Document:

ex10_2.htm

Exhibit 10.2

 

XOMA LTD.

 

1998 EMPLOYEE SHARE PURCHASE PLAN

 

(Amended and Restated through May 26, 2011)

 

1.           Purpose.  The purpose of this XOMA Ltd. 1998 Employee Share Purchase Plan (the “Plan”) is to provide employees of XOMA Ltd., a Bermuda company (the “Company”), with an opportunity to purchase common shares of the Company (“Common Shares”) through accumulated payroll deductions.  It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).  The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.

 

2.           Definitions.

 

(a)            “Board” shall mean the Board of Directors of the Company.

 

(b)            “Committee” shall mean the Compensation Committee of the Board or such other committee selected by the Board to administer the Plan.

 

(c)            “Compensation” shall mean total cash compensation received by the Employee from the Company, including regular pay, overtime pay, and bonuses, and shall also include any pretax Employee cash or deferred contributions to a plan maintained by the Company which qualifies under Section 401(k) of the Code and any pretax Employee contributions to a plan maintained by the Company which qualifies under Section 125 of the Code.

 

(d)            “Employee” shall mean any individual who is an employee of the Company for purposes of tax withholding under the Code whose customary employment with the Company is at least twenty (20) hours per week and more than five (5) months in any calendar year.  For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company.  Where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the ninety-first (91st) day of such leave.

 

(e)            “Enrollment Date” shall mean the first day of each Offering Period.

 

(f)            “Exercise Date” shall mean the last day of each Offering Period.

 

(g)            “Fair Market Value” shall mean, as of any date, the value of Common Shares determined as follows:

 

	
(1)  

	
If the Common Shares are listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market, their Fair Market Value shall be the closing selling price for the Common Shares, as quoted on such exchange (or the exchange with the greatest volume of trading in Common Shares) or system on the date of such determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

  

  

  

	
(2)  

	
If the Common Shares are quoted on the Nasdaq Stock Market (but not on the Nasdaq National Market), their Fair Market Value shall be the closing selling price for the Common Shares on the date of such determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

	
(3)  

	
In the absence of an established market for the Common Shares, the Fair Market Value thereof shall be determined in good faith by the Committee.

 

(h) “Offering Periods” shall mean consecutive three (3) month periods commencing once every calendar quarter beginning on the first Trading Day on or after January 1, April 1, July 1 and October 1 of each year and ending on the last Trading Day prior to the end of such three (3) month period.

 

(i)            “Purchase Price” shall mean with respect to new Offering Periods under the Plan commencing on or after January 1, 2005, the Purchase Price for such Offering Periods shall be an amount equal to 95% of the Fair Market Value of a Common Share on the Exercise Date for that Offering Period.

 

(j)            “Reserves” shall mean the number of Common Shares covered by each option under the Plan which has not yet been exercised and the number of Common Shares which have been authorized for issuance under the Plan but not yet placed under option.

 

(k)            “Trading Day” shall mean a day on which national stock exchanges and the Nasdaq Stock Market are open for trading.

 

3.           Eligibility.

 

(a)            Any person who is an Employee on a given Enrollment Date shall be eligible to participate in the Plan.

 

(b)            Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee would own shares (together with shares owned by any other person or entity that would be attributed to such Employee pursuant to Section 424(d) of the Code) of the Company (including, for this purpose, all shares of stock subject to any outstanding options to purchase such stock, whether or not currently exercisable and irrespective of whether such options are subject to the favorable tax treatment of Section 421(a) of the Code) possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any parent (within the meaning of Section 424(e) of the Code) or subsidiary (within the meaning of Section 424(f) of the Code), or (ii) which permits his or her rights to purchase stock under all Offering Periods and all employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company and its parents and subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding at any time.  The limitation described in clause (ii) of the preceding sentence shall be applied in a manner consistent with Section 423(b)(8) of the Code.

 

4.           Offering Periods.  The Plan shall be implemented by concurrent Offering Periods with a new Offering Period commencing on the first Trading Day of each calendar quarter, or on such other date as the Committee shall determine, with such Offering Periods extending for twenty-four (24) months, or such other length as the Committee shall determine.  The Committee shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of the first Offering Period to be affected thereafter.

 

  

-2-

  

5.           Participation.

 

(a)            An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in a form prepared by the Company and filing it with the Company’s Human Resources Department at least one (1) day prior to the applicable Enrollment Date for a particular Offering Period, unless a different time for filing the subscription agreement is set by the Committee for all eligible Employees with respect to a given Offering Period.

 

(b)            Payroll deductions for a participant shall commence on the first payroll date following the Enrollment Date and shall end on the last payroll date in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof.

 

6.           Payroll Deductions.

 

(a)            At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each payday during the Offering Period in an amount not exceeding twenty percent (20%) (or such other lesser percentage, applied uniformly to all participants, as an executive officer of the Company shall set), in whole multiples of one percent (1%), of the Compensation which he or she receives on each payday during the Offering Period.  The aggregate amount of payroll deductions for all concurrent Offering Periods shall not exceed twenty percent (20%) (or such lesser percentage, applied uniformly to all participants, as an executive officer of the Company shall set).

 

(b)            All payroll deductions made for a participant shall be credited to his or her account under the Plan and will be withheld in whole percentages only.  A participant may not make any additional payments into such account.

 

(c)            Once an Offering Period has commenced, a participant may decrease, but not increase, the rate of his or her payroll deductions for that Offering Period once per calendar quarter by filing a new subscription agreement at least one (1) day prior to the beginning of the calendar quarter (or such other time set by the Committee for all eligible Employees with respect to a given Offering Period), which decrease shall become effective at the beginning of the next calendar quarter; provided, however, that a participant may discontinue his or her participation in the Plan, as provided in Section 10 hereof, at any time during the Offering Period prior to the Exercise Date.  During an Offering Period, a participant may elect to have new or additional payroll deductions made with respect to the next beginning Offering Period, by completing or filing with the Company an additional subscription agreement, at least one (1) day prior to the beginning of the next Offering Period (or such other time set by the Committee for all eligible Employees with respect to a given Offering Period), authorizing a payroll deduction rate with respect to the new Offering Period.  A participant’s subscription agreement shall remain in effect for other Offering Periods, but separate subscription agreements are required for each Offering Period.

 

(d)            Notwithstanding the foregoing, a participant’s payroll deductions for each Offering Period may be decreased to 0% at any time, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof.

 

(e)            At the time the option is exercised, in whole or in part, or at the time some or all of the Company’s Common Shares issued under the Plan are disposed of, the participant must make adequate provisions for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Shares.  At any time, the Company may, but will not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations.

 

  

-3-

  

7.           Grant of Option.  On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on the Exercise Date of such Offering Period (at the applicable Purchase Price) up to a number of Common Shares determined by dividing such Employee’s payroll deductions accumulated with respect to that Offering Period prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the applicable Purchase Price; provided, however, that in no event shall an Employee be permitted to purchase during each Offering Period and with respect to such Offering Period more than 3,333 Common Shares; and provided, further, that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12 hereof.  Exercise of the option with respect to that Offering Period shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and the option with respect to that Offering Period shall expire on the last day of the Offering Period.

 

8.           Exercise of Option.  Unless a participant has withdrawn from the Plan as provided in Section 10 hereof, his or her option for the purchase of Common Shares will be exercised automatically on the Exercise Date, and, subject to the limitations set forth in Sections 3(b), 7 and 12 hereof, the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account with respect to that Offering Period.  Unless otherwise approved by the Committee, no fractional shares will be purchased.  Unless acquisition of fractional shares has been so approved, any payroll deductions accumulated in a participant’s account which are not sufficient to purchase a full Common Share shall be retained in the participant’s account for the next expiring Offering Periods, subject to earlier withdrawal by the participant as provided in Section 10 hereof.  Any other monies left over in a participant’s account after the Exercise Date shall be returned to the participant.  During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by the participant.

 

9.           Issuance; Delivery; Restriction.  The Common Shares purchased for a participant on the last day of an Offering Period shall be deemed to have been issued by the Company for all purposes as of the Exercise Date.  Prior to such date, none of the rights and privileges of a shareholder of the Company shall exist with respect to such Common Shares.  The registrar for the Company shall be instructed to make entries on its books and records evidencing that Common Shares issued hereunder have been duly issued as of each pertinent Exercise Date; provided, however, that an employee may in the alternative elect in writing to receive a stock certificate representing the amount of such shares so acquired; and provided, further, that, regardless of whether an employee elects to receive such stock certificates, the Committee may direct the Company to distribute stock certificates representing the amount of shares acquired to any or all employees.  Notwithstanding the foregoing, delivery of certificates representing Common Shares or transfer to or for the account of any participant under the Plan may be conditioned upon the agreement of such participant to allow federal income tax withholdings as may be required to be made by the Company.

 

10.           Withdrawal; Termination of Employment.

 

(a)            A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan with respect to each Offering Period at any time prior to the last business day of the Offering Period by giving written notice to the Company in a form prepared by the Company.  All of the participant’s payroll deductions credited to his or her account will be paid to such participant promptly after receipt of notice of withdrawal and such participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offering Period with respect to such Offering Period.  If a participant withdraws from the Plan with respect to one Offering Period during an Offering Period, he or she may resume participation for a subsequent Offering Period by delivering to the Company a new subscription agreement at least fifteen (15) days prior to the Enrollment Date for such Offering Period and he or she may continue in the Plan with respect to other Offering Periods that have already begun.

 

  

-4-

  

(b) Upon a participant’s ceasing to be an Employee, for any reason, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during the current Offering Periods but not yet used to exercise the option will be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 14 hereof, and such participant’s option will be automatically terminated.

 

(c)            A participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in subsequent and all other Offering Periods.

 

11.           Interest.  No interest or other increment shall accrue or be payable with respect to any of the payroll deductions of a participant in the Plan.

 

12.           Shares.

 

(a)            The maximum number of Common Shares which shall be made available for sale under the Plan shall be 233,333 shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 18 hereof.  Such Common Shares may be authorized but unissued shares or shares purchased in the open market.

 

(b)            If on a given Exercise Date the number of Common Shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Committee shall make a pro-rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable, and the balance of the payroll deductions accumulated in the participant’s account shall be returned to the participant.

 

(c)            No participant will have an interest or voting right in Common Shares covered by his or her option until such option has been exercised.

 

(d)            Common Shares to be delivered to a participant under the Plan will be registered in the name of the participant or in the name of the participant and his or her spouse.

 

13.           Administration.  The Plan shall be administered by the Committee.  The Committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan.  Every finding, decision and determination made by the Committee shall, to the full extent permitted by law, be final and binding upon all parties.  Members of the Committee shall not be permitted to participate in the Plan.

 

14.           Designation of Beneficiary.

 

(a)            A participant may file a written designation of a beneficiary who is to receive any Common Shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares or cash.  In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option.  If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.

 

(b)            Such designation of beneficiary may be changed by the participant at any time by written notice.  In the event of the death of a participant and in the absence of a beneficiary validly designated

 

  

-5-

  

under the Plan who is living at the time of such participant’s death, the Company shall deliver such Common Shares or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

15.           Transferability.  Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive Common Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 14 hereof) by the participant.  Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.

 

16.           Use of Funds.  All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

 

17.           Reports.  Individual accounts will be maintained for each participant in the Plan.  Statements of account will be given to participating Employees at least annually, within such time as the Committee may reasonably determine, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.

 

18.           Adjustments Upon Changes in Capitalization.

 

(a)            Changes in Capitalization.  The Reserves, the maximum number of Common Shares an Employee is permitted to purchase in any Offering Period under Section 7, and the price per Common Share covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued Common Shares resulting from a share split, reverse share split, share dividend, combination or reclassification of the Common Shares, or any other increase or decrease in the number of Common Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Common Shares subject to an option.

 

(b)            Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee.

 

(c)            Amalgamation, Merger or Asset Sale.  In the event of a proposed sale of all or substantially all of the assets of the Company, or the amalgamation or merger of the Company with or into another corporation, all options under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Periods then in progress by setting new Exercise Dates (“New Exercise Dates”).  If the Committee shortens the Offering Period then in progress in lieu of assumption or substitution in the event of an amalgamation, merger or sale of assets, the Committee shall notify each participant in writing, at least fifteen (15) days prior to the New Exercise Dates, that the Exercise Dates for his or her option have been changed to the New Exercise Dates and that his or her options will be exercised automatically on the New Exercise Dates, unless prior to such dates he or she has

 

  

-6-

  

withdrawn from the Offering Periods as provided in Section 10 hereof.  For purposes of this paragraph, options granted under the Plan shall be deemed to be assumed if, following the sale of assets, amalgamation or merger, the options confer the right to purchase, for each option share subject to the option immediately prior to the sale of assets, amalgamation or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets, amalgamation or merger by holders of Common Shares for each Common Share held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Common Shares); provided, however, that if such consideration received in the sale of assets, amalgamation or merger was not solely common shares of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Committee may, with the consent of the successor corporation and the participant, provide for the consideration to be received upon exercise of the options to be solely common shares of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Shares in the sale of assets, amalgamation or merger.

 

19.           Amendment or Termination.

 

(a)            The Board may at any time and for any reason terminate or amend the Plan.  Except as provided in Section 18 hereof, no such termination may adversely affect options previously granted; provided, however, that Offering Periods may be terminated by the Board on any Exercise Date if the Board determines that the termination of the Plan is in the best interests of the Company and its stockholders.  Except as provided in Section 18 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant.  To the extent necessary to comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or Section 423 of the Code (or any successor rule or provision or any other applicable law or regulation), the Company shall obtain stockholder approval in such a manner and to such a degree as required.

 

(b)            Without shareholder consent and without regard to whether any participant rights may be considered to have been adversely affected, the Committee shall be entitled to change the Offering Periods, limit the frequency or number of changes in the amount withheld during the Offering Periods, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Shares for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Committee finds, in its sole discretion, advisable and consistent with the Plan.

 

20.           Notices.  All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

21.           Conditions Upon Issuance of Shares.  Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.  As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

 

  

-7-

  

22.           Term of Plan.  The Plan shall become effective on February 25, 1998 (the “Effective Date”), subject to its approval by the stockholders of the Company within twelve (12) months after its adoption by the Board.  It shall continue in effect until terminated under Section 19 hereof.  The Plan was amended, effective as of May 20, 1998, by the Board of Directors to clarify the limits of contributions. The Plan was restated by the Board of Directors on February 24, 1999, effective December 31, 1998, to reflect the change of domicile of the Company from Delaware to Bermuda.  The Plan was again restated by the Board of Directors on July 26, 2000, effective June 30, 2000, to make certain administrative corrections.

 

 

-8-breapsagreement.htm

 

PURCHASE AND SALE AGREEMENT

 

 

This PURCHASE AND SALE AGREEMENT (the “Agreement”) is made and entered into as of the 4 day of May, 2011 (the “Execution Date”) by and between BREA 806 LLC, a Delaware limited liability company (“Seller”) and Emeritus Corporation, a Washington corporation (the “Purchaser”).

 

 

BACKGROUND

 

WHEREAS, Seller and Purchaser are members of BREA Emeritus LLC, a Delaware limited liability company (the “Company”) pursuant to the terms of that certain Amended and Restated Limited Liability Company Agreement of the Company dated as of December 1, 2006 (the “LLC Agreement”), between Seller and Purchaser.

 

 

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all of Seller’s limited liability company interests (the “Interests”) in the Company, on the terms and conditions set forth in this Agreement.

 

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for such other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

SALE, PURCHASE PRICE, CLOSING

 

1.1 Sale of Interests

 

.

 

(a) On the Closing Date, pursuant to the terms and subject to the conditions set forth in this Agreement, Seller shall sell and transfer to Purchaser and Purchaser shall purchase and accept from Seller, the Interests.

 

(b) The transfer of the Interests shall include the transfer of all Interest-Related Rights and accordingly, whether or not specifically stated in this Agreement, all references herein to the Interests shall be deemed to be references to the Interests and the Interest-Related Rights, taken as a whole.  For purposes of this Agreement, “Interest-Related Rights” shall mean all of Seller’s right, title and interest in, to and under the Company and the LLC Agreement including, without limitation, all of Seller’s right, title and interest in, to and under all (i) distributions after the Closing Date of profits and income of the Company, (ii) capital distributions after the Closing Date from the Company, (iii) distributions after the Closing Date of cash flow by the Company, (iv) property of the Company to which Seller now or in the future may be entitled, (v) other claims which Seller now has or may in the future acquire against the Company and its property, (vi) proceeds of any liquidation upon the dissolution of the Company and winding up of its affairs, (vii) other rights of Seller to receive any distributions or other payments of any kind whatsoever from or in respect of the Company or in any way derived from the Properties or from the ownership or operation

 

  

1

  

 

 thereof after the Closing Date, whether any of the above distributions consist of money or property, and (viii) all other rights, benefits and obligations of Seller as a member in the Company including, without limitation, rights to reports and accounting, information; provided, however that the Interest-Related Rights shall not include the proceeds of the sale of the Interests contemplated hereby, and the transfer of the Interest-Related Rights shall be subject to the provisions of Section 7.17 of this Agreement.

 

1.2 Purchase Price.

 

The purchase price for the Interests is $101,420,725 (as such amount may be adjusted pursuant to Article V hereof, the “Purchase Price”).  The Purchase Price shall be paid by Purchaser to Seller in cash at Closing, by wire transfer of immediately available funds to an account specified in writing by Seller.

 

1.3 Closing

 

.  The closing of the sale and purchase of the Interests (the “Closing”) shall take place on June 1, 2011 (the “Closing Date”).  The Closing shall be held at 10:00 A.M. at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York, or at such other location agreed upon by the parties hereto, or in escrow with all documents and funds delivered to an escrow agent mutually acceptable to the parties.  For the avoidance of doubt the parties acknowledge and agree that nothing herein shall be construed as an election by the parties to dissolve the Company upon the acquisition of the Interests by Purchaser, but instead the intent is that the Company shall continue in existence with Purchaser being, as of the Closing Date, the sole member thereof.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

2.1 Seller Representations and Warranties.

 

Seller hereby represents and warrants to the Purchaser, as follows:

 

(a) Capacity; Authority; Validity.  Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware.  Seller has all necessary limited liability company power and authority to enter into this Agreement, to perform the obligations to be performed by Seller hereunder and to consummate the transactions contemplated hereby.  This Agreement, the sale of the Interests and the consummation by Seller of the transactions contemplated hereby have been duly and validly authorized by all necessary limited liability company action of Seller.  This Agreement has been duly executed and delivered by Seller and constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights and by general principles of equity (whether applied in a proceeding at law or in equity).

 

(b) Restrictions. Neither the execution, delivery and performance of this Agreement by Seller nor the consummation of the transactions contemplated hereby will conflict with or result in a breach of any term or provision of, or constitute a default

 

  

2

  

 

 or violation under or accelerate performance under (i) the organizational or governing documents of Seller or (ii) any material agreement, contract or instrument to which Seller is a party.

 

(c) Consents, Filings, etc. Other than (i) any consent or approval from Purchaser which may be required under the terms of the LLC Agreement, which consent is deemed granted by Purchaser’s execution of this Agreement,  and (ii) such consents and approvals as have been made or obtained, the execution and delivery of this Agreement and the performance and consummation of the transactions contemplated hereby will not require any filing, consent or approval under Seller’s organizational or governing documents, or any other material contract, agreement or instrument to which Seller is a party.

 

(d) Title to Interests.  The Interests are, and as of the Closing Date will be, wholly-owned legally and beneficially by Seller, free and clear of all liens, encumbrances, pledges, security interests and charges of any kind (other than those granted to Purchaser pursuant to the LLC Agreement).  Other than any rights or options granted to Purchaser pursuant to the LLC Agreement, there is no outstanding right, subscription, warrant, call, unsatisfied preemptive right, option or other agreement of any kind to purchase, dispose of or encumber all or any portion of the Interests.

 

(e) Compliance with Securities Laws. Neither Seller nor anyone acting on Seller’s behalf has offered to sell the Interests by means of any general solicitation or general advertising.

 

(f) No Lawsuits.  There is no lawsuit, proceeding or investigation pending or, to the knowledge of Seller, threatened, against Seller that would prevent or delay consummation of the transactions contemplated hereby or would materially and adversely affect Seller’s title to the Interests.  There is no action or suit by Seller pending or, to the knowledge of Seller, threatened against others relating to the Interests or the Company.

 

2.2 Representations and Warranties of Purchaser.

 

Purchaser hereby represents and warrants to Seller, as follows:

 

(a) Capacity; Authority; Validity. Purchaser is a corporation, duly organized, validly existing and in good standing under the laws of the State of Washington.  Purchaser has all necessary power and authority to enter into this Agreement, to perform the obligations to be performed by Purchaser hereunder and to consummate the transactions contemplated hereby.  This Agreement and the consummation by Purchaser of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action of Purchaser.  This Agreement has been duly executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights and by general principles of equity (whether applied in a proceeding at law or in equity).

 

 

  

3

  

 

(b) Restrictions. Neither the execution, delivery and performance of this Agreement by Purchaser nor the consummation of the transactions contemplated hereby will conflict with or result in a material breach of any term or provision of, or constitute a default or violation under or accelerate performance under (i) the organizational or governing documents of Purchaser, or (ii) any material contract, agreement or instrument to which Purchaser is a party.

 

(c) Consents, Filings, etc. Other than (i) any consent or approval from Seller required under the terms of the LLC Agreement, which consent is deemed granted by Seller’s execution of this Agreement, and (ii) such consents and approvals as have been made or obtained, the execution and delivery of this Agreement and the performance and consummation of the transactions contemplated hereby will not require any filing, consent or approval under Purchaser’s organizational or governing documents, or any other material contract, agreement or instrument to which Purchaser is a party.

 

(d) No Lawsuits.  There is no lawsuit, proceeding or investigation pending or, to the knowledge of Purchaser, threatened, against Purchaser that would prevent or delay consummation of the transactions contemplated hereby.  There is no action or suit by Purchaser pending or, to the knowledge of Purchaser, threatened against others relating to the Company.

 

(e) Accredited Investor.Purchaser is an “accredited investor”within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), or has such knowledge and experience in financial matters as to be capable of evaluating the risks and merits of any investment in the Interests.  Purchaser is acquiring the Interests for its own account for investment and not with a view to, or for resale in connection with, the distribution or other disposition thereof in violation of the Securities Act.  Purchaser understands that resale of the Interests is subject to significant restrictions in the LLC Agreement and compliance with all applicable securities laws.

 

 

ARTICLE III

 

CONDITIONS PRECEDENT TO CLOSING

 

3.1       Conditions Precedent to Seller’s Obligations.

 

The obligation of Seller to consummate the transfer of the Interests to Purchaser on the Closing Date is subject to the satisfaction (or waiver by Seller) as of the Closing of the following conditions:

 

(a) Each of the representations and warranties made by Purchaser in this Agreement shall be true and correct in all material respects when made and on and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date.

 

(b) Purchaser shall have performed or complied in all material respects with each obligation and covenant required by this Agreement to be performed or complied with by Purchaser on or before the Closing and which is not otherwise specifically referred to as a condition to closing in this Section 3.1.

 

 

  

4

  

 

(c) No order or injunction of any court or administrative agency of competent jurisdiction nor any statute, rule, regulation or executive order promulgated by any governmental authority of competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the transfer of the Interests or the consummation of the transactions contemplated hereby.

 

(d) No action, suit or other proceeding shall be pending which shall have been brought by any person or entity (other than the parties hereto and their affiliates) (i) to restrain, prohibit or change in any material respect the purchase and sale of the Interests or the consummation of the transactions contemplated hereby or (ii) seeking material damages with respect to such purchase and sale or any other transaction contemplated hereby.

 

(e) Seller shall have received all of the documents required to be delivered by Purchaser under Section 4.1.

 

(f) Seller shall have received the Purchase Price in accordance with Section 1.2 and all other amounts due to Seller hereunder.

 

3.2 Conditions Precedent to Purchaser’s Obligations

 

.  The obligation of Purchaser to purchase the Interests on the Closing Date is subject to the satisfaction (or waiver by Purchaser) as of the Closing of the following conditions:

 

(a) Each of the representations and warranties made by Seller in this Agreement shall be true and correct in all material respects when made and on and as of the Closing Date as though such representations and warranties were made on and as of Closing Date.

 

(b) Seller shall have performed or complied in all material respects with each obligation and covenant required by this Agreement to be performed or complied with by Seller on or before the Closing and which is not otherwise specifically referred to as a condition to closing in this Section 3.2.

 

(c) No order or injunction of any court or administrative agency of competent jurisdiction nor any statute, rule, regulation or executive order promulgated by any governmental authority of competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the transfer of the Interests or the consummation of the transactions contemplated hereby.

 

(d) No action, suit or other proceeding shall be pending which shall have been brought by any person or entity (other than the parties hereto and their affiliates) (i) to restrain, prohibit or change in any material respect the purchase and sale of the Interests or the consummation of the transactions contemplated hereby or (ii) seeking material damages with respect to such purchase and sale or any other transaction contemplated hereby.

 

(e) Purchaser shall have received all of the documents required to be delivered by Seller under Section 4.2.

 

 

  

5

  

 

ARTICLE IV

 

CLOSING DELIVERIES.

 

 

 

 

4.1       Purchaser Closing Deliveries

 

.  At the Closing, Purchaser shall deliver the following documents:

 

(a) an assignment and assumption of Interests (an “Interest Assignment”) in substantially the form of Exhibit A, duly executed by Purchaser;

 

(b) such other assignments, instruments of transfer, and other documents as Seller may reasonably require in order to complete the transactions contemplated hereunder or to evidence compliance by Purchaser with the covenants, agreements, representations and warranties made by it hereunder, in each case, duly executed by Purchaser;

 

(c) a duly executed and sworn Secretary’s Certificate from Purchaser certifying that Purchaser has taken all necessary action to authorize the execution of all documents being delivered hereunder and the consummation of all of the transactions contemplated hereby and that such authorization has not been revoked, modified or amended; and

 

(d) an executed and acknowledged incumbency certificate from the Purchaser certifying the authority of the officer(s) of the Purchaser to execute this Agreement and the other documents delivered by the Purchaser to the Seller at the Closing.

 

4.2       Seller Closing Deliveries

 

.  At the Closing Seller shall deliver the following documents:

 

(a) An Interest Assignment with respect to the Interests, duly executed by Seller;

 

(b) such other assignments, instruments of transfer, and other documents as the Purchaser may reasonably require (or as may be required under applicable law) in order to complete the transactions contemplated hereunder or to evidence compliance by the Seller with the covenants, agreements, representations and warranties made by it hereunder, in each case, duly executed by Seller;

 

(c) a duly executed and sworn Secretary’s or Member’s Certificate from Seller certifying that Seller has taken all necessary action to authorize the execution of all documents being delivered hereunder and the consummation of all of the transactions contemplated hereby and that such authorization has not been revoked, modified or amended; and

 

(d) an executed and acknowledged incumbency certificate from Seller certifying to the authority of the officers or members of Seller to execute this Agreement and the other documents delivered by Seller to Purchaser at the Closing.

 

 

  

6

  

 

ARTICLE V

 

ADJUSTMENTS

 

 

5.1 Adjustments.

 

 

(a) The Purchase Price shall not be subject to adjustment except as provided in this Section 5.1

(b) In the event Seller receives distributions from the Company from and after the date hereof to and including the Closing Date, the Purchase Price shall be reduced, dollar for dollar, by the amount of such distributions.

(c) In the event Seller makes capital contributions to the Company pursuant to the terms of the LLC Agreement between the date hereof to and including the Closing Date, then the Purchase Price shall be increased, dollar for dollar, by the aggregate amount of such capital contributions.

(d) Subject to the provisions of Section 5.1(b) above, the parties hereto acknowledge and agree that all distributions made to Seller and Purchaser pursuant to the LLC Agreement prior to and including the Closing Date, including any calculation or payment of amounts to Purchaser pursuant to the Promote Clauses, will not be subject to future adjustment or redetermination by either party.

 

 

ARTICLE VI

 

TERMINATION; DEFAULT

 

 

6.1 Purchaser Default; Termination by Seller.

 

(a) This Agreement may be terminated by Seller in its entirety on or prior to the Closing Date if (i) any of the conditions precedent to Seller’ obligations set forth in Section 3.1 have not been satisfied or waived by Seller as of the Closing Date or (ii) there is a material breach or default by Purchaser in the performance of its obligation to purchase the Interests under this Agreement.

(b) In the event this Agreement is terminated pursuant to Section 6.1(a), this Agreement shall be null and void and of no further force or effect and neither party shall have any rights or obligations against or to the other except (i) for those provisions hereof which by their terms expressly survive the termination of this Agreement and (ii) as set forth in Section 6.1(c).

(c) In the event Seller terminates this Agreement pursuant to Section 6.1(a) as a result of a material breach or default by Purchaser in the performance of its obligations under this Agreement, then Seller shall have all rights and remedies available to Purchaser at law or in equity.  In addition, upon such termination by Seller, Purchaser shall have no further rights under Sections 10.1 (captioned “Right of First Opportunity”) of the LLC Agreement (and Sections 10.2 and 10.3 of the LLC Agreement which

 

 

  

7

  

 

 implement the provisions of Section 10.1), and the LLC Agreement shall be deemed to be automatically amended, without the need for any further action on the part of Seller or Purchaser, to delete Sections 10.1, 10.2 and 10.3 and all references to Sections 10.1, 10.2 and 10.3 in the LLC Agreement.

6.2 Seller Default; Termination by Purchaser. 

 

(a) This Agreement may be terminated by Purchaser in its entirety prior to the Closing Date if (i) any of the conditions precedent to Purchaser’s obligations set forth in Section 3.2 have not been satisfied or waived by Purchaser on or prior to the Closing Date or (ii) there is a material breach or default by Seller in the performance of its obligations under this Agreement.  In lieu of terminating this Agreement, in the event of a material breach or default by Seller in the performance of its obligations hereunder, Purchaser may, as its sole and exclusive remedy, seek to specifically enforce the terms and conditions of this Agreement.  Purchaser agrees to, and does hereby, waive all other remedies against Seller which Purchaser might otherwise have at law or in equity by reason of such default by Seller.

 

(b) Upon the termination of this Agreement by Purchaser pursuant to Section 6.2(a), Seller and Purchaser shall have no further obligations under this Agreement, except those obligations which expressly survive such termination, but such termination shall have no affect on the rights or obligations of Seller or Purchaser under the LLC Agreement.

 

ARTICLE VII

 

MISCELLANEOUS

 

 

 

 

7.1 Transaction Costs.

 

Except as otherwise expressly provided in this Agreement, each of Seller and Purchaser will pay its own costs and expenses (including attorneys’ fees) in connection with this Agreement and the transactions contemplated hereby.

 

7.2 Brokers.

 

Each party hereby represents and warrants to the other party hereto that it has dealt with no broker, salesman, finder or consultant with respect to this Agreement or the transactions contemplated hereby.  Each party hereby agrees to indemnify, protect, defend and hold the other party hereto harmless from and against all claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys’ fees and disbursements at the investigative, trial and appellate levels) and charges resulting from such party’s breach of the foregoing representation in this Section 6.2.  The provisions of this Section 7.2 shall survive the Closing or termination of this Agreement.

 

7.3 Assignment.

 

Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any party without the prior written consent of the

 

  

8

  

 

 other party hereto; provided, however, no such consent shall be required in the event of an assignment by Purchaser prior to the Closing Date of its rights or obligations hereunder to an entity which is owned and controlled by, or under common control with, Purchaser.

 

7.4 Entire Agreement.

 

This Agreement supersedes any other agreement, whether written or oral, which may have been made or entered into by the parties hereto relating to the matters contemplated hereby, and, together with the Interest Assignment, constitutes the entire agreement of the parties.  Except as expressly set forth in this Agreement and the Interest Assignment, no party hereto is making any representations or warranties, express or implied, as to such party, the Company or the Interests.

 

7.5 Amendments and Waivers.

 

This Agreement may be amended, modified, superseded, or canceled, and any of the terms, representations, warranties or covenants hereof may be waived, only by written instrument executed by both of the parties hereto or, in the case of a waiver, by the party waiving compliance.

 

7.6 Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

 

7.7 Successors and Assigns.

 

This Agreement shall be binding upon, inure to the benefit of, and may be enforced by, each of the parties to this Agreement and its successors and permitted assigns.

 

7.8 Governing Law.

 

This Agreement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of New York.

 

7.9 Submission to Jurisdiction.

 

Purchaser and each Seller irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County and (b) the United States District Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby.  Purchaser and each Seller further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth above in 

 

 

  

9

  

 

 

the immediately preceding sentence.  Purchaser and Seller irrevocably and unconditionally waive trial by jury and irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (a) the Supreme Court of the State of New York, New York County and (b) the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

7.10 Cooperation and Further Assurances.

 

Seller and Purchaser agree to execute any further instruments or perform any acts which are or may become reasonably necessary to carry out the intent of this Agreement.

 

7.11 Severability.

 

Each provision of this Agreement shall be considered separable, and if, for any reason, any provision or provisions hereof are determined to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein.

 

7.12 Headings.

 

Section titles are for convenience of reference only and shall not control or alter the meaning of this Agreement set forth in the text.

 

7.13 No Consequential Damages.

 

Neither Purchaser nor Seller shall be liable to the other for consequential or punitive, special, indirect or incidental losses or special damages in connection with this Agreement.

 

7.14 Tax Matters.

 

Purchaser shall use commercially reasonable efforts to allocate under Section 706 of the Internal Revenue Code of 1986, as amended (the “Code”), income, gains, losses, deductions or credits attributable to the Interests for the tax year of the Company in which the Closing Date occurs between Purchaser and Seller in a manner mutually agreed upon by Purchaser and Seller; provided such manner is permitted by the Code and the terms of the LLC Agreement.

 

7.15 Notices.

 

All notices, demands or requests made pursuant to, under or by virtue of this Agreement must be in writing and shall be (a) personally delivered, (b) delivered by express mail, Federal Express or other comparable overnight courier service, or (c) faxed (and confirmed by telephone), as follows:

 

To Purchaser:

 

  

10

  

Emeritus Corporation

3131 Elliott Avenue

Seattle, Washington 98121

Attention:  Eric Mendlesohn, SVP Corporate Development

Facsimile:  (206) 357-7388

 

with copies thereof to:

 

The Nathanson Group PLLC

One Union Square

600 University Street

Suite 2000

Seattle, Washington 98101

Attention:                   Randi S. Nathanson

Facsimile:                   (206) 299-9335

To Seller:

 

c/o Blackstone Real Estate Advisors VI L.P.

345 Park Avenue

New York, NY 10154

Attention:                   Gary M. Sumers

Facsimile:                   (212) 583-5726

 

with copies thereof to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attention:                   Gregory J. Ressa, Esq.

Facsimile:                   (212) 455-2502

 

All notices (A) shall be deemed to have been given on the date that the same shall have been received in accordance with the provisions of this Section and (B) may be given either by a party or by such party’s attorneys.  Any party may, from time to time, specify as its address for purposes of this Agreement any other address upon the giving of 10 days’ prior written notice thereof to the other parties.

 

7.16 Defined Terms.

 

Capitalized terms which are used but not defined in this Agreement shall have the meanings assigned to such terms in the LLC Agreement.

 

7.17 Indemnity.

 

  

11

  

 

Notwithstanding anything in this Agreement or the LLC Agreement to the contrary or the sale of the Interests and the Interest-Related Rights to Purchaser, from and after the Closing, Seller shall continue to be entitled to all of the rights and benefits of Section 5.6 of the LLC Agreement, as if it were a “Member” of the Company.

 

  

12

  

 

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above.

 

SELLER:

BREA 806 LLC, a Delaware limited liability company

	
  

	
By:

	
BREA Senior Housing LLC, a Delaware limited liability company

By: /s/  AnthonyBeovich                                           

Name:  Anthony Beovich

Title:  Vice President

PURCHASER:

EMERITUS CORPORATION, a Washington corporation

By:  /s/ EricMendelsohn                                                      

Name:  Eric Mendelsohn

Title:  SVP Corporate Development

  

13

  

Solely for purposes of acknowledging and agreeing to the provisions of Section 7.17 of this Agreement:

BREA Emeritus LLC

By:           Emeritus Corporation, a Washington corporation,

its Administrative Member

By:  /s/  Eric Mendelsohn                                                                

Name:  Eric Mendelsohn

Title:  SVP Corporate Development

  

14

  

Exhibit A

Form of Assignment and Assumption of Interests

  

  

  

Assignment and Assumption of Interests

 

 ASSIGNMENT AND ASSUMPTION OF INTERESTS (this “Assignment”) dated as of May __, 2011, by and among BREA 806 LLC, a Delaware limited liability company (“Assignor”) and Emeritus Corporation, a Washington corporation (the “Assignee”).

 

 

Background

This Assignment is being executed and delivered pursuant to that certain Purchase and Sale Agreement dated as of May __, 2011 (the “Purchase Agreement”) between Assignor and Assignee.  All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

Assignment and Assumption

In consideration of Ten ($10.00) Dollars in hand paid by Assignee, the receipt and sufficiency of which is hereby acknowledged, Assignor does hereby assign, transfer and set over unto Assignee, all of Assignor’s right, title and interest in and to the Interests, free and clear of all liens, encumbrances, pledges, security interests and charges of any kind (other than those granted to Purchaser pursuant to the LLC Agreement).

Assignee hereby accepts the foregoing assignment and assumes all of Assignor’s duties and obligations with respect to the Interests arising from and after the date of this Assignment (whether such duties and obligations arise under the relevant organizational documents of the Company or applicable law), all pursuant to the terms and conditions of the Purchase Agreement.

This Assignment is made without warranty or representation, express or implied, by or recourse against Assignor of any kind or nature whatsoever except as set forth in the Purchase Agreement.

This Assignment may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed an original, but all of which taken together shall constitute but one and the same instrument.

  

  

  

IN WITNESS WHEREOF, Assignor and Assignee have duly executed this instrument as of the day first above written.

Assignor:

BREA 806 LLC, a Delaware limited liability company

	
  

	
By:

	
BREA Senior Housing LLC, a Delaware limited liability company

By: __________________________________

Name:

Title:

Assignee:

EMERITUS CORPORATION, a Washington corporation

By:  _________________________________

Name:

Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}]]