affecting Assets. Contributor shall not permit
either Partnership to sell, assign, pledge, transfer or encumber, or enter into
any other material consent, commitment, understanding or other agreement, or
incur any material obligation or liability (contingent or absolute) with respect
to the Property or merge or consolidate with or into any other entity or enter
into any agreements relating thereto without Transferee's prior consent;
provided, that Excluded Assets may be distributed to partners of the
Partnerships prior to the Closing.
6.2 Access to Property and Records. Upon reasonable notice and
during regular business hours, Contributor shall give Transferee and
Transferee's authorized representatives full access to each Partnership's
personnel and all properties, documents, contracts, facilities, books, equipment
and records of each Partnership.
6.3 Permits. Contributor shall cause each Partnership to
maintain all Permits in full force and effect, and will file timely all reports,
statements, renewal applications and other filings, and will pay timely all fees
and charges in connection therewith that are required to keep the Permits in
full force and effect.
6.4 Contracts. Contributor will not permit either Partnership
to enter into any new Contracts with respect to the Property without
Transferee's prior consent.
6.5 Insurance. Contributor shall cause each Partnership to
maintain in full force and effect substantially the same public liability and
casualty insurance coverage now in effect with respect to the Property.
6.6 Taxes and Assessments. Contributor shall cause each
Partnership to pay or discharge before delinquent all tax liabilities and
obligations, including without limitation those for federal, state or local
income, property, unemployment, withholding, sales, transfer, stamp,
documentary, use and other taxes.
6.7 Binding Commitments. Contributor shall not make nor permit
either Partnership to make any commitments or representations to any applicable
government authorities, any adjoining or surrounding property owners, any civic
association, any utility or any other similar person or entity that would in any
manner be binding upon Transferee or the
- 15 -
Property without Transferee's prior consent. Contributor shall not permit either
Partnership to sell, assign, pledge, transfer or encumber, or enter into any
other material consent, commitment, understanding or other agreement, or incur
any material obligation or liability (contingent or absolute) with respect to
the Property or merge or consolidate with or into any other entity or enter into
any agreements relating thereto without Transferee's prior consent.
6.8 Compliance with Law. The operations of each Partnership
have been and will be conducted in compliance with all applicable Laws,
including, without limitation, all such laws regulations, orders and
requirements promulgated by any Governmental Authority or relating to consumer
protection, equal opportunity, health, health care industry regulation, third
party reimbursement (including Medicare, Medicaid, and workers compensation),
environmental protection, fire, zoning and building and occupational safety
matters.
6.9. No Action. Contributor shall not take or permit to be
taken any action that is taken with the intention to invalidate, void or make
untrue, inaccurate or incomplete any representation or warranty provided under
this Agreement. If any event occurs prior to the Closing which would cause any
of Contributor's or the Stockholders' representations or warranties to become
untrue, inaccurate or incomplete in any material respect, Contributor shall
notify Transferee in writing as soon as practicable after Contributor learns of
such occurrence.
6.10 Operation of Property. Contributor shall cause each
Partnership to continue to operate and maintain the Property owned by it in the
ordinary course of such Partnership's business and consistent with such
Partnership's current practices, and to maintain the Property in its present
order and condition, normal wear and tear excepted, and shall cause each
Partnership to continue the normal operation of the Property, including, without
limitation, the purchase and replacement of supplies and equipment, the
maintenance of beneficial relations with tenants, suppliers and others having
business dealings with the Partnerships and the continuation of the
Partnerships' past practice with respect to maintenance and repairs so that,
except for normal wear and tear, the Property shall be in substantially the same
condition on the Closing Date as on the date hereof.
6.11 Capital Contribution.
(a) In the event that, at Closing, the aggregate amount of the
Highgate Debt Service Reserve Fund and the Highgate Operating Reserve Fund is
less than $1,115,000, Contributor shall make a capital contribution to the Paoli
Partnership in the amount of the deficiency.
(b) In the event that, at Closing, the aggregate amount of the
Woodbridge Debt Service Reserve Fund and the Woodbridge Operating Reserve Fund
is less than $1,052,000, Contributor shall make a capital contribution to the
Kimberton Partnership in the amount of the deficiency.
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6.12 Termination of Employees. Prior to Closing, Contributor
shall cause each Partnership to terminate all employees of such Partnership.
Contributor hereby acknowledges that Transferee and, following the consummation
of the Contribution, each such Partnership, shall have no obligation to employ
any of the persons currently employed by such Partnership or employed by such
Partnership prior to the Closing Date and all obligations to pay any welfare and
other benefits, including without limitation, medical, dental, life insurance,
post-retirement medical, dental and life insurance, accidental death and
dismemberment insurance, disability (short-term and long-term), salary
continuation, vacation, severance, dependent care assistance, tuition
reimbursement, cafeteria plan (including spending accounts) and scholarship
award benefits (collectively, "Welfare Benefits") to any such employee, shall be
the obligation of Contributor. Contributor agrees that to the extent the United
States Worker Adjustment and Retraining Notification Act ("WARN") applies to the
Contribution or to the acquisition of all of the partnership interests in each
Partnership by Transferee, Contributor shall have the obligation to comply with
WARN and neither Transferee, nor following the consummation of the Transaction,
either Partnership shall have any obligation or liability therefor.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF CONTRIBUTION
The obligation of Transferee to consummate the Contribution
shall be subject to fulfillment (or waiver) at or prior to the date of the
Closing of the following conditions:
7.1 Representations, Warranties and Covenants. The
representations, warranties and covenants made by Contributor and the
Stockholders in this Agreement or in any document delivered by Contributor
pursuant to this Agreement shall be true and correct when made and on and as of
the date of the Closing as though such representations, warranties and covenants
were made on and as of such date.
7.2 No Material Adverse Change. There shall have been no
material adverse change in the value or condition of the Property or either
Partnership since the date hereof, except for changes contemplated by this
Agreement and changes in the ordinary course of business which do not have a
material adverse effect on the business or financial condition of the
Contribution, either Partnership or the Property.
7.3 Title Insurance; Survey. Commonwealth Land Title Insurance
Company shall have issued an ALTA owners title insurance policy effective as of
the date of the Closing or an unconditional commitment therefor insuring the
Paoli Partnership's interest in the Highgate Property in an amount not less than
$2,300,000 and insuring the Kimberton Partnership's interest in the Woodbridge
Property in an amount not less than $2,775,000, in each case with only those
exceptions and containing such endorsements as are acceptable to Transferee in
its sole and absolute discretion and otherwise acceptable to Transferee in
Transferee's sole discretion; in addition thereto, Transferee shall have
received a survey for the Real Property that is acceptable to Transferee in
Transferee's sole discretion.
- 17 -
7.4 No Order or Injunction. The consummation of the
Contribution shall not have been restrained, enjoined or prohibited by any order
or injunction of any court or governmental authority of competent jurisdiction.
7.5 Consents. All consents listed on Schedule 4.2 and all
other consents necessary for the execution and delivery of this Agreement by
Contributor and the consummation of the Contribution by Contributor have been
obtained.
7.6 Instruments of Conveyance. Contributor shall have executed
and delivered the instruments evidencing conveyance of the Interests referred to
in Section 8.1.
7.7 Leases.
(a) Transferee (or the Paoli Partnership) and Genesis or an
affiliate or subsidiary thereof shall have entered into a lease with respect to
the Paoli Facility;
(b) Transferee (or the Kimberton Partnership) and an affiliate
or subsidiary of Senior LifeChoice II shall have entered into a lease with
respect to the Woodbridge Facility (the "Woodbridge Lease") and Senior
LifeChoice II shall have executed a guaranty of the Woodbridge Lease.
7.8 Occupancy. At least 85% of the units in the Highgate
Facility shall be occupied as of the Closing Date and at least 70% of the units
in the Woodbridge Facility shall be occupied as of the Closing Date.
7.9 Zoning Change. There shall be no pending or threatened
zoning change without may affect the Property or any part thereof.
7.10 Other Transactions.
(a) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or his designee shall have acquired the
shares of stock of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in Contributor and Transferee or its
designee shall have acquired the limited partnership interests of ▇▇▇▇▇▇
Partnership, Tigh Investments, Tigh Investments II, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, custodian for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, custodian for ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in the Partnership
(collectively, the "Highgate Limited Partners") pursuant to one or more
acquisition agreements between Transferee and the Highgate Limited Partners (the
"Highgate Limited Partner Agreements").
(b) Transferee or its designee shall have acquired the limited
partnership interests of ▇▇▇▇▇▇ Partnership, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Vogenberg
Family Limited Partnership (collectively, the "Woodbridge Limited Partners")
pursuant to one or more acquisition agreements between Transferee and the
Woodbridge Limited Partners (the "Woodbridge Limited Partner Agreements"; the
Highgate Limited Partner Agreements and the Woodbridge Limited Partner Agreement
collectively shall be known as the "Limited Partner Agreements").
- 18 -
7.11. Trustee/Bondholder Consent. ▇▇▇▇▇ ▇▇▇▇▇, as holder of
certain of the bonds issued in connection with the Bond Debt, and, if required
the Trustee under the Bond Debt and ▇.▇. ▇▇▇▇▇▇▇▇, as holder of certain of the
bonds (i) shall have consented to the Contribution and to the acquisition of all
of the partnership interests in each Partnership by Transferee or its designee,
(ii) shall agree and consent to such matters, including, without limitation, any
appropriate modifications to the documents and instruments evidencing or
securing the Bond Debt (the "Bond Documents") and the prepayment of that portion
of the Bond Debt evidenced by the ▇▇▇▇▇▇▇ County Industrial Development
Authority $250,000 Assisted Living Facility Revenue Bonds (Senior LifeChoice of
Paoli, L.P.), Taxable Series 1994B, as shall have been requested by Transferee,
which agreements and consents shall be on terms and conditions acceptable to
Transferee in its sole discretion, (iii) shall have granted such waivers to
provisions of the Bond Documents as shall have been requested by Transferee,
which waivers shall be on terms and conditions acceptable to Transferee in its
sole discretion, (iv) ▇▇▇▇▇ ▇▇▇▇▇, as holder of certain of the bonds issued in
connection with the Bond Debt, and, if required the Trustee under the Bond Debt
shall have agreed to accept a letter of credit in lieu of the Debt Service
Reserve Fund and the Operating Reserve Fund, (v) shall have agreed to release to
Contributor for distribution to the partners of the Paoli Partnership, all
amounts held in all funds and reserves created and existing under the Bond
Documents relating to the Highgate Property in excess of $1,115,000 and (vi)
shall have agreed to release to Contributor for distribution to the partners of
the Kimberton Partnership, all amounts held in all funds and reserves created
and existing under the Bond Documents relating to the Woodbridge Property in
excess of $1,052,000.
7.12 Stockholder Consent. All of the stockholders of
Contributor shall have unanimously approved this Agreement and all of the
transactions contemplated herein.
7.13 Payments. Senior LifeChoice II shall have paid the sum of
$400,000 to the Kimberton Partnership.
ARTICLE VIII
CONDITIONS TO CONSUMMATION
OF TRANSACTION BY CONTRIBUTOR
The obligation of Contributor to consummate the Contribution
shall be subject to fulfillment (or waiver) at or prior to the date of the
Closing of the following conditions:
8.1 Representations, Warranties and Covenants. The
representations, warranties and covenants made by Transferee in this Agreement
or in any document delivered by Transferee pursuant to this Agreement shall be
true and correct in all material respects when made and on and as of the date of
the Closing as though such representations, warranties and covenants were made
on and as of such date.
8.2 Consents. All consents necessary for the consummation of
the Contribution by Transferee shall have been obtained.
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8.3 IPO Closing. The IPO shall close simultaneously with the
Contribution.
8.4 Simultaneous Closing. The Contribution shall close
simultaneously with the closings under the Limited Partner Agreements.
8.5 Lease. Transferee (or the Kimberton Partnership) and an
affiliate or subsidiary of Senior LifeChoice II shall have entered into the
Woodbridge Lease.
8.6 Payment to Contributor.
(a) Contributor shall have received a payment for
distribution to all of the partners of the Paoli Partnership in an amount at
least equal to all amounts held in all funds and reserves created and existing
under the Bond Documents relating to the Highgate Property in excess of
$1,115,000.
(b) Contributor shall have received a payment for
distribution to all of the partners of the Kimberton Partnership in an amount at
least equal to all amounts held in all funds and reserves created and existing
under the Bond Documents relating to the Woodbridge Property in excess of
$1,052,000.
ARTICLE IX
THE CLOSING
Subject to the terms and conditions of this Agreement, the
Closing shall take place promptly after satisfaction or waiver of the conditions
set forth in Article VII hereof.
9.1 Closing Deliveries by Contributors. At Closing,
Contributor shall deliver the following:
(a) a written document of conveyance contributing to
Transferee title to the Interests, free and clear of any
adverse claim or interest;
(b) such documents and certificates as Transferee may
require to establish the authority of the parties executing
any documents in connection with the Contribution including,
in the case of any Contributor that is a corporation,
partnership, limited liability company or other similar entity
(other than a trust or estate), an opinion of counsel,
reasonably satisfactory to Transferee, as to the due execution
and delivery of such documents;
(c) such consents as are contemplated by Section 7.5
hereof, Section 7.11 hereof and Section 7.12 hereof;
(d) a certificate duly executed by Contributor under
penalty of perjury setting forth Contributor's address and
federal tax identification number and
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certifying that Contributor is not a "foreign person" in
accordance with the provisions of Section 1445 (as may be
amended prior to the date hereof) of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated
thereunder; and
(e) such other documents and instruments as
Transferee and Contributor agree are necessary or appropriate.
9.2 Closing Deliveries by Transferee. At Closing, Transferee
shall deliver or cause to be delivered the following:
(a) the Units referred to in Article II hereof;
(b) copies of the executed Registration Rights
Agreement and Operating Partnership Agreement;
(c) the Cash Consideration; and
(d) such other documents and instruments as
Contributor and Transferee agree are necessary or appropriate.
9.3 Closing Costs. Transferee agrees to pay all costs
associated with the closing of the acquisition of the Interests by Transferee,
including (i) survey costs, (ii) costs of obtaining title insurance policies for
the benefit of Transferee, and (iii) except as provided below, all other fees
imposed on or in connection with the Contribution, provided, however, to the
extent any instruments are required to be recorded in connection with the
Contribution, Contributor, on one hand, and Transferee, on the other hand, shall
each pay one-half (1/2) of all costs, transfer and recordation taxes and fees
associated with the recordation. Each party shall pay its own legal fees.
ARTICLE X
REMEDIES ON DEFAULT
10.1 Contributor's Remedies. Except for any breaches waived in
writing by Contributor, if Transferee fails to consummate the Contribution when
required to do so pursuant to the provisions hereof, then Contributor shall be
entitled to terminate this Agreement as the exclusive and sole right and remedy
of Contributor (except as provided in this sentence), whereupon this Agreement
shall terminate and neither party hereto shall have any further obligations to
the other party hereto, provided, however that in such event, Transferee shall
reimburse Contributor for all reasonable costs incurred by Contributor in
connection with the Contribution, provided that the amount to be reimbursed by
Transferee shall not exceed Twenty-Five Thousand Dollars ($ 25,000).
10.2 Transferee's Remedies. Except for any breaches waived in
writing by Transferee, if Contributor has breached any of its covenants or
obligations under this Agreement
- 21 -
or shall have failed, refused or are unable to consummate the Contribution by
the date of the Closing when and as required to do so hereunder, then Transferee
shall have the right to bring an action at law or in equity seeking the specific
performance of the obligations of Contributor hereunder and in addition thereto
or in lieu thereof, Transferee may avail itself of any other remedies available
at law or in equity on account of such breach, provided, however, except in the
case of a willful failure or refusal of Contributor to consummate the
Contribution by the date of the Closing or the inability of Contributor to
consummate the Contribution by the date of the Closing by virtue of an
intentional act of Contributor, the amount of money damages that Transferor may
recover from Contributor shall not exceed Twenty-Five Thousand Dollars
($25,000).
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Contributor. Contributor hereby
indemnifies and agrees to defend and hold harmless Transferee, and its officers,
directors, employees, agents and successors and assigns and its general partner
and any officers, directors, employees, agents and successors and assigns of
such general partners ("Transferee Indemnitees"), from and against any and all
demands, claims, actions or causes of action, assessments, expenses, costs,
damages, losses and liabilities (including attorneys' fees and other charges)
which may at any time be asserted against or suffered by any Transferee
Indemnitee, the Property, or any part thereof, whether before or after date of
the Closing, as a result of, on account of or arising from (a) subject to
Section 10.2 above, the failure of Contributor to perform any of his, her or its
obligations hereunder or, to the extent provided in Section 13.1, the breach by
Contributor or the Stockholders of any of his, her or its representations and
warranties hereunder, (b) events, contractual obligations, acts or omissions of
Contributor or either Partnership that occurred in connection with the ownership
or operation of the Property prior to the Closing, (c) damage to property or
injury to or death of any person or any claims for any debts or obligations
occurring on or about or in connection with the Property or any portion thereof
or with respect to the operation of the Property at any time or times prior to
the Closing, (d) any obligation, claim, suit, liability, contract, agreement,
debt or encumbrance created, arising or accruing prior to the date of the
Closing, regardless of when asserted, relating to the Property or its operation,
including, without limitation, any and all liabilities for federal or state
income taxes or other taxes, which shall not have been set forth or specifically
described in this Agreement or the Schedules and the Exhibits hereto, (e) any
claims made by any person employed by either Partnership for Welfare Benefits or
otherwise in connection with such person's employment by such Partnership or the
termination of said employment or (f) any claims relating to WARN to the extent
applicable to the Contribution or the acquisition of all of the partnership
interests in each Partnership by Transferee. The obligations of Contributor
under this Section 11.1 shall survive the Closing.
11.2 Indemnification by Transferee. Transferee hereby
indemnifies and agrees to defend and hold harmless Contributor, and its
respective successors and assigns ("Contributor Indemnitees"), from and against
any and all demands, claims, actions or causes
- 22 -
of action, assessments, expenses, costs, damages, losses and liabilities
(including attorneys' fees and other charges) which may at any time be asserted
against or suffered by any Contributor Indemnitee, the Property, or any part
thereof, whether before or after the date of the Closing, as a result of, on
account of or arising from (a) subject to Section 10.1 above, the failure of
Transferee to perform any of its obligations hereunder or, to the extent
provided in Section 13.1, the breach by Transferee of any of its representations
and warranties made herein, (b) events, contractual obligations, acts or
omissions of Transferee that occurred in connection with the ownership or
operation of the Property prior to the Closing or (c) damage to property or
injury to or death of any person or any claims for any debts or obligations
occurring on or about or in connection with the Property or any portion thereof
or with respect to the operation of the Property at any time or times prior to
the Closing. The obligations of Transferee under this Section 11.2 shall survive
the Closing.
ARTICLE XII
FEASIBILITY PERIOD
12.1 From the date of this Agreement until the Feasibility
Period Expiration Date (as defined below) ("Feasibility Period"), and if
Transferee elects to proceed to Closing, through the Closing Date, Transferee,
at its sole cost and expense, shall have a right to conduct such feasibility
studies of the Property, including, without limitation, architectural,
engineering, environmental, soil boring, development and economic feasibility
studies (collectively, "Feasibility Studies") as Transferee deems necessary.
Contributor shall cooperate fully with Transferee and its agents (which term for
all purposes of this Agreement shall be deemed to include third party
consultants and contractors) in permitting reasonable access to the Property to
conduct the Feasibility Studies. Such access may be either during normal
business hours or after normal business hours after the giving of reasonable
advance notice to Contributor and subject to the rights of tenants. Transferee
shall give Contributor at least two (2) Business Days advance notice of any
invasive test and shall perform any such test in strict accordance with best
industry procedures and in such a manner as to minimize any interference with
Contributor or Contributor's tenants. Transferee shall reasonably restore the
Property to its condition prior to any such Feasibility Studies and shall
indemnify and defend Contributor from any and all (x) physical damage to the
Property, (y) damage to persons or property of third persons, and (z) amounts
payable to third party contractors as a result of the Feasibility Studies which
may directly arise as a result of the performance of Feasibility Studies by
Transferee (not as a result of the information determined). Contributor shall
provide Transferee and its agents, from time to time during business hours, with
access to and copies upon request of all documents that relate to the ownership,
management, maintenance, repair or operation or the purchase of the Property in
the possession or control of Contributor and have not been previously delivered
to Transferee (the "Documents").
12.2 If in Transferee's sole and absolute discretion (i)
Transferee is not satisfied for any reason whatsoever with any of the results of
the Feasibility Studies, the review of the Title Commitment and/or the Survey,
then Transferee shall have the right to terminate this
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Agreement by giving written notice to Contributor in the manner set forth in
Section 13.2, on or before the Feasibility Period Expiration Date.
12.3 In the event that this Agreement is terminated pursuant
to Section 12.2 above, Contributor and Transferee shall be relieved from all
further obligation or liability hereunder.
12.4 For the purposes of this Agreement, the "Feasibility
Period Expiration Date" shall be 5:00 p.m. EDT on the thirtieth (30th) day after
full execution by Contributor and Transferee of this Agreement. In the event
that the Feasibility Period Expiration Date falls on a weekend or a nationally
recognized holiday, the Feasibility Period Expiration Date shall be deemed to be
the next business day thereafter.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Survival of Liability with Respect to Representations and
Warranties. (a) It is the express intention and agreement of the parties that
(i) the representations and warranties of Contributor set forth in Section 4.1
through Section 4.12, Section 4.13, Section 4.14, Section 4.16 through Section
4.19, Section 4.21, Section 4.22 and Section 4.24 of this Agreement and the
representations and warranties of Transferee set forth in Article III of this
Agreement shall survive the consummation of the Contribution for a period of one
(1) year from the date of the Closing; and (ii) the representations and
warranties of Contributor set forth in Section 4.20 of this Agreement shall
survive the consummation of the Contribution for a period of three (3) years
from the date of the Closing. Such representations and warranties shall expire
and be terminated and extinguished forever at the expiration of the applicable
period. In addition thereto, the representations and warranties of Contributor
set forth in Section 4.15, Section 4.23, Section 4.25 and Section 4.26 of this
Agreement and the representations and warranties of the Stockholders set forth
in Article V of this Agreement shall survive the consummation of the
Contribution and shall not terminate. Any written notice given within such
period setting forth a claim must set forth the nature and details of the claim
with specificity.
(b) Any liability of Contributor to Transferee pursuant to
this Section 13.1 shall not exceed twenty percent (20%) of the value of the
Units received by Contributor pursuant to this Agreement; provided, however,
that such limitation shall not apply to a breach by Contributor of the
representations and warranties made by Contributor in Section 4.23 hereof.
13.2 Notices. All notices, demands, requests or other
communications which may be or are required to be given or made by either
Contributor or Transferee to the other pursuant to this Agreement shall be in
writing and shall be hand delivered or transmitted by certified mail, express
overnight mail or delivery service, telegram, telex or facsimile transmission to
the parties at the following addresses:
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If to Contributor: Senior LifeChoice Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Transferee: Eldertrust Operating Limited Partnership
c/o ElderTrust Realty Group, Inc., General Partner
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as the addressee may indicate by written notice to the
other party.
Each notice, demand, request or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the delivery receipt, the affidavit of messenger or (with respect to a telex)
the answerback being deemed conclusive but not exclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
13.3 Governing Law. This Agreement, the rights and obligations
of the parties hereto and any claims or disputes relating thereto shall be
governed by and construed under the laws of the Commonwealth of Pennsylvania
(but not including the choice of law rules thereof).
13.4 Benefit and Assignment. No party hereto shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Contributor (if the assignor is Transferee)
or Transferee (if the assignor is Contributor), which consent shall not be
unreasonably withheld, and any purported assignment contrary to the terms hereof
shall be null, void and of no force and effect, except that (i) Transferee may
assign this Agreement and its rights hereunder, to a corporation, partnership,
limited liability or other entity of which the entire ownership interest is
owned directly or indirectly by Transferee without the consent of Contributor;
no such assignment shall relieve Transferee of its obligations hereunder and
(ii) Transferee may designate one or more entities to acquire a portion of the
Interest.
This Agreement shall be binding upon and shall inure to the
benefit to the parties hereto and their respective successors and assigns as
permitted hereunder. No person or entity other than the parties hereto is or
shall be entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto, and the covenants and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the parties hereto or their respective successors and assigns as permitted
hereunder.
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13.5 Severability. If any part of any provision of this
Agreement or any other agreement, document or writing given pursuant to or in
connection with this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such invalidity
or unenforceability only, without in any way affecting the remaining parts of
such provisions or the remaining provisions of said agreement so long as the
economic and legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.
13.6 Entire Agreement; Amendment. This Agreement and the
Exhibits and Schedules attached hereto (each of which shall be deemed
incorporated herein and made a part hereof) contain the final and entire
agreement between the parties hereto with respect to the Contribution and are
intended to be an integration of all prior negotiations and understandings.
Contributor and Transferee shall not be bound by any terms, conditions,
statements, warranties or representations, oral or written, not contained or
referred to herein or therein. No amendment, change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto.
13.7 No Waiver. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or under
any other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent expressly specified
therein.
13.8 Power of Attorney. By executing this Agreement below or
pursuant to a Consent Form, Contributor and each Stockholder is constituting and
appointing each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and D. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
individually, with full power of substitution, the true and lawful
attorney-in-fact (the "Attorney") of Contributor and each Stockholder, with full
power and authority in the name of and for and on behalf of Contributor and each
Stockholder, to execute an instrument of conveyance contributing his, her or its
Interest to Transferee pursuant to the terms set forth in this Agreement, to
execute the Operating Partnership Agreement and the Registration Rights
Agreement and to execute any other instruments that Transferee reasonably deems
necessary or appropriate in connection with the contribution of the Interest
pursuant to this Agreement.
13.9 Headings. Section and subsection headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
13.10 [INTENTIONALLY DELETED]
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13.11 Confidentiality. Transferee and Contributor agree not to
make any public announcement about the Contribution without the prior written
consent of the other party. Notwithstanding the foregoing, the Contribution, the
terms and conditions of this Agreement may be described in any registration
statement or other document filed by the REIT with the United States Securities
and Exchange Commission (the "SEC") and a copy of this Agreement may be filed
with the SEC.
ARTICLE XIV
CERTAIN DEFINITIONS
For the purposes of this Agreement, the following terms shall
have the following meanings:
"Claims" means all demands, claims, actions or causes of
action, assessments, losses, damages (including, without limitation, diminution
in value), liabilities, costs and expenses, including, without limitation,
interest, penalties and attorneys' fees and disbursements.
"Environmental Laws" means any Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act), including any plans, other criteria, or guidelines promulgated
pursuant to such Laws, now or hereafter in effect relating to the generation,
production, installation, use, storage, treatment, transportation, release,
threatened release or disposal of Hazardous Materials. noise control, or the
protection of human health or safety, natural resources or the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974 (together with all rules and regulations promulgated thereunder), as
amended, supplemented, or modified from time to time.
"ERISA Affiliate" means any trade or business under common
control (as it is defined in Section 414(b) or Section 414(c) of the Internal
Revenue Code of 1986, as amended, or Section 4001(b)(1) of ERISA) with either
Partnership.
"Governmental Authority" means any nation, government, state,
municipality or any political subdivision of any nation, government, state or
municipality, including any court or other entity exercising executive,
legislative, regulatory, judicial or administrative functions of or pertaining
to, government.
"Hazardous Materials" means any wastes, substances, radiation
or materials (whether solids, liquids or gases) (i) which are hazardous, toxic,
infectious, explosive, radioactive, carcinogenic, or mutagenic; (ii) which are
or become defined as "pollutants," "contaminants," "hazardous materials,"
"hazardous wastes," "hazardous substances," "toxic substances," "radioactive
materials," "solid wastes," or other similar designations in, or otherwise
subject to regulation under, any Environmental Laws; (iii) the presence of which
on
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the Real Property cause or threaten to cause a nuisance pursuant to applicable
statutory or common law upon the Real Property or to adjacent properties; (iv)
without limitation, which contain polychlorinated biphenyls (PCBs), asbestos and
asbestos-containing materials, lead-based pains, urea-formaldehyde foam
insulation and petroleum or petroleum products (including, without limitation,
crude oil or any fraction thereof) or (v) which pose a hazard to human health,
safety, natural resources, industrial hygiene, or the environment, or an
impediment to working conditions.
"Laws" means all foreign, federal, state and local statutes,
laws ordinances, regulations, rules, resolutions, orders, determinations, writs,
injunctions, common law rulings, awards, (including, without limitation, awards
of any arbitrator), judgments and decrees applicable to the specified persons or
entities and to the businesses and Assets thereof (including, without
limitation, Laws relating to securities registration and regulation; the sale,
leasing, ownership or management of real property; employment practices, terms
and conditions, and wages and hours; building standards, land use and zoning;
safety, health and fire prevention; and environmental protection, including
Environmental Laws).
"Plan" means any plan, program or arrangement, whether or not
written, that is or was an "employee benefit plan" as it is defined in ERISA and
(a) that was or is established or maintained by either Partnership or any ERISA
Affiliate; (b) under which either Partnership or any ERISA Affiliate has
contributed or has been obligated to contribute or to fund or provide benefits,
or under which either Partnership or any ERISA Affiliate has any liability; or
(c) that provides or promises benefits to any person who performs or has
performed services for either Partnership or any ERISA Affiliate who, because of
such services, is or was a participant therein or entitled to benefits
thereunder.
"Release" means any emission, spill, seepage, leak, escape,
leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal,
or release of Hazardous Materials from any source (including, without
limitation, the Real Property and property adjacent to the Real Property) into
or upon the environment, including the air, soil, improvements, surface water,
groundwater, the sewer, septic system, storm drain, publicly owned treatment
works, or waste treatment, storage, or disposal systems at, on, from, above or
under the Real Property.
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IN WITNESS WHEREOF, Contributor and Transferee have caused
this Agreement to be duly executed and delivered on its behalf and each of the
Stockholders has executed a separate Consent Form agreeing to be bound by the
terms of this Agreement as of the date first above written.
TRANSFEREE:
ELDERTRUST OPERATING LIMITED
PARTNERSHIP
By: ElderTrust Realty Group, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President and Chief
Executive Officer
CONTRIBUTOR:
SENIOR LIFECHOICE CORP.
By: _________________________________
Name:____________________________
Title:_____________________________
- 29 -
[COUNTERPART SIGNATURE PAGE OF SENIOR LIFECHOICE CORP. TO PLAN OF ASSET TRANSFER
AND CONTRIBUTION AGREEMENT MADE AND ENTERED INTO AS OF SEPTEMBER 25, 1997 BY AND
BETWEEN ELDERTRUST OPERATING LIMITED PARTNERSHIP AND SENIOR LIFECHOICE CORP.]
IN WITNESS WHEREOF, the undersigned has executed this Consent Form as
of the date indicated below.
SENIOR LIFECHOICE CORPORATION
Dated: 9/30/97
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
STATE OF PENNA )
: SS.
COUNTY OF ▇▇▇▇▇▇▇ )
On the 30th day of September 1997, before me personally came
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, to me known, who being by me duly sworn, did depose and say
that he resides at _________________________________________, that he is
President of Senior LifeChoice Corporation, a Pennsylvania corporation, which
executed the foregoing instrument, and that he signed his name thereto on behalf
of said corporation by order of the board of directors of said corporation, and
as the act and deed of said of corporation for the uses and purposes of therein
mentioned.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Notary Public
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