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EXHIBIT 10.15
MEMBER INTEREST
MODIFICATION AGREEMENT
AND AMENDMENT TO
JOINT VENTURE AGREEMENT
BY AND AMONG
ALTERNATIVE LIVING SERVICES, INC.,
DAYS DEVELOPMENT COMPANY, LC,
DAYS DEVELOPMENT OF NORTH CAROLINA, L.L.C.,
AND THE OTHER PARTIES SIGNATORY HERETO
DATED AS OF
JANUARY 8, 1997
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TABLE OF CONTENTS
PAGE
1. Definitions................................................................................... 2
2. Agreement to Alter Rights and Interests in 80/20 Entities..................................... 3
2.1 Alteration of Ownership of 80/20 Entities............................................ 3
2.2 Reconciliation Payment............................................................... 3
2.3 The Closing.......................................................................... 3
2.4 Deliveries at the Closing............................................................ 3
3. Representations and Warranties of DD.......................................................... 4
3.1 Legal Status......................................................................... 4
3.2 Authority............................................................................ 4
3.3 No Violation......................................................................... 4
3.4 Brokers' Fees........................................................................ 4
3.5 DD Interest/Title.................................................................... 5
3.6 Required Consents.................................................................... 5
4. Representations and Warranties of DD-Carolina................................................. 5
4.1 Legal Status......................................................................... 5
4.2 Authority............................................................................ 5
4.3 No Violation......................................................................... 6
4.4 Brokers' Fees........................................................................ 6
4.5 DD Interest/Title.................................................................... 6
4.6 Required Consents.................................................................... 6
5. Representations and Warranties of ALS......................................................... 6
5.1 Legal Status......................................................................... 7
5.2 Authority............................................................................ 7
5.3 No Violation......................................................................... 7
5.4 No Brokers or Finders................................................................ 7
5.5 Required Consents.................................................................... 7
6. Amendments to Joint Venture Agreement......................................................... 7
6.1 Definitions.......................................................................... 8
6.2 Covenants............................................................................ 8
7. Conditions to ALS's Obligation to Close....................................................... 21
7.1 Representations and Warranties....................................................... 21
7.2 Performance.......................................................................... 21
7.3 Litigation........................................................................... 21
7.4 No Material Adverse Event............................................................ 21
7.5 Proceedings and Instruments Satisfactory............................................. 21
7.6 Other Documents...................................................................... 22
7.7 Required Consents.................................................................... 22
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8. Conditions to DD's and DD-Carolina's Obligation to Close...................................... 22
8.1 Representations and Warranties....................................................... 22
8.2 Performance.......................................................................... 22
8.3 Litigation........................................................................... 22
8.4 Proceedings and Instruments Satisfactory............................................. 22
8.5 Other Documents...................................................................... 23
9. Termination, Amendment and Waiver............................................................. 23
9.1 Termination of Agreement............................................................. 23
9.2 Amendment, Extension and Waiver...................................................... 24
10. Other Agreements.............................................................................. 24
10.1 Amendment to Operating Agreements.................................................... 24
11. Miscellaneous................................................................................. 24
11.1 Survival of Representations and Warranties............................................. 24
11.2 Expenses, Taxes, Etc................................................................... 24
11.3 Further Assurances..................................................................... 24
11.4 Successors and Assigns................................................................. 24
11.5 Severability........................................................................... 24
11.6 Entire Agreement....................................................................... 25
11.7 Headings............................................................................... 25
11.8 Notices................................................................................ 25
11.9 Law Governing.......................................................................... 26
11.10 Counterparts/Telecopies................................................................ 26
11.11 No Third Party Beneficiaries........................................................... 26
11.12 Construction........................................................................... 26
11.13 Number; Gender......................................................................... 27
11.14 Incorporation of Schedules and Exhibits................................................ 27
11.15 Taxes and Fees......................................................................... 27
SCHEDULES
Schedule A Holders of Interests in 80/20 Entities
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MEMBER INTEREST
MODIFICATION AGREEMENT
AND AMENDMENT TO JOINT VENTURE AGREEMENT
THIS MEMBER INTEREST MODIFICATION AGREEMENT AND AMENDMENT TO JOINT
VENTURE AGREEMENT, dated as of January 8, 1997 ("Agreement"), by and among
Alternative Living Services, Inc., a Delaware corporation ("ALS"), Days
Development Company, LC, a Virginia limited liability company ("DD"), Days
Development of North Carolina, L.L.C., a North Carolina limited liability
company ("DD- Carolina") and the DD Entities (hereinafter defined).
W I T N E S S E T H:
WHEREAS, DD-Carolina or another DD Entity and ALS own all of the member
interests in (i) Wynwood of Chapel Hill, LLC, a North Carolina limited liability
company ("Chapel Hill"); (ii) Clare Bridge of Cary, LLC, a North Carolina
limited liability company ("Cary"); (iii) Clare Bridge of Winston-Salem, LLC, a
North Carolina limited partnership ("Winston-Salem"); (iv) Clare Bridge of
Greensboro, LLC, a North Carolina limited partnership ("Greensboro"); (v)
Wynwood of Greensboro, LLC, a North Carolina limited partnership ("Greensboro
II"); (vi) Clare Bridge of Charlotte, LLC, a North Carolina limited partnership
("Charlotte"); and (vii) Wynwood of Charlotte, LLC, a North Carolina limited
partnership ("▇▇▇▇▇▇▇▇▇ ▇▇"; each of Chapel ▇▇▇▇, ▇▇▇▇, Winston- Salem,
Greensboro, Greensboro II, Charlotte and ▇▇▇▇▇▇▇▇▇ ▇▇ being referred to herein
individually as an "Existing Entity", and collectively as the "Existing
Entities");
WHEREAS, DD and ALS have entered into that certain Joint Venture
Agreement dated as of November 15, 1995 (the "Joint Venture Agreement"),
pursuant to which DD and ALS have set forth their agreement with respect to the
future development, construction and joint ownership of assisted living and/or
specialty care facilities for the elderly in North Carolina and South Carolina;
WHEREAS, DD-Carolina has agreed to be bound by all the provisions of
the Joint Venture Agreement pursuant to that certain Agreement to be Bound to
Joint Venture Agreement dated as of November 15, 1995; and
WHEREAS, DD, DD-Carolina, the DD Entities and ALS desire to amend and
revise the Joint Venture Agreement and their respective rights and interest with
respect to each of the Existing Entities other than Chapel Hill and Cary (each
such Existing Entity referred to as a "80/20 Entity" and collectively as "80/20
Entities") in the manner set forth herein.
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. DEFINITIONS. In addition to the other definitions
contained elsewhere herein, the following definitions shall apply
for purposes of this Agreement:
"80/20 Entity" and "80/20 Entities" shall have the meanings
set forth in the premises of this Agreement.
"Business Day" shall mean each day upon which state and
national banks are open for business in the City of Milwaukee, Wisconsin.
"Closing" shall have the meaning set forth in Section 2.3
hereof.
"Closing Date" shall have the meaning set forth in
Section 2.3 hereof.
"DD Assignment" shall mean an assignment of a portion of the
DD Interests pursuant to Section 2.1 hereof to be executed and delivered at
Closing by each DD Entity.
"DD Entity" shall mean each affiliate of DD or DD- Carolina
that is a member of any of the 80/20 Entities as set forth on Schedule A
attached hereto.
"DD Interests" shall mean all of the member (or equity)
interests of the DD Entities in the 80/20 Entities.
"Existing Entity" and "Existing Entities" shall have the
meanings set forth in the premises of this Agreement.
"Joint Venture Agreement" shall have the meaning set forth in
the premises of this Agreement.
"Law" shall mean any federal, state, or local law, rule,
regulation or governmental requirement of any kind, including without limitation
those governing the handling, management and disposal of infectious wastes or
medical wastes, and the rules, regulations and orders promulgated thereunder.
"Operating Agreements" shall mean the limited liability
company operating agreements with respect to each of the 80/20 Entities.
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"Person" shall mean a natural person, corporation, trust,
partnership, limited liability company, governmental entity, agency or branch or
department thereof, or any other legal entity.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
2. AGREEMENT TO ALTER RIGHTS AND INTERESTS IN 80/20
ENTITIES.
2.1 ALTERATION OF OWNERSHIP OF 80/20 ENTITIES. On and subject
to the terms and conditions of this Agreement, the parties hereto agree to alter
the member interest of each of ALS and the respective DD Entity with respect to
each of the 80/20 Entities such that ALS has an 80% member interest therein and
the applicable DD Entity shall have a 20% member interest therein, with such
alteration of member interests to be confirmed and reflected in an Operating
Agreement with respect to such 80/20 Entity as contemplated by Section 10.1
hereto. If such DD Entity shall be any person other than DD or DD-Carolina, then
DD and DD-Carolina shall cause such DD Entity to authorize, execute and approve
the modification of member interests and Operating Agreement (or the amendment
thereto) contemplated hereby. To the extent that as of the Closing Date the
aggregate equity capital contributed to the 80/20 Entities by the DD Entities
exceeds 25% of the aggregate equity capital contributed to the 80/20 Entities by
ALS and its affiliates, then ALS shall pay said excess amount (the
"Reconciliation Payment") to DD, as agent for all of the DD Entities, at the
Closing in the manner provided in Section 2.2 hereof.
2.2 RECONCILIATION PAYMENT. ALS agrees to pay at the Closing
(hereinafter defined) the Reconciliation Payment, by certified or bank check or
by wire transfer, to an account (or accounts) designated in writing by DD.
2.3 THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ in Atlanta, Georgia, commencing at 10:00, a.m. local time on the second
Business Day following the satisfaction or waiver of all conditions to the
obligations of ALS, DD and DD-Carolina to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective parties will take at the Closing itself) or such other place, date
and time as ALS, DD and DD-Carolina may mutually determine (the "Closing Date").
2.4 DELIVERIES AT THE CLOSING. At the Closing, (i) all DD
Entities shall deliver to ALS a DD Assignment duly executed by each of them,
(ii) ALS shall deliver to DD and DD-Carolina the
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payment payable pursuant to Section 2.2 hereof, and (iii) each DD Entity and ALS
shall execute and deliver an Operating Agreement (or amendment thereto) to
incorporate and effectuate the amendments thereto and agreements contemplated by
this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF DD. DD represents and warrants to
ALS that the statements contained in this Section 3 are correct and complete as
of the date of this Agreement and will be correct and complete as of the Closing
Date (as though then made).
3.1 LEGAL STATUS. DD is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Virginia and has the requisite power and authority to own, lease and operate its
assets and properties, to carry on its business as it is now being conducted, to
enter into this Agreement and to carry out the transactions contemplated hereby.
3.2 AUTHORITY. The execution and delivery of this Agreement
and all other instruments to be executed and delivered by DD pursuant hereto and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the members of DD. No other act or proceeding on the part of
DD or its members is necessary to authorize this Agreement, the other
instruments to be executed and delivered by DD pursuant hereto or the
transactions contemplated hereby or thereby. This Agreement constitutes, and
when executed and delivered the other instruments to be executed and delivered
by DD pursuant hereto will constitute, the legal, valid and binding agreements
of DD, enforceable against DD in accordance with their respective terms (except
insofar as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except as to the availability of equitable remedies).
3.3 NO VIOLATION. Neither the execution, delivery and
performance of this Agreement or the other instruments to be executed and
delivered by DD pursuant hereto, nor the consummation by DD of the transactions
contemplated hereby or thereby (a) will violate any statute, law, rule,
regulation, order, writ, injunction or decree of any court or governmental
authority by which DD is bound or (b) will violate or conflict with or
constitute a default under any term or provision of the articles of
organization, the operating agreement, or any other document governing DD.
3.4 BROKERS' FEES. DD has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which ALS could become liable or
obligated.
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3.5 DD INTEREST/TITLE. The DD Entities hold of record and own
beneficially the DD Interest in the 80/20 Entities as described on Schedule A,
attached hereto, free and clear of any restrictions on transfer (other than
ALS's rights pursuant to Section 2.1 hereof and any restrictions set forth in
the Operating Agreement for the respective 80/20 Entity and any restrictions
under the Securities Act and applicable state securities laws), liens,
encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, demands, and all other claims of any type. No DD Entity is a party to
any option, warrant, purchase right, or other contract or commitment that could
require such DD Entity to sell, transfer, or otherwise dispose of all or any
part of its respective DD Interest (other than this Agreement), and no DD Entity
has sold, transferred or conveyed any interest in any 80/20 Entity to any other
person.
3.6 REQUIRED CONSENTS. There are no third-party approvals or
consents required for the consummation at the Closing of the transactions
contemplated hereby which have not been obtained.
4. REPRESENTATIONS AND WARRANTIES OF DD-CAROLINA. Each DD Entity and
DD-Carolina represent and warrant to ALS that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though then made).
4.1 LEGAL STATUS. DD-Carolina and each DD Entity is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of North Carolina and has the requisite power and
authority to own, lease and operate its respective assets and properties, to
carry on its business as it is now being conducted, to enter into this Agreement
and to carry out the transactions contemplated hereby.
4.2 AUTHORITY. The execution and delivery of this Agreement
and all other instruments to be executed and delivered by DD-Carolina and each
DD Entity pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the members of DD-Carolina and
each DD Entity. No other act or proceeding on the part of DD-Carolina or any DD
Entity or their members is necessary to authorize this Agreement, the other
instruments to be executed and delivered by DD-Carolina or any DD Entity
pursuant hereto or the transactions contemplated hereby or thereby. This
Agreement constitutes, and when executed and delivered the other instruments to
be executed and delivered by DD-Carolina and each DD Entity pursuant hereto will
constitute, the legal, valid and binding agreements of DD-Carolina or the
applicable DD Entity, enforceable against DD-Carolina or such DD Entity, as
applicable, in accordance with their respective terms
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(except insofar as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except as to the availability of equitable remedies).
4.3 NO VIOLATION. Neither the execution, delivery and
performance of this Agreement or the other instruments to be executed and
delivered by DD-Carolina or any DD Entity pursuant hereto, nor the consummation
by DD-Carolina or any DD Entity of the transactions contemplated hereby or
thereby (a) will violate any statute, law, rule, regulation, order, writ,
injunction or decree of any court or governmental authority by which DD-Carolina
or any DD Entity is bound or (b) will violate or conflict with or constitute a
default under any term or provision of the articles of organization, the
operating agreement, or any other document governing DD-Carolina or any DD
Entity.
4.4 BROKERS' FEES. Neither DD-Carolina nor any DD Entity has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which ALS could become liable or obligated.
4.5 DD INTEREST/TITLE. The DD Entities hold of record and own
beneficially the DD Interest in the 80/20 Entities as described on Schedule A,
attached hereto, free and clear of any restrictions on transfer (other than
ALS's rights pursuant to Section 2.1 hereof and any restrictions set forth in
the Operating Agreement for the respective 80/20 Entity and any restrictions
under the Securities Act and applicable state securities laws), liens,
encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, demands, and all other claims of any type. No DD Entity is a party to
any option, warrant, purchase right, or other contract or commitment that could
require such DD Entity to sell, transfer, or otherwise dispose of all or any
part of its respective DD Interest (other than this Agreement), and no DD Entity
has sold, transferred or conveyed any interest in any 80/20 Entity to any other
person.
4.6 REQUIRED CONSENTS. There are no third-party approvals or
consents required for the consummation at the Closing of the transactions
contemplated hereby which have not been obtained.
5. REPRESENTATIONS AND WARRANTIES OF ALS. ALS represents and warrants
to DD, DD-Carolina and each DD Entity that the statements contained in this
Section 5 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though then made).
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5.1 LEGAL STATUS. ALS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite power and authority to own, lease and operate its assets and
properties, to carry on its business as it is now being conducted, to enter into
this Agreement and to carry out the transactions contemplated hereby.
5.2 AUTHORITY. The execution and delivery of this Agreement
and all other instrument to be executed and delivered by ALS pursuant hereto and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Board of Directors of ALS. No other corporate act or
proceeding on the part of ALS or its stockholders is necessary to authorize this
Agreement, the other instruments to be executed and delivered by ALS pursuant
hereto or the transactions contemplated hereby or thereby, including the payment
by ALS of the Purchase Price. This Agreement constitutes, and when executed and
delivered the other instruments to be executed and delivered by ALS pursuant
hereto will constitute, the legal, valid and binding agreements of ALS,
enforceable against ALS in accordance with their respective terms (except
insofar as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except as to the availability of equitable remedies).
5.3 NO VIOLATION. Neither the execution, delivery and
performance of this Agreement or the other instruments to be executed and
delivered by ALS pursuant hereto, nor the consummation by ALS of the
transactions contemplated hereby or thereby (a) will violate any statute, law,
rule, regulation, order, writ, injunction or decree of any court or governmental
authority by which ALS is bound or (b) will violate or conflict with or
constitute a default under any term or provision of the Certificate of
Incorporation or Bylaws of ALS.
5.4 NO BROKERS OR FINDERS. ALS has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which DD and DD-Carolina
could become liable or obligated.
5.5 REQUIRED CONSENTS. There are no third-party approvals or
consents required for the consummation at the Closing of the transactions
contemplated hereby which have not been obtained.
6. AMENDMENTS TO JOINT VENTURE AGREEMENT. Effective at the Closing, the
Joint Venture Agreement is hereby amended as set forth in this Section 6;
provided, however, that the parties hereto recognize that the terms of the
operating agreements for Chapel
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Hill and Cary are not consistent with certain provisions of this Section 6 and,
in such cases, such operating agreements shall control as to Chapel Hill and
Cary.
6.1 DEFINITIONS. Section 1.31 of the Joint Venture Agreement
is hereby amended and replaced in its entirety, and a new Section 1.36 is added
to the Joint Venture Agreement, each as set forth below:
"1.31 Agreement. "Agreement" means
this Joint Venture Agreement, as
amended from time to time."
"1.36 Project Entity. "Project
Entity" means any entity formed by
ALS and DD (or a DD Affiliate) for
their joint ownership of a Facility
pursuant to Section 3.1 hereof."
6.2 COVENANTS. Article III of the Joint Venture Agreement is
hereby amended as set forth in this Section 6.2.
6.2.1 FORMATION AND CAPITALIZATION OF ALS-CAROLINA;
FORMATION OF PROJECT ENTITIES; CAPITALIZATION OF PROJECT ENTITIES; PROJECT
FINANCING. Sections 3.1, 3.2, 3.3 and 3.4 of the Joint Venture Agreement are
hereby deleted in their entireties and replaced with the following new Sections
3.1, 3.2, 3.3 and 3.4, respectively:
"3.1 EQUITY PARTICIPATION OF DD; FORMATION OF PROJECT
ENTITIES. Commencing on the "Closing Date" as defined in that certain
Member Interest Modification Agreement and Amendment to Joint Venture
Agreement dated as of January 8, 1997 between DD, ALS and Days
Development of North Carolina, L.L.C., and during the remaining
Development Term, DD shall have the right, but not the obligation, to
participate as an equity investor, in the manner set forth herein, in
the ownership of all Facilities (other than Small Facilities
(hereinafter defined)) to be newly constructed by ALS in the Territory.
If DD elects to make the equity investment contemplated hereby with
respect to any such Facility, ALS and DD shall cooperate in the
formation of a limited liability company (unless the parties agree upon
some other form of legal entity) to develop, construct, own and operate
such Facility. The operating agreement, partnership agreement or other
governing documents of such Project Entity ("Entity Documents") shall
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incorporate the terms set forth in this Agreement, and shall otherwise
be in such form as is mutually acceptable to ALS and DD. DD's member
interest in any such Project Entity ("DD Member Interest") shall
represent (unless adjusted pursuant to Section 3.3(b)(ii) hereof) a
twenty (20%) percent equity contribution to the Project Entity (the "DD
Contribution Percentage") and ALS's member interest in any such Project
Entity ("ALS Member Interest") shall represent (unless adjusted
pursuant to Section 3.3(b)(ii) hereof) an eighty (80%) percent equity
contribution to the Project Entity (the "ALS Contribution Percentage").
DD's interest in the profits, losses, and distributions of each Project
Entity shall be as set forth in Section 3.16 hereof.
3.2 OFFER OF DD MEMBER INTEREST. If ALS shall elect to develop
and construct a Facility in which DD shall have a right to invest
pursuant to Section 3.1 hereof, ALS shall prepare a business plan for
such entity providing a description of such Facility, estimated
construction and development costs, a statement of the total initial
equity capital required for such Facility (the "Initial Capital") and
the total additional equity capital that may be required for such
Facility ("Additional Capital") and a five (5) year budget for such
Facility (the "Business Plan"), and shall provide a copy of such
Business Plan to DD. Upon its receipt of such Business Plan, DD shall
have thirty (30) days to elect either to exercise its right to provide
twenty (20%) percent of such Initial and Additional Capital pursuant to
the DD Member Interest, or to reject such opportunity. If DD shall not
notify ALS of its decision to provide such equity capital during such
thirty day period, DD shall be deemed to have waived its right to
provide such capital with respect to such Facility and ALS shall be
free to develop such Facility substantially in accordance with the
terms of the applicable Business Plan, either alone or with one or more
equity partners. If DD shall elect to provide such equity capital, DD
and ALS shall cooperate in the prompt preparation of Entity Documents
for such Facility in accordance herewith and shall promptly fund to
such Project Entity their respective portions of the Initial Capital.
DD's failure to promptly fund its portion of the Initial Capital shall
constitute a waiver of its right to provide equity capital in
connection with such Facility pursuant to Section 3.1 hereof.
3.3 ADDITIONAL CAPITAL CALLS.
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(a) Within thirty (30) days' written request of ALS, ALS and
DD shall provide Additional Capital as necessary to each Project Entity
(on a basis proportionate to their 80%/20% equity contribution
percentages in such Project Entity and in amounts that do not exceed,
in the aggregate, the total Additional Capital for such Project Entity
set forth in the Business Plan) to fund development, construction and
start-up operations of such Project Entity (any capital call of Initial
Capital or Additional Capital, a "Mandatory Capital Call").
(b) If either DD or ALS fails to make any Mandatory Capital
Call hereunder, then the other party may, at its option and in addition
to any other remedies: (i) request and receive a return of any
Mandatory Capital Call contribution made by it disproportionate to its
respective equity contribution percentage; (ii) make its or its and
such defaulting party's Mandatory Capital Call contribution to such
entity, and in such event the respective ownership interests in the
entity shall be adjusted as of the date such capital contribution is
made such that each party's percentage ownership interest shall equal
its cumulative capital contributions made by it to such entity compared
to all cumulative capital contributions made by the parties to such
entity or (iii) loan such amounts to such entity on the terms set forth
in Section 3.3(d) below.
(c) In addition, if either ALS or DD reasonably believes in
the exercise of its business judgment that additional capital is
required by any Project Entity to complete a Facility in accordance
with the Business Plan and applicable construction plans and
specifications previously agreed to by the parties, and the other party
does not agree to contribute a proportionate share of such capital,
then such party may loan such required funds to such entity on the
terms set forth in Section 3.3(d) below.
(d) The loans referred to in Sections 3.3(b) and 3.3(c) above
shall be evidenced by written promissory notes, shall be nonrecourse
(i.e., limited only to the assets of the borrowing entity),
subordinated to all other obligations of the entity to which the loan
is made on such terms as the entity's institutional lender(s) may
reasonably required, shall bear interest at three (3) percentage points
over the entity's existing mortgage loan rate from time to time in
effect and shall be repaid only as and when such entity has sufficient
cash flow (in
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the lending party's reasonable discretion) to repay the loan (but, in
any event, such loans shall be repaid prior to the entity making any
distributions to DD and ALS to which such parties might otherwise be
entitled).
3.4 PROJECT FINANCING. The parties will use their best efforts to cause
each Project Entity to obtain the necessary construction and permanent
financing for the Facility owned by it. ALS will be the sole guarantor
of such financing if a guaranty is required."
6.2.2 RESPONSIBILITIES OF THE PARTIES. Section
3.5(c) of the Joint Venture Agreement is hereby deleted in its entirety and
replaced with the following new Section 3.5(c), as well as the following new
Sections 3.5(d), 3.5(e) and 3.5(f):
"(c) All charges associated with the foregoing services
provided by ALS or DD or a DD Affiliate including, without limitation,
pre-marketing, pre-opening, operating, pre-development, third party,
overhead and aborted project costs, shall be paid by the Project Entity
with respect to which such charges are incurred, or as agreed on by
both parties in writing. Each Project Entity shall reimburse ALS or DD
or a DD Affiliate for any site selection, development costs and other
expenses incurred by such party and directly relating to such Project
Entity, together with costs for services pursuant to Sections 3.5(a)
and 3.5(b) directly related to such Project Entity. A detailed schedule
of services to be performed by ALS and DD or a DD Affiliate as set
forth in Sections 3.5(a) and 3.5(b) and the related charges are set
forth in Exhibit I attached hereto ("Listed Services"). Except for the
Listed Services, and except as otherwise expressly contemplated by this
Agreement or agreed upon subsequently by ALS and DD, Project Entities
will not pay any compensation of any type to ALS, DD or their
respective Affiliates.
(d) Each Project Entity shall be "member managed", if a
limited liability company, and "general partner managed," if a general
or limited partnership.
(e) The requirement to make any capital calls, other than
Mandatory Capital Calls, shall require the approval of both ALS and DD.
(f) All other matters, whether pertaining to the management,
operation and activities of such Project Entity or otherwise, shall be
decided by the affirmative vote, approval or consent of the member(s)
or partners of
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such Project Entity holding in excess of fifty percent (50%) of the
equity interest in such Project Entity; provided, however, that prior
to the first day that the Put Option (hereinafter defined) for such
entity becomes exercisable in accordance with Section 3.9 hereof, the
following actions shall require the approval of both ALS and DD:
(i) Any merger, consolidation, dissolution or
reorganization of such Project Entity, or adoption of any plan
or agreement to do any of the foregoing;
(ii) Any amendment to the Entity Documents for such
Project Entity;
(iii) Any sale, issuance or purchase by such Project
Entity of equity interests in the such Project Entity, or any
sale or issuance by such Project Entity of any rights,
warrants, options or convertible securities granting the
holder thereof the right to purchase from such Project Entity
any equity interests in such Project Entity;
(iv) Any sale or other transfer by an equity owner of
such Project Entity of its interest in such Project Entity,
except a transfer to the other equity owner of such Project
Entity or an Affiliate thereof;
(v) Any change in the principal place of business of
such Project Entity;
(vi) Any declaration or payment by such Project
Entity of any distribution to its equity owners; and
(vii) Guarantee or otherwise act as a surety or
accommodation party to any indebtedness or liability of any
Person, other than endorsement of checks in the normal course
of collection.
6.2.3 CONSTRUCTION SERVICES. Section 3.6 of the
Joint Venture Agreement is hereby deleted in its entirety and replaced with the
following new Section 3.6:
"3.6 DEVELOPMENT AND CONSTRUCTION SERVICES. During the
Development Term, Days Construction Company, a Virginia corporation
("Days Construction"), shall provide development and construction
services to ALS or any Project Entity (ALS or such entity, as
applicable, the "Developer Entity"), on an exclusive basis in the
manner contemplated hereby, in connection with the construction and
development by such
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Developer Entity of new assisted living or specialty care facilities
for the elderly ("New Facilities") in the Territory in the manner
contemplated hereby:
(a) Except as provided in Section 3.6(b) below, Days
Construction shall construct each New Facility pursuant to this Section
3.6 for a guaranteed maximum price agreed upon by Days Construction and
the Developer Entity in accordance with the terms of a construction
agreement for such New Facility, such agreement to be substantially in
the form of the Construction Agreement (Future Project Entities). The
Developer Entity will pay Days Construction a construction fee which
shall be Days Construction's entire compensation for all services
provided by Days Construction as construction manager, including all
construction profit and overhead. The construction fee shall be 11% of
labor, material and subcontract costs set forth in Section 7.1.1
through 7.1.4.5., and Section ;7.2.1, of AIA Form A-111 (such costs,
the "Contract Costs"). 3% will be allocated to development and will be
payable when title to the land is acquired by the Developer Entity;
provided, however, with respect to any Small Facility (hereinafter
defined), the amount payable for development shall be the greater of 3%
of the Contract Costs or $50,000. The remaining 8% will be payable in
accordance with the applicable Construction Agreement. Days
Construction will construct each Facility in accordance with the
applicable Construction Agreement, and for a guaranteed maximum price
to be agreed upon by the parties.
(b) In the event the Developer Entity and Days Construction
are unable to agree upon a guaranteed maximum price for any
construction agreement, despite all reasonable efforts to do so, at the
election of the Developer Entity, the Developer Entity may solicit from
other competent construction companies a competitive bid for the
construction of the New Facility. If, as a result of such competitive
bidding process, the guaranteed maximum price bid (project hard costs,
excluding the cost of any furniture, fixtures and equipment purchased
directly by the Developer Entity and the 8% construction fee) last
submitted by Days Construction shall be more than 105% of the
guaranteed maximum price bid (project hard costs, excluding the cost of
any FF&E purchased directly by the Developer Entity and a reasonable
construction fee (based on the relevant market)) submitted by the other
competent construction company (the "Lower Bidder"), then Days
Construction will have the option exercisable within twenty (20) days
following notice of said Lower Bidder by the Developer Entity to Days
Construction to (i) match the Bid and receive its full 8% construction
management fee, or (ii) have the Developer Entity assign its rights to
the Lower Bidder's
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contract to Days Construction, such that Days Construction can act as
the construction manager on behalf of the Developer Entity, for which
Days Construction will be paid a construction management fee of 5% of
all costs of construction paid to the Lower Bidder. Payment of the
proportional amount of the construction management fee will be made to
Days Construction at the same time each payment of construction costs
is made to the Lower Bidder. If Days Construction fails to elect either
option, Days Construction shall be deemed to have elected the option
outlined in clause (ii) above.
6.2.4 PUT AND CALL OPTIONS. Section 3.9 of the
Joint Venture Agreement is hereby deleted in its entirety and hereby replaced
with the following new Section 3.9:
"3.9 PUT AND CALL OPTIONS.
(a) ALS hereby grants to DD, and shall confirm in the Entity
Documents for each Project Entity, the right to sell to ALS all (but
not less than all) of the DD Member Interest in any one or more Project
Entities at the fair market value (determined as set forth below) of
such DD Member Interest in such Project Entity or Entities pursuant to
the terms and conditions set forth herein ("Put Option"). The Put
Option with respect to a Project Entity shall be exercisable by DD at
any time from and after the six-month anniversary of the acquisition of
the Facility owned by such Project Entity (with respect to any existing
Facility acquired by an ALS Affiliate and a DD Affiliate pursuant to
this Agreement) or Completion of Construction of the Facility owned by
such Project Entity (with respect to any Facility developed and
constructed by an ALS Affiliate and a DD Affiliate pursuant to this
Agreement) (the "6th Month Date"), through and until the tenth (10th)
anniversary of the date of acquisition or Completion of Construction of
such Facility, as applicable (the "Exercise Period").
(b) At ALS's election, the purchase price for any DD Member
Interest pursuant to Section 3.9(a) above shall be payable either: (a)
in cash or (b) in cash and a note (the "Note Option") as provided
below. The Note Option shall only be available if such purchase price
(or such purchase price together with the aggregate purchase price paid
by ALS within the 180 day period preceding the exercise of such Put
Option for DD Member Interests pursuant to prior exercise of any Put
Option(s) with respect thereto exceeds $500,000. To the extent a Put
Option is exercised and ALS is entitled to elect and so elects to pay
the purchase price using the Note Option,
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an amount equal to 1/2 of such price shall be paid in cash at the
closing of the purchase of the DD Interest, and ALS shall give to DD at
such closing ALS's promissory note for the remaining 1/2 of the price
due DD. Such note shall provide for payment of (i) 50% of the principal
amount of the note on the six-month anniversary date of the note, (ii)
the balance of the principal amount of the note on the one-year
anniversary date of the note, and (iii) quarterly installments of
interest only in arrears at a rate of 3% over the rate of interest
charged from time to time by the first mortgage lender of the Facility
owned by such Project Entity (or if there is no such lender, at prime
plus 5%). Such note shall be secured by a pledge of the DD Member
Interest so purchased and may be prepaid at ALS's option without
penalty. Otherwise, the purchase price shall be paid in cash.
The Put Option shall be exercised by written notice from DD to
ALS during such times as such Put Option is exercisable in accordance
herewith, and the exercise by DD of its Put Option or a failure to
exercise such Put Option for one Project Entity shall not preclude DD
from later exercising one or more Put Options for other Project
Entities.
(c) DD hereby grants to ALS, and shall confirm in the Entity
Documents for each Project Entity, the right to purchase all (but not
less than all) of the DD Member Interest in any one or more Project
Entities at the fair market value (determined as set forth below) of
such DD Member Interest in such Project Entity or Entities pursuant to
the terms and conditions set forth herein ("Call Option"). The Call
Option shall be exercisable as to each Project Entity at any time
during the applicable Exercise Period, such purchase price to be
payable in cash. The Call Option shall be exercised by written notice
from ALS to DD during such times as such Call Option is exercisable in
accordance herewith, and the exercise by ALS of its Call Option or a
failure to exercise such Call Option for a Project Entity shall not
preclude ALS from later exercising one or more Call Options for other
Project Entities.
(d) The purchase price for the DD Member Interest in each
Project Entity payable upon the exercise of a Put or Call Option shall
be equal to the proceeds that DD would receive if such Project Entity
were to sell its Facility at its then-fair market value (allocating any
gain or loss resulting therefrom pursuant to the
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methodology set forth in Sections 3.16(a) and (b) below), satisfy all
creditors, and then liquidate. For this purpose, the fair market value
of each Facility shall be determined as of the end of the calendar
month preceding the date on which a Put or Call Option is exercised, as
follows: The fair market value of a Facility shall be the fair market
value of such Facility as established by an appraiser jointly agreed
upon by both parties. If the parties are unable to agree to an
appraiser, then each party will designate an appraiser and the two
appraisers will each determine a fair market value. If any party shall
fail to designate an appraiser within fifteen (15) days following its
receipt of notice from the other party containing (i) the identity of
the appraiser designated by such other party and (ii) reference to such
party's obligation to designate an appraiser pursuant to this Section
3.9 within said fifteen (15) day period, then the appraiser for such
other party shall be deemed to be jointly agreed upon by both parties.
If the fair market value amounts determined by the two appraisers are
equal to or within 5% of their average, then the fair market value
shall be equal to such average. Otherwise, the two appraisers will
mutually select and appoint a third appraiser to determine the fair
market value, in which event the fair market value of the Facility
shall be equal to the result obtained by averaging the two of the three
appraisals which deviate the least from the average of the first two
appraisals. Each party will bear equally the fees and expenses of the
appraiser jointly agreed upon or selected and if applicable the third
appraiser, but each party will be solely responsible for the fees and
expenses of any appraiser selected solely by such party. In determining
such fair market value of a Facility, the assumption shall be made that
the management agreement with ALS or another manager will continue
indefinitely and that the percentage management fee then being charged
to the applicable Project Entity is equal to the greater of (i) the
percentage management fee which is actually being charged at such time,
or (ii) six (6) percent. Each appraiser selected hereunder shall be a
reputable appraisal firm which has experience in appraising commercial
real estate and long term care and/or assisted living facilities (or
similar businesses). All appraisers shall have complete access to the
relevant books and records of the Project Entity they are appraising
during the conduct of their appraisals. Notwithstanding the provisions
of this Section 3.9(d), if a DD Member Interest is to be acquired by
ALS pursuant to the exercise of a Call Option at any time prior to the
twelve month anniversary of the
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Completion of Construction of the Facility owned by the Project Entity
to which such DD Member Interest relates, the fair market value for
such Facility shall be determined in the manner described in this
Section 3.9(d), except that the assumption shall be made that such
Facility has achieved and is maintaining stabilized occupancy and is
operating at corresponding revenue and expense levels (based on such
occupancy) as contemplated by the Business Plan for such Project
Entity.
(e) Either party may invoke the appraisal process of this
Section 3.9 for any Facility prior to the exercise of its Put or Call
Option, as the case may be, so as to enable such party to determine the
fair market value of such Facility and, accordingly, the purchase price
for the DD Member Interest, before it exercises its option and the
price so determined shall govern any subsequent exercise of such Put or
Call Option that occurs within the 90-day period after the
determination thereof; provided, however, that if the party invoking
the appraisal process or the other party does not exercise its Put or
Call Option within ninety (90) days after the determination of the fair
market value in accordance herewith, then the party invoking the
appraisal process will bear all the costs of the appraisal(s). Any and
all transfers to ALS of the DD Member Interest in such Project Entity
pursuant to the exercise of a Put or a Call Option as provided herein
shall be closed, and all payments and deliveries contemplated thereby
made, upon the last to occur of (i) thirty (30) days after the fair
market value of the DD Member Interest in such Project Entity or
Entities is determined in accordance herewith or (ii) ninety (90) days
following the exercise of such Put or Call Option.
(f) At the closing of the exercise of a Put or Call Option
required by this Section 3.9:
(i) DD shall deliver to ALS an instrument
evidencing the transfer of the DD Member
Interest in the Project Entity being
purchased and sold, free and clear of all
security interests, liens and
restrictions, together with such other
documents as ALS may reasonably request
in connection therewith; and
(ii) ALS shall deliver to DD cash and ALS's promissory
note, if applicable, constituting the purchase price
for the
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DD Member Interest in such Project Entity, together
with such other documents as DD may reasonably
request.
At the time of the exercise of a Put or Call Option, if DD has
at the request of ALS guaranteed any financing of a Project Entity
subject to such option, then ALS will use its best efforts to obtain a
release of DD of such guaranty. If ALS is unable to obtain such a
release, and following the closing of a Put or Call Option there occurs
a default in the payment or performance of any obligation whatsoever,
whether monetary or otherwise, in connection with such financing, then
ALS will indemnify DD for any damages, costs and expenses (including
reasonable attorneys' fees) which DD incurs pursuant to any guaranty.
(g) Notwithstanding any provision contained in this Section
3.9 to the contrary:
(i) if a Put or Call Option is exercised,
then ALS may assign its rights and
obligations in respect of the Put or Call
Option to an affiliate of ALS so as to
preserve the legal existence or tax
status of the Project Entity, but no such
assignment shall relieve ALS from any
obligations to DD;
(ii) any reasonable closing costs or real estate transfer
tax or fee which arises in connection with any
purchase and sale hereunder shall be borne equally by
the parties;
(iii) equitable adjustments shall be made (in the case of
the value of a Project Entity) for any distributions
or capital contributions which occur between the date
of the determination of the fair market value of the
Project Entity and the closing of the Put Option or
Call Option transaction; and
(iv) DD shall not be entitled to exercise its Put Option
for a Project Entity if the Project Entity is
materially in default in the financing for the
Facility owned by such Project Entity.
(h) The Put Option and the Call Option provided for in this
Section 3.9 are intended (to the extent that such
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Put or Call Option would otherwise be deemed to be a "roll-up
transaction" pursuant to said Item 901) to be agreements of the type
described in Item 901(c)(2)(i) of Regulation S-K promulgated by the
Securities and Exchange Commission.
(i) DD shall have the right to designate an Affiliate
Controlled by Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ to be the owner of a Project
Entity rather than DD. In such event, all references in this Section
3.9 to DD with respect to the purchase and sale of the ownership
interest in such Project Entity shall be to such Affiliate rather than
DD, and this Section 3.9 shall be construed consistently therewith. In
the event that an Affiliate of DD is designated by DD to own an
interest in a Project Entity, then as a condition thereto the Project
Entity shall execute in form and substance reasonably satisfactory to
ALS an agreement in which the DD Affiliate agrees to be bound by the
provisions of this Agreement applicable to such DD Affiliate, including
without limitation the provisions of this Section 3.9 and the DD
Affiliate shall execute in form and substance reasonably satisfactory
to ALS a Collateral Assignment Agreement.
6.2.5 SECTION 3.10. Section 3.10 is deleted in its
entirety and shall not be used.
6.2.6 AMENDMENT TO NONCOMPETITION PROVISION.
Section 3.11(c) of the Joint Venture Agreement is hereby amended by the addition
of paragraphs (v) and (vi) below to Section 3.11(c):
"(v) such restrictions shall not apply to any assisted living,
dementia or other specialty care facility that has a projected
capital budget (excluding budgeted lease-up deficit) of less
than $2 million (provided that such facilities are in fact
constructed for less than $2 million) (herein referred to as a
"Small Facility"); and
(vi) such restrictions shall not be violated by reason of ALS,
DD or any of their respective Affiliates acquiring all or
substantially all of the operations of another multi-facility
operator (or a multi-facility division or operating unit of
such operator) of assisted living, dementia or other specialty
care facilities, whether by merger, stock or asset purchase or
otherwise, provided that none of the acquired assisted living,
dementia or other specialty care facilities (the "Acquired
Facilities") are located within ten (10) miles of any Facility
then jointly owned by ALS and DD."
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6.2.7 INTERESTS IN PROFITS, LOSSES AND DISTRIBUTIONS.
A new Section 3.16 is hereby added to the Joint Venture Agreement to read as
follows:
"3.16 Interests in Profits, Losses and Distributions.
The Entity Documents for each Project Entity shall provide as
follows:
(a) Net Losses. Any net loss with respect to the particular
Facility, as determined on a quarterly basis, shall be allocated (i)
first, one percent (1%) to ALS and ninety-nine percent (99%) to DD
until DD's invested capital is thereby exhausted, (ii) then, one
hundred percent (100%) to ALS until its invested capital is exhausted,
and (iii) then, in proportion to the parties' respective equity
contribution percentages (provided, however, that any such net loss to
be allocated pursuant to this clause (iii) after both parties' invested
capital is exhausted shall instead be first allocated to any party who
has guaranteed any debt of the Project Entity, up to the amount of such
guaranty).
(b) Net Profits. Any net profits with respect to a particular
Facility, as determined on a quarterly basis, shall be allocated first
to "reverse out" any prior net loss allocations in the reverse order
made, with any remaining profit (i.e., any net overall profit from that
Facility) to be allocated in proportion to the parties' respective
equity contribution percentages. That is (unless the DD Contribution
Percentage and ALS Contribution Percentage are modified in accordance
with Section 3.3(b)(ii) hereof), any quarterly net profits shall be
allocated (i) first, eighty percent (80%) to ALS and twenty percent
(20%) to DD to restore any net losses previously allocated to them
after the exhaustion of all their collective capital (as adjusted in
the event that either party has been allocated any net loss by reason
of its guarantee of any debt of the Project Entity), (ii) then, one
hundred percent (100%) to ALS to restore any net losses allocated to it
by reason of the exhaustion of DD's capital, (iii) then, one percent
(1%) to ALS and ninety-nine percent (99%) to DD to reverse the initial
losses allocated to the parties in that same proportion, and (iv) then,
eighty percent (80%) to ALS and twenty percent (20%) to DD.
(c) Distributions. Any distributions of current cash flow
shall be made in proportion to the parties' respective equity
contribution percentages. No distributions shall be made with respect
to any quarter
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in which the Project Entity derives a net loss, without the consent of
both parties. Distributions upon liquidation of the Project Entity
(i.e., the distribution of proceeds from the sale of the Project
Entity) shall be distributed in accordance with the parties' respective
capital account balances (after giving effect to the allocation of any
gain or loss resulting from such liquidating sale)."
7. CONDITIONS TO ALS'S OBLIGATION TO CLOSE. The obligation of ALS to
close the transactions contemplated by this Agreement are subject to the
fulfillment, prior to or at the Closing unless otherwise required below, of each
of the following conditions (all or any of which may be waived in whole or in
part by ALS):
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by DD, DD-Carolina and the DD Entities in this Agreement and the
statements contained in any other instrument, list, certificate or writing
delivered by DD, DD-Carolina and the DD Entities pursuant to this Agreement
shall be true in all material respects when made and at and as of the Closing
Date as though such representations and warranties were made at and as of such
date, except as consented to by ALS in writing.
7.2 PERFORMANCE. DD, DD-Carolina and the DD Entities shall
have performed and complied with all agreements, obligations and conditions
required by this Agreement to be so performed or complied with by them prior to
or at the Closing.
7.3 LITIGATION. No suit, proceeding, investigation,
injunction, writ or preliminary restraining order shall have been commenced or
threatened by any governmental agency on any grounds to restrain, enjoin or
hinder the transactions contemplated hereby.
7.4 NO MATERIAL ADVERSE EVENT. There shall not have occurred
any damage to or destruction of the properties or assets of any Existing Entity
by fire or by other casualty, or any other business development, which would
have a material adverse effect on any Existing Entity or its business as
presently conducted, unless, in the case of damage or destruction, such damage
or destruction is insured in all material respects (including business
interruption coverage) and can be repaired or replaced in all material respects.
7.5 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings
to be taken in connection with the transactions contemplated by this Agreement,
and all documents incident thereto, shall be reasonably satisfactory in form and
substance to ALS, and DD, DD-Carolina and the DD Entities shall have made
available to ALS for examination the originals or true and correct copies of all
documents which ALS may reasonably request and DD, DD-Carolina and
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the DD Entitites can reasonably obtain in connection with the transactions
contemplated by this Agreement.
7.6 OTHER DOCUMENTS. DD, DD-Carolina and the DD Entities shall
have delivered to ALS such certificates and documents of officers and partners
of DD, DD-Carolina and the DD Entities and public officials as shall be
reasonably requested by ALS's counsel to establish the existence and status of
DD, DD- Carolina and the DD Entities and the due authorization of this Agreement
and the transactions contemplated hereby by DD, DD- Carolina and the DD
Entities.
7.7 REQUIRED CONSENTS. Prior to the Closing, DD, DD- Carolina
and the DD Entities shall have obtained all third-party approvals and consents
required for the consummation of the matters contemplated hereby.
8. CONDITIONS TO DD'S AND DD-CAROLINA'S OBLIGATION TO CLOSE. The
obligation of DD, DD-Carolina and the DD Entities to close the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or at
the Closing unless otherwise required below, of each of the following conditions
(all or any of which may be waived in whole or in part if both DD and
DD-Carolina so agree):
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by ALS in this Agreement and the statements contained in any
other instrument, list, certificate or writing delivered by ALS pursuant to this
Agreement shall be true in all material respects when made and at and as of the
Closing Date as though such representations and warranties were made at and as
of such date.
8.2 PERFORMANCE. ALS shall have performed and complied with
all agreements, obligations and conditions required by this Agreement to be so
performed or complied with by it prior to or at the Closing.
8.3 LITIGATION. No suit, proceeding, investigation,
injunction, writ or preliminary restraining order shall have been commenced or
threatened by any governmental agency on any grounds to restrain, enjoin or
hinder the transactions contemplated hereby.
8.4 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings
to be taken in connection with the transactions contemplated by this Agreement,
and all documents incident thereto, shall be reasonably satisfactory in form and
substance to DD and DD-Carolina, and ALS shall have made available to DD and DD-
Carolina for examination the originals or true and correct copies
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of all documents which DD and DD-Carolina may reasonably request in connection
with the transactions contemplated by this Agreement.
8.5 OTHER DOCUMENTS. ALS shall have delivered to DD and
DD-Carolina such certificates and documents of officers of ALS and of public
officials as shall be reasonably requested by DD's and DD-Carolina's counsel to
establish the existence and status of ALS and the due authorization of this
Agreement and the transactions contemplated hereby by ALS.
9. TERMINATION, AMENDMENT AND WAIVER.
9.1 TERMINATION OF AGREEMENT. Time is of the essence hereof.
This Agreement may be terminated in its entirety at any time prior to the
Closing:
(A) without liability of any party, by mutual agreement of all
the parties hereto;
(B) by ALS, if there has been a material violation or breach
by DD, DD-Carolina or any DD Entity of any of its covenants, agreements,
representations or warranties contained in this Agreement which has not been
waived in writing by ALS;
(C) by ALS, if any of the conditions precedent to Closing set
forth in Section 7 of this Agreement shall not be fulfilled prior to or by
January 31, 1997 and shall not have been waived in writing by ALS;
(D) DD and DD-Carolina, if there has been a material violation
or breach by ALS of any of its covenants, agreements, representations or
warranties contained in this Agreement which has not been waived in writing by
DD and DD-Carolina; and
(E) DD and DD-Carolina, if any of the conditions precedent to
Closing set forth in Section 8 of this Agreement shall not be fulfilled prior to
or by January 31, 1997 and shall not have been waived in writing by DD and
DD-Carolina.
The termination of this Agreement by ALS pursuant to this Section 9.1 shall be
effective with respect to DD, DD-Carolina and the DD Entities regardless of
whether the failure to fulfill a condition precedent or the violation or breach
giving rise to ALS's right to terminate this Agreement is attributable to only
one or more than one of DD, DD-Carolina and the DD Entities. Further, the
termination of this Agreement by DD or DD-Carolina shall be effective with
respect to DD, DD-Carolina and the DD Entities regardless of whether the failure
to fulfill a condition precedent or the violation or breach at issue gives rise
to the right of only one or both of DD and DD-Carolina to terminate this
Agreement.
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9.2 AMENDMENT, EXTENSION AND WAIVER. At any time prior to the
Closing Date, ALS and DD and DD-Carolina may, by an instrument in writing signed
by such Persons, (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of the parties hereto, (c)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (d) waive compliance with any of
the agreements or conditions contained herein. DD is hereby authorized to act on
behalf of each DD Entity in connection with any action taken pursuant to this
Section 9.2.
10. OTHER AGREEMENTS.
10.1 AMENDMENT TO OPERATING AGREEMENTS. At the Closing, ALS
and the applicable DD Entity shall execute, amend or restate each of the
Operating Agreements to conform the terms of each of the Operating Agreements to
those contemplated by this Agreement with respect to Entity Documents.
11. MISCELLANEOUS.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect thereafter.
11.2 EXPENSES, TAXES, ETC. Each of DD, DD-Carolina and the DD
Entities will pay all fees and expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby. ALS will pay all fees and
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby.
11.3 FURTHER ASSURANCES. From time to time, at the request of
a party hereto and without further consideration, the other party will execute
and deliver to such requesting party such documents and take such other action
as such requesting party may reasonably request in order to consummate more
effectively the transactions contemplated hereby.
11.4 SUCCESSORS AND ASSIGNS. This Agreement shall not be
assigned by any party without the prior written consent of the other parties.
This Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and the successors and permitted assigns of such party.
11.5 SEVERABILITY. If any provision, clause, or part of this
Agreement, or the application thereof under certain
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circumstances, is held invalid, the remainder of this Agreement, or the
application of such provision, clause or part under other circumstances, shall
not be affected thereby.
11.6 ENTIRE AGREEMENT. Except as provided herein to the
contrary, this Agreement and other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire understanding of the
parties with respect to the transactions contemplated hereby and supersede all
prior agreements and understandings between the parties on such matters.
11.7 HEADINGS. The Section headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement.
11.8 NOTICES. All notices, claims, certificates, requests,
demands and other communications hereunder will be in writing and will be deemed
to have been duly given if (i) personally delivered; (ii) sent by telecopy,
facsimile transmission or other electronic means of transmitting written
documents (if confirmation of such transmission is received); or (iii) sent to
the parties at their respective addresses indicated herein by registered or
certified mail, postage prepaid, return receipt requested, or by private
overnight mail courier service. The respective addresses to be used for all such
notices, demands or requests are as follows:
(a) If to ALS, to:
Alternative Living Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
2700 International Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to DD, DD-Carolina, or any DD Entity to:
Days Construction Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the Person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
11.9 LAW GOVERNING. This Agreement will be governed by, and
construed and enforced in accordance with, the internal laws of the State of
North Carolina without regard to its conflicts of law rules.
11.10 COUNTERPARTS/TELECOPIES. This Agreement may be executed
simultaneously in counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same instrument. Facsimile and
telecopy versions of signed documents shall be deemed to be original documents
for purposes of Closing.
11.11 NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns.
11.12 CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without limitation. The
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Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance.
11.13 NUMBER; GENDER. Whenever the singular number is used in
this Agreement and when required by the context, the same shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter genders and vice versa.
11.14 INCORPORATION OF SCHEDULES AND EXHIBITS. The Schedules
and Exhibits identified in this Agreement are incorporated herein by reference
and made a part hereof.
11.15 TAXES AND FEES. DD, DD-Carolina or the DD Entities, as
applicable, shall pay any transfer, sales or use taxes arising out of the
modification and alteration of the DD Interests contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ALTERNATIVE LIVING SERVICES, INC.
By: ________________________________
Its: _______________________________
DAYS DEVELOPMENT COMPANY, LC
By: ________________________________
Its: _______________________________
DAYS DEVELOPMENT OF NORTH CAROLINA,
L.L.C.
By: ________________________________
Its: _______________________________
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DAYS DEVELOPMENT OF WINSTON-SALEM,
L.L.C.
By: ________________________________
Its: _______________________________
DAYS AZ OF GREENSBORO, L.L.C.
By: ________________________________
Its: _______________________________
DAYS AL OF GREENSBORO, L.L.C.
By: ________________________________
Its: _______________________________
DAYS AZ OF CHARLOTTE, L.L.C.
By: ________________________________
Its: _______________________________
DAYS AL OF CHARLOTTE, L.L.C.
By: ________________________________
Its: _______________________________
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SCHEDULE A
80/20 ENTITY DD ENTITY DD INTEREST
------------ --------- -----------
Winston-Salem Days Development of 49%
Winston-Salem, L.L.C.
Greensboro Days AZ of Greensboro, L.L.C. 49%
Greensboro II Days AL of Greensboro, L.L.C. 49%
Charlotte Days AZ of Charlotte, L.L.C. 49%
▇▇▇▇▇▇▇▇▇ ▇▇ Days AL of Charlotte, L.L.C. 49%