Document:

Exhibit 10.3

 

 

$80,000,000

 

BRIDGE LOAN AGREEMENT

 

Dated as of May 12, 2011

 

among

 

FIVE STAR QUALITY CARE, INC.,

 

MORNINGSIDE HOLDINGS OF CONCORD, LLC,

 

MORNINGSIDE OF CONCORD, LLC,

 

MORNINGSIDE HOLDINGS OF RALEIGH, LLC,

 

MORNINGSIDE OF RALEIGH, LLC,

 

MORNINGSIDE HOLDINGS OF GASTONIA, LLC,

 

MORNINGSIDE OF GASTONIA, LLC,

 

MORNINGSIDE HOLDINGS OF GREENSBORO, LLC,

 

MORNINGSIDE OF GREENSBORO, LLC

 

and

 

FIVE STAR QUALITY CARE — OBX OPERATOR, LLC,

 

as Borrowers

 

and

 

SENIOR HOUSING PROPERTIES TRUST,

 

as Lender

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    	
DEFINITIONS
    	
1
    
	
1.01
    	
Defined   Terms
    	
1
    
	
1.02
    	
Other   Interpretive Provisions
    	
7
    
	
1.03
    	
Times   of Day
    	
8
    
	
ARTICLE II
    	
THE   COMMITMENT AND BORROWINGS
    	
8
    
	
2.01
    	
Loans
    	
8
    
	
2.02
    	
Prepayments
    	
9
    
	
2.03
    	
Termination   or Reduction of Aggregate Commitment
    	
9
    
	
2.04
    	
Repayment
    	
9
    
	
2.05
    	
Interest
    	
9
    
	
2.06
    	
Computation   of Interest; Breakage Amount
    	
10
    
	
2.07
    	
Evidence   of Loans
    	
10
    
	
2.08
    	
Payments   Generally; Other Taxes
    	
10
    
	
ARTICLE III
    	
CONDITIONS   PRECEDENT TO EFFECTIVENESS AND BORROWING
    	
11
    
	
3.01
    	
Conditions   Precedent to Effectiveness
    	
11
    
	
3.02
    	
Conditions   Precedent to a Loan
    	
11
    
	
ARTICLE IV
    	
REPRESENTATIONS   AND WARRANTIES
    	
12
    
	
4.01
    	
Existence,   Qualification and Power; Compliance with Laws
    	
12
    
	
4.02
    	
Authorization;   No Contravention
    	
13
    
	
4.03
    	
Governmental   Authorization; Other Consents
    	
13
    
	
4.04
    	
Binding   Effect
    	
13
    
	
4.05
    	
Litigation
    	
13
    
	
4.06
    	
Title   to Property
    	
13
    
	
4.07
    	
Margin   Regulations; Investment Company Act
    	
14
    
	
4.08
    	
Compliance   with Laws
    	
14
    
	
ARTICLE V
    	
AFFIRMATIVE   COVENANTS
    	
14
    
	
5.01
    	
Financial   Statements
    	
14
    
	
5.02
    	
Certificates;   Other Information
    	
15
    
	
5.03
    	
Notices
    	
15
    
	
5.04
    	
Payment   of Obligations
    	
15
    
	
5.05
    	
Preservation   of Existence, Etc.
    	
16
    
	
5.06
    	
Maintenance   of Properties
    	
16
    
	
5.07
    	
Maintenance   of Insurance
    	
16
    
	
5.08
    	
Compliance   with Laws
    	
16
    
	
5.09
    	
Inspection   Rights
    	
16
    
	
5.10
    	
Use of   Proceeds
    	
16
    
	
ARTICLE VI
    	
NEGATIVE   COVENANTS
    	
17
    
	
6.01
    	
Liens
    	
17
    
	
6.02
    	
Fundamental   Changes
    	
17
    
	
6.03
    	
Dispositions
    	
18
    
	
6.04
    	
Change   in Nature of Business
    	
18
    
	
ARTICLE VII
    	
EVENTS   OF DEFAULT AND REMEDIES
    	
18
    
	
7.01
    	
Events   of Default
    	
18
    
	
7.02
    	
Remedies   Upon Event of Default
    	
19
    
	
7.03
    	
Application   of Funds
    	
19
    
	
7.04
    	
Specific   Performance
    	
20
    
	
ARTICLE VIII
    	
SECURITY   INTEREST; ADDITIONAL REMEDIES
    	
20
    
	
8.01
    	
Grant   of Security Interest
    	
20
    

 

i

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
8.02
    	
Preservation   of Property and Perfection of Security Interests
    	
20
    
	
8.03
    	
Remittance   of Proceeds to Lender
    	
20
    
	
8.04
    	
Safekeeping   of Property
    	
20
    
	
8.05
    	
State   of Incorporation; Name
    	
20
    
	
8.06
    	
Continuing   Lien
    	
21
    
	
8.07
    	
Possession;   Sale of Property
    	
21
    
	
8.08
    	
Sale following   Maturity Date or Acceleration
    	
22
    
	
ARTICLE IX
    	
MISCELLANEOUS
    	
23
    
	
9.01
    	
Amendments, Etc.
    	
23
    
	
9.02
    	
Notices;   Effectiveness; Electronic Communication
    	
23
    
	
9.03
    	
No   Waiver; Cumulative Remedies
    	
24
    
	
9.04
    	
Expenses;   Indemnity; Damage Waiver
    	
24
    
	
9.05
    	
Payments   Set Aside
    	
25
    
	
9.06
    	
Successors   and Assigns
    	
25
    
	
9.07
    	
Right   of Setoff
    	
25
    
	
9.08
    	
Interest   Rate Limitation
    	
26
    
	
9.09
    	
Counterparts;   Integration; Effectiveness
    	
26
    
	
9.10
    	
Survival   of Representations and Warranties
    	
26
    
	
9.11
    	
Severability
    	
26
    
	
9.12
    	
Governing Law;   Jurisdiction; Etc.
    	
26
    
	
9.13
    	
Arbitration
    	
27
    
	
9.14
    	
Joint and Several   Liability
    	
28
    
	
9.15
    	
Statement Concerning   Limited Liability
    	
28
    

 

	
Exhibits
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A-1
    	
—
    	
Form of Indiana   Mortgage
    	
 
    
	
Exhibit A-2
    	
—
    	
Form of North   Carolina Mortgage
    	
 
    
	
Exhibit B
    	
—
    	
Form of Note
    	
 
    
	
Exhibit C
    	
—
    	
Form of Compliance   Certificate
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Schedules
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule 1
    	
—
    	
Facilities   and Value
    	
 
    

 

ii

 

BRIDGE LOAN AGREEMENT

 

This BRIDGE LOAN AGREEMENT, dated as of May 12, 2011, among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“FVE”), MORNINGSIDE HOLDINGS OF CONCORD, LLC, a Delaware limited liability company, MORNINGSIDE OF CONCORD, LLC, a Delaware limited liability company, MORNINGSIDE HOLDINGS OF RALEIGH, LLC, a Delaware limited liability company, MORNINGSIDE OF RALEIGH, LLC, a Delaware limited liability company, MORNINGSIDE HOLDINGS OF GASTONIA, LLC, a Delaware limited liability company, MORNINGSIDE OF GASTONIA, LLC, a Delaware limited liability company, MORNINGSIDE HOLDINGS OF GREENSBORO, LLC, a Delaware limited liability company, MORNINGSIDE OF GREENSBORO, LLC, a Delaware limited liability company, and FIVE STAR QUALITY CARE — OBX OPERATOR, LLC, a Maryland limited liability company (together with FVE, each a “Borrower” and collectively, the “Borrowers”), and SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust (the “Lender”).

 

WHEREAS, the Borrowers have requested that the Lender provide a bridge loan facility in connection with Acquisitions (defined below) and the Lender is willing to do so on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.01                        Defined Terms.

 

As used in this Agreement, the following terms have the meanings set forth below:

 

“Acquired Facilities” means the first three Facilities listed on Schedule 1.

 

“Acquisition” means the acquisition of an Acquired Facility or other senior living community, as applicable, pursuant to a Purchase Agreement.

 

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Aggregate Commitment” means Eighty Million Dollars ($80,000,000).

 

“Agreement” means this Bridge Loan Agreement.

 

“Availability Period” means the period from and including the Effective Date to and including the time on the date all Acquisitions have either closed or the Purchase Agreements related to any Acquisitions that have not closed have been terminated.

 

“Base Rate Loan” means a Base Rate Loan under, and as defined in, the SNH Revolving Credit Agreement.

 

“Borrower” has the meaning specified in the introductory paragraph hereto.

 

 

“Breakage Amount” means the aggregate amount of cost, expense or compensation payable by the Lender to the lenders under the SNH Revolving Credit Agreement if on the date of a prepayment of principal of any Loan funded by a LIBOR Loan, the Lender prepaid a like amount of principal of such LIBOR Loan.

 

“Bridge Loan Notice” means a request for a Loan pursuant to Section 2.01(b).

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close, or are in fact closed in, the Commonwealth of Massachusetts.

 

“Change in Control”  shall mean (a) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the SEC) of 9.8% or more, or rights, options or warrants to acquire 9.8% or more, of the outstanding shares of voting stock or other voting interests of any Borrower, or the power to direct the management and policies of any Borrower, directly or indirectly, (b) the merger or consolidation of any Borrower with or into any Person or the merger or consolidation of any Person into any Borrower (other than the merger or consolidation of any Person into any Borrower that does not result in a Change in Control of such Borrower under clauses (a), (c), (d), (e) or (f) of this definition), (c) any one or more sales, conveyances, dividends or distributions to any Person of all or any material portion of the assets (including capital stock or other equity interests) or business of any Borrower, whether or not otherwise a Change in Control, (d) the cessation, for any reason, of the individuals who at the beginning of any twenty-four (24) consecutive month period (commencing on the date hereof) constituted the board of directors of any Borrower (together with any new directors whose election by such board or whose nomination for election by the shareholders of such Borrower was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of any such period or whose election or nomination for election was previously so approved, but excluding any individual whose initial nomination for, or assumption of, office as a member of such board of directors occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any Person other than a solicitation for the election of one or more directors by or on behalf of the board of directors) to constitute a majority of the board of directors of such Borrower then in office, or (e) the adoption of any proposal (other than a precatory proposal) by any Borrower not approved by vote of a majority of the directors of such Borrower in office immediately prior to the making of such proposal, or (f) the election to the board of directors of any Borrower of any individual not nominated or appointed by vote of a majority of the directors of such Borrower in office immediately prior to the nomination or appointment of such individual.

 

“Closing Date” means any date on which a Loan is made.

 

“Commitment” means the Lender’s obligation to make Loans pursuant to Section 2.01.

 

“Compliance Certificate” means a certificate substantially in the form of Exhibit C.

 

“Contractual Obligation” means, as to any Person, any provision of any agreement, instrument or other undertaking (including any security issued by such Person) to which such Person is a party or by which it or any of its property is bound.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

2

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

“Default Rate” means the lesser of 12% per annum or the highest rate permitted by law.

 

“Disposition” or “Dispose” means the sale, transfer or assignment of any Property other than (i) in the ordinary course of business, (ii) leases and licenses to residents and service providers, (iii) existing non-resident leases to Subsidiaries of FVE, and (iv) dispositions of obsolete, worn-out or no longer necessary FF&E.

 

“Effective Date” means the date first above written.

 

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to Hazardous Materials, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person and all of the warrants or options for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“Event of Default” has the meaning specified in Section 7.01.

 

“Facility” means all Property associated with each assisted living/Alzheimer’s/independent/senior living community identified on Schedule 1.

 

“FF&E” means all fixtures, furniture, equipment, machinery, systems and other items of personal property (other than any inventory, consumables, vehicles or similar items), which are now or hereafter attached or appurtenant to, located on or used in connection with the ownership, use, operation or maintenance of the Land and Improvements.

 

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

 

3

 

“FVE” has the meaning specified in the introductory paragraph hereto.

 

“FVE Revolving Credit Agreement” means the Credit and Security Agreement, dated as of March 18, 2010, among FVE, as borrower, certain Subsidiaries of FVE as guarantors, the lenders party thereto from time to time, and Jefferies Finance LLC, as administrative agent, collateral agent and issuing bank.

 

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational bodies such as the European Union or the European Central Bank).

 

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Improvements” means the buildings, structures and other improvements located on the Land, and all fixtures and other property affixed thereto.

 

“Indemnitee” has the meaning specified in Section 9.04(b).

 

“Interest Payment Date” means the first day of each month after the initial Closing Date.

 

“Interest Period” means the period from the initial Closing Date to the last day of the month in which the initial Closing Date occurs and each calendar month thereafter.

 

“Land” means all parcels of land on which a Facility is located or otherwise operated, as more particularly described in the Mortgages, together with all appurtenances, easements, and rights of way related to such parcels of land, including, without limitation, all of any Borrower’s right, title and interest in and to any streets, alleys or rights of way adjacent thereto.

 

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, executive orders and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“Lease” means any one of the:  (i) Amended and Restated Master Lease Agreement (Lease No. 1) dated as of August 4, 2009, by and among certain Affiliates of Senior Housing Properties Trust, as Landlord, and Five Star Quality Care Trust, as Tenant; (ii) Amended and Restated Master Lease

 

4

 

Agreement (Lease No. 2) dated as of August 4, 2009, by and among certain Affiliates of Senior Housing Properties Trust, as Landlord, and certain Affiliates of FVE, as Tenant; and (iii) Amended and Restated Master Lease Agreement (Lease No. 4) dated as of August 4, 2009, by and among certain Affiliates of Senior Housing Properties Trust, as Landlord, and certain Affiliates of FVE, as Tenant.

 

“Lender” has the meaning specified in the introductory paragraph hereto.

 

“LIBOR Loan” means a LIBOR Loan under, and as defined in, the SNH Revolving Credit Agreement.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

“Loan” means an extension of credit by the Lender to the Borrowers under Section 2.01.

 

“Loan Documents” means this Agreement, the Note, each Mortgage and all other instruments and agreements executed in connection therewith.

 

“Material Adverse Effect” means (a)  material adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or financial condition of the Borrowers taken as a whole; (b) a material impairment of the ability of any Borrower to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Borrower of any Loan Document to which it is a party.

 

“Maturity Date” means July 1, 2012.

 

“Mortgage” means a Mortgage substantially in the form of Exhibit A-1 in the case of a Facility located in Indiana and in the form of Exhibit A-2 in the case of a Facility located in North Carolina.

 

“Note” means the promissory note made by the Borrowers in favor of the Lender evidencing a Loan, substantially in the form of Exhibit B.

 

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of any Borrower arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Borrower or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority

 

5

 

in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“Other Taxes” means all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery, recordation or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

“Permitted Liens” means Liens permitted under Section 6.01.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Property” means, collectively:

 

(i)                                     the Land,

 

(ii)                                  the Improvements,

 

(iii)                               the FF&E,

 

(iv)                              all certificates of occupancy and other transferable licenses, permits, registrations, authorizations, use agreements, orders, or approvals of governmental or quasi-governmental agencies and authorities (whether federal, state, local, municipal, or foreign) or private parties relating to the ownership, construction, use, management, operation, or enjoyment of the Land, Improvements or FF&E,

 

(v)                                 all books, records, files, and papers, whether in hard copy or electronic format, used in connection with the ownership, use, operation or maintenance of  the Land, Improvements or FF&E, and

 

(vi)                              all of the intangible property used in connection with the ownership, use, operation or maintenance of the Land, the Improvements or the FF&E (including, without limitation, any and all warranties or guaranties related to the FF&E or the Improvements and all contracts and other third-party agreements related to the operation or maintenance of the Land, Improvements or FF&E),

 

in each case whether now owned or hereafter acquired by a Borrower; provided, however, in no event shall the Property include (a) any property described in clauses (iii) through (vi) of this definition to the extent such property constitutes “Collateral” under the FVE Revolving Credit Agreement as in effect on the Effective Date or (b) a Borrower’s leasehold interest in any leased FF&E if the grant of a security interest therein to the Lender would constitute an event of default under the applicable lease.

 

“Purchase Agreements” means the (i) Purchase and Sale Agreement by and among FVE, as Purchaser, and Residential Care I, L.L.C., Residential Care III, Inc., Clearwater Garden Homes, L.L.C., Rosewalk Garden Homes, L.L.C. and American Senior Home Care, L.L.C., jointly and severally as Sellers, dated as of March 18, 2011, relating to the Facility at Clearwater Commons 4519 E. 82nd Street, Indianapolis, Indiana  46250 and the Facility at Rosewalk Commons and Garden Homes 250 Shenandoah Drive Lafayette, Indiana  47905; (ii) Purchase and Sale Agreement by and among FVE, as Purchaser, and Residential Care VII, L.L.C., and Riverwalk Garden Homes, L.L.C., jointly and severally as Sellers,

 

6

 

dated as of March 18, 2011, related to the Facility at Riverwalk Commons and Garden Homes, 7235 Riverwalk Way North Noblesville, Indiana  46062; and (iii) Purchase and Sale Agreement by and among FVE, as Purchaser, and Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co., L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., jointly and severally as Sellers, dated as of March 18, 2011, relating to the senior living communities at Forest Creek Commons, 6510 U.S. 31 South, Indianapolis, Indiana 46227; Covington Commons, 2601 Covington Commons Drive, Fort Wayne, Indiana 46804; and Northwoods Commons, 2501 Friendship Boulevard, Kokomo, Indiana  46901.

 

“Responsible Officer” means the chief executive officer, president, chief financial officer, each executive vice president and senior vice president, and the treasurer of a Borrower.  Any document signed by a Responsible Officer of a Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Borrower.

 

“SNH Revolving Agent” means Wachovia Bank, National Association and any successor administrative agent under the SNH Revolving Credit Agreement.

 

“SNH Revolving Credit Agreement” means the Amended and Restated Credit Agreement dated as of July 29, 2005 by and among the Lender as the borrower, the SNH Revolving Agent and the other institutional lenders a party thereto and any other credit agreement entered into by the Lender upon any replacement or refinancing of such credit agreement.

 

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity the accounts of which are consolidated with the accounts of such Person in such Person’s consolidated financial statements prepared in accordance with GAAP. Unless otherwise specified, all references herein to a Subsidiary or to Subsidiaries shall refer to a Subsidiary or Subsidiaries of FVE.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“UCC” means the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts or of any other state the Laws of which are required to be applied in connection with the perfection of a security interest in the Property.

 

1.02                        Other Interpretive Provisions.

 

With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)                                  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization

 

7

 

Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) unless otherwise specified, all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b)                                 Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

1.03                        Times of Day.

 

Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

ARTICLE II

THE COMMITMENT AND BORROWINGS

 

2.01                        Loans.

 

(a)                                  Subject to the terms and conditions set forth herein and satisfaction of the conditions set forth in Article III, the Lender agrees to make one or more loans (each, a “Loan”) to the Borrowers on a Business Day during the Availability Period in an amount up to and including the amount of the Aggregate Commitment; provided that the Lender shall not be required to make Loans in the aggregate in excess of the Aggregate Commitment.  The Aggregate Commitment is not revolving in nature, and amounts repaid in respect of Loans may not be reborrowed.

 

(b)                                 Each Loan shall be made upon the Borrowers’ irrevocable Bridge Loan Notice to the Lender, which may be given in writing or by telephone to the Lender’s chief financial officer.  Each Bridge Loan Notice must be received by the Lender not later than 10:00 a.m. one (1) Business Day prior to the requested date of any Loan to be funded by a Base Rate Loan or not later than 10:00 a.m. three (3) Business Days prior to the requested date of any Loan to be funded by a LIBOR Loan.  Each telephonic Bridge Loan Notice must be memorialized in a writing delivered to Lender within one (1) Business Day after such telephonic Bridge Loan Notice is given.  Each Bridge Loan Notice (whether telephonic or written) shall specify (i) the requested Closing Date for such Loan (which shall be a Business Day), (ii) the principal amount of the Loan requested, (iii) the Acquisition(s) to be funded by such Loan, (iii) whether the requested Loan is to be funded by a Base Rate Loan or a LIBOR Loan (and in the case of a LIBOR Loan, the requested interest period for such Loan, which may be any interest period then available to the Lender for LIBOR Loans), and (iv) wire transfer instructions for the Loan proceeds.

 

8

 

(c)                                  Subject to the satisfaction of the conditions set forth in Article III, following receipt of a Bridge Loan Notice, the Lender shall make the amount of the requested Loan available to the Borrowers on the requested Closing Date and fund such Loan with a Base Rate Loan or a LIBOR Loan as requested by the Borrowers under the Bridge Loan Notice (to the extent a LIBOR Loan with such interest period is then available under the SNH Revolving Credit Agreement).

 

2.02                        Prepayments.

 

(a)                                  The Borrowers may, upon notice (a “Prepayment Notice”) to the Lender, at any time or from time to time, voluntarily prepay Loans in whole or in part; provided that (i) such Prepayment Notice must be received by the Lender not later than 11:00 a.m. three (3) Business Days prior to any date of prepayment; (ii) any prepayment shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each Prepayment Notice shall specify the date of prepayment and the amount of Loans to be prepaid.  Any partial prepayment of the Loans shall be applied to the Loans in the order the Loans were made. Any prepayment shall be accompanied by all accrued interest on the principal amount prepaid and the Breakage Amount, if any.

 

(b)                                 Any Prepayment Notice may be revoked by the Borrowers without penalty up until the date the Lender has sent a notice of prepayment to the SNH Revolving Agent under the SNH Revolving Credit Agreement with respect to the amount of Loans to be prepaid pursuant to such Prepayment Notice.  The Lender agrees not to send any such notice of prepayment to the SNH Revolving Agent more than one (1) Business Day prior to the date of prepayment set forth in the applicable Prepayment Notice.

 

2.03                        Termination or Reduction of Aggregate Commitment.

 

Unless previously terminated, the Commitment will terminate at the end of the Availability Period.  In addition, the Borrowers may, upon notice to the Lender, terminate the Commitment, or from time to time permanently reduce the Aggregate Commitment.  The Aggregate Commitment shall automatically be reduced on the date of each Loan by the principal amount of such Loan.

 

2.04                        Repayment.

 

The Borrowers shall repay on the Maturity Date, unless accelerated sooner pursuant to Section 7.02, the entire outstanding principal balance of all Loans together with accrued interest and all other sums then due with respect thereto.

 

2.05                        Interest.

 

(a)                                  Applicable Interest.  Subject to the provisions of subsection (b) below, each Loan shall bear interest on the outstanding principal amount thereof at the rates of interest imposed on the borrowing by the Lender under the SNH Revolving Credit Agreement to fund such Loan plus 1%.  Lender will advise the Borrowers of the applicable rate within one (1) Business Day of (x) the funding of such Loan and (y) any change in the applicable rate upon continuation of the interest period for any Loan funded by a LIBOR Loan.

 

9

 

(b)                                 Default Interest.

 

(i)                                     While any Event of Default exists, to the fullest extent permitted by applicable Laws, the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at the Default Rate and any unpaid interest shall itself bear interest at the Default Rate.

 

(ii)                                  Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

(c)                                  Interest Payment Date.  Interest on each Loan shall be due and payable in arrears on each Interest Payment Date and at such other times as may be specified herein.  Interest shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.06                        Computation of Interest; Breakage Amount.

 

All computations of interest shall be made on the basis of a 360-day year and actual days elapsed.  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall bear interest for one day.  Each determination by the Lender of the interest rate applicable to a Loan or the amount of interest or Breakage Amount owed hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

2.07                        Evidence of Loans.

 

Loans made by the Lender shall be evidenced by one or more accounts or records maintained by the Lender in the ordinary course of business.  The accounts or records maintained by the Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lender and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers to pay any amount owing with respect to the Obligations.  Upon the request of the Lender, the Borrowers shall execute and deliver to the Lender the Note, in addition to such accounts or records.  The Lender may attach schedules to the Note and endorse thereon the date and amount of, and accrued interest on, the Loans and payments with respect thereto.

 

2.08                        Payments Generally; Other Taxes.

 

(a)                                  General.  All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment, setoff or Taxes.  Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Lender in Dollars and in immediately available funds not later than noon on the date specified herein.  All payments received after noon shall be deemed received on the next succeeding Business Day and any applicable interest shall continue to accrue.  If any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest.

 

(b)                                 Payment of Other Taxes.  Without limiting the provisions of subsection (a) above, the Borrowers shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Law and shall indemnify the Lender, within ten (10) days after demand therefor, for the full amount of any Other Taxes paid by the Lender and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate of the Lender as to the amount to which it

 

10

 

is entitled to indemnification under this Section 2.08(b) setting forth in reasonable detail the basis for such amounts, shall be conclusive absent manifest error.

 

ARTICLE III

CONDITIONS PRECEDENT TO EFFECTIVENESS AND BORROWING

 

3.01                        Conditions Precedent to Effectiveness.

 

The effectiveness of this Agreement on the Effective Date is subject to satisfaction of the following conditions precedent:

 

(a)                                  The Lender’s receipt of the following, each of which shall be originals or telecopies:

 

(i)                                     counterparts of this Agreement executed by each Borrower;

 

(ii)                                  a certificate of the Secretary or an Assistant Secretary of each Borrower certifying as to and attaching (A) the Organization Documents of such Borrower, (B) the resolutions of such Borrower authorizing the execution, delivery and performance of the Loan Documents to which it is a party, and (C) a list of the Responsible Officers authorized to act in connection with the Loan Documents; and

 

(iii)                               a legal existence/good standing certificate of a recent date with respect to each Borrower issued by its jurisdiction of organization.

 

3.02                        Conditions Precedent to a Loan.

 

The obligation of the Lender to make a Loan on a Closing Date is subject to satisfaction of the following conditions precedent:

 

(a)                                  This Agreement shall have become effective in accordance with Section 3.01;

 

(b)                                 No Event of Default or other Default of which the Borrowers shall have then received written notice or Material Adverse Effect, both before and after giving effect to the Loan to be made on such Closing Date, shall exist;

 

(c)                                  Each of the representations and warranties made by any Borrower set forth in Article IV or in any other Loan Document shall be true and correct in all respects on and as of such Closing Date with the same effect as though made on and as of such date;

 

(d)                                 No litigation or proceeding shall be pending or threatened in writing by or before any Governmental Authority which challenges, and no order shall have been entered which restrains, the ability or authority of any Borrower or the Lender to enter into and perform its obligations under the Loan Documents;

 

(e)                                  The Lender’s receipt of the following:

 

(i)                                     If required by the Lender, the Note executed by the Borrowers in favor of the Lender in the amount of the Loan being funded as of such Closing Date;

 

11

 

(ii)                                  a certificate signed by a Responsible Officer of FVE certifying (A) that the conditions set forth in clauses (b), (c), (d), (g) and (h) have been satisfied as of such Closing Date;

 

(iii)                               a Mortgage executed by the applicable Borrower of all Property owned by such Borrower as of such Closing Date and of all Property being acquired by such  Borrower on such Closing Date;

 

(iv)                              UCC financing statements in appropriate form for filing under the UCC and such other documents under applicable Laws in each jurisdiction as may be necessary or appropriate, desirable to perfect the Liens created, or purported to be created, under the Loan Documents in the Property;

 

(v)                                 evidence reasonably acceptable to the Lender of payment or arrangements for payment by the Borrowers of all applicable Other Taxes, fees, charges, costs and expenses required for the filing or recording of the items delivered pursuant to clause (iv) above and the Mortgages; and

 

(vi)                              a Lender’s title insurance policy with respect to each Mortgage, together with endorsements thereto reasonably acceptable to the Lender, insuring that such Mortgage is a valid, first lien on the Property subject to such Mortgage, subject only to Permitted Liens;

 

(f)                                    Any fees and expenses of the Lender required to be paid on or before the Closing Date shall have been paid;

 

(g)                                 The Acquisition(s) to be funded by such Loan (as specified in the applicable Bridge Loan Notice) shall be consummated substantially concurrently with the Loan.  The Purchase Agreement for such Acquisition shall not have been amended or waived by the Borrowers in a manner materially adverse to the Lender (in the Lender’s commercially reasonable judgment) without the consent of the Lender (such consent not to be unreasonably withheld, conditioned or delayed), it being understood that any change in the acquisition consideration contemplated by the Purchase Agreement for usual and customary closing adjustments shall not be deemed to be materially adverse to the Lender; and

 

(h)                                 Immediately following the funding of such Loan and the consummation of the Acquisition(s) to be funded by such Loan, the aggregate outstanding principal of all Loans shall not exceed 80% of the aggregate value of all Land and Improvements then securing the Loans pursuant to a Mortgage, based on the values set forth on Schedule 1.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Each Borrower represents and warrants to the Lender (as to itself only) that on and as of the Effective Date and each Closing Date:

 

4.01                        Existence, Qualification and Power; Compliance with Laws.

 

Such Borrower (a) is validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, and (b) has all requisite corporate or limited liability company power and authority to execute, deliver and perform its obligations under the Loan Documents to which it is a party.

 

12

 

4.02                        Authorization; No Contravention.

 

The execution, delivery and performance by such Borrower of each Loan Document to which it is a party has been duly authorized by all necessary corporate or limited liability company action, and do not and will not (a) contravene the terms of such Borrower’s Organization Documents; (b) to the knowledge of the applicable Borrower, conflict with or result in any breach or contravention of, or require any payment to be made under (i) any Contractual Obligation to which such Borrower is party or affecting any of the Property or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Borrower or its property is subject; (c) result in the creation of any Lien on the Property (other than in favor of the Lender) or (d) to the knowledge of such Borrower, violate any Law.

 

4.03                        Governmental Authorization; Other Consents.

 

No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by such Borrower of this Agreement or any other Loan Document except as have been obtained or would not reasonably be expected to result in an Event of Default or a Material Adverse Effect.

 

4.04                        Binding Effect.

 

(a)                                  This Agreement has been, and each other Loan Document, when executed and delivered, will have been, duly executed and delivered by such Borrower.  This Agreement constitutes, and each other Loan Document when so executed and delivered will constitute, a legal, valid and binding obligation of each Borrower a party thereto, enforceable against such Borrower in accordance with its terms.

 

(b)                                 The provisions of Article VIII and the Mortgages create legal and valid Liens in all of the Property in favor of the Lender and when all proper filings and other actions necessary to perfect such Liens have been completed, such Liens will constitute perfected and continuing Liens on all of the Property owned by such Borrower, having priority over all other Liens on such Property (other than Permitted Liens), enforceable against such Borrower in accordance with their respective terms.

 

4.05                        Litigation.

 

There are no actions, suits, proceedings, claims, investigations or disputes pending or, to the knowledge of such Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against such Borrower or any of its Subsidiaries or against any of their properties or revenues that, either individually or in the aggregate would reasonably be expected to result in an Event of Default or a Material Adverse Effect.

 

4.06                        Title to Property.

 

Such Borrower has good and insurable title to all Property now owned by it and each Borrower will have as of the consummation of each Acquisition, good and insurable title to all Property to be acquired by it in such Acquisition, in each case, subject to no Liens other than Permitted Liens.

 

13

 

4.07                        Margin Regulations; Investment Company Act.

 

(a)                                  Such Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

 

(b)                                 Neither Borrower nor any Person Controlling such Borrower, or any Subsidiary of such Borrower is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

4.08                        Compliance with Laws.

 

Such Borrower and each Subsidiary of such Borrower is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to result in an Event of Default or a Material Adverse Effect.

 

ARTICLE V

AFFIRMATIVE COVENANTS

 

Following the initial Closing Date, so long as any Loan or other Obligation hereunder or under any other Loan Document shall remain unpaid or unsatisfied, each Borrower shall, and shall (except in the case of the covenants set forth in Sections 5.01, 5.02, and 5.03) cause each Subsidiary to:

 

5.01                        Financial Statements.

 

Deliver to the Lender:

 

(a)                                  as soon as available, but in any event within five (5) days after the date FVE is required to file its Form 10-K with the SEC, a consolidated balance sheet of FVE and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards; and

 

(b)                                 as soon as available, but in any event within five (5) days after the date FVE is required to file its Form 10-Q with the SEC, a consolidated balance sheet of FVE and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income, shareholders’ equity and cash flows for such fiscal quarter and for the portion of FVE’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of FVE as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of FVE and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.

 

14

 

5.02                        Certificates; Other Information.

 

Deliver to the Lender, in form and detail satisfactory to the Lender:

 

(a)                                  concurrently with the delivery of the financial statements referred to in Sections 5.01(a) and (b) a duly completed Compliance Certificate signed by a Responsible Officer of FVE;

 

(b)                                 such information with respect to each of the Facilities as would be required to be delivered to the Lender or any of its Affiliates under the Leases if the Facilities were “Facilities” under such Leases; and

 

(c)                                  promptly, such additional information regarding the business, financial or corporate affairs of a Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Lender may from time to time reasonably request.

 

Documents required to be delivered pursuant to Section 5.01(a) or (b) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which FVE posts such documents, or provides a link thereto on FVE’s website; or (ii) on which such documents are posted on FVE’s behalf on an internet or intranet website, if any, to which the Lender has access (including a commercial, third-party website).

 

5.03                        Notices.

 

Promptly notify the Lender of:

 

(a)                                  the occurrence of any Default of which a Borrower obtains actual knowledge; and

 

(b)                                 any matter of which a Borrower obtains actual knowledge and that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of FVE setting forth details of the occurrence referred to therein and stating what action the Borrowers have taken and propose to take with respect thereto.

 

5.04                        Payment of Obligations.

 

Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by a Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon any Property; and (c) all indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such indebtedness, in each case except in the case of clauses (a) and (c), where the failure to do so could not reasonably be expected to result in an Event of Default or have a Material Adverse Effect.

 

15

 

5.05                        Preservation of Existence, Etc.

 

Except as permitted by Section 6.02, preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization; and, except to the extent that failure to do so could not reasonably be expected to result in an Event of Default or have a Material Adverse Effect, take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business.

 

5.06                        Maintenance of Properties.

 

Except where the failure to do so could not reasonably be expected to result in an Event of Default or a Material Adverse Effect, (a) maintain, preserve and protect, or make contractual or other provisions to cause to maintain, preserve or protect, all of the Properties in good working order and condition, ordinary wear and tear excepted; and (b) make, or make contractual or other provisions to cause to be made, all necessary repairs thereto and renewals and replacements thereof.

 

5.07                        Maintenance of Insurance.

 

Maintain with financially sound and reputable insurance companies, insurance with respect to the Properties and the business conducted thereon against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, and in such amounts as are customarily carried under similar circumstances by such other Persons and as are acceptable to the Lender.

 

5.08                        Compliance with Laws.

 

Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to result in an Event of Default or a Material Adverse Effect.

 

5.09                        Inspection Rights.

 

Permit representatives and independent contractors of the Lender to visit and inspect any of the Properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrowers and at such reasonable times during normal business hours upon reasonable advance notice to the Borrowers and unless an Event of Default exists and is continuing, no more than once in any calendar year; provided, however, that when an Event of Default exists, the Lender (or any of its representatives or independent contractors) may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice.

 

5.10                        Use of Proceeds.

 

Use proceeds from the Loans solely to finance the Acquisitions identified in the applicable Bridge Loan Notice (including repayment of existing indebtedness) and to pay transaction fees, commissions and expenses in connection therewith.

 

16

 

ARTICLE VI

NEGATIVE COVENANTS

 

Following the initial Closing Date, so long as any Loan or other Obligation shall remain unpaid or unsatisfied, no Borrower shall directly or indirectly:

 

6.01                        Liens.

 

Create, incur, assume or suffer to exist any Lien upon any portion of the Property, whether now owned or hereafter acquired, other than the following:

 

(a)                                  Liens pursuant to any Loan Document;

 

(b)                                 Liens for Taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Borrower in accordance with GAAP;

 

(c)                                  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto, to the extent required by GAAP, are maintained on the books of the applicable Borrower in accordance with GAAP;

 

(d)                                 pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

 

(e)                                  deposits to secure the performance of bids, trade contracts and leases (other than indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(f)                                    easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business at the Properties; and

 

(g)                                 non-monetary Liens on any Property set forth in the Schedule B to a Borrower’s title policy for such Property provided to the Lender, or otherwise disclosed in writing to the Lender, and reasonably acceptable to the Lender, on or prior to the Closing Date with respect to any Property owned by a Borrower as of such Closing Date, and as of the applicable Closing Date as to any Property being acquired on such Closing Date.

 

6.02                        Fundamental Changes.

 

Merge, dissolve, liquidate, consolidate with or into another Person, except that, notwithstanding anything in this Agreement to the contrary, so long as no Event of Default exists or would result therefrom, any Borrower may merge with any other Borrower, provided that in a merger involving FVE, FVE shall be the continuing or surviving Person.

 

17

 

6.03                        Dispositions.

 

Make any Disposition of all or any portion of the Property.

 

6.04                        Change in Nature of Business.

 

Engage in any material line of business substantially different from those lines of business conducted by the Borrowers as of the date hereof or any business substantially related or incidental thereto.

 

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

 

7.01                        Events of Default.

 

The occurrence of any of the following at any time after the Effective Date shall constitute an Event of Default:

 

(a)                                  Non-Payment.  The Borrowers fail to pay when and as required to be paid, any amount of principal or interest of any Loan or any other Obligation within five (5) Business Days after notice from the Lender that the same is past due; or

 

(b)                                 Specific Covenants.  Any Borrower or any Subsidiary fails to perform or observe any term, covenant or agreement applicable to it and contained in Section 5.05, Section 5.07 or Article VI and such failure continues for ten (10) Business Days after notice thereof from the Lender; or

 

(c)                                  Other Defaults.  Any Borrower or any Subsidiary fails to perform or observe any other covenant or agreement applicable to it (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after notice thereof from the Lender (or, provided that if such Borrower or Subsidiary commences to cure such failure during said thirty (30) day period and has, and continues to, diligently prosecute such cure to completion, such additional reasonable period of time (but not exceeding an additional sixty (60) days) as may be necessary to effect such cure); or

 

(d)                                 Cross Defaults.  Any Borrower or any Subsidiary fails to make any payment when due or fails to perform or observe any other covenant or agreement contained in any other Contractual Obligation owed by a Borrower or any Subsidiary to the Lender or any of its Affiliates which continues after the expiration of any applicable notice or cure period; or

 

(e)                                  Change in Control.  The occurrence of a Change in Control; or

 

(f)                                    Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Borrower herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect in any material respect when made or deemed made and not cured within ten (10) Business Days after written notice thereof from the Lender; or

 

(g)                                 Insolvency Proceedings, Etc.  Any Borrower institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or

 

18

 

applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Borrower and the appointment continues undischarged or unstayed for sixty (60) days; or any proceeding under any Debtor Relief Law relating to any Borrower or to all or any material part of its property is instituted without the consent of such Borrower and continues undismissed or unstayed for sixty(60) days, or an order for relief is entered in any such proceeding; or

 

(h)                                 Inability to Pay Debts; Attachment.  (i) Any Borrower becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any Borrower and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or

 

(i)                                     Litigation; Enforceability.  Any Borrower shall disavow, revoke or terminate (or attempt to terminate) any Loan Document to which it is a party or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of this Agreement, the Note or any other Loan Document, or this Agreement, the Note, or any other Loan Document shall cease to be in full force and effect (except as a result of the express terms thereof) or shall cease to create a perfected Lien in favor of the Lender in the Property subject or purported to be subject thereto, subject to no other Liens other than Permitted Liens.

 

7.02                        Remedies Upon Event of Default.

 

If any Event of Default occurs and is continuing, the Lender may take any or all of the following actions:

 

(a)                                  declare the Commitment to be terminated;

 

(b)                                 declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other Obligations to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers; and

 

(c)                                  exercise all rights and remedies available to it under the Loan Documents, including pursuant to Article VIII, or at law or in equity;

 

provided, however, that upon the occurrence of an Event of Default pursuant to Sections 7.01(g) or (h), the Commitment shall automatically terminate, the unpaid principal amount of all outstanding Loans, and all interest and other Obligations shall automatically become due and payable without further act of the Lender.

 

7.03                        Application of Funds.

 

After the exercise of remedies provided for in Section 7.02 (or after the Loans have become due and payable as set forth in Section 7.02), any amounts received on account of any of the Obligations shall be applied by the Lender to the Obligations in such amounts and in such order as the Lender shall determine.

 

19

 

7.04                        Specific Performance.

 

The Lender may enforce any judgment obtained in connection with the Loan Documents through an action for specific performance.

 

ARTICLE VIII

SECURITY INTEREST; ADDITIONAL REMEDIES

 

8.01                        Grant of Security Interest.

 

To secure the prompt payment and performance of all of the Obligations, each Borrower hereby collaterally assigns and pledges to the Lender a continuing security interest in all of such Borrower’s right, title and interest in and to the Property and in all proceeds thereof.

 

8.02                        Preservation of Property and Perfection of Security Interests.

 

Each Borrower shall, on request of the Lender, execute and deliver to the Lender all financing statements or other documents (and pay the cost of filing or recording the same in all public offices deemed necessary by the Lender), in a form reasonably satisfactory to the Lender, necessary or desirable to perfect, keep perfected and to protect and preserve the Liens on the Property granted under the Loan Documents.  The Lender is hereby irrevocably authorized to file (and sign if necessary) on behalf of each Borrower UCC or effective financing statements on the Property at any time or from time to time and any continuation statement or amendment with respect thereto, in any appropriate filing office.

 

8.03                        Remittance of Proceeds to Lender.

 

At any time an Event of Default exists, if any proceeds of any Property shall come into the possession of a Borrower, such Borrower shall hold such proceeds as the sole and exclusive property of the Lender, and as trustee for the Lender, and no later than the first Business Day following receipt, remit any proceeds constituting cash or cash items (or cause the same to be remitted), in kind to the Lender.

 

8.04                        Safekeeping of Property.

 

To the maximum extent permitted by Law, the Lender shall not be responsible for:  (a) the safekeeping of the Property; (b) any loss or damage to the Property; (c) any diminution in the value of the Property; or (d) any act or default of any other Person relating to the Property.  All risk of loss, damage, destruction or diminution in value of the Property shall be borne by the Borrowers.

 

8.05                        State of Incorporation; Name.

 

The exact legal names of each Borrower are set forth on the signature pages of this Agreement and their respective jurisdictions of organization are correctly stated in the introductory paragraph of this Agreement.  The principal place of business and chief executive office of each Borrower is 400 Centre Street, Newton, Massachusetts 02458.  No Borrower may change such office, its name or state of organization, unless such Borrower gives the Lender at least 30-days’ prior written notice thereof.

 

20

 

8.06                        Continuing Lien.

 

It is the intent of the parties hereto that the Liens granted under the Loan Documents (a)  shall constitute a continuing Lien securing any and all future, as well as existing, Obligations, and (b)  shall attach to after-acquired as well as existing Property of a Borrower.

 

8.07                        Possession; Sale of Property.

 

(a)                                  In addition to the rights and remedies contained in Section 7.02, while an Event of Default exists, the Lender shall have all the rights and remedies of a secured party under the UCC and the right (subject to any applicable Laws):

 

(i)                                     with or without notice or demand for performance and without liability for trespass, subject to the rights of lessees, if any, enter any of the Property and peaceably take possession of the same, and may take such measures as the Lender may deem necessary or proper for the care or protection thereof (including without limitation, the right to remove all or any portion of such Property);

 

(ii)                                  with or without taking such possession, may sell or cause to be sold, in one or more sales or parcels, for cash, on credit or for future delivery, without assumption of any credit risk, all or any portion of the Property, at public or private sale, without demand of performance or notice of intention to sell or of time or place of sale, except at least ten (10) Business Days’ written notice to the Borrowers of the time and place of such sale or sales (and such other notices as may be required by applicable Law, if any, and which cannot be waived), which each Borrower hereby expressly acknowledges is commercially reasonable.  The Lender shall have no obligation to clean-up or otherwise prepare any Property for such sale.  Each purchaser at any such sale shall hold the Property sold absolutely, free from any claim or right on the part of any Borrower, and each Borrower hereby waives (to the fullest extent permitted by applicable Law) all rights of redemption, stay and appraisal that such Borrower now have or may at any time in the future have under any applicable Law now existing or hereafter enacted; and

 

(iii)                               at any such sale, the Property, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Lender (in its sole and absolute discretion) determines.  The Lender shall not be obligated to make any sale of any Property if it shall determine not to do so, regardless of the fact that notice of sale of such Property shall have been given.  The Lender may, without notice or publication, adjourn any such public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.  In case any such sale of all or any part of the Property is made on credit or for future delivery, the Property so sold may be retained by the Lender until the sale price is paid by the purchaser or purchasers thereof.  The Lender shall not incur any liability for the failure to collect or realize upon any or all of the Property or for any delay in doing so and, in case of any such failure, shall not be under any obligation to take any action with respect thereto; provided such Property may be sold again upon like notice.

 

(b)                                 At any public sale made pursuant to this Agreement (or to the extent permitted by applicable Law at any private sale), the Lender may bid for or purchase the Property and any other security for the Obligations, free from any right of redemption, stay or appraisal and all rights of marshalling, (all said rights being also hereby waived and released by each Borrower to the fullest extent

 

21

 

permitted by applicable Law), and may make payment on account thereof by using any claim then due and payable to the Lender from the Borrowers as a credit against the purchase price, and the Lender, upon compliance with the terms of sale, may hold, retain and dispose of such Property without further accountability to the Borrowers therefor.

 

(c)                                  As an alternative to exercising the power of sale herein conferred upon it, in connection with the exercise of any remedies, the Lender may proceed by a suit or suits at law or in equity to foreclose on the Property and to sell the same or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.  In any action hereunder, the Lender shall be entitled to the appointment of a receiver without notice, to peaceably take possession of all or any portion of the Property and to exercise such powers as the court shall confer upon the receiver.  Notwithstanding the foregoing, if an Event of Default shall have occurred and be continuing, the Lender shall be entitled to apply, without notice to any Borrower, any cash or cash items constituting Property or proceeds thereof in its possession to payment of the Obligations.

 

8.08                        Sale following Maturity Date or Acceleration.

 

(a)                                  Notwithstanding anything in this Agreement to the contrary, if all Obligations are not paid in full as of the Maturity Date, or if earlier, upon acceleration of the Loans pursuant to Section 7.02, then at the request of the Lender, the Borrowers will transfer to the Lender or its designee (the “New Owner”) the Acquired Facilities as follows:

 

(i)                                     if the aggregate amount of the outstanding Obligations is not more than $30.4 million, the New Owner shall only be entitled to require transfer of the first Acquired Facility listed on Schedule 1;

 

(ii)                                  if the aggregate amount of the outstanding Obligations is more than $30.4 million, but not more than $53.82 million, the New Owner shall be entitled to require transfer of the first and second Acquired Facilities listed on Schedule 1; and

 

(iii)                               if the aggregate amount of the outstanding Obligations is more than $53.82 million, the New Owner shall be entitled to require transfer of all three Acquired Facilities.

 

(b)                                 Upon transfer of an Acquired Facility the Lender will acknowledge satisfaction of the then outstanding Obligations in an amount equal to the value of such Acquired Facility set forth in Schedule 1; provided, the Acquired Facilities must be transferred in the order they appear on Schedule 1 (for example, the first listed Acquired Facility must be transferred before or simultaneously with the second listed Acquired Facility).  If the aggregate value for the Acquired Facilities transferred exceeds the then outstanding Obligations, the New Owner shall on the date of the transfer pay an amount equal to the excess in cash to the Borrowers.  If the then outstanding Obligations exceed the aggregate value of the Acquired Facilities transferred, the Borrowers shall remain liable for the deficiency and the Lender shall have and retain all rights and remedies under this Agreement with respect thereto and any remaining Property.

 

(c)                                  Contemporaneously with the transfer of an Acquired Facility pursuant to this Section 8.08, an Affiliate of FVE shall lease such Acquired Facility from the New Owner pursuant to a Lease.  The New Owner shall specify the Lease under which the Acquired Facility will be leased and all of the terms of such Lease will apply to such Acquired Facility except “Base Gross Revenues” with respect to such Acquired Facility will be the “Gross Revenues” for calendar year 2012 and the annual “Minimum Rent” for such Acquired Facility will equal 8% of the value of such Acquired Facility as set forth on

 

22

 

Schedule 1. “Base Gross Revenues”, “Gross Revenues” and “Minimum Rent” have the meanings given therefor in the applicable Lease.

 

(d)                                 The foregoing notwithstanding, the rights and obligations of the parties under this Section 8.08 shall be subject to New Owner’s obtaining all required licenses and regulatory approvals for the ownership of such Facility by the New Owner, and the parties will reasonably cooperate in the process of obtaining such licenses and approvals.

 

ARTICLE IX

MISCELLANEOUS

 

9.01                        Amendments, Etc.

 

No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrowers therefrom, shall be effective unless in writing signed by the Lender and the Borrowers, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

9.02                        Notices; Effectiveness; Electronic Communication.

 

(a)                                  Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service or sent by telecopier as follows:

 

(i)                                     if to a Borrower, to:

 

Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn:  Bruce J. Mackey, Jr.

Telecopy No.: 617-796-8243

 

(ii)                                  if to the Lender, to:

 

Senior Housing Properties Trust

Two Newton Place

255 Washington Street

Newton, Massachusetts 02458

Attn:  David J. Hegarty

Telecopy No.:  617-796-8349

 

Notices sent by hand or overnight courier service, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).

 

(b)                                 Change of Address, Etc.  Each of the Borrowers and the Lender may change its address or telecopier address by notice to the others as provided in this Section 9.02.

 

23

 

(c)                                  Reliance by the Lender.  The Lender shall be entitled to rely and act upon any notices (including telephonic Bridge Loan Notices) purportedly given by or on behalf of the Borrowers even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.

 

9.03                        No Waiver; Cumulative Remedies.

 

No failure by the Lender to exercise, and no delay by the Lender in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

9.04                        Expenses; Indemnity; Damage Waiver.

 

(a)                                  Costs and Expenses.  The Borrowers shall pay (i) all reasonable out-of-pocket expenses incurred by the Lender (including the reasonable fees, charges and disbursements of counsel for the Lender, filing fees, recording costs and title insurance premiums), in connection with the diligence, preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by the Lender (including the reasonable fees, charges and disbursements of any counsel for the Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Loans.

 

(b)                                 Indemnification by the Borrowers.  The Borrowers shall indemnify the Lender and its Affiliates and their respective officers, directors, agents and employees (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, penalties, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or Subsidiary arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby (including, without limitation, the Lender’s agreement to make Loans or the use or intended use of the proceeds thereof), (ii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by a Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to a Borrower or any of its Subsidiaries, or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by a Borrower or a Subsidiary, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties, liabilities or related expenses (A) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (B) result from a claim brought by a Borrower against an Indemnitee for breach in bad faith or a material breach of such

 

24

 

Indemnitee’s obligations hereunder or under any other Loan Document, if a Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction, or (C) arose from any event occurring after the Lender or its designee have taken to the applicable Property by foreclosure or deed in lieu thereof.  Notwithstanding the foregoing, each Indemnitee shall be obligated to refund and return any and all amounts paid by the Borrowers under this paragraph to such Indemnitee to the extent such Indemnitee is not entitled to payment of such amounts in accordance with the terms hereof.

 

(c)                                  Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.

 

(d)                                 Payments.  All amounts due under this Section 9.04 shall be payable not later than twenty (20) days after demand therefor.

 

(e)                                  Survival.  The agreements in this Section 9.04 shall survive the termination of the Commitment and the repayment, satisfaction or discharge of all Obligations.

 

9.05                        Payments Set Aside.

 

To the extent that any payment by or on behalf of the Borrowers is made to the Lender, or the Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lender in its commercially reasonable discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

 

9.06                        Successors and Assigns.

 

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrowers may not assign or otherwise transfer any of their rights or obligations hereunder without the prior written consent of the Lender.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, and to the extent expressly contemplated hereby, Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

9.07                        Right of Setoff.

 

If an Event of Default shall have occurred and be continuing, the Lender and its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all amounts at any time held and other obligations at any time owing by the Lender or any such Affiliate to a Borrower against any and all of the Obligations, irrespective of whether or not the Lender shall have made any demand therefor and although such Obligations may be contingent

 

25

 

and unmatured.  The rights of the Lender and its Affiliates under this Section 9.07 are in addition to other rights and remedies (including other rights of setoff) that the Lender or its Affiliates may have.

 

9.08                        Interest Rate Limitation.

 

Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law.  If the Lender shall receive interest in an amount that exceeds such maximum rate, the excess interest shall be applied to the principal of Loans or, if it exceeds such unpaid principal, refunded to the Borrowers.

 

9.09                        Counterparts; Integration; Effectiveness.

 

This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic image scan transmission (e.g., “pdf” via e-mail) shall be effective as delivery of a manually executed counterpart of this Agreement.

 

9.10                        Survival of Representations and Warranties.

 

All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Lender, regardless of any investigation made by the Lender or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default at the time of any Loan, and shall continue in full force and effect as long as any Obligation shall remain unpaid or unsatisfied.

 

9.11                        Severability.

 

If any provision of the Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of the Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

9.12                        Governing Law; Jurisdiction; Etc.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS; WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.

 

26

 

9.13        Arbitration.

 

(a)           Disputes.  Any disputes, claims or controversies between or among the parties hereto (i) arising out of or relating to this Agreement or the transactions contemplated hereby, or (ii) brought by or on behalf of any shareholder of either the Lender or FVE (which, for purposes of this Section 9.13, shall mean any shareholder of record or any beneficial owner of shares in either the Lender or FVE, or any former shareholder of record or beneficial owner of shares of the Lender or FVE) either on his, her or its owner behalf, on behalf of either the Lender or FVE or on behalf of any series of class of shares of either the Lender or FVE against the Lender or FVE or any trustee, director officer, manager (including Reit Management & Research LLC or its successor), agent or employee of the Lender or FVE, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement (all of which are referred to as “Disputes”) or relating in any way to such a Dispute or Disputes, shall on the demand of any party to such Dispute be resolved through binding and final Arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as modified herein.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

 

(b)           Selection of Arbitrators.  There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within 15 days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

 

(c)           Location of Arbitration.  The place of Arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

 

(d)           Scope of Discovery.  There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.

 

(e)           Arbitration Award.  In rendering an award or decision (the “Arbitration Award”), the arbitrators shall be required to follow the laws of the Commonwealth of Massachusetts.  Any

 

27

 

arbitration proceedings or Arbitration Award rendered hereunder and the validity, effect and interpretation of this Section 9.13 shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  The Arbitration Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based.

 

(f)            Costs.  Except to the extent expressly provided by this Section 9.13 or as otherwise agreed between the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees).  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

 

(g)           Final Judgment.  The Arbitration Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between such parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon the Arbitration Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this Section 9.13 to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

(h)           Payment.  Any monetary award shall be made and payable in Dollars free of any tax, deduction or offset.  The party against which the Arbitration Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Arbitration Award or such other date as the Arbitration Award may provide.

 

(i)             Beneficiaries.  This Section 9.13 is intended to benefit and be enforceable by the shareholders, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

 

9.14        Joint and Several Liability.

 

Each and every obligation of the Borrowers under this Agreement or any other Loan Document is the joint and several obligation of each Borrower whether or not so expressed.  Such obligations are independent, and may be enforced against any Borrower, irrespective of whether enforcement is brought against any other Borrower.  If for any reason any Borrower has no legal existence or is under no legal obligation to discharge any of its obligations to the Lender, or if any of the moneys payable on such obligations have become irrecoverable from a Borrower, by operation of law or otherwise, such obligations shall nevertheless be binding on each other Borrower.

 

9.15        Statement Concerning Limited Liability.

 

THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING SENIOR HOUSING PROPERTIES TRUST, DATED SEPTEMBER 20, 1999, AS AMENDED AND

 

28

 

SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SENIOR HOUSING PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SENIOR HOUSING PROPERTIES TRUST.  ALL PERSONS DEALING WITH SENIOR HOUSING PROPERTIES TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF SENIOR HOUSING PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

29

 

Each of the parties hereto has caused a counterpart of this Agreement to be duly executed as of the date first above written.

 

 

	
 
    	
SENIOR HOUSING   PROPERTIES TRUST
    
	
 
    	
as Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ David J. Hegarty
    
	
 
    	
Name:
    	
David J. Hegarty
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
FIVE STAR QUALITY   CARE, INC.
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE HOLDINGS OF   CONCORD, LLC
    
	
 
    	
as Borrower  
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE OF CONCORD,   LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    

 

30

 

	
 
    	
MORNINGSIDE HOLDINGS OF   RALEIGH, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE OF RALEIGH,   LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE HOLDINGS OF   GASTONIA, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MORNINGSIDE OF   GASTONIA, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    

 

31

 

	
 
    	
MORNINGSIDE HOLDINGS OF   GREENSBORO, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE OF   GREENSBORO, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
FIVE STAR QUALITY CARE   — OBX OPERATOR, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bruce J. Mackey Jr.
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    

 

32

 

EXHIBIT A-1

 

FORM OF INDIANA MORTGAGE

 

 

EXHIBIT A

 

[Form of Indiana Mortgage]

 

[SUBJECT TO LOCAL COUNSEL/TITLE COMPANY REVIEW]

 

THIS INSTRUMENT PREPARED BY 

AND AFTER RECORDING RETURN TO:

 

Louis A. Monti, Esq.

 

Sullivan & Worcester LLP

 

One Post Office Square

 

Boston, MA  02109

 

MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING

 

[INSERT PROPERTY ADDRESS]

 

THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING (this “Mortgage”) is made as of                           , 2011 by FIVE STAR QUALITY CARE-OBX OPERATOR, LLC, a Maryland limited liability company having a business address of 400 Centre Street, Newton, Middlesex County, Massachusetts  02458 (the “Mortgagor”), for the benefit of SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust having a business address of Two Newton Place, 255 Washington Street, Newton, Middlesex County, Massachusetts  02458 (the “Mortgagee”).

 

WHEREAS, the Mortgagor, Five Star Quality Care, Inc. and certain subsidiaries of Five Star Quality Care, Inc., as borrowers (jointly and severally, the “Borrowers”), and the Mortgagee entered into that certain $80,000,000 Bridge Loan Agreement, dated as of May       , 2011 (the

 

 

“Loan Agreement”), pursuant to which the Mortgagee agreed to loan to the Borrowers up to Eighty Million and 00/100 Dollars ($80,000,000.00) (the “Maximum Loan Amount”) in accordance with the terms and conditions of the Loan Agreement;

 

WHEREAS, the Borrowers have executed that certain Promissory Note, dated as of                   , 2011 for the Maximum Loan Amount in favor of the Mortgagee (the “Note”); and

 

WHEREAS, the Mortgagor is obligated under the Loan Agreement to execute and deliver this Mortgage to the Mortgagee as security for the due and punctual payment and performance of all of the obligations of the Borrowers under the Loan Agreement and the Note (collectively, the “Obligations”).

 

NOW, THEREFORE, as security for the due and punctual payment and performance of the Obligations, the Mortgagor, intending to be legally bound hereby, hereby mortgages and warrants to the Mortgagee, its successors and assigns forever:

 

All of the Mortgagor’s right, title and interest, in and to the following (collectively, the “Mortgaged Property”):

 

A.            Those certain parcels of land in                  County, Indiana as further described on Exhibit A, together with all appurtenances, easements, and rights of way related to such parcels of land, including, without limitation, all of the Mortgagor’s right, title and interest in and to any streets, alleys or rights of way adjacent thereto (the “Land”);

 

B.            The buildings, structures and other improvements located on the Land, and all fixtures and other property affixed thereto (the “Improvements”);

 

C.            All fixtures, furniture, equipment, machinery, systems and other items of personal property (other than any inventory, consumables, vehicles or similar items), which are now or hereafter attached or appurtenant to, located on or used in connection with the ownership, use, operation or maintenance of the Land and Improvements (the “FF&E”);

 

3

 

D.            All certificates of occupancy and other transferable licenses, permits, registrations, authorizations, use agreements, orders, or approvals of governmental or quasi-governmental agencies and authorities (whether federal, state, local, municipal, or foreign) or private parties relating to the ownership, construction, use, management, operation, or enjoyment of the Land, Improvements or FF&E;

 

E.             All books, records, files, and papers, whether in hard copy or electronic format, used in connection with the ownership, use, operation or maintenance of the Land, Improvements or FF&E; and

 

F.             All of the intangible property used in connection with the ownership, use, operation or maintenance of the Land, the Improvements or the FF&E (including, without limitation, any and all warranties or guaranties related to the FF&E or the Improvements and all contracts and other third-party agreements related to the operation or maintenance of the Land, Improvements or FF&E);

 

in each case whether now owned or hereafter acquired by the Mortgagor; provided, however, in no event shall the Mortgaged Property include (a) any property described in clauses (C) through (F) above to the extent such property constitutes “Collateral” under the FVE Revolving Credit Agreement (as defined in the Loan Agreement) as in effect on the effective date of the Loan Agreement, or (b) the Mortgagor’s leasehold interest in any leased FF&E if the grant of a security interest therein to the Mortgagee would constitute an event of default under the applicable lease.

 

The final payment and performance of the Obligations are scheduled to become due on or before July 1, 2012, or such later date as may be established pursuant to the terms of the Loan Agreement.

 

The Mortgagor expressly agrees to pay and perform the Obligations, without any relief whatsoever from valuation or appraisement laws of the State of Indiana.

 

The Mortgagor shall keep the Improvements, now or hereafter erected, constantly insured for the benefit of the Mortgagee against loss by fire, windstorm and such other casualties and contingencies, in such manner and in such companies and for such amounts, as indicated in the Loan Agreement.  All proceeds from any insurance so maintained shall at the option of the Mortgagee be applied to the debt secured hereby and if payable in installments, applied in the inverse order of maturity of such installments or to the repair or reconstruction of any Improvements.

 

In the event that any or all of the Mortgaged Property shall be condemned and taken under the power of eminent domain, the Mortgagor shall give immediate written notice to the Mortgagee and the Mortgagee shall have the right to receive and collect all damages awarded by

 

4

 

reason of such taking, and the right to such damages hereby is assigned to the Mortgagee who shall have the discretion to apply the amount so received, or any part thereof, to the indebtedness due hereunder and if payable in installments, applied in the inverse order of maturity of such installments, or to any alteration, repair or restoration of the Mortgaged Property by the Mortgagor.

 

The Mortgagor hereby acknowledges and agrees that the Obligations include, and that this Mortgage is given to secure, advances that may be made by the Mortgagee and obligations that may be incurred by the Mortgagor in addition and subsequent to the advances evidenced by the Note (“Future Advances”) and that this Mortgage shall secure all Future Advances of every nature and kind, provided, however, that the aggregate principal amount of Future Advances at any time shall not exceed 200% of the Maximum Loan Amount.  Pursuant to Indiana Code §32-29-1-10, the lien of this Mortgage with respect to any Future Advances, modifications, extensions and renewals referred to herein and made from time to time shall have the same priority to which this Mortgage otherwise would be entitled as of the date this Mortgage is executed and recorded, without regard to the fact that such Future Advance, modification, extension or renewal may occur after this Mortgage is executed.  The maximum amount stated in this paragraph is stated pursuant to and in accordance with Indiana Code §32-29-1-10 and is not and shall not be deemed to be a commitment by the Mortgagee to make Future Advances.

 

If there is an Event of Default (as defined in the Loan Agreement), then, at any time thereafter (until the Event of Default is cured), the Mortgagee shall have the right to (i) foreclose the lien of this Mortgage against all or any part of the Mortgaged Property, (ii) enforce in whole or in part every security interest granted by this Mortgage or the Loan Agreement, (iii) institute any proceeding that the Mortgagee may deem to be necessary or appropriate for the protection of its interests (including, without limitation, a proceeding for injunction or for specific performance with respect to the terms and conditions of this Mortgage and the Loan Agreement, (iv) cure the Event of Default for the account of the Mortgagor (including, without limitation, paying any delinquent taxes, assessments, and premiums for the policies of insurance required to be maintained by the Mortgagor under the Loan Agreement), and/or (v) exercise any other right or remedy granted under the Loan Agreement or otherwise available at law or in equity.  All costs and expenses incurred by the Mortgagee in exercising or enforcing any of its rights or remedies hereunder shall be paid by the Mortgagor upon demand by the Mortgagee, together with interest thereon from the date of demand until payment in full at the Default Rate (as defined in the Loan Agreement) and constitute a part of the Obligations.

 

This Mortgage is intended to be a security agreement pursuant to the Indiana Uniform Commercial Code (“UCC”) for (i) any and all items of personal property specified above as part of the Mortgaged Property which, under applicable law, may be subject to a security interest pursuant to the UCC and which are not herein effectively made part of the real property, and (ii) any and all items of property specified above as part of the Mortgaged Property which, under

 

5

 

applicable law, constitute fixtures and may be subject to a security interest under Article 9.1 of the UCC, and the Mortgagor hereby grants the Mortgagee a security interest in said property, and in all additions thereto, substitutions therefore and proceeds thereof, for the purpose of securing all Obligations now or hereafter secured by this Mortgage.  The Mortgagor hereby authorizes the Mortgagee to file financing statements and continuation statements to perfect the Mortgagee’s security interest in said property.  The Mortgagor shall pay (i) all costs of filing such statements and renewals and releases thereof, and (ii) all costs and expenses of any record searches for financing statements the Mortgagee may reasonably require.  Upon the occurrence and during the continuance of an Event of Default (as defined in the Loan Agreement), the Mortgagee shall have the rights and remedies of a secured party under the UCC, as well as all other rights and remedies available at law or in equity, and, at the Mortgagee’s option, the Mortgagee may also invoke the rights and remedies provided elsewhere in this Mortgage as to such property.  This Mortgage constitutes a financing statement filed as a fixture filing under the UCC in the real estate records of the county in which the Mortgaged Property is located with respect to any and all fixtures included within the term “Mortgaged Property” and with respect to any goods or other personal property that may now be or hereafter become such a fixture.

 

6

 

IN WITNESS WHEREOF, the Mortgagor has caused this deed to be made as of the                day of                             , 2011.

 

 

	
 
    	
FIVE   STAR QUALITY CARE-OBX OPERATOR, LLC, a Maryland limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
COMMONWEALTH OF   MASSACHUSETTS  )
    	
 
    
	
 
    	
 
    
	
 
    	
) SS:
    
	
 
    	
 
    
	
COUNTY OF MIDDLESEX
    	
)
    

 

 

On this              day of             , 2011, before me, the undersigned notary public, personally appeared                               , the                        of Five Star Quality Care-OBX Operator LLC, a Maryland limited liability company, proved to me based on personal knowledge or through satisfactory evidence of identification consisting of                                   , to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he signed it voluntarily for its stated purposes as an authorized person of the company.

 

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Official   signature and seal of notary
    
	
 
    	
 
    
	
 
    	
My commission expires:
    

 

 

I affirm, under the penalties for perjury, that I have taken reasonable care to redact each Social Security number in this document, unless required by law.

 

 

	
 
    	
 
    
	
 
    	
 
    
	
Louis A.   Monti, Esq.
    	
 
    

 

 

EXHIBIT A-2

 

FORM OF NORTH CAROLINA MORTGAGE

 

 

EXHIBIT A

 

[Form of North Carolina Deed of Trust]

 

[SUBJECT TO LOCAL COUNSEL/TITLE COMPANY REVIEW]

 

NORTH CAROLINA DEED OF TRUST, SECURITY AGREEMENT, 
 FIXTURE FILING AND FINANCING STATEMENT
  [INSERT PROPERTY ADDRESS]

 

THIS NORTH CAROLINA DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT (this “Deed of Trust”) is made as of the          day of                   , 2011, by and between                                      , LLC, a Delaware limited liability company having a business address of 400 Centre Street, Newton, Middlesex County, Massachusetts  02458 (the “Grantor”), and                                                 , a                                                 having a business address of                                             (the “Trustee”) for the benefit of SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust having a business address of Two Newton Place, 255 Washington Street, Newton, Middlesex County, Massachusetts  02458 (the “Beneficiary”).  The designations Grantor, Trustee, and Beneficiary as used herein shall include said parties, their heirs, successors, and assigns, and shall include singular, plural, masculine, feminine or neuter as required by context.

 

WHEREAS, the Grantor, Five Star Quality Care, Inc. and certain subsidiaries of Five Star Quality Care, Inc., as borrowers (jointly and severally, the “Borrowers”), and the Beneficiary entered into that certain $80,000,000 Bridge Loan Agreement, dated as of May       , 2011 (the “Loan Agreement”), pursuant to which the Grantor agreed to loan to the Borrowers up to a principal sum of Eighty Million and 00/100 Dollars ($80,000,000.00) (the “Maximum Loan Amount”), in accordance with the terms and conditions of the Loan Agreement;

 

WHEREAS, the Borrowers have executed that certain Promissory Note, dated as of                               , 2011 for the Maximum Loan Amount in favor of the Beneficiary (the “Note”);

 

WHEREAS, the Grantor is obligated under the Loan Agreement to execute and deliver this Deed of Trust to the Trustee for the benefit of the Beneficiary as security for the due and 

 

 

punctual payment and performance of all of the obligations of the Borrowers under the Loan Agreement and the Note (collectively, the “Obligations”); and

 

WHEREAS, the final due date for payment and performance of the Obligations, if not sooner paid and performed, is July 1, 2012.

 

NOW, THEREFORE, as security for the Obligations and other sums expended by Beneficiary pursuant to this Deed of Trust, the Loan Agreement and the Note and costs of collection (including attorneys fees as provided in the Loan Agreement) and other valuable consideration, the receipt of which is hereby acknowledged, the Grantor has bargained, sold, given, granted and conveyed and does by these presents bargain, sell, give, grant and convey to said Trustee, his heirs, or successors, and assigns:

 

All of the Grantor’s right, title and interest, in and to the following (collectively, the “Property”):

 

A.            Those certain parcels of land situated in the City of                                  Township,                                              County, North Carolina as further described on Exhibit A, together with all appurtenances, easements, and rights of way related to such parcels of land, including, without limitation, all of the Grantor’s right, title and interest in and to any streets, alleys or rights of way adjacent thereto (the “Land”);

 

B.            The buildings, structures and other improvements located on the Land, and all fixtures and other property affixed thereto (the “Improvements”);

 

C.            All fixtures, furniture, equipment, machinery, systems and other items of personal property (other than any inventory, consumables, vehicles or similar items), which are now or hereafter attached or appurtenant to, located on or used in connection with the ownership, use, operation or maintenance of the Land and Improvements (the “FF&E”);

 

D.            All certificates of occupancy and other transferable licenses, permits, registrations, authorizations, use agreements, orders, or approvals of governmental or quasi-governmental agencies and authorities (whether federal, state, local, municipal, or foreign) or private parties relating to the ownership, construction, use, management, operation, or enjoyment of the Land, Improvements or FF&E;

 

 

E.             All books, records, files, and papers, whether in hard copy or electronic format, used in connection with the ownership, use, operation or maintenance of  the Land, Improvements or FF&E; and

 

F.             All of the intangible property used in connection with the ownership, use, operation or maintenance of the Land, the Improvements or the FF&E (including, without limitation, any and all warranties or guaranties related to the FF&E or the Improvements and all contracts and other third-party agreements related to the operation or maintenance of the Land, Improvements or FF&E);

 

in each case whether now owned or hereafter acquired by the Grantor; provided, however, in no event shall the Property include (a) any property described in clauses (C) through (F) above to the extent such property constitutes “Collateral” under the FVE Revolving Credit Agreement (as defined in the Loan Agreement) as in effect on the effective date of the Loan Agreement, or (b) the Grantor’s leasehold interest in any leased FF&E if the grant of a security interest therein to the Beneficiary would constitute an event of default under the applicable lease.

 

TO HAVE AND TO HOLD said Property with all privileges and appurtenances thereunto belonging, to said Trustee, his heirs, successors, and assigns forever, upon the trusts, terms and conditions, and for the uses hereinafter set forth.

 

If the Grantor shall pay and perform the Obligations secured hereby in accordance with the terms of the Loan Agreement and the Note, and any renewals or extensions thereof in whole or in part, all other sums secured hereby and shall comply with all of the covenants, terms and conditions of this Deed of Trust, the Loan Agreement and the Note, then this conveyance shall be null and void and may be cancelled of record at the request and the expense of the Grantor.  If, however, there shall be any default in the payment or performance of the Obligations beyond all applicable cure periods, then and in any of such events, without further notice, it shall be lawful for and the duty of the Trustee, upon request of the Beneficiary, to sell the land herein conveyed at public auction for cash, after having first given such notice of hearing as to commencement of foreclosure proceedings and obtained such findings or leave of court as may then be required by law and giving such notice and advertising the time and place of such sale in such manner as may then be provided by law, and upon such and any resales and upon compliance with the law then relating to foreclosure proceedings under power of sale to convey title to the purchaser in as full and ample manner as the Trustee is empowered.  The Trustee shall be authorized to retain an attorney to represent him in such proceedings.

 

The proceeds of the sale after the Trustee retains his commission, together with reasonable attorneys fees incurred by the Trustee in such proceeding, shall be applied to the costs of sale, including, but not limited to, costs of collection, taxes, assessments, costs of recording, service fees and incidental expenditures, the amount due on the Loan Agreement and the Note hereby secured and advancements and other sums expended by the Beneficiary according to the provisions hereof and otherwise as required by 

 

 

the then existing law relating to foreclosures.  The Trustee’s commission shall be five percent (5%) of the gross proceeds of the sale for a completed foreclosure.  In the event foreclosure is commenced, but not completed, the Grantor shall pay all expenses incurred by the Trustee, including reasonable attorneys fees.

 

And the said Grantor does hereby covenant and agree with the Trustee as follows:

 

1.               INSURANCE.  The Grantor shall keep the Improvements, now or hereafter erected, constantly insured for the benefit of the Beneficiary against loss by fire, windstorm and such other casualties and contingencies, in such manner and in such companies and for such amounts, as indicated in the Loan Agreement.  All proceeds from any insurance so maintained shall at the option of the Beneficiary be applied to the debt secured hereby and if payable in installments, applied in the inverse order of maturity of such installments or to the repair or reconstruction of any Improvements.

 

2.               TAXES, ASSESSMENTS, CHARGES. The Grantor shall pay all taxes, assessments and charges as may be lawfully levied against said Property as required pursuant to the Loan Agreement.

 

3.               CONDEMNATION.  In the event that any or all of the Property shall be condemned and taken under the power of eminent domain, the Grantor shall give immediate written notice to the Beneficiary and the Beneficiary shall have the right to receive and collect all damages awarded by reason of such taking, and the right to such damages hereby is assigned to the Beneficiary who shall have the discretion to apply the amount so received, or any part thereof, to the indebtedness due hereunder and if payable in installments, applied in the inverse order of maturity of such installments, or to any alteration, repair or restoration of the Property by the Grantor.

 

4.               SUBSTITUTION OF TRUSTEE.  The Grantor and the Trustee covenant and agree to and with the Beneficiary that in case the said Trustee, or any successor trustee, shall die, become incapable of acting, renounce his trust, or for any reason the Beneficiary desires to replace said Trustee, then the Beneficiary may appoint, in writing, a trustee to take the place of the Trustee; and upon the such appointment, the trustee thus appointed shall succeed to all the rights, powers, and duties of the Trustee.

 

5.               ADVANCEMENTS.  If the Grantor shall fail to perform any of the covenants or obligations contained herein or in any other instrument given as additional security for the Obligations secured hereby, the Beneficiary may, but without obligation, make advances to perform such covenants or obligations, and all such sums so advanced shall be added to the principal sum, shall bear interest at the rate provided in the Loan Agreement for sums due after default and shall be due from the Grantor on demand of the Beneficiary.  No advancement or anything contained in this paragraph shall constitute a waiver by the Beneficiary or prevent such failure to perform (after the expiration of any applicable notice and/or cure period) from constituting an Event of Default under the Loan Agreement.

 

6.               INDEMNITY.  If any suit or proceeding be brought against the Trustee or the Beneficiary or arising out of this Deed of Trust or the Loan Agreement, or if any suit or proceeding be brought which may, in the Beneficiary’s commercially reasonable judgment, affect the value or title of the Property, the Grantor shall defend, indemnify and hold harmless and on demand reimburse the Trustee or the 

 

 

Beneficiary from any actual loss, cost, damage or expense incurred by reason thereof, and any sums expended by the Trustee or the Beneficary shall bear interest as provided in the Loan Agreement for sums due after default and shall be due and payable on demand.

 

7.               WAIVERS.  The Grantor waives all rights to require marshalling of assets by the Trustee or the Beneficiary.  No delay or omission of the Trustee or the Beneficiary in the exercise of any right, power or remedy arising under the Loan Agreement, the Note or this Deed of Trust shall be deemed a waiver of any default or aquiescence therein or shall impair or waive the exercise of such right, power or remedy by the Trustee or the Beneficiary at any other time.

 

8.               CIVIL ACTION.  In the event that the Trustee is named as a party to any civil action as the Trustee in this Deed of Trust, the Trustee shall be entitled to employ an attorney at law, including himself if he is a licensed attorney, to represent him in said action and the reasonable attorney’s fee of the Trustee in such action shall be paid by the Beneficiary and added to the principal of the Note and bear interest at the rate provided in the Loan Agreement for sums due after default.

 

9.               CREATION OF SECURITY INTERESTS.  This Deed of Trust shall constitute a “security agreement” within the meaning of the Uniform Commercial Code of the State of North Carolina, N.C.G.S. 25-9-101, et seq (the “UCC”).  By executing and delivering this Deed of Trust, the Grantor hereby expressly grants to the Beneficiary, as security for the Obligations, a security interest in the personal property encumbered hereby (the “Personal Property”), for the purpose of securing the Obligations, to the full extent that such Personal Property may be subject to the UCC, but subject to the rights of the beneficiary of any deed of trust senior in priority to this Deed of Trust.  At the Beneficiary’s request, the Grantor will join the Beneficiary in executing one or more financing statements and renewals and amendments thereof pursuant to the UCC, in form reasonably satisfactory to the Beneficiary and will pay all costs of filing thereof.  Certain items of the Personal Property are, may, or will become attached to the real property that is encumbered by this Deed of Trust.  It is intended that the filing for record of this Deed of Trust will make it effective as a financing statement filed as a fixture filing within the meaning of the UCC.  Notwithstanding anything to the contrary in this Deed of Trust, if, in the event of a foreclosure (whether judicial or non-judicial) of this Deed of Trust, less than all of the Personal Property subject to this security interest is sold at foreclosure, that portion of the Personal Property not sold shall continue to remain subject to the security interest granted hereby.

 

 

IN WITNESS WHEREOF, the Grantor has caused this instrument to be signed in its corporate name by its duly authorized officers and its seal to be hereunto affixed by authority of its Board of Directors, the day and year first above written.

 

 

	
GRANTOR:
    	
 
    
	
 
    	
 
    
	
                         ,   LLC,
    	
(SEAL)
    
	
a Delaware limited   liability company
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
CORPORATE ATTESTATION:
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
COMMONWEALTH OF   MASSACHUSETTS )
    	
 
    
	
 
    	
 
    
	
 
    	
) SS:
    
	
 
    	
 
    
	
COUNTY OF MIDDLESEX
    	
)
    

 

On this              day of             , 2011, before me, the undersigned notary public, personally appeared                               , the                        of                                              LLC, a Delaware limited liability company, proved to me based on personal knowledge or through satisfactory evidence of identification consisting of                                   , to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he signed it voluntarily for its stated purposes as the act of and on behalf of the company.

 

	
 
    	
 
    
	
 
    	
Official   signature and seal of notary
    
	
 
    	
 
    
	
 
    	
My commission expires:
    

 

 

EXHIBIT B

 

FORM OF NOTE

 

	
$80,000,000
    	
Boston,   Massachusetts
    
	
 
    	
[                        ]
    

 

FOR VALUE RECEIVED, the undersigned, FIVE STAR QUALITY CARE, INC., a Maryland corporation, MORNINGSIDE HOLDINGS OF CONCORD, LLC, a Delaware limited liability company, MORNINGSIDE OF CONCORD, LLC, a Delaware limited liability company, MORNINGSIDE HOLDINGS OF RALEIGH, LLC, a Delaware limited liability company, MORNINGSIDE OF RALEIGH, LLC, a Delaware limited liability company, MORNINGSIDE HOLDINGS OF GASTONIA, LLC, a Delaware limited liability company, MORNINGSIDE OF GASTONIA, LLC, a Delaware limited liability company, MORNINGSIDE HOLDINGS OF GREENSBORO, LCC, a Delaware limited liability company, MORNINGSIDE OF GREENSBORO, LLC, a Delaware limited liability company, FIVE STAR QUALITY CARE — OBX OPERATOR, LLC, a Maryland limited liability company (“Borrowers”), hereby jointly and severally promise to pay to SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust or its successors and assigns (the “Lender”) on the Maturity Date (as defined in the Bridge Loan Agreement referred to below) in lawful money of the United States and in immediately available funds, the principal amount of EIGHTY MILLION ($80,000,000) DOLLARS or such lesser principal amount of Loans (as defined in the Bridge Loan Agreement referred to below) as have then been extended by the Lender.  The Borrowers further agree to pay interest in like money at the chief executive office of the Lender on the unpaid principal amount hereof from time to time at the rates, and on the dates, specified in Sections 2.05 and 2.06 of the Bridge Loan Agreement.  Capitalized terms used herein which are defined in the Bridge Loan Agreement shall have such defined meanings unless otherwise defined herein.

 

The Lender may endorse and attach a schedule to reflect the date and amount of interest accrued, the date and amount of each payment or prepayment of principal or interest hereof; provided that the failure of the Lender to make any such recordation (or any error in such recordation) shall not affect the obligations of the Borrowers hereunder or under the Bridge Loan Agreement.

 

This Note is the Note referred to in the Bridge Loan Agreement, dated as of May       , 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Bridge Loan Agreement”), among the Borrowers and the Lender.  This Note is subject to the provisions thereof and is subject to optional prepayment in whole or in part as provided therein.

 

This Note is secured as provided in the Bridge Loan Agreement.  Reference is hereby made to the Bridge Loan Agreement and the Mortgages for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security, the terms and conditions upon which the security interest was granted and the rights of the holder of this Note in respect thereof.

 

Upon the occurrence and during the continuation of any one or more Events of Default, all amounts then remaining unpaid on this Note may be declared to be, and in certain instances shall automatically become, immediately due and payable, all as provided in the Bridge Loan Agreement.

 

All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.

 

 

All disputes, claims or controversies arising out of this Note are subject to arbitration in accordance with Section 9.13 of the Bridge Loan Agreement.

 

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

Executed as of the date first written above.

 

BORROWERS:

 

	
 
    	
FIVE STAR QUALITY   CARE, INC.
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE HOLDINGS OF   CONCORD, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE OF CONCORD,   LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    

 

2

 

	
 
    	
MORNINGSIDE HOLDINGS OF   RALEIGH, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE OF RALEIGH,   LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE HOLDINGS OF   GASTONIA, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE OF   GASTONIA, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    

 

3

 

	
 
    	
MORNINGSIDE HOLDINGS OF   GREENSBORO, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MORNINGSIDE OF   GREENSBORO, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: LIFETRUST   AMERICA, INC., as its member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
FIVE STAR QUALITY CARE   — OBX OPERATOR, LLC
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Bruce J. Mackey Jr.
    
	
 
    	
Title:
    	
President
    

 

4

 

SCHEDULE TO PROMISSORY NOTE DATED               , 2011

 

BY AND AMONG

 

FIVE STAR QUALITY CARE, INC., A MARYLAND CORPORATION, MORNINGSIDE HOLDINGS OF CONCORD, LLC, A DELAWARE LIMITED LIABILITY COMPANY, MORNINGSIDE OF CONCORD, LLC, A DELAWARE LIMITED LIABILITY COMPANY, MORNINGSIDE HOLDINGS OF RALEIGH, LLC, A DELAWARE LIMITED LIABILITY COMPANY, MORNINGSIDE OF RALEIGH, LLC, A DELAWARE LIMITED LIABILITY COMPANY, MORNINGSIDE HOLDINGS OF GASTONIA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, MORNINGSIDE OF GASTONIA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, MORNINGSIDE HOLDINGS OF GREENSBORO, LCC, A DELAWARE LIMITED LIABILITY COMPANY, MORNINGSIDE OF GREENSBORO, LLC, A DELAWARE LIMITED LIABILITY COMPANY, FIVE STAR QUALITY CARE — OBX OPERATOR, LLC, A MARYLAND LIMITED LIABILITY COMPANY JOINTLY AND SEVERALLY AS BORROWERS

 

AND

 

SENIOR HOUSING PROPERTIES TRUST, A MARYLAND REAL ESTATE INVESTMENT TRUST OR ITS SUCCESSORS AND ASSIGNS AS LENDER

 

Date of Schedule:           

 

	
Loan
   Amount
    	
 
    	
Loan Date
    	
 
    	
Aggregate
   Principal
   Payments
    	
 
    	
Unpaid
   Principal
   Balance
    	
 
    	
Accrued and
   Unpaid
   Interest
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Endorsed by:

 

	
SENIOR HOUSING   PROPERTIES TRUST
    	
 
    
	
as Lender
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

 

EXHIBIT C

 

FORM OF COMPLIANCE CERTIFICATE

 

This Compliance Certificate is delivered to Senior Housing Properties Trust (the “Lender”) pursuant to Section 5.02(a) of the Bridge Loan Agreement, dated as of                      , 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Bridge  Loan Agreement”), among Five Star Quality Care, Inc., a Maryland corporation (“FVE”), the other borrowers thereunder and the Lender.  Unless otherwise defined herein, terms defined in the Bridge Loan Agreement and used herein shall have the meanings given to them in the Bridge Loan Agreement.  All certifications made in this Compliance Certificate are made in my capacity as Chief Financial Officer and not in any individual capacity.

 

1.             I am the duly elected, qualified and acting Chief Financial Officer of FVE.

 

2.             I have reviewed and am familiar with the contents of the Bridge Loan Agreement and this Compliance Certificate.

 

3.             To the best of my knowledge, information and belief after due inquiry, no Default exists[, except as set forth below].

 

(Signature Page Follows)

 

 

IN WITNESS WHEREOF, FVE, through the undersigned acting solely in his or her capacity as Chief Financial Officer and not in any individual capacity, executes this Certificate this          day of                         , 20    .

 

	
 
    	
FIVE STAR QUALITY CARE, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title: Chief Financial   Officer
    

 

2

 

SCHEDULE 1

 

FACILITIES AND VALUE

 

	
 
    	
 
    	
Facilities
    	
 
    	
Value
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
10.
    	
 
    	
Riverwalk Commons and   Gardens
    Indianapolis, IN
    	
 
    	
$
    	
30,400,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
11.
    	
 
    	
Rosewalk Commons and   Gardens
    Lafayette, IN
    	
 
    	
$
    	
23,420,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
12.
    	
 
    	
Clearwater Commons
    Indianapolis, IN
    	
 
    	
$
    	
16,940,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
13.
    	
 
    	
Morningside of Raleigh
    Raleigh NC
    	
 
    	
$
    	
19,368,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
14.
    	
 
    	
Morningside of Concord
    Concord, NC
    	
 
    	
$
    	
18,449,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
15.
    	
 
    	
Morningside of Gastonia
    Gastonia, NC
    	
 
    	
$
    	
18,435,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
16.
    	
 
    	
Morningview at Irving   Park
    Greensboro, NC
    	
 
    	
$
    	
16,647,000
    	
 
    

 

1Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

 

BY AND AMONG

 

FIVE STAR QUALITY CARE, INC.,

AS PURCHASER,

 

AND

 

RESIDENTIAL CARE I, L.L.C., 

RESIDENTIAL CARE III, INC.,

CLEARWATER GARDEN HOMES, L.L.C.,

ROSEWALK GARDEN HOMES, L.L.C. AND

AMERICAN SENIOR HOME CARE, L.L.C.

JOINTLY AND SEVERALLY,

AS SELLERS

 

MARCH 18, 2011

 

Clearwater Commons
 4519 E. 82nd Street
 Indianapolis, Indiana  46250

 

Rosewalk Commons and Garden Homes
 250 Shenandoah Drive
 Lafayette, Indiana  47905

 

 

	
ARTICLE I.    DEFINITIONS
    	
1
    
	
1.1.  Definitions
    	
1
    
	
ARTICLE II.  PURCHASE   AND SALE; CLOSING
    	
6
    
	
2.1.  Purchase and Sale
    	
6
    
	
2.2.  Closing
    	
7
    
	
2.3.  Purchase Price
    	
7
    
	
2.4.  Duties of Escrow Agent
    	
7
    
	
ARTICLE III.    DILIGENCE, ETC.
    	
9
    
	
3.1.  Diligence Inspections
    	
9
    
	
3.2.  Diligence Materials
    	
9
    
	
3.3.  Termination of Agreement
    	
10
    
	
3.4.  Title and Survey Matters
    	
10
    
	
3.5.  Termination of Service Contracts
    	
11
    
	
ARTICLE IV.    CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE
    	
11
    
	
4.1.  Purchaser’s Conditions Precedent
    	
11
    
	
4.2.  Conditions to Sellers’ Obligations to Close
    	
13
    
	
4.3.  Failure of Conditions Precedent
    	
14
    
	
ARTICLE V.    REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
    	
14
    
	
5.1.  Representations of Seller Parties
    	
14
    
	
5.2.  Survival of the Seller’s Representations
    	
18
    
	
5.3.  “As Is”
    	
19
    
	
ARTICLE VI.    REPRESENTATIONS AND WARRANTIES OF PURCHASER
    	
19
    
	
6.1.  Representations of Purchaser
    	
19
    
	
6.2.  Survival
    	
20
    
	
ARTICLE VII.    COVENANTS OF THE SELLER
    	
20
    
	
7.1.  Compliance with Laws, Etc.
    	
20
    
	
7.2.  Compliance with Agreements
    	
20
    
	
7.3.  Approval of Agreements
    	
20
    
	
7.4.  Notice of Material Changes or Untrue   Representations
    	
20
    
	
7.5.  Operation of Property
    	
20
    
	
7.6.  Employees
    	
21
    
	
7.7.  Non-Solicitation
    	
22
    
	
7.8.  Non-Competition
    	
22
    
	
7.9.  Government Inspections
    	
23
    
	
7.10.  Trade Payables
    	
23
    
	
7.11.  Cooperation
    	
23
    
	
ARTICLE VIII.    APPORTIONMENTS
    	
23
    
	
8.1.  Apportionments
    	
23
    
	
8.2.  Holdback
    	
25
    
	
8.3.  Closing Costs
    	
25
    
	
8.4.  Withholding Amounts
    	
26
    
	
8.5.  Errors on Settlement Statements
    	
26
    
	
8.6.  Survival
    	
26
    
	
ARTICLE IX.  CASUALTY   AND CONDEMNATION
    	
26
    
	
9.1.  Casualty
    	
26
    
	
9.2.  Condemnation
    	
27
    

 

 

	
9.3.  Survival
    	
27
    
	
ARTICLE X.  DEFAULT   AND REMEDIES
    	
27
    
	
10.1.  Default by the Seller Parties
    	
27
    
	
10.2.  Default by the Purchaser
    	
27
    
	
10.3.  Survival
    	
28
    
	
ARTICLE XI.    MISCELLANEOUS
    	
28
    
	
11.1.  Allocation of Liability
    	
28
    
	
11.2.  Brokers
    	
28
    
	
11.3.  Publicity
    	
28
    
	
11.4.  Trading in Purchaser’s Securities
    	
29
    
	
11.5.  Notices
    	
29
    
	
11.6.  Waivers, Etc.
    	
30
    
	
11.7.  Assignment; Successors and Assigns
    	
31
    
	
11.8.  Bulk Sales Laws
    	
31
    
	
11.9.  No Presumption Against Drafter
    	
31
    
	
11.10.  Entire Agreement; Severability
    	
31
    
	
11.11.  Counterparts, Etc.
    	
31
    
	
11.12.  Performance on Business Days
    	
32
    
	
11.13.  Attorneys Fees
    	
32
    
	
11.14.  Section and Other Headings
    	
32
    
	
11.15.  Time of Essence
    	
32
    
	
11.16.  Liability of Sellers
    	
32
    
	
11.17.  Financials
    	
32
    
	
11.18.  GOVERNING LAW; JURISDICTION
    	
33
    
	
11.19.  WAIVER OF JURY TRIAL
    	
33
    
	
11.20.  ASC Brand
    	
33
    
	
11.21.  Survival
    	
33
    

 

ii

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT is made and entered into as of March 18, 2011 (the “Effective Date”) by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation, as purchaser (the “Purchaser”), and RESIDENTIAL CARE I, L.L.C.,  an Indiana limited liability company, RESIDENTIAL CARE III, INC., an Indiana corporation, CLEARWATER GARDEN HOMES, L.L.C., an Indiana limited liability company, ROSEWALK GARDEN HOMES, L.L.C., an Indiana limited liability company and AMERICAN SENIOR HOME CARE, L.L.C., an Indiana limited liability company (each individually, a “Seller” and, jointly and severally, the “Sellers”).

 

WITNESSETH:

 

WHEREAS, the Sellers own and operate certain real property and related property comprising two assisted living/independent living communities located in the State of Indiana as more particularly described on Schedule 1 attached hereto and made a part hereof; and

 

WHEREAS, American Senior Communities, L.L.C., an Indiana limited liability company (“ASC”), manages each of the Facilities (as defined below), and EagleCare II, L.L.C., an Indiana limited liability company (“Eagle”), provides employees to each of the Facilities, for and on behalf of the Sellers; and

 

WHEREAS, the Purchaser desires to purchase the Properties (as defined below) from the Sellers, and the Sellers desire to sell the Properties to the Purchaser, subject to and in accordance with the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the Purchaser and the Sellers, intending to be legally bound, hereby agree as follows:

 

ARTICLE I.
 DEFINITIONS

 

1.1.          Definitions.  Capitalized terms used in this Agreement have the meanings set forth below or in the section of this Agreement referred to below and such definitions apply equally to the singular and plural forms, and to the masculine and feminine forms, of such words:

 

“Agreement”  means this Purchase and Sale Agreement, together with all of the Schedules and Exhibits attached hereto, as it and they may be amended, modified or supplemented from time to time as herein provided.

 

“ASC”  has the meaning given such term in the recitals to this Agreement.

 

“Broker”  means Marcus & Millichap.

 

 

“Business Day”  means any day other than a Saturday, Sunday or any other day on which banking institutions in the Commonwealth of Massachusetts or the State of Indiana are authorized by law or executive action to close.

 

“Closing”  means the closing of the transactions contemplated by this Agreement.

 

“Closing Date”  means the first day of the first full calendar month following the date which is twenty-one (21) days after the last to occur of (a) the expiration of the Inspection Period, or (b) the date on which the Purchaser shall have obtained the applicable healthcare licenses described in Section 4.1(a).

 

“Code”  means the Internal Revenue Code of 1986 and the regulations promulgated thereunder, as it and they may be amended, modified or supplemented from time to time.

 

“Deposit”  means Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00).

 

“Eagle”  has the meaning given such term in the recitals to this Agreement.

 

“ERISA”  means the Employee Retirement Income Security Act of 1974, as it may be amended, modified or supplemented from time to time.

 

“ERISA Affiliate”  means any Person and/or such Person’s Subsidiaries or affiliates or any trade or business (whether or not incorporated) which is under common control with such Person or such Person’s Subsidiaries or affiliates or which is treated as a single employer with such Person or such Person’s Subsidiaries or affiliates under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.

 

“Effective Date”  has the meaning given such term in the first paragraph of this Agreement.

 

“Employee”  means any individual who has been hired or retained, in whatever capacity, to provide services to the Residents of any Facility or otherwise in connection with the day-to-day operation of any Facility.

 

“Employee Benefit Plan”  means any employee benefit plan, as defined in Section 3(3) of ERISA.

 

“Escrow Agent”  means the New York, New York office of Commonwealth Land Title Insurance Company or any other Person as shall be designated by the Purchaser and reasonably approved by the Sellers.

 

“Facility”  means any one of the assisted living/independent living communities identified on Schedule 1 attached hereto.

 

“FF&E”  means, with respect to each Facility, collectively, all fixtures, furniture, equipment, machinery, systems and other items of personal property, which are attached or appurtenant to, located on or used in connection with the ownership, use, operation or

 

2

 

maintenance of such Facility, including, without limitation, any motor vehicles used in connection with the operation or maintenance of such Facility.

 

“Files and Records”  means, with respect to each Facility, collectively, all books, records, files, and papers, whether in hard copy or electronic format, used in connection with the ownership, use, operation or maintenance of such Facility or the business conducted thereon, including, without limitation, sales, marketing and advertising materials, lists of present suppliers and personnel, employment records, policies and procedures, and all records relating to the personal, medical, social, and financial status of each Resident, including but not limited to, admission applications, Multiple Data Set (MDS) evaluations, care plans, medical records and other resident specific data required to be kept by licensing and certification authorities.

 

“Freddie Mac Purchase Agreement” means  that certain Purchase and Sale Agreement, dated as of the Effective Date, by and among Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co, L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., as sellers, and the Purchaser, as purchaser, as the same may be amended, restated, supplemented or modified from time to time.

 

“GAAP”  means United States generally accepted accounting principles as in effect on the date of the applicable Seller Financial Statements being referenced.

 

“Hazardous Materials” means, collectively, any substances or materials which are now or hereafter classified or considered to be hazardous or toxic or the presence of which requires investigation or remediation under any Laws relating to pollution, the protection or regulation of human health, natural resources or the environment, or the emission, discharge, release or threatened release of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or waste into the environment (including ambient air, surface water, ground water or land or soil).

 

“Healthcare Licenses”  means, with respect to each Facility, collectively, those certain healthcare licenses and approvals which are necessary to permit such Facility to be operated as it is currently operated and to permit the Sellers or any of their affiliates to provide the services which each currently provides to the Residents of such Facility, including, without limitation, the home healthcare license issued in the name of American Senior Home Care, L.L.C.

 

“Holdback Amount”  means, collectively, the sum of Eight Hundred Ten Thousand and No/100 Dollars ($810,000.00), together with any interest earned thereon.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, together with all rules and regulations promulgated thereunder.

 

“Improvements”  means, with respect to each Facility, collectively, the buildings, structures and other improvements located on the Land on which such Facility is located (including, without limitation, the Facility), and all fixtures and other property affixed thereto.

 

“Inspection Period”  means the period commencing on the Effective Date and expiring at 6:00 p.m., local time at the Property, on May 2, 2011.

 

3

 

“Intangible Property”  means, with respect to each Facility, collectively, all of the intangible property arising from or used in connection with the ownership, use, operation or maintenance of the Land, the Improvements, the FF&E, the Files and Records and the Inventory associated with such Facility (including, without limitation, any and all warranties or guaranties related to the FF&E or the Improvements as well as the name of such Facility, and the Licenses and Permits, the Resident Agreements and the Service Contracts associated with such Facility).

 

“Inventory”  means, with respect to each Facility, collectively, all consummables, inventories, stocks, supplies and other related items which are used in connection with the ownership, use, operation or maintenance of such Facility or the provision of services to the Residents of such Facility.

 

“Land”  means, with respect to each Facility, those certain parcels of land as further described on Schedule 2 attached hereto and made a part hereof and containing approximately 7.56 acres in the aggregate, together with all appurtenances, easements, and rights of way related to such parcels of land, including, without limitation, all of the applicable Seller’s right, title and interest in and to any streets, alleys or rights of way adjacent thereto.

 

“Laws”  means, collectively, all laws, ordinances, statutes, codes, rules, regulations, agreements, judgments, orders and decrees now or hereafter enacted, promulgated, or amended, of the United States, the states, the counties, the cities or any other political subdivisions in which each Property is located and any other political subdivision, agency or instrumentality exercising jurisdiction over the owner of such Property, such Property or the use of such Property or any other legal requirements applicable to such Property, including, without limitation, those relating to the environment, zoning, construction, occupancy, occupational health and safety or fire safety.

 

“Licenses and Permits”  means, with respect to each Facility, collectively, all certificates of occupancy and other transferable licenses, permits, registrations, authorizations, use agreements, orders, or approvals of governmental or quasi-governmental agencies and authorities (whether federal, state, local, municipal, or foreign) or private parties relating to the ownership, construction, use, management, operation, or enjoyment of such Facility.

 

“Losses”  has the meaning given such term in Section 8.2.

 

“Other Purchase Agreements” means, collectively, the Freddie Mac Purchase Agreement and the Riverwalk Purchase Agreement.

 

“Outside Closing Date”  means July 1, 2011.

 

“Permitted Exceptions”  means, with respect to each Property, collectively, (a) any liens for real estate taxes or assessments not yet due and payable or due and payable but not yet delinquent, and (b) such other non-monetary encumbrances with respect to such Property which are shown on the Title Commitments or the Surveys with respect to such Property but are not objected to by the Purchaser in accordance with Section 3.4 or which are otherwise deemed to be Permitted Exceptions in accordance with Section 3.4.

 

4

 

“Person”  means an individual, partnership, joint venture, corporation, limited liability company, trust, real estate investment trust, any other form of business association or organization, and/or any government or governmental board, body or authority.

 

“Property”  means, with respect to each Facility, collectively, the Land, the Improvements, the FF&E, the Files and Records, the Intangible Property, the Inventory, the Licenses and Permits, the Resident Agreements, the Resident Deposits and the Service Contracts.

 

“Purchase Price”  means Forty Million Five Hundred Thousand and 00/100 Dollars ($40,500,000.00).

 

“Purchaser”  has the meaning given such term in the initial paragraph of this Agreement, together with any permitted successors and assigns.

 

“Resident”  means any resident under a Resident Agreement.

 

“Resident Agreement”  means any resident agreement or any other agreement pursuant to which a Resident occupies a unit in any Facility, as the same may be amended, modified or supplemented from time to time as herein provided.

 

“Resident Deposit”  means any deposit or other security given by a Resident pursuant to a Resident Agreement.

 

“Riverwalk Purchase Agreement” means that certain Purchase and Sale Agreement, dated as of the Effective Date, by and among Residential Care VII, L.L.C. and Riverwalk Garden Homes, L.L.C., as sellers, and the Purchaser, as purchaser, as the same may be amended, restated, supplemented or modified from time to time.

 

“Seller” and “Sellers” have the meaning given such terms in the initial paragraph of this Agreement.

 

“Seller Benefit Arrangement”  means any employment, consulting, severance or other similar contract, arrangement or policy and each plan, arrangement (written or oral), program, agreement or commitment providing for insurance coverage (including any self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, fringe benefits, change in control benefits, life, health, dental, disability or accident benefits (including, without limitation, any “voluntary employees’ beneficiary association” as defined in Section 501(c)(9) of the Code providing for the same or other benefits) or for deferred compensation, profit-sharing bonuses, stock options, stock appreciation rights, stock purchases or other forms of equity or incentive compensation or post-retirement insurance, compensation or benefits which (a) is not a Seller Employee Benefit Plan, (b) is entered into, maintained, contributed to or required to be contributed to, as the case may be, by any Seller Party (but only with respect to the Employees or former employees or directors or former directors at the Facilities) or any of their ERISA Affiliates, and (c) covers any Employees, former employees, directors or former directors of any Seller Party (but only with respect to the Employees or former employees or directors or former directors at the Facilities) or any of their ERISA Affiliates.

 

5

 

“Seller Employee Benefit Plan”  means any Employee Benefit Plan that is sponsored or contributed to by any Seller Party or any of its ERISA Affiliates (or that has been maintained by such Person within the preceding six (6) years) covering Employees or former employees of any Seller Party (but only with respect to the Employees or former employees at the Facilities) or any of their ERISA Affiliates.

 

“Seller Financial Statements”  has the meaning given such term in Section 5.1(e).

 

“Seller Parties” means, collectively, ASC, Eagle and each Seller.

 

“Service Contracts”  means, with respect to each Facility, collectively, all contracts and other third-party agreements related to the use, operation or maintenance of such Facility (other than Licenses and Permits and Residential Agreements), as the same may be amended, modified or supplemented from time to time as herein provided.

 

“Subsidiaries”  means all corporations, associations or other entities of which a Person owns, directly or indirectly, more than twenty percent (20%) of the voting stock or other voting equity interests of such corporation, association or other entity.

 

“Surveys”  has the meaning given such term in Section 3.4(b).

 

“Surviving Obligations”  means the liabilities and obligations of the Purchaser or the Seller Parties which expressly survive the Closing or the termination of this Agreement.

 

“Title Commitments”  has the meaning given such term in Section 3.4(a).

 

“Title Company”  means Commonwealth Land Title Insurance Company or such other nationally-recognized title insurance company as may be selected by the Purchaser.

 

“Title Objection Notice”  shall have the meaning given such term in Section 3.4(c).

 

“Title Policies”  has the meaning given such term in Section 4.1(g).

 

“Title Response Date”  has the meaning given such term in Section 3.4(c).

 

“Trade Payables”  means, with respect to each Property, amounts payable to providers or suppliers of goods and services to such Property in the ordinary course of business.

 

“Voluntary Lien”  means any mortgage, deed of trust or other consensual or non-consensual monetary lien encumbering any Property, as well as any consensual lien that results from a breach by any Seller of its obligations under this Agreement.

 

ARTICLE II.
 PURCHASE AND SALE; CLOSING

 

2.1.          Purchase and Sale.  In consideration of the payment of the Purchase Price by the Purchaser to the Sellers and for other good and valuable consideration, the Sellers hereby agree to sell the Properties to the Purchaser, and the Purchaser hereby agrees to purchase the Properties

 

6

 

from the Sellers, subject to and in accordance with the terms and conditions of this Agreement.  For the avoidance of doubt, the Properties include all of the assets of any home healthcare agency operating at any Facility, including, without limitation, American Senior Home Care, L.L.C., to the extent such assets are used in or otherwise relate to the operations of the home healthcare agency at such Facility, including, without limitation, any FF&E, Files and Records, Intangible Property, Inventory, and Licenses and Permits of such home healthcare agency.

 

2.2.          Closing.  The purchase and sale of the Properties will be consummated at the Closing which will be held through an escrow established at the offices of the Escrow Agent on the Closing Date.  If the Closing does not occur on or before the Outside Closing Date, any party may terminate this Agreement provided such party is not in default hereunder, whereupon the Escrow Agent shall immediately return the Deposit to the Purchaser and no party shall have any further rights or obligations hereunder except for the Surviving Obligations; provided, however, such termination shall not impair or otherwise excuse any of the rights or obligations of the parties under Article X if the Closing fails to occur because of any breach or default by any party to this Agreement.

 

2.3.          Purchase Price.

 

(a)           Payment of Purchase Price.  The purchase price to be paid for the Properties will be the Purchase Price.  The Purchase Price will be paid as follows:

 

(i)            The Purchaser has delivered, or shall deliver within two (2) Business Days after the Effective Date, the Deposit into escrow with the Escrow Agent by wire transfer of immediately available funds.

 

(ii)           On the Closing Date, the Purchaser shall deliver the balance of the Purchase Price into escrow with the Escrow Agent by wire transfer of immediately available funds, subject to any adjustments and apportionments as may be provided for in this Agreement.

 

(b)           Disbursement of Purchase Price.  Upon satisfaction of all of the conditions precedent to the Purchaser’s obligation to proceed to Closing hereunder, the Purchaser shall authorize and instruct the Escrow Agent to disburse the Purchase Price, subject to any adjustments and apportionments as may be provided for in this Agreement and less the Holdback Amount, to the Sellers.

 

(c)           Allocation of Purchase Price.  The Purchase Price shall be allocated between the Properties as set forth on Schedule 1 attached hereto and made a part hereof.

 

2.4.          Duties of Escrow Agent.

 

(a)           Holding of Funds.  The Escrow Agent shall hold the Deposit and the Holdback Amount in interest-bearing accounts and shall pay the Deposit and the Holdback Amount to the parties entitled thereto in accordance with the terms of this Agreement.  Interest earned on the Deposit shall be earned for the account of the Purchaser and interest earned on the Holdback Amount shall be earned for the account of the Sellers.

 

7

 

(b)           Limitations on Liability.  The acceptance by the Escrow Agent of its duties as such under this Agreement is subject to the following terms and conditions, which the Purchaser and the Sellers hereby agree shall govern and control with respect to the obligations, liabilities, rights and duties of the Escrow Agent:

 

(i)            The Escrow Agent acts hereunder as a depositary only and is not responsible or liable in any manner whatever for the sufficiency of any amounts deposited with it.

 

(ii)           The Escrow Agent will not be liable for acting upon any notice, request, waiver, consent, receipt or other instrument or document which the Escrow Agent in good faith believes to be genuine and what it purports to be.

 

(iii)          The Escrow Agent will not be liable for any error in judgment, or for any act done or step taken or omitted by it in good faith, or for any mistake of fact or law, or for anything which it may do or refrain from doing in connection herewith, except its own bad faith, gross negligence or willful misconduct.

 

(iv)          The Escrow Agent may consult with, and obtain advice from, legal counsel in the event of any dispute or question as to the construction of any of the provisions hereof or its duties hereunder, and it will incur no liability and shall be fully protected in acting in good faith in accordance with the opinion and advice of such counsel.

 

(c)           Disputes.  If there is ever a dispute between the parties with respect to the disposition of the Deposit or the Holdback Amount, the Escrow Agent shall either retain the Deposit or the Holdback Amount (as applicable), or deliver the same into a court of competent jurisdiction. Upon delivery of the Deposit or the Holdback Amount to a court of competent jurisdiction, the Escrow Agent will be released and discharged from all further obligations and liabilities hereunder relating to the Deposit or the Holdback Amount, respectively.  Notwithstanding the foregoing, the Escrow Agent shall comply with the unilateral instructions of the Purchaser regarding the disposition of the Deposit if the Purchaser terminates this Agreement in accordance with Section 3.3.

 

(d)           Removal of Escrow Agent.  The Purchaser or the Sellers may each remove the Escrow Agent at any time upon not less than five (5) Business Days’ prior notice to the Escrow Agent.  Following any such removal, the Sellers and the Purchaser shall together appoint a successor Escrow Agent mutually satisfactory to each of them in their reasonable discretion.  Such successor Escrow Agent shall accept such appointment in a written instrument pursuant to which it agrees to be bound by the terms and conditions of this Agreement.  If no such successor Escrow Agent is appointed and acting hereunder within five (5) Business Days after the removal of the acting Escrow Agent, the acting Escrow Agent shall deliver the Deposit or the Holdback Amount (as applicable) into a court of competent jurisdiction as provided in Section 2.4(c).  Upon delivery of the Deposit or the Holdback Amount (as applicable) to a court of competent jurisdiction, the Escrow Agent shall be released and discharged from all further obligations and liabilities hereunder.

 

8

 

(e)           IRS Real Estate Sales Reporting.  The Escrow Agent shall act as “the person responsible for closing” the transactions contemplated hereby pursuant to Section 6045(e) of the Internal Revenue Code of 1986, as amended.  In connection therewith, the Escrow Agent shall prepare and file all informational returns, including IRS Form 1099-S and shall otherwise comply with the provisions of said Section 6045(e).

 

(f)            No Compensation.  The Escrow Agent agrees to serve without compensation for its services; provided, however, that the Purchaser (on the one hand) and the Sellers (on the other hand) each hereby agree to reimburse, or to advance to, the Escrow Agent one-half (1/2) of all reasonable expenses incurred by the Escrow Agent in the performance of its duties hereunder, unless the Escrow Agent incurs any such expenses in connection with any action, dispute or proceeding between the Sellers and the Purchaser hereunder, in which event the party which does not prevail in such dispute shall be responsible for the payment of all such expenses.

 

ARTICLE III.
 DILIGENCE, ETC.

 

3.1.          Diligence Inspections.  From and after the Effective Date until the Closing or earlier termination of this Agreement, the Seller Parties shall permit the Purchaser and its representatives to inspect all aspects of the Properties (including, without limitation, all roofs, electrical, mechanical and structural elements, and HVAC systems), to perform due diligence, soil analysis and environmental investigations, to review the Files and Records, the Licenses and Permits, the Resident Agreements and the Service Contracts, to interview Employees and to undertake such other inspections, investigations, tests and studies as the Purchaser and its representatives shall deem appropriate.  Any such inspections shall be performed in a manner consistent with this Agreement and so as not to unreasonably interfere with the operations of the Properties.  To the extent that the Purchaser or its representatives damage any Property during any such inspections, the Purchaser shall return such Property to substantially the same condition that such Property was in immediately prior to such damage.  The Purchaser shall indemnify, defend and hold harmless the Seller Parties from and against any and all expense, loss or damage that the Seller Parties incur as a result of any entry by the Purchaser or its representatives onto the Properties in connection with any such inspections, except to the extent that any such expense, loss or damage (a) arises from any Seller Party’s negligence or any act or omission of any Seller Party during any such entry or (b) relates to the discovery of any pre-existing condition at any Property.

 

3.2.          Diligence Materials.

 

(a)           Seller Deliverables.  Within two (2) Business Days following the Effective Date, the Sellers shall deliver copies of the following to the Purchaser: all Licenses and Permits; all Files and Records; all forms of Resident Agreements and any Resident Agreements that are not in form and substance substantially similar to the forms of Resident Agreements; all Service Contracts; all title reports, title policies and exception documents regarding the Properties in any Seller’s possession or control; all surveys of the Properties in any Seller’s possession or control; and all environmental reports or assessments regarding the Properties in any Seller’s possession or control.

 

9

 

 

 

(b)           Other Materials.  From and after the Effective Date until the Closing or the earlier termination of this Agreement, the Sellers shall permit the Purchaser and its representatives to review and examine all building evaluations, financial data and other information and materials pertaining to the Properties as are in the possession or control of the Sellers, and the Sellers shall permit the Purchaser or its representatives to make copies of any such information materials at the Purchaser’s sole cost and expense.

 

3.3.          Termination of Agreement.  If the results of the inspections performed by or on behalf of the Purchaser pursuant to Sections 3.1 or 3.2 shall be unsatisfactory to the Purchaser in any respect or if the Purchaser otherwise determines not to proceed to Closing, in each case as determined by the Purchaser in its sole and absolute discretion, then the Purchaser shall have the right to terminate this Agreement at any time prior to the expiration of the Inspection Period by giving written notice thereof to the Sellers, in which event the Escrow Agent shall return the Deposit to the Purchaser promptly following the Purchaser’s request for the same and no party shall have any further obligations or liabilities to the other party hereunder except for the Surviving Obligations.  Notwithstanding the foregoing, any termination of this Agreement or either of the Other Purchase Agreements by the Purchaser pursuant to this Section 3.3 or Section 3.3 of either of the Other Purchase Agreements shall operate to automatically and simultaneously terminate each of this Agreement and the Other Purchase Agreements without the need to execute any additional notices or documents.  If the Purchaser shall fail to terminate this Agreement prior to the expiration of the Inspection Period, then the Purchaser shall have no further right to terminate this Agreement pursuant to this Section 3.3.

 

3.4.          Title and Survey Matters.

 

(a)           Title Commitments.  Promptly following the Effective Date, the Purchaser may order one or more commitments for an ALTA owner’s policy of title insurance with respect to each Property (collectively, the “Title Commitments”).

 

(b)           Surveys.  Promptly following the Effective Date, the Purchaser may order one or more current ALTA surveys with respect to each Property from a licensed surveyor in the State of Indiana (collectively, the “Surveys”).

 

(c)           Title and Surveys Review.  Prior to the expiration of the Inspection Period, the Purchaser may give the Sellers written notice of any matters identified in the Title Commitments or shown on the Surveys as to which the Purchaser objects in its sole and absolute discretion (other than Permitted Exceptions) (a “Title Objection Notice”); provided, however, if the Purchaser receives any revisions to the Title Commitments or the Surveys after the date of the Purchaser’s Title Objection Notice which did not appear in the prior versions of the Title Commitments or Surveys, then the Purchaser shall have five (5) Business Days following its receipt of such revision to object to any new matters first appearing or otherwise shown thereon in accordance with the terms hereof in a supplemental Title Objection Notice.  If, for any reason, the Sellers are unable or unwilling to take such actions as may be required to cause such matters to be removed from the Title Commitments or the Surveys, or to be otherwise remedied, the Sellers shall give the Purchaser notice thereof.  If the Sellers fail to give such notice within five (5) Business Days following the date on which the Sellers received the applicable Title Objection Notice (the “Title Response Date”), such failure shall be deemed an election by the Sellers not to

 

10

 

cause such removal and/or remedy.  If the Sellers shall elect (or be deemed to have elected) not to remove or remedy any matters as to which the Purchaser has objected, the Purchaser may elect, in its sole and absolute discretion, (i) to terminate this Agreement by notice given to the Sellers within five (5) Business Days following the earlier to occur of the date that the Purchaser received the applicable Sellers’ response notice or the applicable Title Response Date or (ii) to proceed to the Closing, notwithstanding such defect, without any abatement or reduction in the Purchase Price on account thereof.  If the Purchaser elects to terminate this Agreement in accordance with clause (i) of the preceding sentence, then the Escrow Agent shall return the Deposit to the Purchaser promptly upon the Purchaser’s request for the same and no party shall have any further obligations or liabilities to the other party hereunder except for the Surviving Obligations.

 

(d)           Voluntary Liens.  Notwithstanding anything contained in Section 3.4(c) to the contrary, the Sellers shall discharge, cure, remediate and otherwise remove all Voluntary Liens encumbering any Property at or prior to Closing.

 

(e)           Title Affidavits, Etc.  Each Seller shall use commercially reasonable efforts (such as furnishing the Title Company with an affidavit which may be required to establish that an instrument or document is no longer in effect or applicable to its Property) to cause all matters that do not appear to be a valid exception to the applicable Seller’s title to its Property (including, without limitation, references to instruments or documents which on their face or by law are no longer effective and matters which have no apparent applicability to its Property) to be omitted as exceptions to the Title Commitments and/or the Title Policies.

 

3.5.          Termination of Service Contracts.  Prior to the expiration of the Inspection Period, the Purchaser may elect, in its sole and absolute discretion, to provide the Sellers with a written notice identifying any Service Contracts which the Purchaser requires to be terminated prior to the Closing.  The Sellers shall terminate any such Service Contracts so identified by the Purchaser at the Sellers’ sole cost and expense on or prior to the Closing Date.  Notwithstanding the foregoing, each Seller acknowledges and agrees that it shall terminate any management agreements affecting its Property (including, without limitation, any management agreements between each Seller and ASC) on or prior to the Closing Date at no cost or expense to the Purchaser (whether or not the Purchaser provides the Sellers with a written notice requiring them to terminate the same) and the Purchaser shall have no liability or obligation with respect to any such management agreements.

 

ARTICLE IV.
 CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE

 

4.1.          Purchaser’s Conditions Precedent.  The obligation of the Purchaser to proceed with the Closing shall be subject to the satisfaction of the following conditions precedent on or before the Closing Date:

 

(a)           Licensing Approval.  The Purchaser shall have obtained appropriate and unconditional licenses (or commitments to issue unconditional licenses) from all applicable licensing authorities, which licenses shall authorize the Purchaser to operate each Facility as an assisted living/independent living community in the same manner as such Facility is currently

 

11

 

operated (and for at least the same number of beds/units as such Facility is currently licensed for), which licenses or commitments shall be satisfactory to the Purchaser in its reasonable discretion.

 

(b)           Closing Documents.  The Seller which owns such Property shall have delivered to the Purchaser the following with respect thereto:

 

(i)            One or more warranty deeds, in proper statutory form for recording, duly executed and acknowledged by such Seller, conveying fee simple title to the applicable Land and Improvements to the Purchaser, free from all liens and encumbrances other than the Permitted Exceptions, and otherwise in the form attached hereto as Exhibit A;

 

(ii)           One or more assignment and assumption agreements, duly executed and acknowledged by such Seller, assigning the applicable Intangible Property to the Purchaser and otherwise in the form attached hereto as Exhibit B;

 

(iii)          One or more bills of sale, duly executed by such Seller, transferring the applicable FF&E, Files and Records and Inventory to the Purchaser and otherwise in the form attached hereto as Exhibit C;

 

(iv)          One or more settlement statements, duly executed by the applicable Sellers, which sets forth all of the adjustments and prorations as described in this Agreement, and otherwise in a form acceptable to all parties;

 

(v)           A so called “FIRPTA” or “Non-Foreign” affidavit, duly executed and acknowledged by such Seller, in the form contemplated by Section 1445 of the Code, and otherwise in the form attached hereto as Exhibit D;

 

(vi)          Original copies of the applicable Files and Records, Licenses and Permits, Resident Agreements and Service Contracts to be conveyed by such Seller hereunder (delivery of which may be accomplished by leaving the same at the applicable Facility);

 

(vii)         To the extent the same are in such Seller’s possession or control, original, fully executed copies of all other material documents and agreements, plans and specifications and contracts, licenses and permits pertaining to such Property, to the extent not duplicative of such Seller’s other deliveries hereunder (delivery of which may be accomplished by leaving the same at the applicable Facility);

 

(viii)        Evidence reasonably satisfactory to the Purchaser and the Title Company regarding the good standing of such Seller and the legal authority of such Seller to execute this Agreement and the other documents which such Seller is required to deliver hereunder and to otherwise perform its obligations under this Agreement; and

 

(ix)           A parties in possession affidavit, a mechanic’s lien affidavit, a gap indemnity and such other conveyance documents, certificates, deeds and instruments as the Purchaser or the Title Company may reasonably require and as are customary in like transactions in the county in which such Property is located.

 

12

 

(c)           No Defaults.  No notice of default shall have been given or received by any Seller Party under any material agreement benefiting or affecting any Property in any respect and all such agreements shall be in full force and effect (each Seller Party agreeing to issue default notices in a commercially reasonable manner consistent with past practices).  All Licenses and Permits and any other authorizations necessary for the current use, occupancy and operation of each Property shall be in full force and effect.

 

(d)           Seller Parties’ Representations and Warranties.  All representations and warranties of the Seller Parties made herein shall be true, correct and complete in all material respects on and as of the Effective Date and on and as of the Closing Date, as if such representations and warranties were first being made and given as of the Closing Date.

 

(e)           Seller Parties’ Covenants.  Each Seller Party shall have performed in all material respects all covenants and obligations required to be performed by such Seller Party on or before the Closing Date, including, without limitation, the curing of all title and survey matters which any Seller Party shall have undertaken to perform.

 

(f)            No Material Adverse Change.  No material adverse change shall have occurred with respect to any Property between the expiration of the Inspection Period and the Closing Date.  Without limiting the foregoing, the overall Resident census at the Facilities, when combined with the overall resident census at the assisted living/independent living communities that are subject to the Other Purchase Agreements to the extent the “closings” (as defined therein) under such Other Purchase Agreements have not yet occurred, shall not have decreased by more than five percent (5%) in the aggregate between (i) the date of the most recent census delivered prior to the expiration of the Inspection Period, and (ii) the Closing Date; provided, however, if the “closing” (as defined therein) under one of the Other Purchase Agreements has occurred, then such percentage threshold shall increase to seven and one-half percent (7.5%) in the aggregate, and if the “closing” (as defined therein) under both of the Other Purchase Agreements has occurred, then such percentage threshold shall increase to ten percent (10%) in the aggregate.

 

(g)           Title Policies.  The Title Company shall be irrevocably committed to issue one or more ALTA owner’s title insurance policies to the Purchaser, insuring title to the Land and the Improvements is vested in the Purchaser, subject only to the Permitted Exceptions, with such endorsements as shall be required by the Purchaser and otherwise in form and substance consistent with the Title Commitments (collectively, the “Title Policies”), subject only to payment of the usual and customary premium.

 

(h)           HSR.  If applicable, all required filings under the HSR Act with respect to the transactions contemplated by this Agreement shall have been made and approved by the applicable governmental authority, and all waiting periods under the HSR Act shall have expired or otherwise been terminated.

 

4.2.          Conditions to Sellers’ Obligations to Close.  The obligation of the Sellers to proceed with the Closing is subject to the satisfaction of the following conditions precedent on and as of the Closing Date:

 

13

 

(a)           Purchase Price.  The Purchaser shall have delivered the Purchase Price to the Escrow Agent and shall have authorized and instructed the Escrow Agent to deliver the Purchase Price to the Sellers, subject to any adjustments and apportionments as may be provided for in this Agreement.

 

(b)           Closing Documents.  The Purchaser shall have delivered to the Sellers duly executed and acknowledged counterparts of the applicable documents described in Section 4.1(b) (including evidence reasonably satisfactory to the Sellers and the Title Company regarding the good standing of the Purchaser and the legal authority of the Purchaser to execute this Agreement and the other documents which the Purchaser is required to deliver hereunder and to otherwise perform its obligations under this Agreement).

 

(c)           Purchaser’s Representations.  All representations and warranties of the Purchaser herein shall be true, correct and complete in all material respects on and as of the Effective Date and on and as of the Closing Date, as if such representations and warranties were first being made and given as of the Closing Date.

 

(d)           Purchaser’s Covenants.  The Purchaser shall have performed in all material respects all covenants and obligations required to be performed by the Purchaser on or before the Closing Date.

 

(e)           HSR.  If applicable, all required filings under the HSR Act with respect to the transactions contemplated by this Agreement shall have been made and approved by the applicable governmental authority, and all waiting periods under the HSR Act shall have expired or otherwise been terminated.

 

4.3.          Failure of Conditions Precedent.  If there is a failure of any of the conditions precedent to any party’s obligation to close which is not due to a breach of representation or other default by the party in whose favor such condition runs, then the party in whose favor such condition runs shall have the right to terminate this Agreement by giving written notice thereof to the other party at or prior to the Closing, in which event the Deposit shall be refunded to the Purchaser and no party shall have any further obligations or liabilities to any other party hereunder except for the Surviving Obligations; provided, however, if the failure of any of the conditions precedent to either party’s obligation to close is due to a breach of representation or other default by the other party, then Article X shall control.

 

ARTICLE V.
 REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

 

5.1.          Representations of Seller Parties.  To induce the Purchaser to enter into this Agreement, each Seller, and ASC and Eagle, where applicable, for itself, hereby represent and warrant to the Purchaser as follows:

 

(a)           Status and Authority of the Seller Parties, Etc.  Each Seller Party is either a corporation or limited liability company (as applicable) duly organized, validly existing and in good standing under the laws of the State of Indiana, and each Seller Party has all requisite power and authority under the laws of such state and its charter documents to enter into

 

14

 

and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

 

(b)           Action of the Seller Parties, Etc.   Each Seller Party has taken all necessary action to authorize the execution, delivery and performance of this Agreement and each document to be executed, delivered and performed by such Seller Party hereunder, and upon the execution and delivery of this Agreement and any such document by such Seller Party, this Agreement and each such document shall constitute the valid and binding obligation and agreement of such Seller Party, enforceable against such Seller Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

 

(c)           No Violations of Agreements.  Neither the execution, delivery or performance of this Agreement by each Seller, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any Property pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which any Seller or its Property is bound.

 

(d)           Litigation.  No investigation, action or proceeding is pending and, to each Seller’s knowledge, no action or proceeding is threatened and no investigation looking toward any such action or proceeding has begun, which (i) questions the validity of this Agreement or any action taken or to be taken pursuant hereto, (ii) could reasonably be expected to result in any material adverse change in the business, operation, affairs or condition of any Property, (iii) could reasonably be expected to result in or subject any Property to a material liability, or (iv) involves condemnation or eminent domain proceedings against any part of any Property.

 

(e)           Financial Statements.  Attached hereto as Schedule 3 are complete and accurate copies of the unaudited financial statements of each Seller for the fiscal years ended December 31, 2008, December 31, 2009 and December 31, 2010, and for the period commencing January 1, 2011 through the last day of the month before the Effective Date (collectively, the “Seller Financial Statements”).  The Seller Financial Statements, including in each case the notes thereto, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, and, except as otherwise noted therein, are complete and accurate, do not contain any untrue statement of a material fact or omit to state a material fact required by GAAP to be stated therein or necessary in order to make the statements contained therein not misleading, and fairly present the results of operations of such Seller on the bases therein stated, as of the respective dates thereof, and for the respective periods covered thereby.

 

(f)            No Undisclosed Liabilities.  Except as set forth in the Seller Financial Statements, as of the Effective Date, no Seller had any obligation, indebtedness or liability of any nature which would have been required by GAAP to be reflected on the balance sheets of any Seller or described in the notes thereto, that is not shown on such balance sheets or on the notes to such balance sheets.  Except as set forth in the Seller Financial Statements, no Seller has outstanding any material obligation, indebtedness or liability, and no Seller knows of any basis for the assertion against such Seller of any such obligation, indebtedness or liability.

 

15

 

(g)           Resident Agreements.  Schedule 4 identifies all of the Residents at each Facility under Resident Agreements as of the last day of the month before the Effective Date.  Except for the Residents, no Person has any right to occupy any portion of any Property.  The copies of the forms of Resident Agreements, and any Resident Agreements that are not in form and substance substantially similar to the forms of Resident Agreements, heretofore delivered (or to be delivered) to the Purchaser are (or will be) true, correct and complete copies thereof; and neither the forms of Resident Agreements nor the other Resident Agreements delivered (or to be delivered) to the Purchaser have been amended except as evidenced by amendments similarly delivered and constitute the entire agreement between the applicable Seller and the Residents thereunder.  Except as otherwise set forth on Schedule 4 attached hereto: (i) to each Seller’s knowledge, each of the Resident Agreements is in full force and effect on the terms set forth therein; (ii) to each Seller’s knowledge, there are no defaults or circumstances which, with the giving of notice, the passage of time or both, would constitute a default by either party under any Resident Agreement; (iii) to each Seller’s knowledge, each Resident is legally required to pay all sums and perform all material obligations set forth therein without concessions, abatements, offsets, defenses or other basis for relief or adjustment; (iv) no Resident has asserted in writing or, to each Seller’s knowledge, has any defense to, offsets or claims against, rent payable by it or the performance of its other obligations under its Resident Agreement; (v) no Resident is entitled to any “guaranteed” rates or other arrangement that would preclude the Purchaser from charging market rates to such Resident; (vi) no Resident has provided any Seller with any Resident Deposit; and (vii) no Resident has prepaid any rent or other charge more than thirty (30) days in advance of its due date.  The other information set forth on Schedule 4 is true, correct and complete in all material respects.

 

(h)           Service Contracts.  Schedule 5 identifies all of the Service Contracts at each Facility as of the last day of the month before the Effective Date.  The copies of the Service Contracts heretofore delivered (or to be delivered) to the Purchaser are (or will be) true, correct and complete copies thereof; the Service Contracts have not been amended except as evidenced by amendments similarly delivered and constitute the entire agreement between the applicable Seller and each other party thereto.  To each Seller’s knowledge, each Service Contract is in full force and effect on the terms set forth therein, and there are no defaults or circumstances which, with the giving of notice, the passage of time or both, would constitute a default by either party under such Service Contract.

 

(i)            Other Agreements, Etc.  Other than the Resident Agreements, the Service Contracts and the Permitted Exceptions, there are no other agreements, contracts or other instruments with respect to or otherwise affecting any Property that will be binding on the Purchaser or such Property after the Closing.

 

(j)            Utilities, Etc.  To each Seller’s knowledge, all utilities and services necessary for the use and operation of each Property (including, without limitation, road access, gas, water, electricity and telephone) are available thereto, and no fact, condition or proceeding exists which would result in the termination or impairment of the furnishing of such utilities to such Property.

 

(k)           Compliance With Law.  To each Seller’s knowledge, (i) each Property complies in all material respects with all Laws and Permitted Exceptions, and (ii) there are

 

16

 

presently in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation of each Property.  No Seller Party has received any written notice of any violation of any Law or Permitted Exception which has not been corrected, or of any threatened request, application, proceeding, plan or study which would materially and adversely affect the present use or zoning of any Property or which would modify or realign any adjacent street or highway.

 

(l)            Healthcare Licensing.  Each Seller currently maintains all applicable Healthcare Licenses with respect to its Facility.  Such Seller has provided the Purchaser with true, correct and complete copies of all compliance surveys related to such Healthcare Licenses which were conducted within two (2) years prior to the Effective Date.  Each of the Healthcare Licenses is in full force and effect and no Seller has received any written notice regarding, nor does any Seller have any knowledge of, any circumstance at any Property which needs to be rectified in connection with any Healthcare Licenses.  To each Seller’s knowledge, each Facility is in compliance with all applicable licensing requirements related thereto.  No Seller has taken any action (or failed to take any action) which might jeopardize the effectiveness or good standing of any of the Healthcare Licenses.

 

(m)          Sanctions.  No Seller has knowledge of any imposed or threatened sanction by any governmental authority having jurisdiction over any Seller or any Property, including but not limited to, loss of or limitation on license, denial of payment for new admissions, directed plans of correction, or civil money penalties that apply to or may affect the operation of any Facility.  No Seller Party has received any notice of deficiencies from any such governmental authority with respect to any Property or the business conducted thereon.

 

(n)           Taxes.  To each Seller’s knowledge, other than the amounts disclosed by tax bills, no taxes or special assessments of any kind (special, bond or otherwise) are or have been levied with respect to any Property, or any portion thereof, which are outstanding or unpaid, other than amounts not yet due and payable or, if due and payable, not yet delinquent, and, to each Seller’s knowledge, no such taxes or special assessments are pending or threatened.

 

(o)           Hazardous Materials.  To each Seller’s knowledge, neither any Seller Party nor any Resident or other occupant or user of any Property, or any portion thereof, has stored or disposed of (or engaged in the business of storing or disposing of) or has released or caused the release of any Hazardous Materials on, in, under or about any Property in violation of any Laws, and, to each Seller’s knowledge, each Property is free from any such Hazardous Materials, except for any such Hazardous Materials maintained in accordance with all Laws.

 

(p)           Property Employment Contracts; Labor Matters.  No Seller Party has entered into any employment contracts or consulting contracts with any Person with respect to any Property other than Eagle.  Schedule 6 attached hereto sets forth a complete and accurate list of all Employees and the annual salary, benefit entitlements (if any) and other compensation paid to each Employee or accrued by each Employee as of the last day of the month before the Effective Date.  All of the Employees are common law employees of Eagle and any individuals considered by the Seller Parties to be “independent contractors” are and could only be reasonably considered to be independent contractors and not employees for tax, benefits, wage, labor or any other legal purpose.  No Employees are represented by any labor organization, and no labor

 

17

 

organization or group of Employees have made a pending demand for recognition or have filed a petition seeking a representation proceeding with the National Labor Relations Board within the last two (2) years.

 

(q)           Pension and Benefit Plans.  Schedule 7 attached hereto lists each Seller Employee Benefit Plan and Seller Benefit Arrangement in which any Employee participates.  The Sellers and Eagle have delivered to the Purchaser with respect to each Seller Employee Benefit Plan and Seller Benefit Arrangement complete and accurate copies of (i) all written documents comprising such plans and arrangements (including amendments and individual, trust or insurance agreements relating thereto); (ii) the three (3) most recent Federal Form 5500 series (including all schedules thereto) filed with respect to each such Seller Employee Benefit Plan; (iii) the summary plan description currently in effect and all material modifications thereto, if any, for each such Seller Employee Benefit Plan; and (iv) any written communications to Employees to the extent the substance of any Seller Employee Benefit Plan described therein differs materially from the other documentation furnished under this Section.  Neither any Seller nor Eagle nor any ERISA Affiliate of any Seller or Eagle is or has ever been a party to, nor made any contributions to, any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA, or a plan subject to Title IV of ERISA or, within the six (6) years preceding the Effective Date, Section 412 of the Code.

 

(r)            Inventory.  All items of Inventory are suitable and useable in the ordinary course of business at each Property and include, and will on the Closing Date include, a sufficient but not excessive quantity of each type of item in order to meet the normal requirements of each Seller’s business at such Property.  Without limiting the foregoing, such inventory and supplies shall include, as of the Closing Date, a sufficient quantity of food and grocery items at each Property to provide for the needs of the Residents at such Property for at least one (1) week.

 

(s)           Not a Foreign Person.  No Seller is a “foreign person” within the meaning of Section 1445 of the Code.

 

(t)            Disclosure.  None of the information concerning any Seller Party or its businesses, condition (financial or otherwise), assets, liabilities, property, prospects, personnel, products, plans and policies contained herein, in any Schedules, Exhibits or in the Seller Financial Statements contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

 

5.2.          Survival of the Seller’s Representations.  The representations and warranties made in this Agreement by each Seller Party shall be continuing and shall be deemed remade by such Seller Party as of the Closing Date, with the same force and effect as if made on, and as of, the Closing Date.  All representations and warranties made in this Agreement by each Seller Party shall survive the Closing for a period of one (1) year following the Closing Date unless the Purchaser commences an action based thereon within such one (1) year period, in which event the representations and warranties subject to such action shall survive until final resolution or judgment of such action.

 

18

 

5.3.          “As Is”.  Except as otherwise expressly provided in this Agreement or in any documents to be delivered at the Closing, no Seller Party has made (and the Purchaser has not relied upon), any promise, representation or warranty, express or implied, regarding any Property, whether made by any Seller Party, on such Seller Party’s behalf or otherwise.  The Purchaser acknowledges that, except as otherwise expressly provided in this Agreement or in any documents to be delivered at the Closing hereunder, it (a) has entered into this Agreement with the intention of making and relying upon its own investigation or that of third parties with respect to the physical, environmental, economic and legal condition of each Property and (b) is not relying upon any statements, representations or warranties of any kind, other than those specifically set forth in this Agreement or in any document to be delivered at the Closing, made (or purported to be made) by any Seller Party or anyone acting or claiming to act on any Seller Party’s behalf.

 

ARTICLE VI.
 REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

6.1.          Representations of Purchaser.  To induce the Sellers to enter into this Agreement, the Purchaser hereby represents and warrants to the Sellers as follows:

 

(a)           Status and Authority of Purchaser.  The Purchaser is duly organized, validly existing and in good standing under the laws of the state of its organization, and has all requisite power and authority under the laws of its state of organization and its charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

 

(b)           Action of Purchaser.  The Purchaser has taken all necessary action to authorize the execution, delivery and performance of this Agreement and each document to be executed, delivered or performed by the Purchaser hereunder, and upon the execution and delivery of this Agreement and any such document, this Agreement and each such document shall constitute the valid and binding obligation and agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

 

(c)           No Violations of Agreements.  Neither the execution, delivery or performance of this Agreement by the Purchaser, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Purchaser pursuant to the terms of any material agreement by which the Purchaser is bound.

 

(d)           Litigation.  No investigation, action or proceeding is pending and, to the Purchaser’s knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun, which questions the validity of this Agreement or any action taken or to be taken pursuant hereto.

 

19

 

 

6.2.          Survival.  The representations and warranties made in this Agreement by the Purchaser shall be continuing and shall be deemed remade by the Purchaser as of the Closing Date with the same force and effect as if made on, and as of, such date.  All representations and warranties made in this Agreement by the Purchaser shall survive the Closing for a period of one (1) year following the Closing Date unless the Sellers commence an action based thereon within such one (1) year period, in which event the representations and warranties subject to such action shall survive until final resolution or judgment of such action.

 

ARTICLE VII.
 COVENANTS OF THE SELLER

 

7.1.          Compliance with Laws, Etc.  Each Seller hereby covenants with the Purchaser that, between the Effective Date and the Closing Date, such Seller shall comply in all material respects with (a) all Laws, (b) all Licenses and Permits, and (c) the Healthcare Licenses.

 

7.2.          Compliance with Agreements.  Each Seller hereby covenants with the Purchaser that, between the Effective Date and the Closing Date, such Seller shall comply in all material respects with all Permitted Exceptions, Resident Agreements and Service Contracts, and any other material document or agreement affecting any Property and to monitor its compliance thereunder consistent with such Seller’s past practices.

 

7.3.          Approval of Agreements.  Each Seller hereby covenants with the Purchaser that, between the last day of the month before the Effective Date and the Closing Date, such Seller has not and will not enter into, modify, amend or terminate any of the Resident Agreements (other than in the ordinary course of such Seller’s business and on such Seller’s standard form and at prevailing rates), the Service Contracts, the Permitted Exceptions or any other material agreement with respect to any Property (including, without limitation, any document that would affect any Seller’s title to such Property) which would encumber or be binding upon such Property from and after the Closing Date.

 

7.4.          Notice of Material Changes or Untrue Representations.  Each Seller Party hereby covenants with the Purchaser that, between the Effective Date and the Closing Date, such Seller Party shall promptly notify the Purchaser of any material change in any condition with respect to any Property or of any event or circumstance which makes any representation or warranty of any Seller Party under this Agreement untrue or misleading.

 

7.5.          Operation of Property.  Each Seller hereby covenants with the Purchaser that, between the Effective Date and the Closing Date, such Seller shall continue (a) to operate its Property in a good and businesslike fashion consistent with past practices, (b) to maintain its Property in good working order and condition in a manner consistent with past practices and (c) to carry “all risk” property insurance on a replacement cost basis on its Improvements.  Without limiting the foregoing, the Seller Parties shall use commercially reasonable efforts to maintain the census of each Facility at its current levels and the good will of the Employees and Residents at each Facility.

 

20

 

7.6.          Employees.

 

(a)           Termination and Rehiring.  The Sellers and Eagle hereby covenant with the Purchaser to terminate the employment of each of the Employees immediately prior to the Closing.  The Purchaser hereby covenants with the Sellers and Eagle to offer (or to cause one of its Subsidiaries or affiliates to offer) substantially all such Employees the opportunity to continue his/her employment, as an “at will” employee similarly situated, with base compensation comparable to that provided to comparable employees of the Purchaser (or its Subsidiaries and/or affiliates) immediately prior to the Closing and with bonus opportunities, incentive compensation and pension and health and welfare benefits comparable to those provided to similarly situated employees of the Purchaser (or its Subsidiaries and/or affiliates) immediately prior to the Closing.  Notwithstanding the foregoing, the Purchaser (or its Subsidiaries or affiliates) shall have the right, in the exercise of its or their managerial discretion, to modify compensation, bonus programs, incentive compensation and pension and health and welfare benefits from time to time and to terminate the employment of any Employee.  Nothing in this Agreement shall be construed as granting any Employee any rights of continuing employment, compensation or benefits.

 

(b)           Benefits.  The Sellers or Eagle, as applicable, shall have full responsibility for, and neither the Purchaser nor its Subsidiaries and/or affiliates shall assume or otherwise have any liability, obligation or expense with respect to, (i) any wages, severance or employment related obligations with respect to any Employee to the extent related to, or arising out of, any Employee’s employment prior to the Closing Date, or (ii) any bonus, pension, profit sharing, 401(k), stock option, deferred compensation, hospitalization, medical, vision or dental, post-retirement medical, sickness, accident, severance pay, vacation pay, disability, death benefits, insurance and other plans, programs, funds, contracts or arrangements with respect to any Employee to the extent related to, or arising out of, any Employee’s employment prior to the Closing Date, including, without limitation, any Seller Employee Benefit Plan or Seller Benefit Arrangement, providing benefits to the Employees, former employees or their dependents sponsored or maintained by any Seller or Eagle or any predecessor of such Seller or Eagle or to which such Seller or Eagle contributes or is obligated to make contributions.  Notwithstanding the foregoing, the Purchaser may elect, in its sole discretion (but subject to applicable legal requirements), by written notice given to the Sellers prior to Closing, to assume (or to cause its Subsidiaries and/or affiliates to assume) all of such Seller’s or Eagle’s obligations and liabilities to pay the Employees for any vacation time or sick days which they have accrued (a detailed schedule of which shall be provided to the Purchaser at Closing), whereupon the Purchaser shall receive a credit for all amounts so assumed at Closing.  Absent such an election, each Seller or Eagle shall remain responsible for all of such Seller’s or Eagle’s obligations and liabilities to pay the Employees for any vacation time or sick days which they have accrued.  If the Purchaser elects to assume (or to cause its Subsidiaries and/or affiliates to assume) such obligations and liabilities, the Purchaser shall indemnify, defend and hold harmless such Seller and Eagle from and against any and all expense, loss or damage which such Seller and Eagle may incur as a result of any failure to pay any such obligations and liabilities to the extent that the Purchaser receives a credit for the same and such Seller and Eagle shall indemnify, defend and hold harmless the Purchaser (and its Subsidiaries and/or affiliates) from and against any and all expense, loss or damage which the Purchaser (and its Subsidiaries and/or affiliates) incurs in

 

21

 

connection with any such obligations or liabilities which are not assumed by the Purchaser (or its Subsidiaries or affiliates).

 

(c)           COBRA Coverage.  With respect to each Employee Benefit Plan of any Seller or Eagle (or any ERISA Affiliate of any Seller or Eagle) that is a “group health plan” as defined in Section 5000(b)(1) of the Code, any Seller or Eagle (or an ERISA Affiliate of any Seller or Eagle) shall have sole responsibility on and after the Closing Date for any liability under Section 4980B of the Code with respect to each person who is an “M & A qualified beneficiary,” as defined in Treas. Reg. § 54.4980B-9 in connection with the transactions contemplated by this Agreement.  In the event that any Seller or Eagle (and any ERISA Affiliates of any Seller or Eagle) shall, after the Closing, cease to maintain all such plans, such Seller or Eagle shall promptly notify the Purchaser if any “M & A qualified beneficiary” in connection with the transactions contemplated by this Agreement loses group health plan coverage.

 

(d)           Survival.  The provisions of this Section 7.6 shall survive the Closing hereunder.

 

7.7.          Non-Solicitation.  For a period of four (4) years following the Closing Date, each Seller Party hereby covenants with the Purchaser and its Subsidiaries and affiliates that no Seller Party or any affiliated entity which controls, is controlled by or is under common control with any Seller Party shall directly or indirectly solicit any Residents or Employees to leave any Facility; provided, however, nothing in this Section shall prevent the Seller Parties from (a) continuing to employ any assisted living management personnel of the Seller Parties working in the corporate offices of the Seller Parties in Indianapolis, Indiana, or (b) general employment or resident solicitations made pursuant to newspaper, television, radio or other general advertisement or attending job fairs, in all cases so long as such solicitations or job fairs are not specifically targeted at the Residents or the Employees.  Notwithstanding anything in this Agreement to the contrary, including, without limitation, Section 11.16, the Purchaser and its Subsidiaries and affiliates shall have the right to seek injunctive relief in connection with a breach of this Section 7.7.  This Section 7.7 shall survive the Closing.

 

7.8.          Non-Competition.  For a period of two (2) years following the Closing Date, each Seller Party hereby covenants with the Purchaser that neither such Seller Party, nor any affiliate of such Seller Party, shall own, lease, operate or develop any senior community offering assisted living, independent apartments, or garden homes within a five (5) mile radius of any Facility; provided, however, that nothing in this Section shall prevent (a) any Seller Party or any of its affiliates from continuing to own, lease or operate the assisted living facilities listed in Schedule 8 attached hereto so long as such facilities or the operations thereof are not expanded during such two (2) year period, (b) any Seller Party or any of its affiliates from continuing to own, lease, operate or develop the skilled nursing facilities listed in Schedule 9 so long as such facilities, operations or development are not expanded beyond (i) the facilities and operations in existence as of the Effective Date and (ii) the development of assisted living and/or independent living housing as a complement to such skilled nursing facilities for which the Seller Parties or its affiliates commenced the process with the applicable governmental authorities for permitting and licensing prior to the Effective Date, in which event the Seller Parties or its affiliates may continue to develop and permit such development so long as such development is not occupied

 

22

 

or licensed prior to the expiration of such two (2) year period, and (c) ASC from continuing to be the exclusive manager for all healthcare properties operated or acquired by an unrelated third party Indiana healthcare organization for whom ASC is the exclusive manager as of the Effective Date.  Notwithstanding anything in this Agreement to the contrary, including, without limitation, Section 11.16, the Purchaser and its Subsidiaries and affiliates shall have the right to seek injunctive relief in connection with a breach of this Section 7.8.  This Section 7.8 shall survive the Closing.

 

7.9.          Government Inspections.  Each Seller hereby covenants with the Purchaser that, between the Effective Date and the Closing Date, each Seller shall promptly notify the Purchaser of any survey, inspection or other investigation of any Property which is conducted by any third party (including, without limitation, any governmental authority).

 

7.10.        Trade Payables.  The Sellers shall be responsible for all Trade Payables relating to the period prior to the Closing Date and shall timely pay all such Trade Payables in accordance with the usual and customary practices of the Sellers.  If the Sellers fail to pay any such Trade Payables, within thirty (30) days after the Closing Date, the Purchaser may (but shall not be obligated) to pay such Trade Payables and receive reimbursement from the Sellers within ten (10) days after the Purchaser provides notice to the Sellers together with supporting evidence, indicating that such Trade Payables have been paid.  The Sellers shall indemnify the Purchaser from and against any actual costs and expenses incurred by the Purchaser as a result of the Sellers’ failure to timely pay any Trade Payables.  This Section 7.10 shall survive the Closing.

 

7.11.        Cooperation.  Each Seller Party hereby covenants with the Purchaser to use reasonable efforts to cooperate with the Purchaser and to take such actions as may be reasonably necessary in order to consummate the transactions contemplated by this Agreement.  Without limiting the foregoing, each Seller Party shall use reasonable efforts to assist the Purchaser (a) in obtaining all appropriate licenses for each Property, (b) in transitioning the Employees onto the Purchaser’s (or its Subsidiary’s or affiliate’s) payroll systems, and (c) in ensuring that all applicable motor vehicles are properly transferred to the Purchaser; provided, however, in no event shall any Seller Party be obligated to incur any out-of-pocket costs or expenses in connection with any such cooperation.  In addition, the Purchaser and each Seller Party shall cooperate with each other in promptly making any required filings under the HSR Act with respect to the transactions contemplated by this Agreement.  The parties’ obligations under this Section 7.11 shall survive the Closing.

 

ARTICLE VIII.
 APPORTIONMENTS

 

8.1.          Apportionments.

 

(a)           Closing Apportionments.  The following items shall be apportioned at 11:59 pm on the day preceding the Closing Date, such that the Closing Date shall be for the account of the Purchaser:

 

(i)            rents and all other fixed and unfixed charges payable under the Resident Agreements, to the extent the same have been received and collected;

 

23

 

(ii)           fuel, electric, water and other utility costs;

 

(iii)          real estate taxes and assessments other than special assessments, based on the rates and assessed valuations applicable in the 2011 calendar year (it being acknowledged and agreed that real estate taxes and assessments shall be prorated based on when such taxes are accrued, rather than when they are paid);

 

(iv)          amounts paid or payable under Service Contracts being assumed by the Purchaser;

 

(v)           amounts which the Purchaser (or its Subsidiaries and/or affiliates) elects to assume with respect to Employee vacation time or sick days (if any); and

 

(vi)          all other items of income and expense normally apportioned in sales of property in similar situations.

 

If any of the foregoing cannot be apportioned at the Closing because of the unavailability of the amounts which are to be apportioned, such items shall be apportioned on the basis of a good faith estimate by the parties and reconciled as soon as practicable after the Closing Date but, in any event, no later than ninety (90) days after the Closing Date for all items other than real estate taxes, which shall be reconciled no later than six (6) months after the Closing Date.

 

(b)           Meter Readings.  The Purchaser and the Sellers shall cooperate to cause the Sellers’ water, gas, electric or other utility accounts with respect to each Property to be closed on the day preceding the Closing Date and for new accounts to be opened in the Purchaser’s name on the Closing Date, in which case each of the Purchaser and the Sellers shall be responsible for their own accounts.  If the Purchaser and the Sellers are not able to switch over any such accounts as aforesaid, the Sellers endeavor to obtain readings for all applicable utility meters as close as possible to the Closing Date and any corresponding charges based thereon shall be prorated based upon such readings.  If any readings cannot be obtained by the Closing Date, then, at the Closing, any corresponding charges based thereon shall be prorated based upon the last readings then available.  Upon the taking of subsequent actual readings, the apportionment of such charges shall be recalculated and the Sellers or the Purchaser, as the case may be, shall make prompt payment to the other based upon such recalculations.

 

(c)           Tax Refunds.  If any refunds of real property taxes or assessments, water rates and charges or sewer taxes and rents shall be made after the Closing, the same shall be held in trust by the Sellers or the Purchaser, as the case may be, and shall first be applied to the unreimbursed costs incurred in obtaining the same, then the balance, if any, shall be paid to the Sellers (with respect to the period prior to the Closing Date) and to the Purchaser (with respect to the period commencing with the Closing Date).

 

(d)           Special Assessments.  If, on the Closing Date, any Property shall be or shall have been affected by any special or general assessment or assessments or real property taxes payable as a lump sum or which are or may become payable in installments of which the first installment is then a charge or lien and has become payable, the Sellers shall pay or cause to be paid at the Closing the unpaid installments of such assessments, including those which are to become due and payable after the Closing Date.

 

24

 

(e)           Resident Deposits.  At the Closing, the Purchaser shall receive a credit for the amount of all Resident Deposits or, if required by Law, the segregated accounts containing such Resident Deposits or the amounts therein shall be transferred to the Purchaser.

 

(f)            Insurance Policies.  Except as set forth in Section 9.1, no insurance policies of the Sellers are to be transferred to the Purchaser, and no apportionment of the premiums therefor shall be made.

 

(g)           Credits or Debits.  If a net amount is owed by the Sellers to the Purchaser pursuant to this Section 8.1, such amount shall be credited against the Purchase Price at Closing.  If a net amount is owed by the Purchaser to the Sellers pursuant to this Section 8.1, such amount shall be paid together with the Purchase Price at Closing.

 

8.2.          Holdback.  At the Closing, the Sellers shall deposit the Holdback Amount with Escrow Agent and Escrow Agent shall hold the Holdback Amount in an interest bearing account to be available to reimburse the Purchaser (and its Subsidiaries and/or affiliates) for any and all losses, damages, liabilities, costs and expenses, including, without limitation, interest, penalties, and reasonable attorney’s fees (collectively, “Losses”) incurred by the Purchaser (and its Subsidiaries and/or affiliates) in connection with any breach by any Seller Party of any of the terms, conditions, covenants or representations and warranties of such Seller Party as set forth in this Agreement.  If neither the Purchaser nor its Subsidiaries or affiliates has made a claim for any such Losses on or before the first (1st) anniversary of the Closing Date, then the Escrow Agent shall release the Holdback Amount to the Sellers. If the Purchaser (or its Subsidiaries and/or affiliates) makes a claim against any Seller Party on or before the first (1st) anniversary of the Closing Date and notifies Escrow Agent thereof, then the Escrow Agent shall retain the Holdback Amount until the claim is finally resolved by a written agreement signed by both parties and delivered to the Escrow Agent or by delivery of the amount of the claim to a court of competent jurisdiction by Escrow Agent, in which event the Escrow Agent shall be released and discharged from all further obligations hereunder.  Any Loss determined to be due to the Purchaser (and its Subsidiaries and/or affiliates) shall be recovered first from the Holdback Amount; provided, however, the Holdback Amount shall not limit or otherwise cap any Seller’s liability under this Agreement.

 

8.3.          Closing Costs.

 

(a)           Seller’s Costs.  The Sellers shall pay the following closing costs:  (i) one-half (1/2) of all costs, fees and premiums incurred in connection with the Title Commitments, the Surveys and the Title Policies; (ii) one-half (1/2) of all excise, sale, use, value added, registration, stamp, recording, documentary, conveyance, franchise, transfer, gains and similar taxes and impositions incurred in connection with the transactions contemplated by this Agreement; (iii) the entire amount of all recording charges for instruments removing liens or otherwise curing title and survey matters; (iv) the costs of the attorneys and consultants of the Sellers; and (v) all other costs incurred by the Sellers in connection with this Agreement, including, without limitation, any costs associated with any filing required to be made by any Seller Party under the HSR Act.

 

25

 

(b)           Purchaser’s Costs.  The Purchaser shall pay the following closing costs: (i) one-half (1/2) of all costs, fees and premiums incurred in connection with the Title Commitments, the Surveys and the Title Policies; (ii) one-half (1/2) of all excise, sale, use, value added, registration, stamp, recording, documentary, conveyance, franchise, transfer, gains and similar taxes and impositions incurred in connection with the transactions contemplated by this Agreement; (iii) all recording charges (as opposed to taxes) for the deeds; (iv) the costs of the Purchaser’s attorneys and consultants; and (v) all other costs incurred by the Purchaser in connection with this Agreement, including, without limitation, any costs associated with any filing required to be made by the Purchaser under the HSR Act.

 

8.4.          Withholding Amounts.  The Purchaser shall be entitled to withhold from the Purchase Price any amounts that the Purchaser is required to withhold or is responsible for withholding under any applicable Laws.

 

8.5.          Errors on Settlement Statements.  If either party discovers any errors in any of the prorations or adjustments shown on the settlement statements or closing statements, then the party discovering such error shall promptly notify the other party thereof and the parties shall promptly make such payments to one another as shall be necessary to rectify such errors; provided, however, that any such error notices shall be delivered on or before the first (1st) anniversary of the Closing Date.

 

8.6.          Survival.  All of the provisions of this Article VIII shall survive the Closing or the earlier termination of this Agreement.

 

ARTICLE IX.
 CASUALTY AND CONDEMNATION

 

9.1.                  Casualty.  If, prior to the Closing, all or any part of any Property is destroyed or damaged by fire or other casualty, the Sellers shall promptly notify the Purchaser of such fact.  If any such casualty shall damage all or any material portion of such Property, then the Purchaser shall have the right to terminate this Agreement by giving notice thereof to the Sellers not later than ten (10) Business Days after the date on which the Purchaser receives the Sellers’ notice as aforesaid (and, if necessary, the Closing Date shall be extended until two (2) Business Days after the expiration of such period).  If the Purchaser elects to terminate this Agreement as aforesaid, then the Escrow Agent shall return the Deposit to the Purchaser, whereupon this Agreement shall terminate and be of no further force and effect and no party shall have any liability or obligation to any other party hereunder except for the Surviving Obligations.  If any such casualty shall damage less than a material portion of any Property or if the Purchaser shall not elect to terminate this Agreement as aforesaid, then there shall be no abatement of the Purchase Price and the Sellers shall assign to the Purchaser at the Closing all of the Sellers’ rights to the insurance proceeds, if any, under the Sellers’ insurance policies covering such Property with respect to such damage or destruction and there shall be credited against the Purchase Price the following: (a) the amount of any applicable insurance deductibles; and (b) the amount of any proceeds received by any Seller that have not been applied to the costs of repairs that were approved by the Purchaser.  For purposes of this Section 9.1, any casualty damage which the Purchaser reasonably estimates will cost in excess of $150,000.00 to repair will be deemed to have damaged a material portion of such Property.

 

26

 

9.2.                  Condemnation.  If, prior to the Closing, all or any part of any Property is taken by eminent domain (or is the subject of a pending taking which has not yet been consummated), the Sellers shall promptly notify the Purchaser of such fact, and the Purchaser shall have the right to terminate this Agreement by giving notice thereof to the Sellers not later than ten (10) Business Days after the date on which the Purchaser receives the Sellers’ notice as aforesaid (and, if necessary, the Closing Date shall be extended until two (2) Business Days after the expiration of such period).  If the Purchaser elects to terminate this Agreement as aforesaid, then the Escrow Agent shall return the Deposit to the Purchaser, whereupon this Agreement shall terminate and be of no further force and effect and no party shall have any other obligation or liability to the other hereunder except for the Surviving Obligations.  If the Purchaser shall not elect to terminate this Agreement as aforesaid, the sale of the Properties shall be consummated as herein provided without any adjustment to the Purchase Price (except to the extent of any condemnation award received by the Sellers) and the Sellers shall assign to the Purchaser at the Closing all of such Sellers’ right, title and interest in and to all awards, if any, for the taking, and the Purchaser shall be entitled to receive and keep all awards for the taking of such Property or portion thereof.

 

9.3.          Survival.  All of the provisions of this Article IX shall survive the Closing or the earlier termination of this Agreement.

 

ARTICLE X.
 DEFAULT AND REMEDIES

 

10.1.        Default by the Seller Parties.  If any Seller Party shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if any Seller Party shall fail to perform any of the material covenants and agreements contained herein to be performed by such Seller Party, then the Purchaser, as its sole and exclusive remedy prior to Closing, may elect to either (a) terminate this Agreement and receive a refund of the Deposit, whereupon the Sellers shall reimburse the Purchaser for the Purchaser’s out-of-pocket expenses incurred in connection with this Agreement whereupon this Agreement shall terminate and be of no further force and effect and no party shall have any other obligation or liability to any other party hereunder except for the Surviving Obligations, or (b) pursue a suit for specific performance; provided, however, if the Purchaser is unsuccessful in its suit for specific performance it shall nevertheless be entitled to the remedies provided in the immediately preceding clause (a).  Nothing contained in this Section 10.1 shall operate to limit the Purchaser’s rights or remedies under this Agreement with respect to any breach of representation, warranty or covenant which is first discovered (or which first occurs) after the Closing.

 

10.2.        Default by the Purchaser.  If the Purchaser shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if the Purchaser shall fail to perform any of the covenants and agreements contained herein to be performed by it, the Sellers, as their sole and exclusive remedy prior to Closing, may terminate this Agreement and retain the Deposit, as liquidated damages and not as a penalty, whereupon this Agreement shall terminate and be of no further force and effect and no party shall have any other obligation or liability to any other party hereunder.  Nothing contained in this Section 10.2 shall operate to limit the Sellers’ rights or remedies under this Agreement with respect to any

 

27

 

breach of representation, warranty or covenant which is first discovered (or which first occurs) after the Closing.

 

10.3.        Cross-Default.  This Agreement and each of the Other Purchase Agreements are cross-defaulted until the earlier of the Closing hereunder or the “closing” thereunder.  If the Purchaser terminates one or both of the Other Purchase Agreements pursuant to Section 10.1 thereunder prior to the “closing” thereunder, then the Purchaser shall have the right to terminate this Agreement prior to the Closing hereunder pursuant to Section 10.1 hereunder.  If the “sellers” under one or both of the Other Purchase Agreements terminate such Other Purchase Agreement(s) pursuant to Section 10.2 thereunder prior to the “closing” thereunder, then the Sellers shall have the right to terminate this Agreement prior to the Closing hereunder pursuant to Section 10.2 hereunder.

 

10.4.        Survival.  All of the provisions of this Article X shall survive the Closing or the earlier termination of this Agreement.

 

ARTICLE XI.
 MISCELLANEOUS

 

11.1.        Allocation of Liability.  It is expressly understood and agreed that the Sellers shall be liable to third parties for, and shall indemnify, defend and hold harmless the Purchaser (and its Subsidiaries and/or affiliates) from and against, any and all obligations, claims, losses, damages, liabilities and expenses arising out of events, contractual obligations, acts, or omissions of the Sellers that occurred in connection with the ownership or operation of the Properties prior to the Closing, and the Purchaser shall be liable to third parties for and shall indemnify, defend and hold harmless the Sellers from and against any and all obligations, claims, losses, damages, liabilities and expenses arising out of events, contractual obligations, acts, or omissions of the Purchaser (or its Subsidiaries or affiliates) that occur in connection with the ownership or operation of the Properties after the Closing.

 

11.2.        Brokers.  Each of the parties hereto represents to the other parties that it dealt with no broker, finder or like agent in connection with this Agreement or the transactions contemplated hereby other than the Broker.  The Sellers shall be responsible for paying any commissions or other amounts due to the Broker in connection with this Agreement.  The Sellers shall indemnify, defend and hold harmless the Purchaser from and against any loss, liability or expense, including, without limitation, reasonable attorneys’ fees, arising out of any claim or claims for commissions or other compensation owed to the Broker.  Each party shall indemnify, defend and hold harmless the other from and against any loss, liability or expense, including, reasonable attorneys’ fees, arising out of any claim or claims for commissions or other compensation for bringing about this Agreement or the transactions contemplated hereby made by any other broker, finder or like agent, if such claim or claims are based in whole or in part on dealings with the indemnifying party.

 

11.3.        Publicity.  No Seller Party shall make any public pronouncements, issue any press releases or otherwise furnish any information regarding this Agreement or the transactions contemplated hereby (including, without limitation, the identity of the Purchaser (or its Subsidiaries or affiliates) as a party to this transaction) to any third party without the prior

 

28

 

written consent of the Purchaser, which consent may be withheld by the Purchaser in its sole and absolute discretion.

 

11.4.        Trading in Purchaser’s Securities.  Each Seller Party acknowledges, and each Seller Party agrees to advise its representatives who are informed of the matters that are the subject of this Agreement, that United States securities laws prohibit any person who has received from the issuer of such securities material, nonpublic information concerning the matters that are the subject of this Agreement from purchasing or selling securities of such issuer or from communicating such information to any other person when it is reasonably foreseeable that such other person is likely to purchase or sell such securities in reliance upon such information, and each Seller Party hereby agrees for the benefit of the Purchaser and its affiliates to be bound by such prohibitions.  No party expresses a view as to whether or not any portion or all of the information regarding this Agreement and the transaction contemplated hereby constitutes, or in the future may constitute, material, nonpublic information with respect to the Purchaser and its affiliates.

 

11.5.        Notices.

 

(a)           Means of Delivery.  Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement by any party shall be deemed adequately given if in writing and the same shall be delivered either in hand, by facsimile or electronic mail transmission with electronic confirmation of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).  Any notice to the Seller Parties which is delivered to ASC at the address specified below shall be deemed to have been given to all other Seller Parties simultaneously with its delivery to ASC.

 

(b)           Timing of Delivery.  All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of confirmed delivery, in the case of a notice by facsimile or electronic mail transmission (which confirmation may be electronically generated by the sender’s machine), and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

 

(c)           Notice Addresses.  All such notices shall be addressed,

 

	
If   to any Seller Party, to:
    	
American   Senior Communities, L.L.C.
    
	
 
    	
6900   S. Gray Road
    
	
 
    	
Indianapolis, Indiana   46237
    
	
 
    	
Attention:   Blake A. Jackson
    
	
 
    	
Fax   No.: (317) 783-5469
    
	
 
    	
Email:   blakejackson@tcm-bai.com
    

 

29

 

`

	
with   a copy to:
    	
American   Senior Communities, L.L.C.
    
	
 
    	
6900   S. Gray Road
    
	
 
    	
Indianapolis, Indiana   46237
    
	
 
    	
Attention:   Teresa C. Williams
    
	
 
    	
Fax   No.: (317) 780-4686
    
	
 
    	
Email:   teresawilliams@tcm-bai.com
    
	
 
    	
 
    
	
If   to the Purchaser, to:
    	
Five   Star Quality Care, Inc.
    
	
 
    	
400   Centre Street
    
	
 
    	
Newton,   Massachusetts 02458
    
	
 
    	
Attn:   Bruce J. Mackey Jr.
    
	
 
    	
Fax   No.: (617) 796-8385
    
	
 
    	
Email:   bmackey@5sqc.com
    
	
 
    	
 
    
	
with   a copy to:
    	
Sullivan &   Worcester LLP
    
	
 
    	
One   Post Office Square
    
	
 
    	
Boston,   Massachusetts 02109
    
	
 
    	
Attn:   Louis A. Monti
    
	
 
    	
Fax   No.: (617) 338-2880
    
	
 
    	
Email:   lmonti@sandw.com
    
	
 
    	
 
    
	
If   to the Escrow Agent, to:
    	
Commonwealth   Land Title Insurance Company
    
	
 
    	
2   Grand Central Tower
    
	
 
    	
140   East 45th Street
    
	
 
    	
New   York, New York 10017
    
	
 
    	
Attn:   Kathryn Andriko
    
	
 
    	
Fax   No.: (212) 986-5989
    
	
 
    	
Email:   kandriko@cltic.com
    

 

(d)           Change of Address.  By notice given as herein provided, the parties hereto and their respective successor and assigns shall have the right from time to time to change their respective addresses effective upon receipt by the other parties of such notice.

 

(e)           Notice by Attorneys.  The attorneys for any party may give notices on behalf of the party whom they represent.

 

11.6.        Waivers, Etc.  Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party’s right at a later time to enforce or require performance of such provision or any other provision hereof.  This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.

 

30

 

11.7.        Assignment; Successors and Assigns.  This Agreement and all rights and obligations hereunder shall not be assignable by any party without the written consent of the other, except that the Purchaser may assign this Agreement, in whole or in part, to any of its Subsidiaries or affiliates, or to Senior Housing Properties Trust or any of its Subsidiaries or affiliates.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns.  The Subsidiaries and affiliates of the Purchaser are third party beneficiaries of this Agreement and shall be entitled to enforce the representations, warranties, covenants and other obligations of each Seller Party set forth herein; otherwise this Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other persons except as specifically contemplated herein.

 

11.8.        Bulk Sales Laws.  The Sellers shall indemnify, defend and hold harmless the Purchaser from and against any loss, claim or damage that the Purchaser may incur as a result of any failure to comply with any so-called “bulk sales laws” or similar Laws (if any) which are applicable to the transactions contemplated under this Agreement.

 

11.9.        No Presumption Against Drafter.  This Agreement has been extensively negotiated between the Purchaser and the Sellers and none of the provisions set forth herein shall be construed narrowly against either party on the account of the fact that such party (or its attorney) drafted such provision.

 

11.10.      Entire Agreement; Severability.  This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof, including, without limitation, any confidentiality agreement executed in connection with the subject matter hereof.  If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not render the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or otherwise render any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

 

11.11.      Counterparts, Etc.  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any such counterparts may be delivered by facsimile or e-mail (in the form of a .pdf or any other readily accessible attachment thereto), and all such counterparts so delivered shall be treated as original documents for all purposes.

 

31

 

11.12.      Performance on Business Days.  In the event the date on which performance or payment of any obligation of a party required hereunder or the delivery of any notice permitted or required hereunder is other than a Business Day, the time for payment, performance or delivery shall automatically be extended to the first (1st) Business Day following such date.

 

11.13.      Attorneys Fees.  Notwithstanding anything contained herein to the contrary, if any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, each party shall pay its own costs and expenses, including, without limitation, attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefrom.

 

11.14.      Section and Other Headings.  The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

11.15.      Time of Essence.  Time shall be of the essence with respect to the performance of each and every covenant and obligation, and the giving of all notices, under this Agreement.

 

11.16.      Liability of Sellers.  Each Seller shall be jointly and severally liable for the obligations of each Seller Party hereunder.  Notwithstanding the foregoing, neither the members, managers, employees or agents of any Seller, nor the shareholders, officers, directors, employees or agents of any of them shall be liable under this Agreement, and all parties hereto shall look solely to the Holdback Amount and the assets of the Sellers for the payment of any claim or the performance of any obligation by the Sellers.

 

11.17.      Financials.  Each Seller shall provide the Purchaser with access to the books and records of such Seller that relate to its Property and the business that such Seller conducts thereon for purposes of preparing audited financial statements for the 2008, 2009 and 2010 calendar years (and the 2011 stub period).  For the avoidance of doubt, to the extent the Purchaser or any of its affiliates are acquiring any other business or properties from a Seller or any of their respective affiliates (including, without limitation, the businesses and properties that are subject to the Other Purchase Agreements), the financial statements to be prepared by the Purchaser may be consolidated or combined financial statements representing the results of operations and financial condition of all such businesses and properties on a consolidated or combined basis, as appropriate.  In addition, each Seller shall execute and deliver (or shall cause its officers to execute and deliver) to the Purchaser or the independent public accounting firm auditing such financial statements such certifications, “representations” letters and consents as to such financial statements, books and records as are customarily provided in connection with the preparation of audited financial statements in accordance with the requirements of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”), and the applicable rules and regulations thereunder, for inclusion in any registration statement or other public filing of the Purchaser or any of its affiliates under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, and any other prospectus, offering circular or document used by the Purchaser or such affiliate in any other offering of securities, whether public or private.  The Purchaser shall be responsible for all out-of-pocket costs or expenses reasonably incurred by a Seller in connection with the preparation of such financial statements, certifications, consents and representations.  Notwithstanding the foregoing, the Purchaser agrees to prepare such

 

32

 

audited financial statements only to the extent (a) the Purchaser determines appropriate, after consultation with counsel, in connection with any registration statement, prospectus, report or other filing of the Purchaser or its affiliates with the SEC or any stock exchange on which securities of the Purchaser or any affiliate are listed, or (b) the Purchaser or an affiliate determines advisable in connection with its investor relations program, conducted in the normal course.

 

11.18.      GOVERNING LAW; JURISDICTION.  THIS AGREEMENT IS TO BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF INDIANA.

 

11.19.      WAIVER OF JURY TRIAL.  THE PURCHASER AND EACH SELLER PARTY HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE DOCUMENTS RELATED HERETO, ANY DEALINGS BETWEEN THE PURCHASER AND ANY SELLER PARTY RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN THE PURCHASER AND ANY SELLER PARTY HEREUNDER.

 

11.20.      ASC Brand.  Notwithstanding anything in this Agreement to the contrary, within ninety (90) days after the Closing, the Purchaser shall cease using all materials, signage, logos, marketing brochures and other marketing materials that contain the name or logo of ASC.

 

11.21.      Survival.  All of the provisions of this Article XI shall survive the Closing or the earlier termination of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

33

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a sealed instrument as of the Effective Date.

 

	
 
    	
PURCHASER:
    
	
 
    	
 
    
	
 
    	
FIVE STAR QUALITY CARE, INC.,
    
	
 
    	
a Maryland corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bruce J. Mackey Jr.
    
	
 
    	
 
    	
Name:
    	
Bruce   J. Mackey Jr.
    
	
 
    	
 
    	
Its:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
SELLERS:
    
	
 
    	
 
    
	
 
    	
RESIDENTIAL CARE I, L.L.C.,
    
	
 
    	
an Indiana limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Blake A. Jackson
    
	
 
    	
 
    	
Name:
    	
Blake   A. Jackson
    
	
 
    	
 
    	
Its:
    	
Manager
    
	
 
    	
 
    
	
 
    	
RESIDENTIAL CARE III, INC.,
    
	
 
    	
an Indiana corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Blake A. Jackson
    
	
 
    	
 
    	
Name:
    	
Blake   A. Jackson
    
	
 
    	
 
    	
Its:
    	
Manager
    
	
 
    	
 
    
	
 
    	
CLEARWATER   GARDEN HOMES, L.L.C.,
    
	
 
    	
an Indiana limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Blake A. Jackson
    
	
 
    	
 
    	
Name:
    	
Blake   A. Jackson
    
	
 
    	
 
    	
Its:
    	
Manager
    
	
 
    	
 
    
	
 
    	
ROSEWALK GARDEN HOMES, L.L.C.,
    
	
 
    	
an Indiana limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Blake A. Jackson
    
	
 
    	
 
    	
Name:
    	
Blake   A. Jackson
    
	
 
    	
 
    	
Its:
    	
Manager
    
					

 

34

 

	
 
    	
AMERICAN   SENIOR HOME CARE, L.L.C.,
    
	
 
    	
an Indiana limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Blake A. Jackson
    
	
 
    	
 
    	
Name:
    	
Blake   A. Jackson
    
	
 
    	
 
    	
Its:
    	
Manager
    
					

 

35

 

ESCROW AGENT:

 

THE UNDERSIGNED HEREBY ACKNOWLEDGES AND

AGREES TO BE BOUND BY THE PROVISIONS OF

SECTIONS 2.4 AND 8.2 OF THE FOREGOING AGREEMENT.

 

COMMONWEALTH LAND TITLE INSURANCE COMPANY

 

	
By:
    	
/s/   Kathryn Andriko
    	
 
    
	
 
    	
Name:
    	
Kathryn   Andriko
    	
 
    
	
 
    	
Its:
    	
Vice   President
    	
 
    
					

 

36

 

JOINDER

 

The undersigned hereby joins in this Agreement solely for the purposes of being the beneficiary of, and being bound by, the terms and provisions of this Agreement applicable to it, including, without limitation, Sections 3.1, 5, 7.4, 7.5, 7.7, 7.8, 7.11, 11.3, 11.4 and 11.19 of this Agreement.

 

AMERICAN SENIOR COMMUNITIES, L.L.C.,
 an Indiana limited liability company

 

	
By:
    	
/s/   Blake A. Jackson
    	
 
    
	
 
    	
Name:
    	
Blake   A. Jackson
    	
 
    
	
 
    	
Its:
    	
Vice   President
    	
 
    
					

 

The undersigned hereby joins in this Agreement solely for the purposes of being the beneficiary of, and being bound by, the terms and provisions of this Agreement applicable to it, including, without limitation, Sections 3.1, 5, 7.4, 7.5, 7.6, 7.7, 7.8, 7.11, 11.3, 11.4 and 11.19 of this Agreement.

 

EAGLE CARE II, L.L.C.,
 an Indiana limited liability company

 

	
By:
    	
/s/   Blake A. Jackson
    	
 
    
	
 
    	
Name:
    	
Blake   A. Jackson
    	
 
    
	
 
    	
Its:
    	
Vice   President
    	
 
    
					

 

37

 

 

SCHEDULE 1

 

THE FACILITIES

 

	
Name
    	
 
    	
Address
    	
 
    	
Sellers
    	
 
    	
Units
    	
 
    	
Allocated
   Purchase
   Price
    	
 
    
	
Clearwater Commons
    	
 
    	
4519 E. 82nd Street
   Indianapolis, IN  46250
    	
 
    	
Residential Care I, L.L.C.

 

Clearwater Garden Homes, L.L.C.

 

American Senior Home Care, L.L.C.
    	
 
    	
AL:  81

 

IL:  7
    	
 
    	
$
    	
17,000,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Rosewalk Commons and Garden Homes
    	
 
    	
250 Shenandoah Drive
   Lafayette, IN  47905
    	
 
    	
Residential Care III, Inc.

 

Rosewalk Garden Homes, L.L.C.

 

American Senior Home Care, L.L.C.
    	
 
    	
AL:  87

 

IL:  22
    	
 
    	
$
    	
23,500,000.00
    	
 
    

 

 

SCHEDULE 2

 

THE LAND

 

(See attached copy.)

 

	
  

  	
   

  

 

	
  

  	
   

  

 

	
  

  	
   

  

 

	
  

  	
   

  

 

	
  

  	
   

  

 

	
  

  	
   

  

 

 

 

SCHEDULE 3

 

FINANCIAL STATEMENTS

 

 

SCHEDULE 4

 

RESIDENTS

 

 

SCHEDULE 5

 

SERVICE CONTRACTS

 

(See attached copy.)

 

 

Clearwater Commons

 

Schedule   5 - Service Agreements - Residential Care I

 

	
Number
    	
 
    	
Name of   Agreement/Document
    	
 
    	
Date of
   Doc.
    	
 
    	
Contracting 
   Party
    	
 
    	
Other Parties
   (if any)
    	
 
    	
Description of   Agreement
    
	
 
    	
 
    	
Beauty Shop Agreement
    	
 
    	
10/9/2010
    	
 
    	
Marsha Tousant
    	
 
    	
 
    	
 
    	
Beauty Shop Services
    
	
 
    	
 
    	
Uniform Rental Service   Agreement
    	
 
    	
6/11/2010
    	
 
    	
CINTAS
    	
 
    	
 
    	
 
    	
Uniform Rental
    
	
 
    	
 
    	
Rental Agreement
    	
 
    	
3/7/2002
    	
 
    	
Extra Space Storage
    	
 
    	
 
    	
 
    	
Storage Unit
    
	
 
    	
 
    	
Odor-Control Service   Agreement
    	
 
    	
1/14/2010
    	
 
    	
Fikes Fresh   Brands, Inc.
    	
 
    	
 
    	
 
    	
Odor Control
    
	
 
    	
 
    	
Service Agreement
    	
 
    	
2/11/2011
    	
 
    	
Freedom Communications
    	
 
    	
 
    	
 
    	
Lifeline Wireless   E-Call Systems
    
	
 
    	
 
    	
Lease Agreement
    	
 
    	
1/26/2009
    	
 
    	
Ikon Financial Services
    	
 
    	
 
    	
 
    	
Copier rental
    
	
 
    	
 
    	
Contract
    	
 
    	
2/11/2011
    	
 
    	
Integrated Electronics
    	
 
    	
 
    	
 
    	
Alarm System Test
    
	
 
    	
 
    	
Service Agreement
    	
 
    	
2/11/2011
    	
 
    	
Mainscape
    	
 
    	
 
    	
 
    	
Lawn Services
    
	
 
    	
 
    	
Pharmacy Services   Agreement
    	
 
    	
10/1/2009
    	
 
    	
Pharmakon Long Term   Care Pharmacy, Inc.
    	
 
    	
 
    	
 
    	
Pharmaceutical provider
    
	
 
    	
 
    	
Rental Agreement
    	
 
    	
10/31/2007
    	
 
    	
Pitney Bowes
    	
 
    	
 
    	
 
    	
Postage Meter
    
	
 
    	
 
    	
Service Agreement
    	
 
    	
2/9/2004
    	
 
    	
Rays Trash Service
    	
 
    	
 
    	
 
    	
Non-Hazardous Waste
    
	
 
    	
 
    	
Pest Prevention Service   Agreement
    	
 
    	
10/1/2008
    	
 
    	
Steritech
    	
 
    	
 
    	
 
    	
Rodent Prevention
    
	
 
    	
 
    	
Service Agreement
    	
 
    	
4/1/2009
    	
 
    	
AMPRO
    	
 
    	
 
    	
 
    	
Medical Waste
    
	
 
    	
 
    	
Agreement
    	
 
    	
2/4/2009
    	
 
    	
A Place for Mom
    	
 
    	
 
    	
 
    	
Referral Service
    

 

 

Rosewalk Commons

 

Schedule   - Service Agreements - Residential Care III

 

	
Number
    	
 
    	
Name of Agreement/Document
    	
 
    	
Date of
   Doc.
    	
 
    	
Contracting
   Party
    	
 
    	
Other Parties
   (if any)
    	
 
    	
Description of Agreement
    	
 
    	
Comments
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
11/17/2000
    	
 
    	
Electronic   Telephone Services
    	
 
    	
 
    	
 
    	
Telephone
    	
 
    	
 
    
	
 
    	
 
    	
Rental   Agreement
    	
 
    	
5/28/2007
    	
 
    	
Pyramid   Self-Storage, LLC
    	
 
    	
 
    	
 
    	
Storage   rental
    	
 
    	
 
    
	
 
    	
 
    	
Facility   Service Agreement
    	
 
    	
3/11/2008
    	
 
    	
Preferred   Podiatry Group, P.C.
    	
 
    	
 
    	
 
    	
Podiatric   Services
    	
 
    	
 
    
	
 
    	
 
    	
Power   Purchasing Health Care Agreement
    	
 
    	
7/26/1998
    	
 
    	
Power   Purchasing, Inc.
    	
 
    	
 
    	
 
    	
Postage
    	
 
    	
 
    
	
 
    	
 
    	
Music   Service Agreement
    	
 
    	
12/16/2008
    	
 
    	
Muzak
    	
 
    	
 
    	
 
    	
Music   Equipment
    	
 
    	
 
    
	
 
    	
 
    	
Landscape   Maintenance Service Agreement
    	
 
    	
11/6/2008
    	
 
    	
Mainscape
    	
 
    	
 
    	
 
    	
Landscape   services
    	
 
    	
 
    
	
 
    	
 
    	
Advertising   Contract
    	
 
    	
10/1/2004
    	
 
    	
Journal   and Courier
    	
 
    	
 
    	
 
    	
Advertising   Services
    	
 
    	
 
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
4/2/2005
    	
 
    	
Integrated   Electronics
    	
 
    	
 
    	
 
    	
Alarm/Sprinkler   Testing
    	
 
    	
 
    
	
 
    	
 
    	
Contract
    	
 
    	
1/17/2002
    	
 
    	
AQUA   Systems
    	
 
    	
 
    	
 
    	
Water   Softner
    	
 
    	
 
    
	
 
    	
 
    	
Installation &   Services Agreement
    	
 
    	
7/17/2009
    	
 
    	
Comcast
    	
 
    	
 
    	
 
    	
Cable
    	
 
    	
 
    
	
 
    	
 
    	
Beauty   Shop Agreement
    	
 
    	
1/1/2010
    	
 
    	
Linda   Weise
    	
 
    	
 
    	
 
    	
Beautician   services
    	
 
    	
 
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
9/10/2007
    	
 
    	
Allied   Waste Services
    	
 
    	
 
    	
 
    	
Waste   removal
    	
 
    	
 
    
	
 
    	
 
    	
Agreement
    	
 
    	
3/22/2001
    	
 
    	
ISO   Capital
    	
 
    	
 
    	
 
    	
Copier
    	
 
    	
 
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
4/24/2002
    	
 
    	
Indiana   Pest Control
    	
 
    	
 
    	
 
    	
Pest   Control
    	
 
    	
 
    
	
 
    	
 
    	
Pharmacy   Service Agreement
    	
 
    	
7/6/2009
    	
 
    	
Pharmacy   Long Term Care Pharmacy, Inc.
    	
 
    	
 
    	
 
    	
Pharmacy   Services
    	
 
    	
 
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
1/21/2008
    	
 
    	
Freedom   Communications
    	
 
    	
 
    	
 
    	
Wireless   E-Call System
    	
 
    	
 
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
 
    	
 
    	
Verizon   Wireless
    	
 
    	
 
    	
 
    	
Home   Health Phone
    	
 
    	
 
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
4/1/2009
    	
 
    	
AMPRO
    	
 
    	
 
    	
 
    	
Medical   Waste
    	
 
    	
 
    
	
 
    	
 
    	
Vehicle   Lease Agreement
    	
 
    	
3/2/2011
    	
 
    	
TESCO   Transportation
    	
 
    	
 
    	
 
    	
Bus   Rental
    	
 
    	
 
    
	
 
    	
 
    	
Service   Agreement
    	
 
    	
 
    	
 
    	
FIKES
    	
 
    	
 
    	
 
    	
Odor   Control
    	
 
    	
 
    

 

1

 

SCHEDULE 6

 

EMPLOYEES

 

 

SCHEDULE 7

 

SELLER EMPLOYEE BENEFIT PLANS
 SELLER BENEFIT ARRANGEMENTS

 

(See attached copy.)

 

 

Schedule — Employee Benefit Plans

 

1.     American Senior Communities, L.L.C. Retirement Savings Plan

 

2.     American Senior Communities, L.L.C. Group Health Plan

 

3.     American Senior Communities, L.L.C. Life, Long Term Disability, Accidental Death and Dismemberment Plan

 

4.     American Senior Communities, L.L.C. Flexible Benefit Plan

 

5.     American Senior Communities, L.L.C. 2009 Clinical Director Bonus Plan (still in effect)

 

6.     American Senior Communities, L.L.C. 2009 General Manager Bonus Plan (still in effect)

 

7.     American Senior Communities, L.L.C. 2009 Licensed General Manager Incentive Program (still in effect)

 

8.     American Senior Communities, L.L.C.  2009 Licensed Residential Care Clinical Director Bonus Plan (still in effect)

 

9.     American Senior Communities, L.LC. 2009 Sales Bonus Plan

 

 

SCHEDULE 8

 

EXCEPTIONS TO NON-COMPETE (ASSISTED LIVING FACILITIES)

 

	
Name
    	
 
    	
Address
    	
 
    	
Owner
    	
 
    	
Units
    
	
Rosegate Commons
    	
 
    	
7525 Rosegate Drive
   Indianapolis, IN 46237
    	
 
    	
Residential Care V, L.L.C.
    	
 
    	
AL: 82

IL: 81
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Coventry Meadows
    	
 
    	
7833 W. Jefferson Blvd.
   Fort Wayne, IN 46804
    	
 
    	
Coventry Meadows, L.L.C.
   Residential Care IX, L.L.C.
    	
 
    	
AL: 82

IL: 36
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Rosewalk at Lutherwoods
    	
 
    	
1301 N. Ritter Avenue
   Indianapolis, IN 46219
    	
 
    	
Basic American Convalescent Centres, L.P. II
    	
 
    	
AL: 98
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Meadow Lake
    	
 
    	
200 Meadow Lakes Drive
   Mooresville, IN 46158
    	
 
    	
Meadow Lake of Mooresville, L.L.C.

 

Meadow Lakes Garden Homes, L.L.C.
    	
 
    	
AL: 53

IL: 42
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
American Village
    	
 
    	
2026 E. 54th Street
   Indianapolis, IN 46220
    	
 
    	
Lincoln Lodge, Inc.

 

Parrish Patriot Place, L.L.P.

 

Parrish American Villages, LLC
    	
 
    	
AL: 79

IL: 102
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Zionsville Meadows
    	
 
    	
675 S. Ford Road
   Zionsville, IN 46077
    	
 
    	
Zionsville Meadows, L.L.C.

 

Zionsville Garden Homes, L.L.C.
    	
 
    	
AL: 86

IL: 60
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Spring Mill Meadows
    	
 
    	
2140 W. 86th Street
   Indianapolis, IN 46260
    	
 
    	
Childrens’ Convalescent Centers, Inc.

 

Spring Mill Garden Homes, L.L.C.
    	
 
    	
AL: 0

IL: 14
    

 

 

	
Beech Grove Meadows
    	
 
    	
2002 Albany Street
   Beech Grove, IN 46107
    	
 
    	
Basic American Convalescent Centres V, L.L.C.

 

Beech Grove Patio Homes, L.L.C.
    	
 
    	
AL: 16

IL: 35
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Monticello Assisted Living & Healthcare   Center
    	
 
    	
1120 North Main Street
   Monticello, IN 47960
    	
 
    	
Basic American Convalescent Centres IX, L.L.C.
    	
 
    	
AL: 14

IL: 0
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Heritage Park Commons
    	
 
    	
2002 Heritage Park Drive
   Fort Wayne, IN 46805
    	
 
    	
Basic Amercian Convalescent Centres VIII, L.L.C.

 

Heritage Park Garden Homes, L.L.C.
    	
 
    	
AL: 32

IL: 48
    

 

 

SCHEDULE 9

 

EXCEPTIONS TO NON-COMPETE (SKILLED NURSING FACILITIES)

 

	
Name
    	
 
    	
Address
    	
 
    	
Owner
    	
 
    	
Units
    
	
Allisonville Meadows
    	
 
    	
10312 Allisonville Road
   Fishers, IN 46038
    	
 
    	
Allisonville Meadows, L.L.C.

 

F.S. Jackson Family Limited Partnership No. 1
    	
 
    	
SNF: 171

AL: 0

IL: 0
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Brownsburg Meadows
    	
 
    	
2 East Tilden Drive
   Brownsburg, IN 46112
    	
 
    	
Brownsburg Meadows, L.L.C.

 

Residential Care X, L.L.C.
    	
 
    	
SNF: 136

AL: 11

IL: 10
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Meadow Lake of Mooresville
    	
 
    	
200 Meadow Lakes Drive
   Mooresville, IN 46158
    	
 
    	
Meadow Lake of Mooresville, L.L.C.

 

Meadow Lake Garden Homes, L.L.C.
    	
 
    	
SNF: 137

AL: 53

IL: 42
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Coventry Meadows
    	
 
    	
7843 West Jefferson Blvd.
   Fort Wayne, IN 46804
    	
 
    	
Coventry Meadows, L.L.C.

 

Residential Care IX, L.L.C.
    	
 
    	
SNF: 150

AL: 82

IL: 36
    

 

 

EXHIBIT A

 

FORM OF DEED

 

[Attach Indiana Warranty Deed.]

 

 

WARRANTY DEED

 

THIS INDENTURE WITNESSETH, that                                                                              (“Grantor”), a limited liability company organized and existing under the laws of the State of Indiana, CONVEYS AND WARRANTS to                                                      , a                                     , organized and existing under the laws of the State of                     (“Grantee”), for the sum of Ten Dollars ($10.00) and other valuable consideration, the receipt of which is hereby acknowledged, the following described real estate in                              County, in the State of Indiana (hereinafter called the “Real Estate”):

 

[INSERT LEGAL DESCRIPTION HERE]

 

TOGETHER with all buildings, structures, fixtures and improvements now erected or located on the Real Estate, or affixed thereto (collectively, the “Improvements”), and TOGETHER with all tenements, hereditaments, rights, privileges, interests, easements and appurtenances now belonging or in any wise pertaining to the Real Estate and/or the Improvements.

 

Subject to (i) all easements, highways, rights-of-way, covenants, conditions, restrictions and other matters of record to the extent the same are in effect and enforceable; (ii) all current, non-delinquent real estate taxes and assessments; and (iii) all matters that would be disclosed by a current accurate ALTA survey of said real estate.

 

The undersigned person executing this Deed on behalf of Grantor represents and certifies  that he is a duly elected manager of Grantor and has been fully empowered, by proper resolution of the Board of Managers of Grantor, to execute and deliver this deed; that Grantor has full company capacity to convey the Real Estate described herein; and that all necessary company action for the making of such conveyance has been taken and done.

 

IN WITNESS WHEREOF, Grantor has caused this deed to be executed this          day of                                 , 20      .

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name of Company
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
Printed Name and Title
    

 

 

	
STATE   OF INDIANA
    	
)
    
	
 
    	
)  SS:
    
	
COUNTY   OF MARION
    	
)
    

 

Before me, a Notary Public in and for said County and State, personally appeared                                                            , the manager of [H.I. Name of Company], who acknowledged execution of the foregoing Warranty Deed as such manager acting for and on behalf of said company, and who, having been duly sworn, stated that the representations therein contained are true.

 

Witness my hand and Notarial Seal this             day of                             , 200      .

 

 

	
 
    	
 
    
	
 
    	
Signature
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Printed   Name
    	
Notary Public
    
	
 
    	
 
    
	
 
    	
 
    
	
My   Commission Expires:
    	
County   of Residence:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Send   tax statements to and
    	
 
    
	
Grantee’s   mailing address is:
    	
 
    
	
 
    	
 
    

 

 

This instrument was prepared by Teresa C. Williams, Attorney at Law, 6900  S. Gray Road, Indianapolis, Indiana  46237, Phone: 317-783-5461.

 

I affirm, under the penalties for perjury, that I have taken reasonable care to redact each Social Security number in this document, unless required by law.  [Printed Name or Signature of Preparer].

 

 

EXHIBIT B

 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

 

(See attached copy.)

 

 

ASSIGNMENT AND ASSUMPTION OF

RESIDENT AGREEMENTS, SERVICE CONTRACTS

AND OTHER INTANGIBLE PROPERTY

 

THIS ASSIGNMENT AND ASSUMPTION OF RESIDENT AGREEMENTS, SERVICE CONTRACTS AND OTHER INTANGIBLE PROPERTY (this “Assignment”) is made and entered into as of                               , 2011 by and between                             , a                                        (the “Assignor”), and                               , a                                  (the “Assignee”).

 

WITNESSETH:

 

WHEREAS, the Assignor and the Assignee are parties to that certain Purchase and Sale Agreement, dated as of [                        ], (the “Purchase Agreement”), pursuant to which the Assignor has agreed to sell, and the Assignee has agreed to purchase, certain land and other property, including, without limitation, the independent living/assisted living facility known as [                        ] and having an address at [                        ] (the “Facility”);

 

WHEREAS, in connection with the closing of the sale contemplated by the Purchase Agreement, the Assignor has agreed to assign, and the Assignee has agreed to assume, among other things, the Resident Agreements described on Exhibit A attached hereto (the “Resident Agreements”), the Service Contracts described on Exhibit B attached hereto (the “Service Contracts”), the Licenses and Permits with respect to the Facility and the Intangible Property with respect to the Facility (as such terms are defined in the Purchase Agreement), subject to and upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Assignor and the Assignee agree as follows:

 

1.             Capitalized Terms.  Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement.

 

2.             Assignment and Assumption.  The Assignor hereby assigns to the Assignee all of the Assignor’s right, title and interest in and to the Resident Agreements, the Service Contracts, the Licenses and Permits and the Intangible Property as hereinabove described.  The Assignee hereby assumes, as of the date hereof, all of the Assignor’s obligations under such Resident Agreements, Service Contracts, Licenses and Permits and Intangible Property first arising from and after the date hereof.  The Assignee hereby agrees to perform all of the Assignor’s obligations first arising under such Resident Agreements, Service Contracts, Licenses and Permits and Intangible Property from and after the date hereof.

 

3.             Indemnification of Assignee.  The Assignor shall indemnify, defend and hold harmless the Assignee from and against all of the obligations, liabilities, claims and expenses arising under all Resident Agreements, Service Contracts, Licenses and Permits and Intangible Property assigned hereby prior to the date hereof.

 

Exhibit B - Page 1

 

4.             Indemnification of Assignor.  The Assignee shall indemnify, defend and hold harmless the Assignor from and against all of the obligations, liabilities, claims and expenses first arising under all Resident Agreements, Service Contracts, Licenses and Permits and Intangible Property assumed hereby from and after the date hereof.

 

5.             Successors and Assigns.  This Assignment shall be binding on, and inure to the benefit of, the parties hereto, their respective successors in interest, and their respective assigns.

 

6.             Governing Law.  This Assignment shall be governed by, and construed in accordance with, the laws of the State of Indiana.

 

7.             Counterparts.  This Assignment may be executed in two or more counterparts, all of which shall be construed together as a single instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

Exhibit B - Page 2

 

IN WITNESS WHEREOF, the Assignor and the Assignee have executed this Assignment as a sealed instrument as of the day and year first hereinabove written.

 

	
 
    	
ASSIGNOR:
    
	
 
    	
 
    
	
 
    	
 
    	
,
    
	
 
    	
a
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
,
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
ASSIGNEE:
    
	
 
    	
 
    
	
 
    	
 
    	
,
    
	
 
    	
a
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
,
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    
						

 

Exhibit B - Page 3

 

EXHIBIT A

 

RESIDENT AGREEMENTS

 

 

EXHIBIT B

 

SERVICE CONTRACTS

 

 

EXHIBIT C

 

FORM OF BILL OF SALE

 

(See attached copy.)

 

 

BILL OF SALE

 

Reference is hereby made to that certain Purchase and Sale Agreement, dated as of [                        ] (the “Purchase Agreement”), between                                             , a                                  (the “Seller”) and                                       , a                                  (the “Purchaser”), pursuant to which the Seller has agreed to sell, and the Purchaser has agreed to purchase, certain land and other property, including, without limitation, the [    ]-unit assisted living/independent living community known as [                        ] and having an address at [                        ] (the “Facility”).  Capitalized terms used and not otherwise defined in this Bill of Sale shall have the meanings given such terms in the Purchase Agreement.

 

The Seller, for good and valuable consideration paid by the Purchaser, the receipt and sufficiency of which are hereby acknowledged, by these presents does hereby BARGAIN, SELL, ASSIGN AND DELIVER unto the Purchaser all of the Seller’s right, title and interest in and to the FF&E, the Files and Records and the Inventory related to the Facility (collectively, the “Subject Property”).

 

THE SELLER HEREBY WARRANTS TO THE PURCHASER THAT THE SELLER IS THE LAWFUL OWNER OF THE SUBJECT PROPERTY AND THE SUBJECT PROPERTY IS FREE AND CLEAR FROM THE RIGHTS AND CLAIMS OF OTHERS, BUT MAKES NO OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE SUBJECT PROPERTY, EXCEPT TO THE EXTENT SET FORTH IN THE PURCHASE AGREEMENT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE SELLER MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE WITH RESPECT TO THE SUBJECT PROPERTY, AND THE SAME IS SOLD IN AN “AS IS, WHERE IS” CONDITION, WITH ALL FAULTS AND THAT THERE ARE NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, EXCEPT TO THE EXTENT SET FORTH IN THIS BILL OF SALE OR THE PURCHASE AGREEMENT.

 

TO HAVE AND TO HOLD the Subject Property unto the Purchaser, its successors and assigns forever.

 

This Bill of Sale shall be governed by, and construed in accordance with, the laws of the State of Indiana.

 

Exhibit C - Page 1

 

IN WITNESS WHEREOF, this Bill of Sale has been duly executed as a sealed instrument effective as of                               , 2011.

 

	
 
    	
 
    	
,
    
	
 
    	
a
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    
						

 

Exhibit C - Page 2

 

EXHIBIT D

 

FORM OF FIRPTA CERTIFICATE

 

(See attached copy.)

 

 

CERTIFICATION OF NON-FOREIGN STATUS

 

Section 1445 of the Internal Revenue Code provides that a transferee of a United States real property interest must withhold tax if the transferor is a foreign person.  To inform [·], the transferee of a U.S. real property interest (the “Transferee”), that withholding of tax is not required upon the disposition of such U.S. real property interest by [·], the transferor of a U.S. real property interest (the “Transferor”), the undersigned hereby certifies the following on behalf of the Transferor:

 

1.                                       The Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

 

2.                                       The Transferor is not a disregarded entity as defined in §1.1445-2(b)(2)(iii) of the Income Tax Regulations;

 

3.                                       The Transferor’s U.S. taxpayer identification number is [·]; and

 

4.                                       The Transferor’s address is:

 

 

 

 

 

The Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

 

Under penalties of perjury, the undersigned declares that he/she has examined this certification and, to the best of his/her knowledge and belief, it is true, correct and complete, and he/she further declares that he/she has the authority to sign this document on behalf of Transferor.

 

 

	
 
    	
 
    	
,
    
	
 
    	
an   Indiana [corporation][limited liability company]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
Date:  [·], 2011

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]